GA Aioo ,RI S42. 1994-95 STATE OF GEORGIA DEPARTMENT OF AUDITS 254 WASHINGTON STREET ATLANTA. GEORGIA 30334 REVIEW REPORT STATE OF GEORGIA SECRETARY OF STATE YEAR ENDED JUNE 30, 1995 SECRETARY OF STATE -TABLE OF CONTENTS- SECTION I FINANCIAL INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION EXHIBITS FINANCIAL STATEMENTS A COMBINED BALANCE SHEET (STATUTORY BASIS) ALL FUND TYPES AND ACCOUNT GROUPS 2 B COMBINED STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS) ALL FUND TYPES 4 C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND 5 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND D "A" SECRETARY OF STATE 8 E "B" REAL ESTATE COMMISSION 9 F STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS STATE REVENUE COLLECTIONS FUND 10 G COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FIDUCIARY FUND TYPE - EXPENDABLE TRUST FUNDS 12 H NOTES TO THE FINANCIAL STATEMENTS 13 SUPPLEMENTARY INFORMATION COMBINING BALANCE SHEET (STATUTORY BASIS) BUDGET FUND 30 COMBINING STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS) BUDGET FUND 31 K COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND 32 L COMBINING BALANCE SHEET FIDUCIARY FUND TYPE - EXPENDABLE TRUST FUNDS 34 M COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FIDUCIARY FUND TYPE- EXPENDABLE TRUST FUNDS 35 N COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FIDUCIARY FUND TYPE -AGENCY FUNDS 36 SECRETARY OF STATE - TABLE OF CONTENTS - SECTION I FINANCIAL SUPPLEMENTARY INFORMATION SCHEDULES SCHEDULE OF APPROVED BUDGET I "A"SECRETARYOFSTATE 37 2 "B" REAL ESTATE COMMISSION 38 3 CASH AND CASH EQUIVALENTS 39 4 SCHEDULE OF GOVERNOR'S EMERGENCY FUND 40 5 SCHEDULE OF FEDERAL REVENUES 41 6 SCHEDULE OF OTHER REVENUES RETAINED 42 7 SCHEDULE OF OTHER OPERATING EXPENSES 43 8 SUMMARY OF SALARIES, TRAVEL AND PER DIEM AND FEES 44 SECTION II FINDINGS AND IMPROPER OR QUESTIONED COSTS SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS SECTION! FINANCIAL CLAUDE L. VICKERS STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS 254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 November 21, 1995 Honorable Zell Miller, Governor Members of the General Assembly of Georgia and Honorable Max Cleland Secretary of State INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Ladies and Gentlemen: We have reviewed the accompanying financial statements (Exhibits A through H) of the Secretary of State as of and for the year ended June 30, 1995, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. As described in Note I, 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. All information included in these financial statements is the representation of the management of the Secretary of State. A review consists principally of inquiries of agency personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware ofany material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the basis of accounting described in Note 1. Our review was made for the purpose of expressing limited assurance that there were no material modifications that should be made to the financial statements in order for them to be in conformity with the basis of accounting described in Note 1. The accompanying supplementary information (Exhibits I through N and Schedules 1 through 8) is presented only for supplementary analysis purposes. Such information has been 95ARL-4 subjected to the inquiries and analytical procedures applied in the review of the financial statements and we are not aware of any material modifications that should be made thereto. Respectfully submitted, ~~ Claude L. Vickers State Auditor CLV:jy 95ARL-4 FINANCIAL STATEMENTS -I- SECRETARY OF STATE COMBINED BALANCE SHEET (STATUTORY BASIS) ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30 1995 ASSETS Cash and Cash Equivalents (See Schedule) Accounts Receivable s - Appropriation Federal Financial Assis1ance Other Fixed Assets Equipment Amount to be Provided for Payment of Accrued Compensated Absences Total Assets LIABILITIES AND FUND EQUITY liabilities Cash Overdraft Accounts Payable Payroll Withholdings Funds Held for Others Compensated Absences Total liabilities Fund Equity Investment in General Fixed Assets Fund Balances Reserved Archives Donations Federal Financial Assistance Nurses Forum Rhodes Merncrial Hall Restoration Taylor Fund 5 - Revenue Collections Fund Unreserved . Designated Surplus Undeslgnated Total Fund Equity Total liabilities and