Audit report, state of Georgia, State Personnel Board, Merit System of Personnel Administration, year ended June 30, 1994

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STATE OF GEORGIA DEPARTMENT OF AUDITS
254 WASHINGTON STREET ATLANTA. GEORGIA 30334

AUDIT REPORT STATE OF GEORGIA STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION YEAR ENDED JUNE 30, 1994

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION
-TABLE OF CONTENTS-

SECTION I

FINANCIAL

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

5

C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGET FUND

6

D STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

COMPARED TO BUDGET

BUDGET FUND

8

E NOTES TO THE FINANCIAL STATEMENTS

9

SUPPLEMENTARY INFORMATION

F COMBINING BALANCE SHEET (STATUTORY BASIS)

BUDGET FUND

22

G COMBINING STATEMENT OF CHANGES IN FUND BALANCES

(STATUTORY BASIS)

BUDGET FUND

23

H COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGET FUND

24

I COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

FIDUCIARY FUND TYPE -AGENCY FUNDS

26

SCHEDULES

I SCHEDULE OF APPROVED BUDGET

27

2 CASH AND CASH EQUIVALENTS

28

3 SCHEDULE OF OTHER OPERATING EXPENSES

29

4 RECONCILIATION OF TRAVEL

30

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION
- TABLE OF CONTENTS -
SECTION II FINDINGS AND IMPROPER OR QUESTIONED COSTS SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS

SECTION I FINANCIAL

CLAUDE L. VICKERS STATE AUDITOR (404) 656-2174
TAX RATIO (404) 656-0494

~.epartm.eut nf J\uhits
254 WASHINGTON STREET, S.W ROOM 214
J\.tfonta, Oienrgia 30334-8400
January 6, 1995

FINANCIAL AUDITS (404) 656-2180
PROGRAM AUDITS (404) 656-2006

Honorable Zell Miller, Governor Members ofthe General Assembly of Georgia Members ofthe State Personnel Board Merit System ofPersonnel Administration
and Honorable Bobbie Jean Bennett, Commissioner
INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying financial statements (Exhibits A through E) of the State Personnel Board, Merit System ofPersonnel Administration as of and for the year ended June 30, 1994. These financial statements are the responsibility of the Board'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 perfonn 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 State Personnel Board, Merit System of Personnel Administration as of June 30, 1994, and the results of its operations (statutory basis) for the year then ended, on the basis of
accounting described in Note I.
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplementary information (Exhibits F through I and Schedules 1 through 4) is presented for purposes of additional analysis and is not a required part of the financial statements of the State Personnel
94ARL-l

