Savannah State University, Savannah, Georgia, management report for fiscal year ended June 30, 2010

SAVANNAH STATE UNIVERSITY
SAVANNAH, GEORGIA
MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30,2010
A Member Institution of the
University System of Georgia

Geo

Andits and AEcamts

1

I Iussell W.Hinton State Auditor

SAVANNAH STATE UNIVERSITY - TABLE OF CONTENTS -
SECTION I FINANCIAL LETTER OF TRANSMIlTAL SELECTED FINANCIAL INFORMATION EXHIBITS A STATEMENT OF NET ASSETS - (GAAP BASIS) B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (GAAP BASIS) C STATEMENT OF CASH FLOWS - (GAAP BASIS) D SELECTED FINANCIAL NOTES SUPPLEMENTARY INFORMATION SCHEDULES
1 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT
(STATUTORY BASIS) BUDGET FUND 3 STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING
SOURCE COMPARED TO BUDGET (STATUTORY BASIS) BUDGET FUND
4 RECONCILIATION OF SALARIES AND TRAVEL
SECTION II ENTITY'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION Ill FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

SECTION I FINANCIAL

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-1 56 Atlanta, Georgia 30334-8400
October 6,2010

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the State Board of Regents of the University System of Georgia
and Honorable Earl G. Yarbrough, Sr., President Savannah State University

Ladies and Gentlemen:

As part of our audits of the basic financial statements of the University System of Georgia presented in the Annual Financial Reportfor the University System of Georgia, the basic financial statements of the State of Georgia presented in the State of Georgia ComprehensiveAnnual Financial Repoftand the issuance of a State of GeorgiaSingle Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2010, we have performed certain audit procedures at Savannah State University. Accordingly, the financial statements and compliance activities of Savannah State Universitywere examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.

This Management Report contains information pertinent to the financial and compliance activities of Savannah State University as of and for the year ended June 30, 2010. Information contained in this report is a by-product of our audits of the basic financial statements of the University System of Georgia and the basic financial statements of the State of Georgia and is the representation of management. Accordingly, we do not express an opinion or any other form of assurance on it. The particular information provided which includes a section on findings and other items reported in accordance with Commission on Colleges regulation 2.11.1 is enumerated in the Table of Contents.

This report is intended solely for the information and use of the management of Savannah State University, members of the Board of Regents of the University System of Georgia and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties.

Respectfully submitted,

A

I'

Russell W. Hinton, CPA, CGFM State Auditor

SELECTED FINANCIAL INFORMATION

SAVANNAH STATE UNIVERSITY
STATEMENT OF NET ASSETS - (GAAP BASIS)
JUNE 30,2010
ASSETS
Current Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable, Net (Note 3) Federal Financial Assistance Other lnventorles Prepaid Items
Total Current Assets
Noncurrent Assets Noncurrent Cash Short-Term lnvestments lnvestments Notes Receivable Capital Assets, Net (Note 4)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Deferred Revenue (Note 5) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Compensated Absences
Total Noncurrent Liabilities
Total Liabilit~es
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for:
Nonexpendable Expendable Unrestricted
Total Net Assets

EXHIBIT "A"

SAVANNAH STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - (GAAP BASIS)
YEAR ENDED JUNE 30,2010
OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Grants and Contracts Federal State Other
Sales and Services of Educational Departments Rents and Royalties Auxiliary Enterprises
Residence Halls Bookstore Food Services Parkinflransportation Health Services IntercollegiateAthletics Other Organizations Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarshipsand Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES)
State Appropriations
Federal Stimulus - Stabilization Funds
Grants and Contracts Federal State
Gifts lnterest and Other Investment Income lnterest Expense Other Nonoperating Revenues/Expenses
Net Nonoperating Revenues
Income (Loss) Before Other Revenues. Expenses, Gains. or Losses
Capital Grants and Gifts State
Increase(Decrease)in Net Assets
Net Assets - Beginningof Year
Net Assets - End of Year