Fund Equity GOVERNMENTAL FUND TYPES STATE REVENUE BUDGET COLLECTIONS FIDUCIARY FUND TYPES EXPENDABLE TRUST AGENCY $ 963,202.09 $ $ 695,436.37 18,497.60 0.00 $ 713,933.97 7,405.49 $ 1,597,397.74 $ 124,548.81 $ 1 677136.06 $ 7 405.49 $ 1,597397.74 $ 124548.81 $ 0.00 1,523,362.79 838.62 $ 1,524,201.41 $ 124,548.81 $ 124,548.81 $ 6,765.60 46,722.86 3,114.59 5,832.22 3,297.81 $ 87,201.'57 152,934.65 $ $ 1 677 136.06 $ 7,405.49 $ 7,405.49 $ 1,597,397.74 1,597,397.74 7 405.49 $ 1,597 397.74 $ 124548.81 See Independent Accountant's Combined Report on Review of Financial 5-ments and Supplementary Information. The notes to 1he financial -ments are an integral part of 1his statement -2- EXHIBIT"A" ACCOUNT GROUPS GENERAL GENERAL FIXED LONG-TERM ASSETS DEBT TOTALS (Memorandum Only) JUNE 30, 1995 JUNE 30, 1994 $ 2,692,554.13 $ 2,306,546.42 695,436.37 $ 18,497.60 0.00 2,267,927.15 1,203.89 472.90 $ 713,933.97 $ 2,269,603.94 $ 3,455,822.61 $ 3,455,822.61 $ 3,334,386.24 $ 1,457,400.36 $ 1,457,400.36 $ 1,431,621.46 $ 3455822.61 $ 1 457 400.36 $ 8319,711.07 $ 9342158.06 $ 1,457,400.36 $ 1,457,400.36 $ 0.00 $ 1,523,362.79 838.62 124,548.81 1,457,400.36 3,106,150.58 $ 161,705.81 1,599,166.63 0.00 636,909.48 1,431,621.46 3,829,403.38 $ 3,455,822.61 $ 3,455,822.61 3,334,386.24 6,765.60 46,722.86 3,114.59 5,832.22 3,297.81 7,405.49 6,756.10 97,137.36 0.00 5,832.22 5,425.25 19,132.87 $ 3,455,822.61 87,201.57 1,597,397.74 $ 5,213,560.49 393,580.57 1,850,504.07 5,512,754.68 3455822.61 $ 1 457 400.36 $ 8 319,711.07 $ 9 342158.06 -3 - ECBET~QE2I!If QQ!,'!B1NEl2 STA!EMENT OF ! . ~ E S IN FUN12 BALANCES (SIAI!.[!ORY ~IS} ALL FUNl2 I'fPES YEAR ENDED JUNE 1995 EXHIBIT"B" -~p~~E~J!.!LX1 R--i Dosignal8d Surplus Undeoignal8d ~ Adjustments to Prior Yea(s Accoun1s Payable Cash Receipts for lhe Year Exhibit"P Excess of Funds Availabkt over Expenditures Exhlbit"C" Excess of Revenues over (under) Expenditures ExhibitG 12&1'.llK;TIQNS Unl'8S8Mld Fund Balance (Surplus) Returned to Office of Treasury and Fisc:al Services Year Ended June 30, 1993 Year Ended June 30, 1994 Cash Disbun,ements for lhe Year Exhibit"P Relum of Donated Funds R - - i Fund Balance Carried Over from Prior Year as Funds Available FUND ~ ! . E S - ~UNE 30 (To Exhibit "A") GOVERNMENTAL FUND TYPES STATE REVENUE BUDGET COLLECTIONS ADUCIARY FUND TYPE EXPENDABLE TRUST TOTALS {Memorandum OnM YEAR ENDED JUNE30 1995 JUNE30 1894 115,150.93 $ 19,132.87 134,283.80 $ 49,724.54 393,580.57 508 731.50 $ 1,650,504.07 393,580.57 1,650,504.07 362,122.13 1,599,788.70 19132.87 $ 1 650 504.07 $ 2 178 368.44 $ 2011835.37 40,357.52 112.sn.13 27,287,675.02 152934.65 $ 27,ll87 675.02 $ 40,357.52 $ 75,467.91 27,287,675.02 26,123,123.45 112,577.13 434,739.10 -53106.33 -53106.33 50715.37 -53106.33 $ 27 387 503.34 $ 26 684 045.83 0.00 393,580.57 27,299,402.40 0.00 115150.93 508 731.50 $ 27 299 402.40 0.00 $ 393,580.57 362,122.13 0.00 27,299,402.40 0.00 26,112,627.32 1,475.51 115150.93 41 087.80 27 808133.90 $ 26517312.76 152934.65 $ 7405.49 $ 1 597 397.74 $ 1 757 737.88 $ 2178368.44 See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financlal statements are an integral part of this statement. -4- SECRETARY OF STATE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND YEAR ENDED JUNE 30 1995 EXHIBIT"C" FUNDS AVAILABLE REVENUES STATE APPROPRIATION General Appropriation Amended Appropriation Governor's Emergency Fund (See Schedule) Less: Lapsed Funds Total State Appropriation FEDERAL REVENUES (See Schedule) OTHER REVENUES RETAINED (See Schedule) Total Revenues CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance Archives Donations Federal Financial Assistance Rhodes Memorial Hall Restoration Taylor Fund Total Carry-Over from Prior Year TOTALS YEARENOEb JONE 30, 1995 JUNE 3o, 1994 $ 28,276,304.00 $ 102,504.00 10,000.00 25,172,233.00 13,500.00 0.00 $ 28,388,808.00 $ 25,185,733.00 0.00 13,500.00 $ 28,388,808.00 $ 25,172,233.00 28,754.17 89,350.33 1,741 468.70 1,707,669.08 $ 30,159,030.87 $ 26,969,252.41 $ 6,756.10 $ 97,137.36 5,83222 5 425.25 $ 115150.93 $ 6,816.26 25,463.81 7,332.22 1,475.51 41,087.80 Total Funds Available $ 30,274,181.80 $ 27,010,340.21 EXPENDITURES PERSONAL SERVICES Salaries and Wages Employer's Contributions for: F.I.C.A. Retirement Health Insurance Personal Liability Insurance Unemployment Compensation Insurance Workers' Compensation Insurance Assessments by Merit System Drug Testing $ 12,963,678.00 $ 12,099,378.29 917,618.58 