Board, Merit System of Personnel Administration. Such information has been 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.
Respectfully submitted,
~~~
Claude L. Vickers State Auditor
CLV:cm 94ARL-l

FINANCIAL STATEMENTS - 1-

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION COMBINED BALANCE SHEET (STATUTORY BASIS}
ALL FUND TYPES AND ACCOUNT GROUPS
JUNE 30.1994

ASSETS Cash and Cash Eguivalents
(See Schedule) Investments (See Note 8) Accounts Receivable
Claim Refunds Due Less: Allowance for Uncollectible Claim Refunds Due
Other
Interest Receivable Fixed Assets
Equipment Amount to be Provided for Payment of
Accrued Compensated Absences Installment Purchase Commitments

GOVERNMENTAL FUND TYPE
BUDGET

FIDUCIARY FUND TYPE
AGENCY

$205,601,822.02$ 4,932,079.21 $167,694,964.25

$ 3,115,770.22 $ -1,580,352.07 13,536,128.96
$15,071,547.11 $ $ 3,289,435.51

23,114.18 -19,542.48 172,503.45 176,075.15

Total Assets
LIABILITIES AND FUND EQUITY Liabilities
Accounts Payable Contracts Payable Payroll Withholdings Incurred But Not Reported Claims
Health Insurance Funds Held for Others Compensated Absences Installment Purchases
Total Liabilities Fund Equity
Investment in General Fixed Assets Fund Balances
Reserved Health Insurance Claims Summer Hiring Program
Unreserved Designated Surplus Total Fund Equity

$=2=2=3=,=9=6=2=,8==0=4=.6==4 $=1=7=2=,=8=0=3=,1==1=8=.6=1=

$11,431,949.99$ 1,621,174. 71 260.75

306,157.03

125,823,000.00 172,496,961.58

$138,876,385.45 $172,803,118.61

$ 85,086,419.19 0.00 0.00
$ 85,086,419.19

Total Liabilities and Fund Equity

$=2=2=3=,=9=6=2=,8==0=4=.6==4 $=1=7=2=,=8=0=3=,1==1=8=.6=1=

The notes to the financial statements are an integral part .of this statement. - 2-

EXHIBIT "A"

ACCOUNT GROUPS

GENERAL FIXED
ASSETS

GENERAL LONG-TERM
DEBT

TOTALS (Memorandum Only) JUNE 30, 1994 JUNE 30, 1994

$210,533,901.23 $169,370,832.90 $167,694,964.25 $146,134,287.70

$ 3,138,884.40$ 2,688,648.16 -1,599,894.55 -1,305,317.43 13,708,632.41 8,570,493.97
$15,247,622.26 $ 9,953,824.70 $ 3,2B9,435.51 $ 3,299,661.24

$ 710,693.45

$ 710,693.45$ 678,606.10

$ 675,324.62$ 6,613.70
$ 681,938.32$

675,324.62$ 6,613.70
681,938.32 $

573,411.52 20,140.83
593,552.35

$=z==7=1=0=,=6=9=3=.=4=5$==6=8=1=,=9=3=8=.=3=2 $z3=9=8=,=1=5=8=,=5=5=5=.0==2 $=3=3=0=,0==3=0=,7==6=4=.9==9

$11,738,107.02$ 10,015,561.25

1,621,174.71 2,178,623.40

260.75

368.25

125,823,000.00 122,240,000.00

172,496,961.58 150,128,286.25

$ 675,324.62

675,324.62

573,411.52

6,613.70

6,613.70

20,140.83

$ 681,938.32 $312,361,442.38 $285,156,391.50

$ 710,693.45 $ 710,693.45

$ 710,693.45 $ 678,606.10

85,086,419.19 44,191,504.06

0.00

4,263.33

0.00

0.00

$85,797,112.64$ 44,874,373.49

$====7=1=0=,=6=9=3=.=4=5$====6=8=1=,=9=3=8=.3==2

$=3=9=8=,=1=5=8=,5==5=5=.0==2

$330,030,764.99
==============

- 3-

4

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS)
GOVERNMENTAL FUND TYPE YEAR ENDED JUNE 30, 1994

EXHIBIT "B"

FUND BALANCES - JULY 1
Reserved Unreserved
Designated Surplus
ADDITIONS
Adjustments to Prior Year's Accounts Payable Claims Refunds Due Revenues
Decrease in Allowance for Uncollectible Claim Refunds Due
Excess of Funds Available over Expenditures Exhibit "C"
Reimbursement of Prior Year's Expenditures
DEDUCTIONS
Adjustments to Prior Year's Accounts Receivable Expenditures Fund Balance Increase in Incurred But Not Reported Claims Liability Health Insurance
Increase in Allowance for Uncollectible Claims Refunds Due
Reserved Fund Balance Carried Over from Prior Year as Funds Available
Uncollectible Claim Refunds Due Written Off
FUND BALANCES - JUNE 30
(To Exhibit "A")

BUDGET FUND YEAR ENDED JUNE 30, 1994 JUNE 30, 1993

$44,195,767.39 $39,969,913.84

0.00

0.00

$44,195,767.39 $39,969,913.84

$ 86,309.85 $ 302,694.67 330,908.30

58,779.76 4,707.23
250.55

0.00 1,096,839.01

88,637,369.47 55,725,309.34

7,548.00

18,361.42

------------- -------------

$89,364,830.29 $56,904,247.31

$

335.84 $

68.33

260,310.71

288,849.44

3,583,000.00 12,285,000.00

294,577.12

0.00

44,195,767.39 39,969,913.84

140,187.43

134,562.15

$48,474,178.49 $52,678,393.76

$85,086,419.19 $44,195,767.39
============= =============

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

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30. 1994

EXHIBIT "C" Page 1

FUNDS AVAILABLE REVENUES
OTHER REVENUES RETAINED Contributions Employees State Agencies, Authorities and County Governments Local Education Agencies Individuals Employers State Agencies, Authorities and County Governments Local Education Agencies
Administrative Fees Charitable Contributions Deferred Compensation Employees' Flexible Benefit Program Health Insurance Program Agency Assessments for Operations (Net)
Interest Earned Reimbursement for Salaries (Summer Hiring Program)
Southern Bell Training Fees
Total Revenues CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance Health Insurance Claims Summer Hiring Program Total Carry-Over from Prior Year

TOTALS YEAR ENDED JUNE 30, 1994 JUNE 30, 1993

$74,843,560.35$ 63,754,975.59 143,059,113.54 120,413,049.84 4,980,777.26 4,747,374.77 225,820,041.88 201,643,438.36 377,643,623.61 334,868,021.48

$826,347,116.64 $725,426,860.04

67,997.75 142,464.88 87,686.00 35,358.25 9,856,091.14 7,044,812.85
0.00 25,650.00

68,662.11 135,848.09 84,898.87 36,743.95 10,140,512.33 9,027,553.44
3,358.39 0.00

$843,607,177.51 $744,924,437.22

$ 44,191,504.06 $ 39,963,967.09

4,263.33

5,946.75

$ 44,195,767.39 $ 39,969,913.84

Total Funds Available

$=8=8=7=,=8=0=2=,9==4=4=.9==0 $=7=8=4=,=8=9=4=,3==5=1=.0==6

EXPENDITURES

PERSONAL SERVICES

Salaries and Wages Employer's Contributions for:
F. I .C.A. Retirement Health Insurance Personal Liability Insurance Unemplorment Compensation Insurance Workers Compensation Insurance Assessments by Merit System REGULAR OPERATING EXPENSES

$ 5,450,230.93 $ 5,233,381.18

389,573.55 854,062.54 676,529.90
26,040.00 6,786.00
21,422.00
-------7-,9--0-7-.1--9

382,634.61 820,132.25 662,231.14
16,766.00 4,076.00 14,755.00
-------7-,2--0-8-.2--0

$---7-,4-3--2-,5-5--2-.1-1- $---7-,1-4--1-,1--8-4-.3--8

Supplies and Materials

$

Repairs and Maintenance

Rents (Other than Real Estate)

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

- 6-

487,103.03 $ 44,034.09
5,853.90

633,734.88 28,292.35 3,472.25

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30 1 1994

EXHIBIT "C" Page 2

EXPENDITURES REGULAR OPERATING EXPENSES
Insurance and Bonding Other Operating Expenses (See Schedule) Duplicating and Rapid Copy Publications and Printing
TRAVEL EQUIPMENT
Equipment Purchases Lease/Purchase of Equipment Rental of Equipment