EXHIBIT " B

SAVANNAH STATE UNIVERSITY STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDEDJUNE 30,2010
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Paymentsto Suppliers Paymentsto Employees Payments for Scholarships and Fellowships Loans Issued t o Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services ParkinglTransportation Health Services Intercollegiate Athletics Other Organizations Other Receipts (Payments)
Net Cash Provided(Used) by Operating Activities
CASH FLOWS FROM NONCAPITALFINANCINGACTIVITIES State Appropriations
Federal Stimulus - Stabilization Funds
Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes
Net Cash Flows Provided (Used) by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets Interest Paid on Capital Debt and Leases
Net Cash Provided (Used) by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Proceedsfrom Sales and Maturities of Investments Interest on lnvestments Purchaseof lnvestments
Net Cash Provided(Used) by Investing Activities
Net Increase (Decrease)in Cash
Cash and Cash Equivalents- Beginningof Year
Cash and Cash Equivalents - End of Year

EXHIBIT "C"

SAVANNAH STATE UNIVERSITY STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30.2010
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments to Reconcile OperatingIncome to Net Cash
Provided (Used) by OperatingActivities Depreciation Change in Assets and Liabilities: Accounts Receivable, Net Inventories Prepaid Items Notes Receivable Accounts Payable Deferred Revenue Other Liabilities Compensated Absences
Net Cash Provided (Used) by OperatingActivities
NONCASH ACTIVITY Change in Fair Value of Investments Recognizedasa Component of Interest Income Change in Accrued lnterest Payable Affecting lnterest Paid Gift of Capital Assets ReducingProceedsof Cap~taGl rants and Gifts

EXHIBIT ' C

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SAVANNAH STATE UN1VERSI-W SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "Dl'

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Savannah State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanyingfinancial 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 appropriations (surplus) for any given fiscal year. Accordingly, Savannah State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial RersortinR Standards.
NET ASSETS The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the
University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) of $112,922.69. Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the Office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

SAVANNAH STATE UNIVERSrPl SELECTED FINANCIAL NOTES
JUNE 30, 2010

EXHIBIT "D"

NOTE 2: DEPOSITS AND INVESTMENTS

DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:

1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.

2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.

3.

Bonds of any public authority created by the laws of the State of Georgia, providing that the

statute that created the authority authorized the use of the bonds for this purpose.

4.

Industrial revenue bonds and bonds of development authorities created by the laws of the

State of Georgia.

5.

Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary

corporation of the United States government, which are fully guaranteed by the United States

government both as to principal and interest and debt obligations issued by the Federal Land

Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank

for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and

the Federal National MortgageAssociation.

6 . Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.

The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

At June 30, 2010, the carrying value of deposits was $8,837,839 and the bank balance was $9,844,754. Of the University's deposits, $9,572,688 were uninsured. Of these uninsured deposits, $158,276 were collateralized with securities held by the financial institution's trust department or agent in the University's name, $9,414,412 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University'sname.

l NVESTM ENTS At June 30, 2010, the carrying value of the University's investment was $3,641,074, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows:

SAVANNAH STATE UNIVERSrrY SELECTED FINANCIAL NOTES
JUNE 30, 2010

EXHIBlT "D"

NOTE 2: DEPOSITS AND INVESTMENTS
INVESTMENTS
Investment Pools
Board of Regents Legal Fund Total Return Fund
Total Investments

The Board of Regents lnvestment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents lnvestment Pool is voluntary.

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2010.

