C; A A~OO "RJ ~~S \qQS -90 AUDIT REPORT STATE OF GEORGIA SAVANNAH STATE UNIVERSITY SAVANNAH, GEORGIA YEAR ENDED JUNE 3D, 1996 SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION EXHIBITS FINANCIAL STATEMENTS A COMBINED BALANCE SHEET ALL FUND GROUPS 2 B COMBINED STATEMENT OF CHANGES IN FUND BALANCES ALL FUND GROUPS 4 C STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES, AND OTHER CHANGES 6 D NOTES TO THE FINANCIAL STATEMENTS 7 SUPPLEMENTARY INFORMATION E COMBINING BALANCE SHEET CURRENT FUNDS - UNRESTRICTED 20 F COMBINING STATEMENT OF CHANGES IN FUND BALANCES CURRENT FUNDS - UNRESTRICTED 21 G COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES, AND OTH, ER CHANGES UNRESTRICTED 23 SCHEDULES SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO BUDGET 1 RESIDENT INSTRUCTION 24 2 LOTTERY FOR EDUCATION 26 SCHEDULES OF OPERATIONS 3 LOAN FUNDS 27 4 ENDOWMENT AND SIMILAR FUNDS 28 5 SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS AGENCY FUNDS 29 6 CASH AND CASH EQUIVALENTS 31 7 ACCOUNTS RECEIVABLE 33 8 CHANGES IN INVESTMENT IN PLANT 34 9 SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS 36 SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS - SECTION I FINANCIAL SUPPLEMENTARY INFORMATION SCHEDULES 10 SCHEDULE OF REVENUES CURRENT FUNDS 38 SCHEDULES OF EXPENDITURES BY OBJECT 11 CURRENT FUNDS 40 12 PLANT FUNDS 44 13 RECONCILIATION OF SALARIES AND WAGES, AND TRAVEL 45 14 RECONCILIATION OF PER DIEM AND FEES 46 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) 6562174 DEPARTMENT OF AUDITS 254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 December 11, 1996 Honorable Zell Miller, Governor Members ofthe General Assembly of Georgia Members ofthe Board ofRegents ofthe University System of Georgia and Honorable John T. Wolfe, President Savannah State University 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 Savannah State University as ofand for the year ended June 30, 1996. These financial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with 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 to the financial statements, Georgia Law and State budgetary policy require the University to prepare its financial statements on a basis which is not consistent with generally accepted accounting principles with respect to the recording of encumbrances as expenditures and liabilities. To conform with generally accepted accounting principles, encumbrances should be recorded as a reservation of fund balance. The effects on the financial statements of this departure from generally accepted accounting principles were not reasonably determinable, but are believed to be material. 96ARL-62 As disclosed in Note 1 to the financial statements, the University did not report the liability and related expenditure for compensated absences in the current funds as required by generally accepted accounting principles. Ifcompensated absences were reported, liabilities would be increased and fund balance would be decreased by $758,613.59 as ofJune 30, 1996, and the net change in fund balance for the year ended June 30, 1996, would be decreased by $15,811.85. In our opinion, except for the effects on the financial statements ofthe matters discussed in the third and fourth paragraphs, the financial statements referred to above present fairly, in all material respects, the financial position of Savannah State University as ofJune 30, 1996, and the changes in fund balances and the current operating funds revenues, expenditures, and other changes for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose offorming an opinion on the financial statements taken as a whole. The accompanying supplementary information (Exhibits E through G and Schedules 1 through 14) is presented for purposes of additional analysis and is not a required part of the financial statements of Savannah State University. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, except for the effects of the matters discussed in the third and fourth paragraphs, such information is fairly presented in all material respects in relation to the financial statements taken as a whole. Respectfully submitted, t:L~ Claude L. Vickers State Auditor CLV:gp 96ARL-62 FINANCIAL STATEMENTS - 1- SAVANNAH STATE UNIVERSITY COMBINED BALANCE SHEET ALL FUND GROUPS JUNE 30,1996 ASSETS Cash and Cash Equivalents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups Investment in Plant Total Assets LIABILITIES AND FUND BALANCES Liabilities Accounts Payable Salaries Payable Student Deposits Deferred Revenue Tuition and Fees Deposits Held in Custody for Others Due to Other Fund Groups Total Liabilities Fund Balances U. S. Government Grants Refundable Institutional Loans - Restricted Endowment Term Endowment Net Investment in Plant Restricted Unrestricted Total Fund Balances Total Liabilities and