COMPUTER CHARGES Other Costs Supplies and Materials Repairs and Maintenance Software Equipment Equipment Purchases Per Diem, Fees and Contracts Contracts Computer Billings, DOAS
REAL ESTATE RENTALS TELECOMMUNICATIONS PER DIEM, FEES AND CONTRACTS
Per Diem and Fees Contracts
OTHER HEALTH INSURANCE PAYMENTS Other Costs Other Expenditures Total Expenditures
Excess of Funds Available over Expenditures

TOTALS YEAR ENDED JUNE 30, 1994 JUNE 30, 1993

$

1,816.00$

1,715.00

109,598.13

77,914.53

111,905.30

71,052.77

896,181.76

818,072.21

$ 1,656,492.21 $ 1,634,253.99

$

78,704.17$

79,729.47

$ 21,377.60 $ 35,369.74

14,88o3..p3o6
--------------

9,035.28
-------5-,8--4-8-.0--8

$------3-6-,2--6-0-.-9-6 $------5-0-,2--5-3-.1--0

$ 28,717.66 $ 14,170.24

40,101.92

50,437.61

17,317.38

77,952.17

189,580.26

162,239.97

724,800.00 1,221,562.00
--1--,8-1--4-,9-7--0-.0--3 ---1-,6-9--4-,9--2-5-.6--9
$ 2,815,487.25$ 3,221,287.68

$ 908,597.92$ 904,730.22

$ 295,075.73 $ 226,610.91

$ 647,891.30$ 770,238.39 115,763,679.79 96,885,582.46
$116,411,571.09 $ 97,655,820.85

$669,530,833.99 $618,255,171.12
$799,165,575.43 $729,169,041.72 88,637,369.47 55,725,309.34

$=8=8=7=,=8=0=2=,9==4=4=.9==0 $=7=8=4=,8==9=4=,3==5=1=.0=6=
The notes to the financial statements are an integral part of this statement.
- 7-

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
YEAR ENDED JUNE 30, 1994

EXHIBIT "D"

FUNDS AVAILABLE REVENUES
Other Revenues Retained CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance
EXPENDITURES Personal Services Regular Operating Expenses Travel Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts Health Insurance Payments
Excess of Funds Available over Expenditures

BUDGET

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$B68,616,607.00 $843,607,177.51 $-25,009,429.49
375,000.00 44,195,767.39 43,820,767.39
$868,991,607.00 $887,802,944.90$ 18,811,337.90
============== -------------- --------------

$ 8,572,331.00 $ 7,432,552.11 $ 1,139,778.89

1,683,552.00 1,656,492.21

27,059.79

82,440.00

78,704.17

3,735.83

37,818.00

36,260.96

1,557.04

3,067,474.00 2,815,487.25

251,986.75

908,771.00

908,597.92

173.08

296,698.00

295,075.73

1,622.27

116,801,794.00 116,411 , 571 . 09

390,222.91

737,540,729.00 669,530,833.99 68,009,895.01

-------------- -------------- --------------

$868,991,607.00 $799,165,575.43$ 69,826,031.57
============== -------------- --------------

$ 88,637,369.47 $ 88,637,369.47
============== ==============

The notes to the financial statements are an integral part of this statement.
- 8-

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXIllBIT "E"

NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The State Personnel Board, Merit System ofPersonnel Administration, an organizational unit of the State of Georgia, is part ofthe executive branch ofthe government ofthe State of Georgia. The agency is under the control of the State Personnel Board, which consists of five (5) members appointed by the Governor. The policies of the Board are administered by the Commissioner, who is appointed by the Governor, subject to confirmation by the Senate ofthe General Assembly ofGeorgia. The annual operating costs of the agency are funded by pro rata assessments to the various agencies ofgovernment ofthe State of Georgia.
The State Personnel Board, Merit System ofPersonnel Administration does not have authority to determine the amount of funding it will receive from the State of Georgia for any given fiscal year. Such authority is vested in the General Assembly ofGeorgia. The Board also does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the State Personnel Board, Merit System of Personnel Administration 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 2I00 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING The State Personnel Board, Merit System ofPersonnel Administration uses funds 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 of Georgia. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group, on the other hand, is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources. Funds and account groups presented in the accompanying financial statements are as follows:
GOVERNMENTAL FUND TYPE
BUDGET FUND - The fund used to account for activities and functions as set forth in the Amended Appropriations Act of 1993-1994. This presentation differs from generally accepted accounting principles in that such principles provide that the Budget Fund of the State Personnel Board be accounted for in the following manner:
MERIT SYSTEM ADMINISTRATION The Merit System Administration should be accounted for as a Proprietary Fund Type - Internal Service Fund. An Internal Service Fund is used to account for the financing of goods or services provided by one department or agency to other departments or agencies ofthe governmental unit, or to other governmental units, on a cost-reimbursement basis.
-9-

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,.1994

EXIIlBIT "E"

NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
GOVERNMENTAL FUND TYPE
BUDGETFUND
HEALTH INSURANCE PROGRAM The Health Insurance Program, a public entity risk pool which provides health and other medical benefits to employees and retirees ofparticipating employers, should be accounted for as a Proprietary Fund Type Enterprise Fund. A public entity risk pool is defined as a cooperative group ofgovernmental entities joining together to finance an exposure, liability or risk.
FIDUCIARY FUND TYPE
AGENCY FUNDS - The funds used to account for assets held for use by other funds, governments, or individuals.
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 historical cost. 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. This accounting methodology differs from generally accepted accounting principles in that the Budget Fund of the Board should be accounted for as a proprietary fund type. Fixed assets utili7.ed in the operations ofa proprietary fund type should be recorded as assets ofsuch a fund type, rather than in the General Fixed Assets Account Group. The depreciation of such fixed assets should be recorded as expenses of the respective fund in order to more effectively determine the total cost of providing goods and services.
GENERAL LONG-TERM DEBT - The account group used to report the noncurrent portions ofcertain governmental long-term liabilities, such as claims, judgments and compensated absences, which will be paid from future resources. This presentation differs from generally accepted accounting principles in that the Budget Fund of the Board should be reflected as a proprietary fund type. The liabilities and related expenses for the items listed above should be recorded as a part ofthe Proprietary Fund Type in order to more effectively determine the total cost of providing goods and services.