Student Tuition and Fees Auxiliary Enterprisesand Other OperatingActivities Federal, State and Private Funds GSFlC Other

$ 956,761 633,293
3,909,063 48,455
206,719

Less Allowance for Doubtful Accounts Net Accounts Receivable

SAVANNAH STATE UNIVERSrrY SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "DM

NOTE 4: CAPITAL ASSETS

Followingare the changes in the University's capital assets for the year ended June 30,2010:

Beginning Balance
July 1,2009

Additions

Reductions

Ending Balance
June 30.2010

Capital Assets, Not Being Depreciated:

Land

$

Construction Work-In-Progress

Total Capital Assets, Not Being Depreciatec $

575,975 0 $
575.975 $

1,943,168$ 1,943,168$

$

575,975

0

1,943,168

0 $

2.519.143

Capital Assets. Being Depreciated:

Building and Building Improvements

$

Facilities and Other Improvements

Equipment

Capital Leases

Library Collections

Land Use Rights

Total Assets Being Depreciated

$

Less: Accumulated Depreciation:

Building and Building Improvements

$

Facilities and Other Improvements

Equipment

Capital Leases

Library Collections

Patents, Copyrights and Trademarks

Total Accumulated Depreciation

$

Total Capital Assets, Being Depreciated, Net $

88,070,016$ 2,520,259 4,592,180 53,816,031 7,304,290 55,285
156,358,061$
26,956.119 $ 1,564,111 2,218,798 2,508,621 5,871,003 11.323
39,129,975 $
117,228,086$

640,110 316,394 768,102 $
213,694
1,938,300 $
2,381,102 97,634 580,759 $
2,195,534 268,656 1.382
5,525,067 $
-3,586,767$

$
194,814 10,034
204,848 $

88,710,126 2,836.653 5,165,468
53.816.031 7,507,950 55,285
158,091,513

$
76,382 10,034
86,416 $ 118,432 $

29,337,221 1,661,745 2,723,175 4,704,155 6,129,625 12,705
44,568,626
113,522,887

Capital Assets, Net

NOTE 5: DEFERRED REVENUE Deferred revenue consisted of the following at June 30, 2010.
Other Deferred Revenue

SAVANNAH STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2010

EXHIBIT "D"

NOTE 6: LONG-TERM LIABILITIES The University's Long-Term liability activity for the year ended June 30, 2010 was as follows:

Beginning Balance July 1,2009

Additions

Reductions

Ending Balance June 30,2010

Current Portion

Lease

Lease Obligat~ons

$

53,568,935

Other Liabilities Compensated Absences

1361,078 $

956,601

800,806

1,516,873

696,705

Total Long-Term Obligations $

54,930,013 $

956,601 $

267,043 $

55,619,571 $ 1,158,034

NOTE 7: NET ASSETS Changes in Net Asset activity for the year ended June 30, 2010 are as follows:

Balance July 1,2009

Additions

Reductions

Balance June 30,2010

Invested in Capital Assets Net of Related Debt

Restricted Net Assets

4,299,338

567,849

210,628

4,656,559

Unrestricted Net Assets

Total Net Assets

NOTE 8: LEASE OBLIGATIONS
Savannah State University is obligated under various operating leases for the use of real property and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.
CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2 0 1 1 and 2033. Expenditures for fiscal year 2010 were $3,372,029 for interest expense, of which a net of $760,121 was funded by increasingthe principal liability for the imputed interest on University Commons capital lease. Total principal paid on the University Village lease was $226,358. Therefore, a net of $533,763 increase was incurred on the principal balance for both leases for the fiscal year ended June 30, 2010. Interest rates range from 4.486 percent to 4.655 percent.

SAVANNAH STATE UNIVERSrrY SELECTED FINANCIAL NOTES
JUNE 30, 2010

EXHIBlT "D"

NOTE 8: LEASE OBLIGATIONS
CAPITAL LEASES Savannah State University has two capital leases with SSU Foundation Real Estate Ventures, LLC, of which Savannah State University Foundation, Inc., is the sole member. In February 2008, Savannah State University entered into a capital lease of $29,229,205 for University Village with the LLC. In August 2008, Savannah State University entered into a capital lease of $24,586,826 for University Commons with the LLC.
OPERATING LEASES Savannah State University's noncancellable operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancelable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers, other small business equipment, and buildings.
Noncancellable operating lease rental expenses in 2010 were $101,260 for real property and/or equipment.
FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30,2010, were as follows:

Capital Leases

Year Ending June 30: 2011 2012 2013 2014 2015 2016 - 2020 2021 - 2025 2026 - 2030 2031 - 2033

Total Minimum Lease Payments

$ 91,817,649

Less: Interest

37,714.951

Principal Outstanding

$ 54,102,698

SAVANNAH STATE UNIVERSIlY SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA
Plan Description Savannah State University participates in the Teachers Retirement System of Georgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the TRS offices or the Georgia Department of Audits and Accounts.