1,995,186.45 1,575,719.97 67,665.00 12,251.00 140,424.00 51,567.97 835.50 858,206.02 1,868,315.06 1,476,626.61 49,725.00 12,742.00 100,805.00 48,963.66 1,126.32 $ 17,724 946.47 $ 16,515,887.96 See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -5- SEC STATEMENT OF FUN YEAR E D EXPENDITURES EXHIBIT"C" EXPENDITURES REGULAR OPERATING EXPENSES Motor Vehicle Expenses Supplies and Materials Repairs and Maintenance Utilities Rents (Other than Real Estate) Insurance and Bonding Other Operating Expenses (See Schedule) Dupticating and Rapid Copy Publications and Printing TRAVEL MOTOR VEHICLE PURCHASES EQUIPMENT Equipment Purchases Lease/Purchase of Equipment Rental of Equipment COMPUTER CHARGES Other Costs Supplies and Materials Repairs and Maintenance Other Operating Expenses (See Schedule) Software Equipment Equipment Purchases Per Diem, Fees and Contracts Per Diem and Fees Computer Billings, DOAS REAL ESTATE RENTALS TELECOMMUNICATIONS PER DIEM FEES AND CONTRACTS Per Diem and Fees Contracts TOTALS VE:ARENOEO JONE 30, 1995 JONE 30, 1994 $ 174,400.25 $ 1,213,655.53 455,061.81 12,787.25 21,921.76 110,883.00 851,368.09 51,825.22 883,009.18 $_--'-3'-,'-7-7'-4'-,'9"-12.09 $ $_---="'2--6=4-,'-1'-42.79 $ $---'-1=8=8,'7-47.00 $ 167,043.27 846,966.66 328,208.69 9,135.47 13,693.40 91,221.00 716,279.19 49,477.89 381,077.85 2,603,103.42 253,734.53 173,151.00 $ 273,400.67 $ 0.00 18,781.54 292,182.21 $ 168,723.49 38,921.92 18 843.13 226,488.54 $ 40,331.13$ 7,467.40 5,879.01 49,934.67 253,043.49 15,000.00 2,381,069.61 $ -2~ ,752~ ,725-.3-1 $ $_=2=,5'3-2=,7-3=5.=68- $ $_----"5'-7'-7'-,"9'7--0'.=5-7'- $ 32,977.14 11,304.74 1,466.41 77,455.88 278,617.38 12,000.00 1,555,505.01 1,969,326.56 2,450,566.69 392,242.21 $ 1,449,092.99 $ 1,205,754.52 5,875.80 82,375.00 $ 1,454,968.79 $ 1,288,129.52 See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -6- SECRETARY OF STATE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND YEAR ENDED JUNE 30 1995 EXHIBIT"C" EXPENDITURES OTHER ELECTION EXPENSES Personal Services Salaries and Wages Employer's Contribution for: F.I.CA. Other Costs Supp&es and Materials Duplicating and Rapid Copy Publications and Printing Travel Equipment Equipment Purchases Telecommunications Per Diem, Fees and Contracts Per Diem and Fees Contracts Total Other Total Expenditures Excess of Funds Available over Expenditures TOTALS VEARENDfD JONE 30, 1995 JONf 30, 1994 $ 81,953.39 $ 79,963.08 1,202.79 1,110.80 79,823.80 54,548.30 313,198.52 3,253.37 203,115.81 0.00 373,001.04 989.03 0.00 905.19 1,330.00 795.92 13,388.40 50,000.00 38,665.00 4,000.00 $ 598,273.76 $ 702,970.68 $ 30,161,604.67 $ 26,575,601.11 112 577.13 434,739.10 $ 30,274,181.80$ 27,010,340.21 See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -7- SECRETARY OF STATE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND "A" SECRFTARY OF STATE YEAR ENDED JUNE 30 1995 EXHIBIT"D" FUNDS AVAILABLE REVENUES s - Appropriation Federal Revenues Other Revenues Retained CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) $ 26,438,983.00 $ 26,438,983.00 $ 78,551.00 28,754.17 1,722,409.00 1,723,074.42 $ 28,239,943.00 $ 28,190,811.59 $ 0.00 -49,796.83 665.42 -49,131.41 0.00 115,150.93 115,150.93 $ 28 239 943.00 $ 28,305,962.52 $ 66,019.52 EXPENDITURES Personal Services Regular Operating Expenses Travel Motor Vehicle Purchases Equipment Computer Charges Real E - Rentals Telecommunications Per Diem, Fees and Contracts Election Expenses $ 16,271,297.00 $ 16,568,364.37 $ 3,743,478.00 3,620,375.99 254,656.00 250,242.32 164,137.00 163,625.00 285,756.00 280,745.88 2,386,610.00 2,420,900.94 2,484,990.00 2,421,191.90 547,513.00 546,928.89 1,401,500.00 1,343, 171.85 700,000.00 598,273.76 -297,007.37 123,102.01 4,413.68 512.00 5,010.12 -34,296.94 63,798.10 584.11 58,334.15 101,726.24 $ 28 239 943.00 $ 28,213,826.90 $ 26,116.10 Excess of Funds Available over Expenditures See Independent Aceoun1anfs Combined Report on Review of Financial Statements and Supplemen1ary Information. The nctes to the financial statements are an integral part of this statement. -8- 92 135.62 $ ____92.._135=.62- SECRETARY OF STATE STATEMENT OF FUNps AVAILABI E AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND "B" REAL ESTATE COMMISSION YEAR ENDED JUNE 30 1995 EXHIBIT "E" FUNDS AVAILABLE ~ State Appropriation other Revenues Retained BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) 1,949,825.00 $ 1,949,825.00 $ 0.00 18,394.00 18,394.28 