- 10-

STATE PERSONNEL BOARD :MERIT SYSTEM OF PERSONNEL ADMINISTRATION
NOTES TO THE FINANCIAL STATE:MENTS JUNE 30, 1994

EXHIBIT "E"

NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING :MEASURE:MENT 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 current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements ofthese funds present increases (i.e., revenues) and decreases (i.e., expenditures) in net current assets. Proprietary fund types, on the other hand, should be accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities are included on the balance sheet. Operating statements of these funds present increases, (i.e., revenues) and decreases (i.e., expenses) in net total assets. In accordance with accounting practices prescribed or permitted by the State of Georgia, the Budget Fund utilizes the current financial resources measurement focus.
GOVERNMENTAL FUND TYPE BUDGETFUND
Except as disclosed in the following paragraphs, units of government of the State of Georgia record their Budget Fund revenues and expenditures in accordance with the modified accrual basis of accounting. Under the modified accrual basis ofaccounting, revenues are recognized when susceptible to accrual (i.e., when they become both 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 be used to pay liabilities ofthe current period. Revenues that are accrued consist of certain amounts earned under operating agreements with other parties. Further, the modified accrual basis ofaccounting calls for expenditures, other than accrued interest ofgeneral long-term debt, to be recorded when the related fund liability is incurred. The Budget Fund, which should be reflected as a proprietary fund type in accordance with generally accepted accounting principles, should be maintained on the accrual basis of accounting.
Accounting practices prescribed or permitted by statutes and regulations of the State of Georgia allow a liability for estimates of costs relating to incurred but not reported (IBNR) claims to be recorded on the Combined Balance Sheet (Statutory Basis) with changes in this liability from the prior year reported on the Statement of Changes in Fund Balance (Statutory Basis). This method of accounting for estimated IBNR claims is not consistent with generally accepted accounting principles, which provide for the recording ofa liability and an expense for estimated IBNR claims in proprietary funds.
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 do not provide for the recording of encumbrances within the proprietary fund types.

- 11 -

STATE PERSONNEL BOARD :MERIT SYSTEM OF PERSONNEL ADMINISTRATION
NOTES TO THE FINANCIAL STATE:MENTS JUNE 30, 1994

EXIilBIT "E"

NOTE l: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPE BUDGETFUND
Prior period adjustments and certain other items are reported as additions to and deductions from fund balances ofthe Budget Fund in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations of the State ofGeorgia, but differs from generally accepted accounting principles for proprietary fund types in that immaterial adjustments should be reported as current period revenues and expenses.
In accordance with policies ofthe State ofGeorgia, the cost ofannual and sick leave is recorded when paid rather than when earned. The cost of annual leave earned but not yet paid at the end of the fiscal year is reflected in the General Long-Term Debt Account Group, in that such liability is not expected to be financed from expendable available financial resources. This practice differs from generally accepted accounting principles for proprietary fund types in that the total accrued liability for compensated absences at the end of the fiscal year should be reflected as a fund liability ofthe proprietary fund type involved.
. FIDUCIARY FUND TYPE AGENCY FUNDS
The Agency Funds are custodial in nature in that assets are equally offset by liabilities to other funds, governmental units, or individuals. The modified accrual basis ofaccounting is utilized for recognizing assets and liabilities.
BUDGET The operations of the State Personnel Board, Merit System ofPersonnel Administration are on the basis of a budget submitted by the Board and approved by the Legislature and the Governor. The budget is compiled in the same manner as all State departments and expenditures are classified by budget unit object classes as provided in Act No. 608 of Georgia Laws 1993 (as approved April 28, 1993) and amended by Act No. 622 ofGeorgia Laws 1994 (as approved February 8, 1994), which is an appropriated budget and is referred to in these notes as the Amended Appropriations Act of 1993-1994.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include currency on hand, demand deposits with banks and other financial institutions, and cash management pools that have the general characteristics of demand deposit accounts in that the Board may deposit additional cash at any time and also may withdraw cash at any time without prior notice or penalty. Cash and Cash Equivalents also include short-term, highly liquid investments with maturity dates within three months of the date acquired.
INVESTMENTS Investments consist of funds held by custodians for the state employees' deferred compensation plan. The Official Code ofGeorgia Annotated Section 45-18-33 provides that the State Personnel Board is authorized to make payments for the purchase ofinsurance, endowments, annuities, mutual funds, or savings from funds
- 12 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1994

EXIIlBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS derived from the deferral ofcompensation. The code section further provides that the State Personnel Board has the power to arrange for a custodian for the holding of such insurance policies, funds, investments, and other assets ofthe fund. (See Note 8)
CLAIMS REFUNDS DUE The State Personnel Board, Merit System ofPersonnel Administration is legally restricted by the Official Code of Georgia Annotated Section 13-1-13 as to certain recoveries of voluntary payments of health insurance claims. Although the State Personnel Board has implemented policies and procedures for continued collection efforts, under the Constitution ofthe State of Georgia, the State Personnel Board is precluded from forgiving certain debts due the State in the absence of statutory exception. Accordingly, significant claim refunds due cannot be deleted from the accounting records of the State Personnel Board, Merit System of Personnel Administration.