Fund Balances CURRENT FUNDS UNRESTRICTED RESTRICTED LOAN FUNDS $ 488,135.48 $ 50,057.96 234,635.81 $ 1,090,874.82 789,247.55 688,401.76 8,706.96 935,201.81 $ 2,355,081.82 $ 1,090,874.82 $ 839,305.51 $ 922,989.87 23,019.70 63,660.00 627,192.50 $ 935,201.81 $ 1,636,862.07 $ 935,201.81 $ 764,912.92 74,392.59 $ 155,673.01 $ 718,219.75 $ 718,219.75 $ 155,673.01 $ 839,305.51 $ 2,355,081.82 $ 1,090,874.82 $ 839,305.51 The notes to the financial statements are an integral part of this statement. -2- EXHIBIT "A" ENDOWMENT AND SIMILAR FUNDS UNEXPENDED PLANT FUNDS RENEWALS AND REPLACEMENTS INVESTMENT IN PLANT AGENCY FUNDS TOTAL (Memorandum Only) $ 614,392.34 $ 185,706.97 $ 467,916.10 $ 267,023.95 $ 2,073,232.80 1,046,874.26 697.29 3,162,329.73 688,401.76 8,706.96 935,201.81 _ _ _ _ _ _ $ 49,687,420.12 49,687,420.12 $ 614,392.34 $ 1,232,581.23 $ 467,916.10 $ 49,687,420.12 $ 267,721.24 $ 56,555,293.18 $ 1,136,248.48 $ $ 1,136,248.48 $ $ 420,746.11 193,646.23 $ 96,332.75 $ $ 614,392.34 $ 96,332.75 $ 68,894.00 68,894.00 $ 172,165.89 $ 2,300,298.24 23,019.70 63,660.00 95,555.35 627,192.50 95,555.35 935,201.81 $ 267,721.24 $ 4,044,927.60 $ 49,687,420.12 399,022.10 399,022.10 $ 49,687,420.12 $ 764,912.92 74,392.59 420,746.11 193,646.23 49,687,420.12 155,673.01 1,213,574.60 $ 52,510,365.58 $ 614,392.34 $ 1,232,581.23 $ 467,916.10 $ 49,687,420.12 $ 267,721.24 $ 56,555,293.18 -3- SAVANNAH STATE UNIVERSITY COMBINED STATEMENT OF CHANGES IN FUND BALANCES AI.l FUND GROUPS YEAR ENDED JUNE 30, 1996 EXHIBIT "8" ENDOWMENT AND SIMILAR FUNDS UNEXPENDED PlANT FUNDS RENEWALS AND REPLACEMENTS INVESTMENT IN PLANT TOTAL (Memorandum Only) $ 181,239.00 1,1n.593.00 338,046.40 109.147.83 $ 5.000.00 34,335.00 13,201.78 $ 3.729.00 $ 5,000.00 $ 1,857.292.01 $ $ 26.351,267.47 181,239.00 1.177,593.00 13,704,203.86 687.187.01 109,147.83 133.171.31 19,449.14 33,4n.29 32.698.52 15,389.93 7,637.01 20,316.38 6,608.54 $ 1.605,074.17 1,605,074.17 1,760.959.26 490,853.34 210,958.75 1,760,959.26 490,853.34 210,958.75 4,795.00 27,086.15 $ 4,067,845.52 $ 46,524,941.66 $ 0.00 $ 35.907,163.45 4.286,695.n 199,921.06 $ 75,746.14 90,372.49 1,026.00 4,936.19 3,734.18 1,760,959.26 $ 490.853.34 $ 550,099.05 2,251.812.60 550,099.05 $ 0.00 $ 1,836,705.40 $ 490,853.34 $ 550,099.05 $ 43,295,760.74 $ 14,384.60 $ 14,384.60 $ 19.384.60 $ 595,007.74 $ $ 20,586.61 $ 75,746.14 $ 0.00 196,055.15 0.00 196,055.15 $ 0.00 -267.712.04 $ 3,517.746.47 $ 3,229,180.92 666,734.14 46,169,673.65 49,281,184.66 $ 614,392.34 $ 96,332.75 $ 399,022.10 $ 49,687,420.12 $ 52,510,365.58 -5- Net Increase/(Decrease) in Fund Balances $ The notes to the financial statements are an integral part of this statement. -6- 9,026.60 $ -81,413.48 $ -72,386.88 SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1996 EXHIBIT"D" NOTE 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY Savannah State University (fonnerly Savannah State College) is one of thirty-four (34) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit ofthe State of Georgia. The accompanying financial statements reflect the operations of Savannah State University as a separate reporting entity. The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Savannah State University does not have authority to retain unexpended State funds (surplus) for any given fiscal year. Accordingly, Savannah State University is considered an organizational unit ofthe Board ofRegents ofthe University System of Georgia reporting entity for financial reporting purposes because ofthe significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards. FUND ACCOUNTING In order to ensure observance oflimitations and restrictions placed on the use of the resources available to the University, the accounts ofthe University are maintained in accordance with the principles offund accounting. This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with activities or objectives specified. Separate accounts are maintained for each fund; however, in the accompanying financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial transactions have been recorded and reported by fund group. Within each fund group, the University's fund balance allocations and designations represent those portions ofthe fund balances that are reserved, restricted and/or designated for specific future use by legal covenants, State policies, or institutional policies. Fund groups and funds presented in the accompanying financial statements are as follows: CURRENT FUNDS UNRESTRICTED - The fund used to account for those economic resources over which the University retains full control to use for purposes of performing the primary functions of the University, e.g., instruction, research, public service, auxiliary enterprises, and student activities. RESTRICTED - The fund used to record externally restricted funds which may only be utilized