0.28 1,968,219.00 $ 1,968,219.28 s _ _ _ _ _o_.2_s EXPENDITURES Personal Services Regular Operating Expenses Travel Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts $ 1,147,497.00 $ 1,156,582.10 $ 155,100.00 154,536.10 16,000.00 13,900.47 25,122.00 25,122.00 11,600.00 11,436.33 350,000.00 331,818.37 113,700.00 111,543.78 31,200.00 31,041.68 118,000.00 111,796.94 -9,085.10 563.90 2,099.53 0.00 163.67 18,181.63 2,156.22 158.32 6,203.06 1,968,219.00 $ 1,947,m.n s 20,441.23 Excess of Funds Available over Expend~ures $ 20,441.51 $ 20,441.51 see Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -9- SECRETARY OF STATE STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS STATE REVENUE COLLECTIONS FUND YEAR ENDED JUNE 30 1995 EXHIBIT"P STATE REVENUE COLLECTIONS Corporations Regulation Division BusiMSS Services Charities Limited Partnership Fees T.-marks Elections and Campaign Disclosure Division Commissions Elections Qualifying Fees S - Campaign Financial Disclosure Occupational Certification Division Licensing and EJCamining Board Fees Accountancy Architect Athletic Agents Athletic Trainers Auctioneers Barber Behavioral Scienca Chiropractics Construction Industry Cosmetology Dental Dietitians Engi,-,Forestry Funeral Geology Hearing Aid Landscape Architecture Librarian Medical Nursing Home Occupational Therapy Optician Optometry Pharmacy Physical Therapy Podiatry CASH RECEIPTS $ 6,808,231.51 33,410.00 113,680.00 38,166.50 $ 6,993,488.01 $ 7,619.75 2,644.00 154,256.12 153,850.00 318,369.87 $ 207,226.05 239,550.00 9,100.00 11,580.00 27,345.00 295,199.00 346,080.00 341,280.00 790,994.73 1,060,102.32 91,450.00 19,935.00 829,402.00 8,060.00 118,251.00 18,200.00 8,930.00 91,903.00 7,935.00 989,229.00 37,407.50 26,970.00 65,135.00 28,905.00 1,107,040.00 62,150.00 5,700.00 See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -10- SECRETARY OF STATE STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS STATE REVENUE COLLECTIONS FUND YEAR ENDED JUNE 30 1995 EXHIBIT"P STATE REVENUE COLLECTIONS Occupational Certification Division Licensing and Elcamining Board Fees Practical Nurse Private Detective Psychology Registered Nurse Speech Pathology Used Car Dealers Used Car Parts Veterinary Waste and Waste Water Treatment Internal Adminis1ration Division Georgia Laws Notary Public Fees Real Estate Commission Georgia Land Sales kt Real Estela Appraiser Board Real Estate Appraiser Board/Educational Real Estate Licensing Fees Real Estala Schools and Instruction Real Estala Time Sharing Fees Securities Regulation Division Cemetery Securities Fees Total Cash Receipts CASH AND CASH EQUIVALENTS - JULY 1 1994 CASH RECEIPTS TRANSFERS To Office of Treasury and Fiscal Services CASH AND CASH EQUIVALENTS - JUNE 30 1995 DISBURSEMENTS See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notas to the financial statements are an integral part of this statement. -11- $ 1,309,119.94 290,005.00 382,490.00 3,102,396.65 114,655.00 104,763.00 26,860.00 223,505.00 280,283.00 $ 12,679,137.19 $ 20,166.67 98,812.00 118,978.67 14,900.00 355,427.00 17,300.00 1,920,398.25 11,920.00 17,608.00 2,337,553.25 $ 49,655.00 4,790,493.03 4,840,148.03 $ 'E,287,675.02 19,132.87 27 306 807.89 $ 'E,299,402.40 7,405.49 27 306 807.89 SECRETARY OF STATE EXHIBIT"G" COMBINED STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES FIDUCIARY FUND TYPE - EXPENDABLE TRUST FUNDS YEAR ENDED JUNE 30 1995 REVENUES Auctioneers Recovery Fees Interest Income Real Estate Recovery Fees Total Revenues EXPENDITURES Court Settlements Educational Expense Contracts Total Expenditures Excess of Revenues over (under) Expenditures FUND BALANCE JULY 1 1994 TOTALS YEAR ENDED JUNE 30, 1995 JUNE 30, 1994 $ 23,100.00 $ 19,237.50 76,433.75 52,812.69 95,759.30 80,427.22 $ 195,293.05 $ 152,477.41 $ 47,720.58 $ 5,000.00 200,678.80 96,762.04 $ 248,399.38 $ 101,762.04 $ -53,106.33 $ 50,715.37 1,650,504.07 1,599,788.70 FUND BALANCE JUNE 30 1995 $ 1,597,397.74 $ 1,650,504.07 See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. - 12 - SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS JUNE 30 1995 EXIIlBIT "H" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The Secretary of State, an organizational unit of the State of Georgia, is part ofthe executive branch ofthe government of the State of Georgia. The Agency is under the control and management of the Secretary of State, who is elected by the qualified voters of the State of