At June 30, 1994, the accounts receivable for claim refunds due was $3,138,884.40 ($3,115,770.22 Governmental Fund Type and $23;114.18 - Fiduciary Fund Type). A contra-asset valuation account has been established to indicate the portion of claim refunds due and estimated to be uncollectible in excess of the $400.00 statutory limit which cannot be legally written off. At June 30, 1994, the allowance for uncollectible claim refunds due was determined to be $1,599,894.55 ($1,580,352.07 - Governmental Fund Type and $19,542.48 -Fiduciary Fund Type). The net effect ofthe change in this account balance from the prior year is reflected as an adjustment to fund balance for the Governmental Fund Type in the amount of $294,577.12 on Exhibit "BII of this report.
INVENTORIES No inventories ofsupplies are reported in the current financial statements. Expendable supplies are recorded as expenditures at the time of purchase.
RESERVED FUND BALANCE Reserves represent those portions of fund equity not appropriable for expenditure or legally segregated for a specific future use. The following is a briefdescription ofthe reserve reflected in the accompanying financial statements:
HEALTH INSURANCE CLAIMS Reserved for the payment of health insurance claims in future periods.
MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the Combined Balance Sheet (Statutory Basis) are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
- 13 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXIIlBIT "E"

NOTE l; 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 changes in the Board's financial position and operations. However, comparative data have not been presented in all statements because their inclusion would make certain statements unduly complex and difficult to understand.

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, notes, certificates of indebtedness or other direct obligations ofthe United States or ofthe State ofGeorgia.

(2) Bonds, bills, notes, certificates ofindebtedness or other obligations of the counties or municipalities ofthe State of Georgia.

(3) Bonds ofany public authority created by the laws ofthe 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.

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.

- 14 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1994

EXIIlBIT "E"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

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. These bank balances are categorized below in order to provide information 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 Board or by its agent in the Board's name.

Category 2 - Amounts collateralized with securities (at market value) held by the financial institution's trust department or agent in the Board's name.

Category 3 - Amounts collateralized with securities (at market value) held by the financial institution or by its trust department or agent, but not in the Board's name, and amounts uncollateralized.

Carrying Amount

Bank Balance

Risk Categories

2

3

Cash Deposits

S 779.554916 $1049698873 S 48214054 $===000,.,. $10,014848,19

CATEGORIZATION OF INVESTMENTS Investments consist offunds maintained in an investment pool by the Office ofTreasury and Fiscal Services, and funds held by various custodians for the state employees' deferred compensation plan in guaranteed investment contracts and open-end mutual funds. These types of investments are not subject to risk categorization.

The state investment pool is stated at cost. The state employees' deferred compensation plan investments are stated at market value which approximates cost.

Type ofInvestment

Carrying Amount

Market Value

State Investment Pool
Deferred Compensation Plan Guaranteed Investment Contracts Open-End Mutual Funds

$202,738,247,67 $202 738,247.67
$ 96,637,609.82 $ 96,637,609.82 71,057,354.43 71,057,354.43

$167,694,964 25 $167,694,964,25

- 15 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL AO:MINISTRATION
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1994

EXIIlBIT "E"

NOTE 3: OPERATING LEASES

The State Personnel Board, Merit System ofPersonnel Administration has entered into a certain agreement to lease real property which is classified as an operating lease. This lease contains a provision that, at the expiration date of the original term of the lease, the State Personnel Board, Merit System of Personnel Administration has the option of renewing the lease on a year-to-year basis. Future minimum commitments for the operating lease as ofJune 30, 1994, are listed below. The amount is for a cancellable lease for which an option to renew for the subsequent fiscal year has been exercised.

Fiscal Year Ending June 30

1995

$ 170,127.36

Expenditures for rental of real property and equipment under operating leases for the year ended June 30, 1994, totaled $169,419.42.

NOTE 4: INSTALLMENT PURCHASE COMMITMENTS

The State Personnel Board, Merit System ofPersonnel Administration acquires certain property and equipment through multi-year installment purchases with varying terms and options. The majority ofthese agreements contain fiscal funding clauses in accordance with O.C.G.A. 50-5-64 which prohibits the creation ofa debt to the State ofGeorgia for the payment ofany sums under such agreements beyond the fiscal year ofexecution if appropriated funds are not available. If renewal of such agreements is reasonably assured, however, installment purchases requiring appropriation by the General Assembly of Georgia are considered noncancellable for financial reporting purposes.

At June 30, 1994, future minimum commitments under installment purchases are as follows:

Fiscal Year Ending June 30
1995 Less: Amounts Representing Interest Present Value ofFuture Minimum Commitments NOTE 5: CHANGES IN GENERAL FIXED ASSETS

$ 6,866.81 253.11
$ 6,613.70

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:

- 16 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1994

EXHIBIT "E"

NOTE 5: CHANGES IN GENERAL FIXED ASSETS
Balance July 1, 1993 Additions Deductions Balance June 30, 1994
NOTE 6: GENERAL LONG-TERM DEBT

$ 678,606.10
68,369.52 36,282.17
S 710 693 45

CHANGES IN GENERAL LONG-TERM DEBT A summary of changes in General Long-Term Debt for the year ended June 30, 1994, follows:

Balance July 1, 1993
Additions Annual Leave Earned and Utilized (Net) Salaries S~ary Related Fringe Benefits (*)
Deductions
Balance June 30, 1994