Funding Policy Employees of Savannah State University who are covered by TRS are required by State statute to contribute 5.25% of their gross earnings to TRS. Savannah State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2010, the employer contribution rate was 9.74% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

REGENTS RETIREMENT PLAN
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et. seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Savannah State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State Statute and as advised by their independent actuary. For fiscal year 2010, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.

SAVANNAH STATE UNIVERSrPl SELECTED FINANCIAL NOTES
JUNE 30, 2010

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS
REGENTS RETIREMENT PLAN
Funding Policy Savannah State University and the covered employees made the required contributions of $656,814
(9.24%) and $382,754 (5%),respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description Savannah State University participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia.
Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $3,500.00 credited to his/her account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.
Contributions and Vesting Member contributions are seven and one-half percent (7.5%)of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member.
Total contributions made by employees during fiscal year 2010 amounted to $16,524 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
The Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices.
NOTE 10: 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 cannot be determined at this time although Savannah State University expects such amounts, if any, to be immaterial to its overall financial position.

SAVANNAH STATE UNIVERSIW SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "D"

NOTE 10: CONTINGENCIES
Litigation, claims and assessments filed against Savannah State University (an organizational unit of the Board of Regents of the University System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2010.
NOTE 11: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For the 2009 and 2010 plan years, the employer rate was between 70-75% of the total health insurance cost for eligible retirees and the retiree rate was between 25-30%.
As of June 30, 2010, there were 120 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2010, Savannah State University recognized as incurred $680,063 of expenditures, which was net of $358,908 of participant contributions.
NOTE 12: AFFILIATED ORGANIZATIONS
The Savannah State University Foundation, Inc., and the Savannah State University Student Athletic Fund are legally separate, tax exempt organizations whose activities primarily support Savannah State University. These affiliated organizations are considered potential component units of the State of Georgia in accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Un&. Therefore, the financial statements of these affiliated organizations are not included in these financial statements. Copies of the financial statements for the affiliated organizations may be obtained from Savannah State University.

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SUPPLEMENTARY INFORMATION

SAVANNAH STATE UNIVERSITY BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30,2010
ASSETS
Cash and Cash Equ~valents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures lnventories
Total Assets
LIABILITIES AND FUND EOUITY
Liabilities Accrued Payroll Encumbrances Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved DepartmentSales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds UncollectibleAccounts Receivable Tuition Carly-Over Inventories Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

Statutory Basisfinancial information was prepared on a prescribed basis of accounting that demonstratescompliance with budgetarystatutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.

SAVANNAH STATE UNlVERSllY SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS)
BUDGET FUND YEAR ENDEDJUNE 30.2010

REVENUES
State Appropr~at~on State General Funds
Federal Funds Other Funds
Total Revenues
CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance
Total Funds Ava~lable
EXPENDITURES
Special Funding lnitiatlve Teaching
Total Expenditures Excess of Funds Ava~lableover Expenditures
FUND BALANCE JULY 1

BUDGET

ACTUAL

SCHEDULE "2"
VARIANCE FAVORABLE (UNFAVORABLE)

Prior Year Payables/Expendltures Prior Year Receivables/Revenues Increase in lnventories UnreseNed Fund Balance (Surplus) Returned
to Board of Regents - Un~versitySystem Office Year Ended June 30.2009
Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCEJUNE 3Q
SUMMARY OF FUND BALANCE
Reserved Department Sales and Services Indirect Cost Recover~es Technology Fees Restr~cted/Sponsored Funds Unwllectlble Accounts Receivable Tu~tionCarry-Over Inventories
Total Reserved
UnreseNed Surplus
Total Fund Balance
Statutoty Bas~sfinancial Information was prepared on a prescrlbed basls of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia. which is a comprehensive basis of accounting other than generally accepted accounting principles.