Georgia. The Secretary of State does not have authority to determine the amount of funding it will receive from the State ofGeorgia for any given fiscal year. Such authority is vested in the General Assembly of Georgia. The Agency also does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the Secretary ofState is included within the State of Georgia reporting entity for financial reporting purposes because of the significance ofits legal, operational and financial relationships with the State of Georgia. These reporting entity relationships are defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards. FUND ACCOUNTING The Secretary ofState uses funds and account groups to report on its financial position and the results of its operations determined in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds are maintained consistent with legal and managerial requirements. Account groups are a reporting device used to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. Funds and account groups presented in the accompanying financial statements are as follows: GOVERNMENTAL FUND TYPES BUDGET FUND - The fund used to account for activities and functions as set forth in the Amended Appropriations Act of 1994-1995. The Budget Fund is similar in nature to a General Fund as identified in generally accepted accounting principles in that the Budget Fund is used to account for all activities except those required to be accounted for in some other fund. STATE REVENUE COLLECTIONS FUND - The fund used to account for the collection of specific revenues ofthe State of Georgia as provided by statute or administrative action and the subsequent transfer of such funds to the Office of Treasury and Fiscal Services. This presentation differs from generally accepted accounting principles in that such activity should be included in the General Fund of the governmental organization. - 13 - SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS JUNE 30 1995 EXHIBIT"H" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FUND ACCOUNTING FIDUCIARY FUND TYPES EXPENDABLE TRUST FUNDS - The funds used to account for assets, revenues and expenditures utilized in accordance with the provisions of various trusts established by individual agreement, statute or administrative action. Expendable trust funds are used when both the principal and revenues earned on such principal may be expended for the purposes designated by the trust. 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 cost or at estimated historical cost if historical cost is not practically determinable. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on general fixed assets. The cost ofnormal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not included in the General Fixed Assets Account Group. Material improvements adding to the value or useful life of the assets are included in the General Fixed Assets Account Group. GENERAL LONG-TERM DEBT - The account group used to report the noncurrent portions of certain governmental long-term liabilities, such as claims, judgments and compensated absences, which will be paid from future resources. BASIS OF ACCOUNTING MEASUREMENT FOCUS The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Governmental funds and expendable trust funds should be accounted for using the flow of current financial resources measurement focus. With this measurement focus, operating statements present increases and decreases in net current assets and unreserved fund balance is a measure of available spendable resources. In accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund remits its unreserved fund balance (surplus) to the Office of Treasury and Fiscal Services in the subsequent fiscal year. - 14 - SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS JUNE 30 1995 EXHIBIT "H" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPES 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 are "measurable and available"). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Revenues that are accrued include primarily State appropriations, Federal grants and entitlements, and certain amounts earned under operating agreements with other parties. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences, claims and judgements which are recognized when the obligations are expected to be liquidated with expendable available financial resources. Contractual obligations for services which have not been performed and for goods which have not been delivered at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. 