in accordance with the purposes established by their source. Restricted current funds are recorded as revenues and expenditures when expended for current operating purposes. - 7- SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FUND ACCOUNTING LOAN FUNDS The fund used to account for resources which have been made available for financial loans to students. ENDOWMENT AND SIMllAR FUNDS The fund used to account for endowment funds and term endowment funds. Endowment funds are subject to the restrictions ofgift instruments requiring that the principal be invested in perpetuity and income only be utilized. Term endowment funds are similar to endowment funds except that upon the passage of a stated period oftime or the occurrence of a particular event, all or part of the principal may be expended. PLANT FUNDS UNEXPENDED - The fund used to account for financial resources utilized to acquire or to construct physical properties for institutional purposes. RENEWALS AND REPLACEMENTS - The fund used to account for resources set aside for the renewal and replacement ofinstitutional properties. INVESTMENT IN PLANT - The fund which shows the total amounts representing the book value of all physical properties owned by the University. Net Investment in Plant is an equity account showing the total book value ofphysical properties belonging to the University less the amount of any indebtedness to others. AGENCY FUNDS The fund used to account for resources held by the University as custodian or fiscal agent for individual students, faculty, staff members, and organizations. . BASIS OF ACCOUNTING Except as otherwise disclosed in these notes, the financial statements are prepared on the modified accrual basis ofaccounting, which is materially the same as the accrual basis ofaccounting applicable to colleges and universities prescribed in the American Institute of Certified Public Accountants' audit guide reporting model. The modified accrual basis ofaccounting is defined as that method of accounting in which expenditures, other than accrued interest on general long-term debt, are recorded at the time liabilities are incurred and revenues are recorded when available and measurable to finance expenditures of the fiscal period. - 8- SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXHIBIT liDII NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING Contractual obligations for goods and services which have not been received at the end ofthe fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion of contracts for goods and services. The recognition ofencumbrances 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 offund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles. Compensated absences represent obligations of the University relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated annual leave in which payment is probable and can be reasonably estimated. The compensated absences liability of $758,613.59 and the related current year expenditure of $15,811.85 have not been reported in the current funds as required by generally accepted accounting principles. Prior period adjustments and certain other items are reported as additions to and deductions from fund balances of current funds 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.' The effect of this departure is deemed to be immaterial to the fair presentation of the financial statements. To the extent that Current Funds and Plant Funds are used to finance plant assets, the amounts so provided are accounted for as expenditures. The balances shown on the Combined Balance Sheet as Net Investment in Plant reflect the accumulated expenditures made for plant facilities through Current Funds and Plant Funds and also include expenditures made for plant facilities expended by the Georgia State Financing and Investment Commission on behalf of the University. 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 physical plant and equipment. The Statement of Current Funds Revenues, Expenditures, and Other Changes is a statement of financial activities of current funds related to the current reporting period. It does not purport to present the results of operations or the net income or loss for the period as would a statement of income or a statement of revenues and expenses. BUDGET The Board of Regents of the University System of Georgia - Administrative Central Office receives State appropriation allotments for units of the University System of Georgia. The appropriated budget is adopted at the departmental level and represents appropriations provided by the Amended Appropriations Act of 19951996. The appropriated budget covers current funds and plant funds, except for Auxiliary Enterprises and - 9- SAYANNAB STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 3D. 1996 EXHIBIT "D" NOTE 1: SUM:MAR.Y OF SIGNIFICANT ACCOUNTING POLICIES BUDGET Student Activities which are not subject to appropriation. The budget allocation and disbursement ofthese funds is made to the various organizational units by the Administrative Central Office. In addition, the organizational units receive Federal funds and other funds directly and include these funds in the budget filed with the Administrative Central Office. A comparison ofanticipated funds available and budgeted expenditures by budget unit object class indicates that the following object classes were overspent by the amounts identified below: Resident Instruction Personal Services: Education, General and Departmental Services Sponsored Operations $ 21.854.13 $ 18,144.64 These overexpenditures of budget constitute a violation of Board ofRegents policy, but do not constitute statutory violations of budget authority. Statutory violations of budget authority are reported at the departmental level. CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits, certificates of deposit and temporary investments in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. ACCOUNTS RECEIVABLE Accounts receivable consist ofreimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. No provision has been made for an allowance for doubtful accounts within the accompanying financial statements. INVENTORIES Inventories of consumable supplies are recorded on the consumption method and are valued at cost on the Combined Balance Sheet using the weighted average method. Inventories ofgoods for resale are valued at cost using the first-in, first-out method. MEMORANDUM ONLY - TOTAL COLUMNS The total columns on the financial statements 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 or changes in 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 ofthis data. - 10 - SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXHIBIT "D" NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State ofGeorgia 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 anyone or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59: (1) Bonds, bills, certificates ofindebtedness, 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 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 ofindebtedness, notes, or other obligations ofa subsidiary corporation of the United.States government, which are fully guaranteed by the United States government both as to principal and interest, or 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 of the State of Georgia (which includes organizational units of the Board of Regents ofthe University System of Georgia) the option of exempting demand deposits from the collateral requirements. The treasurer ofthe Board ofRegents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia. 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, 1996, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk: - 11 - SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXHIBIT "0" NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS CATEGORIZATION OF DEPOSITS Category 1 - Amounts covered by depository insurance or collateralized with securities (at market value) held by the University or by its agent in the University's name. Category 2 - Amounts collateralized with securities (at market value) held by the pledging financial institution's trust department or agent in the University'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 University's name, and amounts uncollateralized. Cash Deposits Carrying Amount Bank Balances Risk Categories 2 3 $ 1388998 10 $ 4091 171 79 $ 300 000 00 $ 589733 50 $ 3,201 438.29 Included in Category 3 above were certificates of deposit in the amount of $31,436.01 that were uncollateralized. Exemption from the State collateralization requirements granted by the State Depository Board extends only to demand deposits. CATEGORIZATION OF INVESTMENTS At June 30, 1996, the carrying amount and market value of the University's total investments were $667,474.70 and $664,703.89 respectively, and consisted entirely offunds in the Board ofRegents ShortTerm Investment Fund Investment Pool which are not required to be categorized since the University did not own any specific identifiable securities in the pool. NOTE 3: INVESTMENT IN PLANT Th~ following is a summary ofInvestment in Plant fixed assets as ofJune 30, 1996: Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections $ 325,975.16 31,255,432.49 7,194,018.08 6,894,473.31 4,017,521.08 Total Investment in Plant $49,687420.12 NOTE 4: RISK MANAGEMENT Savannah State University is a participant in the Board ofRegents of the University System of Georgia Health Benefits Plan, which is a self-insurance program ofhealth and dental benefits for employees and retirees ofthe University System ofGeorgia. The University and participating employees and