Installment Compensated Purchase
Absences Commitments

Total

$ 573,411.52 $ 20,140.83 $ 593,552.35

53,922.08 47,991.02
$ 615.324.62 $

13,527.13

53,922.08 47,991.02 13,527.13

6.613.ZQ S 681.938.32

(*) Includes related fiinge benefits applicable to compensated absences at July l, 1993.

NOTE 7: STATE EMPLOYEES' HEALTH BENEFIT PLAN

The State Personnel Board, Merit System ofPersonnel Administration administers a self-insured program of health benefits for the employees of units of government of the State of Georgia and units of county government and local education agencies located within the State of Georgia. This plan, which is a public entity risk pool, is funded by participants covered in the plan, by employers' contributions paid by the various units ofgovernment participating in the plan, and appropriations by the General Assembly of Georgia. The
State Personnel Board, Merit System ofPersonnel Administration has contracted with Blue Cross Blue Shield
of Georgia to process claims in accordance with the State Health Benefit Plan as established by the Board.
NOTE 8: 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 of the State of Georgia and county health departments,
permits such employees to defer a portion of their salary until future years. 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,

- 17 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1994

EXHIBIT "E"

NOTE 8: DEFERRED COMPENSATION PLAN

property, or rights are (until paid or made available to the employee or other beneficiary) solely the property or rights ofthe State ofGeorgia subject only to the claims ofthe State's general creditors. Participant's rights under the plan are equal to those ofa general creditor of the State of Georgia in an amount equal to the fair market value ofthe deferred account of each participant. In the equity funds, the market value may be either greater or less than the participant's contributions. Market values, which approximate cost, ofinvestments at June 30, 1994, by plan type are listed below:

Guaranteed Investment Contracts Allstate Life Insurance Company Continental Assurance Company John Hancock Mutual Life Insurance Company Hartford Insurance Metropolitan Life Insurance Company Nationwide Life Insurance Company Principal Mutual Life Insurance Company Sunlife Insurance Travelers Insurance Company
Guaranteed Principal Option - Prime The Vanguard Group ofInvestment Companies
Federal Portfolio The Vanguard Group ofInvestment Companies
Index Trust 500 Portfolio The Vanguard Group oflnvestment Companies
Magellan Fund Fidelity Institutional Retirement Services Company
Over-The-Counter Portfolio Fidelity Institutional Retirement Services Company
Prime Portfolio The Vanguard Group ofInvestment Companies
Wellesley Income Fund The Vanguard Group ofInvestment Companies
Windsor II The Vanguard Group ofInvestment Companies

$5,516,162.27 4,190,208.64 9,755,796.25
23,427,251.88 5,552,770.58 5,311,841.30 5,335,513.21 10,529,106.19
27,018,959.50$ 96,637,609.82
1,868,111.61
256,699.26
11,349,701.93
25,215,516.33
7,904,252.63
2,581,380.95
14,688,841.06
7,192,850.66

$167.694.964.25

Participants Accounts Reserve for Administration Plan

$163,229,882.41 4,465.081.84

$167.694,964,25

- 18 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL AO:MINISTRATION
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1994

EXHIBIT "E"

NOTE9: RETIREMENTPLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA The State Personnel Board, Merit System of Personnel Administration participates in the Employees' Retirement System of Georgia, a single-employer, defined benefit pension plan. The Employees' Retirement System of Georgia was established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees ofthe State of Georgia. The Retirement System is funded through a combination of employee and employer contributions. Employees are required to contribute a graduated percentage ofannual compensation. Employer contributions are for a specified percentage of active member payroll determined annually by an actuarial valuation. During the year ended June 30, 1994, the Board contributed $854,062.54 to the Employees' Retirement System of Georgia. Participation in the Retirement System is not segregated by employee groups ofindividual governmental units and the Board has no further
liability under the retirement system other than future employer contributions as established for each fiscal year.
Information relative to the plan description, funding status and historical trends is presented in the financial report of the Employees' Retirement System of Georgia for the year ended June 30, 1994.
GEORGIA DEFINED CONTRIBUTION PLAN The State ofGeorgia also provides retirement coverage for temporary, seasonal, and part-time employees who are not eligible for membership in the Employees' Retirement System of Georgia referred to above through a single-employer defined contribution plan. The Georgia Defined Contribution Plan was established by the General Assembly of Georgia and is administered by the Board of Trustees of the Employees' Retirement System of Georgia. Covered employees are required to contribute 7.5% of their gross salary, with no matching contribution by the employer. A member who terminates employment may apply for a refund of contributions and interest. Benefits are based solely on the amount contributed by the employee plus investment earnings. Upon discretion ofthe Board ofTrustees, members who leave employment with less than $3,500.00 credited to their account may be required to make a lump-sum withdrawal. Members are eligible to retire at the age of65 with the option ofreceiving a periodic payment based on mortality tables and interest accumulation as adopted by the Board of Trustees of the Employees' Retirement System of Georgia. Information relative to the plan description and funding status is presented in the financial report of the Employees' Retirement System of Georgia for the year ended June 30, 1994.
NOTE 10: 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 tennination of employment. See Note 1 - Compensated Absences

- 19 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1994

EXHIBIT "E"

NOTE 10: LEAVE POLICIES
Certain employees who retire with one hundred and twenty days or more offorfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System ofGeorgia.
NOTE 11: OTHER FINANCIAL NOTES