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 of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia, but is not consistent with generally accepted accounting principles, which provide for the recording ofencumbrances as a reservation of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles. 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 rt;:gulations 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. STATE REVENUE COLLECTIONS FUND The State Revenue Collections Fund is maintained on the Cash Receipts and Disbursements basis of accounting as prescribed or permitted by statutes and regulations of the State of Georgia. This basis of accounting is defined as that method of accounting in which certain revenue and the related assets are recognized when received rather than when earned, and certain expenses are recognized when paid rather than when the obligation is incurred. The State Revenue Collections Fund, which should be included in the General Fund in accordance with generally accepted accounting principles, should be maintained on the modified accrual basis of accounting. - 15 - SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS JUNE 30 1995 EXHIBIT "H" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING FIDUCIARY FUND TYPES EXPENDABLE TRUST FUNDS Except as disclosed in the following paragraph, revenues and expenditures of Expendable Trust Funds are recorded in accordance with the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they are "measurable and available"). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Revenues that are accrued include primarily interest income and certain amounts earned under terms of the trust. Expenditures are recorded when the related fund liability is incurred. Contractual obligations for services which have not been performed and for goods which have not been delivered at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but is not consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation of fund balance. AGENCY FUNDS Agency Funds are custodial in nature and do not measure results of operations or have a measurement focus. The modified accrual basis of accounting is utilized for recognizing assets and liabilities. BUDGET Appropriation allotments to the Secretary of State are on the basis of budgets submitted by the Agency and approved by the Legislature and the Governor. The budgets are adopted on a basis consistent with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia and are compiled in the same manner as all State departments. Expenditures are classified by budget unit object classes as provided in Act No. 1208 of Georgia Laws 1994 (as approved April 18, 1994) and amended by Act No. 6 of Georgia Laws 1995 (as approved February 22, 1995), which is an appropriated budget and is referred to in these notes as the Amended Appropriations Act of 1994-1995. Overexpenditure of a budget unit object class, except for the "common object classes", included in the Agency's final amended budget is in violation of Section 80 of the 1994-1995 Amended Appropriations Act. Expenditures ofno more than 102% of the stated amount for each common object class are authorized by Section 80. However, the total expenditure for the group of common object classes may not exceed the sum of the stated amounts for the separate object classes of the group. The common object classes include Personal Services, Regular Operating Expenses, Travel, Motor Vehicle Purchases, Equipment, Computer Charges, Real Estate Rentals, Telecommunications and Postage. A comparison of anticipated funds available and budgeted expenditures by budget unit object class indicates that the common object classes were overspent by $133,944.29 for the "A" Secretary of State budget unit. - 16 - SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS JUNE30 1995 EXHIBIT"H" NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include demand deposits with banks and other financial institutions and cash management pools that have the general characteristics of demand deposit accounts in that the Agency may deposit additional cash at any time and also may withdraw cash at any time without prior notice or penalty. INVENTORIES No inventories of supplies 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 brief description of