SAVANNAH STATE UNlVERSlM STATEMENTOF PROGRAM REVENUESAND EXPENDITURESBY FUNDING SOURCE COMPARED TO BUDGEl
(STATUTORY BASIS) BUDGEl FUND YEAR ENDEDJUNE 30.2010

Special Funding Initiative State Appropriation State General Funds

Orlginal A~proprlatlon

Flnal Budget

Current Year Revenues

FundsAvailable Comparedto Budget

Prior Year Carry-Over

Total Funds ~vallable

Varlance Positlve (Negative)

Teaming State Appropriation State General Funds Federal Funds American Recoveryand Reinvestment Act of 2009 Federal StabilizationFunds Other Funds
Total Teacning

Grand Totals -All Programs

Statutory Bassfinancial informationwas prepared on a prescribed basis of accountingthat demonstratesmmpliance wim budgetary statutes and regulationsof the State of Georgia. which is a comprehensive basls of accountingother man generallyacceptedaccounting pr~nwples.

ExpendrmresComparedto Budget

Variance

Posltlve

Actual

(Negative)

Actual Funds Available
Over/(Under) Ekpenaltures

Prlor Pernod

Other

M~ustments Aqustments

Earh. Rernlttance of Surplus

Program Fund
Balances

Transfers

Program Fund Balances

Reserve

Surplus

Total Fund Balance

UnexpendableReserves UncollectibleAccounts Receivable Inventories
TOM ~ u n Bdalance

457,615.80 47.672.64
- $ 2.090.663.46

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SAVANNAH STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDEDJUNE 30.2010

SCHEDULE "4"

Totals per Annual Supplement

Accruals June 30,2010 June 30,2009

Compensated Absences June 30,2010 June 30,2009

Agency Funds

Adjustments

Shared Services on Jointly Staffed Personnel

Armstrong Atlantic State University

Yount,

Lisa

Georgia College and State University

Hales,

Kevin

Unidentified Variance

SALAR l ES

$

24,938,648 $

TRAVEL 548,630

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

SAVANNAH STATE UNIVERSITY ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS
FINDING CONTROL NUMBER AND STATUS
Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses
CORRECTIVE ACTION/RESPONSES
CAPITAL ASSETS lnadequate Capital Asset Records Finding Control Number: FS-548-08-03
Savannah State University is working with the Board of Regents Information Technology Services to resolve this matter.
REVENUES/RECEIVABLES/RECEIPTS lnadequate Control Procedures for Collection of Tuition and Fees Finding Control Number: FS-54809-01
Savannah State University has taken steps to reduce, and eventually eliminate, the number and percentage of students having a balance that has not been guaranteed by Financial Aid or some other source. Additionally, the University has taken steps to strengthen the registration clearance process. The University is confident that these steps taken together will resolve these issues.
PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS
FINDING CONTROL NUMBER AND STATUS
Further Action Not Warranted Partially Resolved - See Corrective Action/Responses
CORRECTIVE ACTION/RESPONSES
SPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Finding Control Number: FA-548-09-01
Although the University implemented a corrective action during fiscal year 2009, that corrective action plan must be updated and adjusted based on the current year findings. Additionally, with the significant increase in the student population over the past few years and the related increase in financial aid the University plans to contract for services to aid personnel in this office. Therefore, it is anticipated that the revised corrective action plan along with the addition of contracted services will be reflected in fiscal year 2 0 1 1 operations.

SECTION Ill FINDINGS, QUESTIONED COSTS AND OTHER ITEMS