retirees pay premiums to the - 12 - SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXHIBIT"D" NOTE 4: RISK MANAGEMENT Health Benefits Plan for this health insurance coverage. The Health Benefits Plan is included in the audit report ofthe Board ofRegents ofthe University System ofGeorgia - Administrative Central Office. All units ofthe University System ofGeorgia share the risk ofloss for claims ofthe Health Benefits Plan. The Health Benefits Plan is considered a self-sustaining risk fund that provides health coverage for its members up to a maximum lifetime benefit of $1,000,000.00 per person and dental coverage up to an annual maximum of $1,000.00 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the Health Benefits Plan as established by the Board ofRegents. 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 processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The University, as an organizational unit of the Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment. A self-insured program of professional liability for its employees was established by the Board ofRegents of the University System ofGeorgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out ofthe performance oftheir duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund. NOTE 5: 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 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 and rights of the State of Georgia subject only to the claims of the State's general creditors. Participants' 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 for each participant. Financial information relative to the plan will be presented in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1996. - 13 - SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1996 EXHIBIT liDII NOTE 6: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description Savannah State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer public employee retirement system (PERS) established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia. The University's payroll for the year ended June 30, 1996, for employees covered by TRS was $11,352,163.51. The University's total payroll for all employees was $15,682,207.26. Benefits TRS provides service retirement, disability retirement, and survivor's benefits for its members. A member is eligible for service retirement after the member (1) has attained the age of 60 years and has at least ten years ofcreditable service, (2) has at least 30 years ofcreditable service, regardless of age, or (3) has attained the age of55 years and has at least 25 years of creditable service. For those members with 30 years ofservice or those age 60 with at least ten years of service, retirement benefits are equal to 2% of the average of the member's two consecutive highest paid years ofservice multiplied by the number of years ofcreditable service up to 40 years. Any member who has between 25 and 30 years of creditable service and is at least 55 years ofage shall receive a benefit which is reduced by the lessor of 1/12 of 7% for each month the member is below age 60, or by 7% for each year or fraction thereofby which the member has less than 30 years of service. The nonnal retirement pension is payable monthly for life. Options are available for distribution ofthe member's monthly pension at a reduced rate to a designated beneficiary on the member's death. Retirement benefits also include death and disability benefits whereby the disabled member or surviving spouse is entitled' to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The benefit is based on member's creditable service (minimum of 10 years of service) and compensation up to the date of death or up to the time of disability. Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting ofemployer contributions occurs, but the member's contributions are refunded with interest. Contributions Required and Contributions Made Employees ofthe University who are covered by TRS are required to pay 5% of their gross earnings to TRS. The University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees as advised by their independent actuary. For fiscal year 1996, the employer contribution rate was 11.81% for covered employees. In addition, the University contributed 4.87% to the TRS on behalf of employees electing to participate in the Regents Retirement Plan. The interest rate assumption (rate ofretum on investments) was 7.50%. Total contributions to the plan made during fiscal year 1996 amounted to $2,043,976.70, of which $1,480,684.29 was made by the University and $563,292.41 was made by employees. These contributions represented 13.04% (University) and 5% (employees) of covered payroll. - 14 - SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30,1996 EXHIBIT liDII NOTE 6: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Funding