INCURRED BUT NOT REPORTED CLAIMS LIABILITY - HEALm INSURANCE At June 30, 1994, the State Personnel Board, Merit System ofPersonnel Administration reported a liability in the amount of$125,823,000.00 based on actuarial calculations ofthe cost ofclaims that had been incurred but not reported to the State Health Benefit Plan. The net effect ofthe change in this account balance from the prior year is reflected as an adjustment to fund balance in the amount of $3,583,000.00. (See Note I Basis of Accounting)
NOTE 12: CONTINGENCIES
Litigation, claims and assessments filed against the State Personnel Board, Merit System of Personnel Administration, ifany, 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 ofGeorgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1994.
NOTE 13: BONDING INFORMATION
The Commissioner and all employees ofthe State Personnel Board, Merit System ofPersonnel Administration are bonded under a Public Employees Blanket Bond written by Employers Insurance ofWausau, their Bond No. 1450-00-110723, on which the premium was paid to October 1, 1994. Under this agreement the Public Employee Dishonesty Coverage insures the Board 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 Board to a maximum of $100,000.00 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 State Personnel Board, Merit System ofPersonnel Administration are also bonded under a Commercial Crime Policy written by the United States Fire Insurance Company, their Policy No. 626 011675 2, on which the premium was paid to October 1, 1994. Under this additional public employee dishonesty coverage, the policy insures the Board to a maximum of $4,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees.

-20-

SUPPLEMENTARY INFORMATION -21 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION COMBINING BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30, 1994

EXHIBIT "F"

ASSETS Cash and Cash Equivalents Accounts Receivable
Claim Refunds Due Less: Allowance for Uncollectible Claim Refunds Due
Other
Interest Receivable
Total Assets
LIABILITIES AND FUND EQUITY Liabilities
Accounts Payable Contracts Payable Payroll Withholdings Incurred But Not Reported Claims
Health Insurance Total Liabilities
Fund Equity Fund Balances Reserved Health Insurance Claims Unreserved Designated Surplus Total Fund Equity
Total Liabilities and Fund Equity

MERIT
SYSTEM ADMI NI STRATI ON

HEALTH INSURANCE PROGRAM

TOTAL

$ 1,833,142.22 $203,768,679.80 $205,601,822.02

$ 3,115,770.22$ 3,115,770.22

-1,580,352.07 -1,580,352.07

$

3,334.88 13,532,794.08 13,536,128.96

$

3,334.88$ 15,068,212.23 $15,071,547.11

$ 3,289,435.51 $ 3,289,435.51

$ 1,836,477.10 $222,126,327.54 $223,962,804.64
============== ============== ==============

$ 854,971.44 $ 10,576,978.55$ 11,431,949.99

981,244.91

639,929.80 1,621,174.71

260.75

260.75

125,823,000.00 125,823,000.00
-------------- -------------- --------------
$ 1,836,477.10 $137,039,908.35 $138,876,385.45

$ 85,086,419.19 $ 85,086,419.19

$

0.00

0.00

0.00

$

0.00 $ 85,086,419.19 $ 85,086,419.19

$ 1,836,477.10 $222,126,327.54 $223,962,804.64
============== ============== ==============

See notes to the financial statements.

- 22 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION COMBINING STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS)
BUDGET FUND YEAR ENDED JUNE 30. 1994

EXHIBIT "G"

MERIT
SYSTEM ADM I NI STRATI ON

HEALTH INSURANCE
PROGRAM

TOTAL

FUND BALANCES - JULY 1

Reserved Unreserved
Designated Surplus

$

4,263.33 $44,191,504.06 $44,195,767.39

0.00

0.00

0.00

$

4,263.33 $44,191,504.06 $44,195,767.39

ADDITIONS

Adjustments to Prior Year's Accounts Payable Claim Refunds Due Revenues
Excess of Funds Available over Expenditures Exhibit "H"
Reimbursement of Prior Year's Expenditures

$ 86,309.85$ 86,309.85 302,694.67 302,694.67 330,908.30 330,908.30

$.

2,722.48 88,634,646.99 88,637,369.47

7,548.00

7,548.00

$

2,722.48 $89,362,107.81 $89,364,830.29

DEDUCTIONS

Adjustments to Prior Year's Accounts Receivable Expenditures Fund Balance Increase in Incurred But Not Reported Claims Liability Health Insurance
Increase in Allowance for Uncollectible Claims Refunds Due
Reserved Fund Balance Carried Over from Prior Year as Funds Available
Uncollectible Claim Refunds Due Written Off

$

335.84

$

335.84

2,386.64 $ 257,924.07 260,310.71

3,583,000.00 3,583,000.00

294,577.12

294,577.12

4,263.33 44,191,504.06 44,195,767.39

140,187.43

140,187.43

$

6,985.81 $48,467,192.68 $48,474,178.49

FUND BALANCES - JUNE 30

(To Exhibit "F") See notes to the financial statements.

$

0.00 $85,086,419.19 $85,086,419.19

============== ============= =============

- 23 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30, 1994

EXHIBIT "H" Page 1

FUNDS AVAILABLE REVENUES
OTHER REVENUES RETAINED Contributions Employees State Agencies, Authorities and County Governments Local Education Agencies Individuals Employers State Agencies, Authorities and County Governments Local Education Agencies
Administrative Fees Charitable Contributions Deferred Compensation Employees' Flexible Benefit Program Health Insurance Program Agency Assessments for Operations (Net)
Interest Earned Training Fees
Total Revenues CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance Health Insurance Claims Summer Hiring Program Total Carry-Over from Prior Year

MERIT SYSTEM ADMINISTRATION

HEALTH INSURANCE PROGRAM

TOTAL

$74,843,560.35$ 74,843,560.35 143,059,113.54 143,059,113.54 4,980,777.26 4,980,777.26

225,820,041.88 225,820,041.88 377,643,623.61 377,643,623.61

$826,347,116.64 $826,347,116.64

$ 67,997.75 142,464.88 87,686.00
9,856,091.14
------2-5-,6--5-0-.0--0

35,358.25 7,044,812.85
--------------

67,997.75 142,464.88 87,686.00 35,358.25 9,856,091.14 7,044,812.85
------2-5-,-6-5-0-.0--0

$10,179,889.77 $833,427,287.74 $843,607,177.51

$44,191,504.06$ 44,191,504.06

$

4,263.33

4,263.33

$

4,263.33$ 44,191,504.06$ 44,195,767.39

Total Funds Available
EXPENDITURES PERSONAL SERVICES
Salaries and Wages Employer's Contributions for:
F. I.C.A. Retirement Health Insurance Personal Liability Insurance Unemplo.yment Compensation Insurance Workers Compensation Insurance Assessments by Merit System
REGULAR OPERATING EXPENSES Supplies and Materials Repairs and Maintenance Rents (Other than Real Estate)
See notes to the financial statements.

$=1=0=,=1=8=4=,=1=5=3==.1==0 $=8=7=7=,=6=1=8=,7==9=1=.8==0 $=8=8=7=,=8=0=2=,9==4=4=.9==0

$ 3,994,013.67 $ 1,456,217.26 $ 5,450,230.93

287,058.35 629,760.69 496,657.96
19,680.00 6,786.00 21,422.00
--------------

102,515.20 224,301.85 179,871.94
6,360.00
-------7-,9--0-7-.1--9

389,573.55 854,062.54 676,529.90
26,040.00 6,786.00
21,422.00 7,907.19
--------------

$ 5,455,378.67 $ 1,977,173.44$ 7,432,552.11

$ 249,924.40$ 237,178.63 $ 487,103.03

32,904.32

11,129.77

44,034.09

5,769.90

84.00

5,853.90

- 24 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30, 1994

EXHIBIT "H" Page 2

EXPENDITURES REGULAR OPERATING EXPENSES
Insurance and Bonding Other Operating Expenses Duplicating and Rapid Copy Publications and Printing
TRAVEL EQUIPMENT
Equipment Purchases Lease/Purchase of Equipment
COMPUTER CHARGES Other Costs Supplies and Materials Repairs and Maintenance Software Equipment Equipment Purchases Per Diem, Fees and Contracts Contracts Computer Billings, DOAS
REAL ESTATE RENTALS TELECOMMUNICATIONS PER DIEM, FEES AND CONTRACTS
Per Diem and Fees Contracts
OTHER HEALTH INSURANCE PAYMENTS Other Costs Other Expenditures Total Expenditures
Excess of Funds Available over Expenditures

MERIT SYSTEM ADMINISTRATION

HEALTH INSURANCE PROGRAM

TOTAL

$

1,816.00

$

1,816.00

97,034.54$ 12,563.59

109,598.13

103,747.22

8,158.08

111,905.30

229,385.68

666,796.08

896,181.76

$ 720,582.06$ 935,910.15$ 1,656,492.21

$ 71,344.06$

7,360.11 $ 78,704.17

$ 21,377.60
------1-4-,8--8-3-.3--6 $------3-6-,2--6-0-.9--6

$ 21,377.60
------1-4-,8--8-3-.3--6 $------3-6-,2--6-0-.9--6

$ 26,966.83 $ 40,079.18 17,317.38

1,750.83 $ 22.74

28,717.66 40,101.92 17,317.38

179,105.47

10,474.79

189,580.26

419,800.00

305,000.00

724,800.00

1,329,269.17

485,700.86 1,814,970.03

-------------- -------------- --------------

$ 2,012,538.03 $ 802,949.22 $ 2,815,487.25

$ 684,197.92 $ 224,400.00$ 908,597.92

$ 93,316.12$ 201,759.61 $ 295,075.73

$ 517,667.80$ 130,223.50$ 647,891.30 590,145.00 115,173,534.79 115,763,679.79
$ 1,107,812.80 $115,303,758.29 $116,411,571.09

$669,530,833.99 $669,530,833.99
$ 10,181,430.62 $788,984,144.81 $799,165,575.43 2,722.48 88,634,646.99 88,637,369.47

See notes to the financial statements.

$=1=0=,=1=8=4=,=1=5=3==.1==0 $=8=7=7=,=6=1=8=,7==9=1=.8==0 $=8=8=7=,=8=0=2=,=9=4=4=.9==0
- 25 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUNDS
YEAR ENDED JUNE 30. 1994

EXHIBIT "I"

ASSETS/

ASSETS/

LIABILITIES

LIABILITIES

FUND

JULY 1, 1993 ADDITIONS

DELETIONS JUNE 30, 1994

Employees' Deferred Compensation Program $146,493,326.07 $49,682,829.95 $28,165,290.32 $168,010,865.70

Cash Bond for Legal Costs

200.00

200.00

Charitable Contributions Fund

334,554.75 1,743,408.07 1,597,705.00

480,257.82

County Health Insurance Program

186,490.12 2,393,431.61 2,375,966.00

203,955.73

Employees' Flexible Benefit Program

3,320,290.56 35,082,277.73 34,294,778.93 4,107,789.36

Savings Bond Encouragement Fund

50.00

50.00

$150,334,911.50 $88,901,947.36 $66,433,740.25 $172,803,118.61

See notes to the financial statements.

- 26 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION
SCHEDULE OF APPROVED BUDGET YEAR ENDED JUNE 30. 1994

SCHEDULE "l"

FUNDS AVAILABLE
REVENUES
Other Revenues Retained CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance
EXPENDITURES
Personal Services Regular Operating Expenses Travel Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts Health Insurance Payments

ORIGINAL

BUDGET

APPROPRIATION ADJUSTMENTS

TOTAL

$864,002,092.00$ 4,614,515.00 $868,616,607.00

0.00 375,000.00

375,000.00

$864,002,092.00$ 4,989,515.00 $868,991,607.00

$ 8,524,141.00$ 48,190.00$ 8,572,331.00

1,683,552.00

1,683,552.00

82,440.00

82,440.00

37,818.00

37,818.00

3,067,474.00

3,067,474.00

908,271.00

500.00

908,771.00

283,698.00

13,000.00

296,698.00

111,873,969.00 4,927,825.00 116,801,794.00

737,540,729.00

737,540,729.00

$864,002,092.00$ 4,989,515.00 $868,991,607.00
============== ============= ==============

See notes to the financial statements.

- 27 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION
CASH AND CASH EQUIVALENTS JUNE 30. 1994

SCHEDULE "2"

NONINTEREST BEARING ACCOUNTS

Bank South, N. A., Atlanta, Georgia NationsBank of Georgia, N. A., Atlanta, Georgia Wachovia Bank of Georgia, Atlanta, Georgia

$ 596,102.49 56,282.00
2,196,932.64 $ 2,849,317.13

INTEREST BEARING ACCOUNTS

NationsBank of Georgia, N. A., Atlanta, Georgia Wachovia Bank of Georgia, Atlanta, Georgia

$ 480,257.82 4,238,865.61

4,719,123.43

Funds on Deposit with Office of Treasury and Fiscal Services State Investment Pool
OTHER

202,738,247.67

Employees' Deferred Compensation Program Funds on Deposit with Fidelity Institutional Retirement Services Company, Dallas, Texas
Funds on Deposit with The Vanguard Group of Investment Companies, Wayne, Pennsylvania
MARTA Change Fund

$ 113,273.79
113,834.81 $ 227,108.60 104.40

227,213.00

$210,533,901.23
==============

See notes to the financial statements.

- 28 -

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION
SCHEDULE OF OTHER OPERATING EXPENSES YEAR ENDED JUNE 30. 1994
REGULAR OPERATING EXPENSES
Advertising Courier Services Freight, Express and Storage Marta Tokens Registration Fees Service Awards Subscriptions and Dues

SCHEDULE "3"
$ 4,049.44 11,921.81 20,350.23 1,137.00 36,851.64 13,034.85 22,253.16
$ 109,598.13
=============

See notes to the financial statements.

- 29 -

STATE PERSONNEL BOARO MERIT SYSTEM OF PERSONNEL ADMINISTRATION
RECONCILIATION OF TRAVEL YEAR ENDED JUNE 30, 1994
Total per Annual Supplement Accruals June 30, 1994
Total per Report

SCHEDULE "4"
$ 68,689.71 10,014.46
$ 78,704.17

See notes to the financial statements.

- 30 -

SECTION IT FINDINGS AND IMPROPER OR QUESTIONED COSTS

STATE PERSONNEL BOARD MERIT SYSTEM OF PERSONNEL ADMINISTRATION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COST
YEAR ENDED JUNE 30, 1994
CURRENT YEAR
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operations ofProperty Management System Financial Statements Audit Control Number 460-94-01
For the year under review, our examination included a review ofthe internal accounting controls utilized by the State Personnel Board, Merit System of Personnel Administration in maintaining their State Property System. This review consisted oftesting the system for compliance with State equipment laws and regulations. In addition, procedures were completed to verify the accuracy of the total equipment inventory valuation contained in the inventory records, which comprise the General Fixed Assets Account Group.
As a result ofthese procedures, it was determined that certain items charged to the State Chart of Accounts, 019 - 643, Equipment Purchases - Required on Inventory, were not being recorded on the property management inventory system in accordance with the State Property System Manual.
The State Personnel Board, Merit System ofPersonnel Administration should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with the provisions ofthe State Property System Manual.