Status and Progress Pension Benefit Obligation The amount of the total pension benefit obligation is based on a standardized measurement established by Statement No.5 of the Governmental Accounting Standards Board (GASB) that is required to be used for reporting purposes. The standardized measurement is the actuarial present value ofcredited projected benefits. This pension valuation method reflects the present value of estimated pension benefits that will be paid in future years as a result of employee services performed to date and is adjusted for the effects of projected salary increases and any step-rate benefits. A standardized measure of the pension benefit obligation was adopted by the GASB to enable readers ofthe PERS financial statements to assess that PERS funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among similar PERS. The total unfunded pension benefit obligation ofTRS as ofJune 30, 1995, which was the latest information available, was as follows: Total pension benefit obligation $ 17,442,607,000.00 Net assets available for benefits, at cost 15,857,066,000.00 Unfunded pension benefit obligation $ 1.585,541.000.00 The measurement ofthe total pension benefit obligation is based on an actuarial valuation as ofJune 30, 1995. Net assets available for benefits were valued as of the same date. TRS does not make separate measurements of assets and pension benefit obligation for individual employers. Retirement System Contributions Total contributions from all employers to TRS for the year ended June 30, 1996, were $607,274,559.00. The University's contribution for the year ended June 30, 1996, of$1,480,684.29 was actuarially determined and represented .2438% of total contributions made by all participating employers. Trend Information Historical trend information is presented in the TRS June 30, 1996, financial report. This information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. REGENTS RETIREMENT PLAN The State of Georgia provides optional pension benefits for eligible faculty and principal administrators through a defined contribution plan. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. - 15 - SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXHIBIT "0" NOTE 6: RETIREMENT PLANS REGENTS RETIREMENT PLAN State legislation requires that the employer contnoute 4% and the employee contribute 5% ofthe participating employee's earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times. The University's payroll for employees covered by the Regents Retirement Plan for the year ended June 30, 1996, was $2,782,996.60. The University's total payroll for all employees was $15,682,207.26. The University and the covered employees made the required contributions of $111,319.87 (4%) and $139,149.83 (5%), respectively. GEORGIA DEFINED CONTRIBUTION PLAN Plan Description Savannah State University participates in the Georgia Oefined Contribution Pl~ (GOCP) which is a singleemployer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GOCP is administered by the Board of Trustees of the Employees'Retirement System of Georgia. The University's payroll for the year ended June 30, 1996, for employees covered by GOCP was $582,377.66. The University's total payroll for all employees was $15,682,207.26. Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. Ifa member has less than $ 3,500.00 credited to his/her account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu ofmaking periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account 'will be paid to the member's designated beneficiary. Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount ofthe member's account is refundable upon request by the member. Total contributions made by employees during fiscal year 1996 amounted to $43,679.29 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. - ;1.6 - SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 3D. 1996 EXHIBIT"D" NOTE 7: LEAVB POLICIES Employees earn armuaI leave ranging from one and one-quarter days to one and three-quarter days each month depending upon the employees' length ofcontinuous State service with maximum accumulation offorty-five days. Employees are paid for unused accumulated armualleave upon retirement or termination ofemployment. See Note 1 - Basis of Accounting (Compensated Absences) Employees earn one day of sick leave each month with no maximum accumulation established. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment. NOTE 8: CONTINGENCIES Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor carmot be determined at this time although the University expects such amounts, if any, to be immaterial to its overall financial position. Litigation, claims and assessments filed against Savannah State University (as an organizational unit of the . Board ofRegents ofthe University System of Georgia), if any, are generally considered to be actions against the State ofGeorgia. 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, 1996. NOTE 9: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board ofRegents ofthe University System ofGeorgia has established group health and life insurance programs for regular employees ofthe University System of Georgia. It is the policy of the Board ofRegents to permit employees ofthe University System ofGeorgia eligible for retirement or that become permanently and totally disabled to continue as members ofthe group health and life insurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System of Georgia and who have at least ten years of service with the University System of Georgia are eligible for these postemployment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. As ofJune 30, 1996, there were 115 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 1996, Savarmah State University recognized as incurred $170,560.92 of expenditures, which was net of$68,429.76 of participant contributions. - 17 - SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXHIBIT"D" NOTE 10: BONDING INFORMATION The President and all employees of Savannah State University are bonded under a Public Employees Blanket Bond written by the Employers Insurance ofWausau, their Bond No. 1450-02-110723, on which the premium was paid to October 1, 1996. Under this agreement, the public employee dishonesty coverage insures Savannah State University to a maximum of $1,000,000.00 against loss sustained through fraudulent or dishonest acts by its. employees. The faithful performance of duty coverage insures the University 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 ofSavannah State University are also bonded under Commercial Crime Policies written by the United States Fire Insurance Company, their Policy Nos. 626 011675 2 and 626 012294 4, on which the premiums were paid to October 1, 1996. Under these additional public employee dishonesty coverages, the policies insure the University to a maximum of $9,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees and from failure ofits employees to perform faithfully. NOTE 11: ENROLLMENT The equivalent full-time student enrollment of Savannah State University was as follows: Regular Term Fall Quarter, 1995 Winter Quarter, 1996 Spring Quarter, 1996 3,035 2,954 2.812 Average Summer School, 1995 - 18 - SUPPLEMENTARY INFORMATION - 19 - SAVANNAH STATE UNIVERSITY COMBINING BALANCE SHEET CURRENT FUNDS - UNRESTRICTEP JUNE 30 1996 EXHIBIT "E- See notes to the financial statements. - 20- SAVANNAH STATE UNIVERSITY COMBINING STATEMENT OF CHANGES IN FUND BALANCES CURRENT FUNDS - UNRESTRICTED yEAR ENDED JUNE 30. 1996 EXHIBIT -P REVENUES AND OTHER ADDITIONS Unrestricted Current Fund Revenues Adjustments PriorYears' ExpencfltureslAccounts Payable Prior Years' Checks Voided Total Revenues and Other Additions EXPENDITURES AND OTHER DEDUCTIONS Educational and General Expenditures Auxiliary Enterprises Expenditures Remittances to the Board of Regents of the University System of Georgia Prior Year's Unrestricted Fund Balance (SurplUS) Adjustments Prior Years' Revenues/Accounts Receivable Total Expenditures and Other Deductions TRANSFERS BETWEEN FUNPS Nonmandatory Renewals and Replacements Net Increasel(Decrease) for the Year FUNp BALANCES JULy 1. 1995 RESIDENT LOITERYFOR AUXILIARY STUDENT INSTRUCTION EDUCATION ENTERPRISES ACTIVITIES TOTAL $ 21,357,327.99 $ 275,867.00 $ 4,475,344.61 $ 242,727.87 $ 26,351,267.47 1,643.40 1,792.74 147.24 1,085.00 7,159.73 3,730.80 8,950.37 6,608.54 $ 21,360,764.13 $ 275,867.00 $ 4,476,576.85 $ 253,618.40 $ 26,366,826.38 $ 21,330,945.38 $ 246,839.24 $ 281,611.94 $ 21,859,396.56 $ 4,286,695.72 4,286,695.72 14,626.35 207.00 819.00 14,626.35 1,026.00 $ 21 .345,571.73 $ 246,839.24 $ 4.286.902.72 $ 282,430.94 $ 26,161 .744.63 $ -196,055.15 $ -196.055.15 $ 15,192.40 $ 29,027.76 $ -6,381.02 $ -28,812.54 $ 9,026.60 100.886.21 46,502.07 486,173.91 75,630.96 709,193.15 FUND BALANCES JUNE 30. 1996 $ 116,078.61 $ 75,529.83 $ 479,792.89 $ 46,818.42 $ 718,219.75 see notes to the financial statements. - 21 - SAVANNAH STATE UNIVERSITY COMBINING STATEMENT OF CURRENT FUNpS REyENUES EXPENPITURES, ANp OTHER CHANGES UNRESTRICTED YEAR ENDED JUNE 30,1996 REyENUES State Appropriations Tuition and Fees Federal Grants and Contracts sales and Services of Educational Activities Sales and Services of Auxiliary Enterprises other Sources Total Revenues EXPENDITURES Educational and General Instruction Research Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships and Fellowships Auxiliary Enterprises Student Housing Faculty and Staff Housing Food Services Stores and Shops InterCOllegiate Athletics Other Service Units Total Expenditures OTHER TRANSFERS AND ADDITIONSI