the reserves reflected in the accompanying financial statements: ARCHIVES DONATIONS Funds received for this program represent donations received which are restricted for various Archives programs. FEDERAL FINANCIAL ASSISTANCE The residual portion ofFederal financial assistance revenues not yet expended or encumbered. This amount is restricted for expenditure in future years. This accounting treatment differs from generally accepted accounting principles in that the unearned portion of Federal financial assistance should be reflected as deferred revenue. NURSES FORUM PROGRAM Funds received for this program represent donations which are restricted for expenditures relating to workshops for nurses. RHODES MEMORIAL HALL RESTORATION Funds received for this program represent donations which are restricted for expenditures relating to Rhodes Memorial Hall. TAYLORFUND Funds received for this program represent donations received from the R. J. Taylor, Jr., Foundation which are restricted for expenditures relating to the preservation of Wilkes County tax records. Balances in this fund are reserved each year so that no part thereof will be deposited in the general treasury. - 17 - SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS JUNE30 1995 EXHIBIT "H" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES RESERVED FUND BALANCE STATE REVENUE COLLECTIONS FUND The balance ofrevenues collected but not transmitted to the Office ofTreasury and Fiscal Services at fiscal year end. These funds are required by the Official Code of Georgta to be transferred to the Office of 'treasury and Fiscal Services and are not available for use by the Secretary of State. UNRESERVED FUND BALANCE In accordance with accounting practices prescribed or pennitted by statutes and regulations of the State of Georgia, the Budget Fund's unreserved fund balance is remitted to the Office of Treasury and Fiscal Services in the subsequent fiscal year as surplus. This amount ofunexpended general appropriations is available to the State for reappropriation in subsequent years. COMPENSATED ABSENCES Compensated absences represent obligations ofthe Secretary of State relating to employee's rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulating annual leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion of this obligation as this amount will not be liquidated with expendable available financial resources. Funds are provided in the appropriation offunds each year to the Agency to cover the cost of annual leave paid to tenninated employees. The liability for compensated absences at year end is reported in the General Long-Term Debt Account Group for governmental funds. MEMORANDUM ONLY -TOTAL COLUMNS Total columns on the Combined Statements (Statutory Basis) are captioned "Memorandum Only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position, results of operations or changes in financial position in confonnity 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. COMPARATIVE DATA Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding of the changes in the Agency's financial position and operations. Comparative totals have not been included on statements where their inclusion would not provide enhanced understanding of the Agency's financial position and operations or would cause the statements to be unduly complex and difficult to understiid. - 18 - SECRETARY OF STATE NOTES TO TIIE FINANCIAL STATEMENTS JUNE30 1995 EXHIBIT"H" NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds of 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 ofa surety bond, the depository may pledge as collateral any one or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59: (1) Bonds, bills, certificates 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 ofthe 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 ofthe State of Georgia. (5) Bonds, bills, certificates of indebtedness, 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, 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. CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 1995, are categorized 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 Agency or by its agent in the Agency's name. Category 2 - Amounts collateralized with securities (at market value) held by the pledging financial institution's trust department or agent in the Agency's name. - 19 - SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS JUNE30 1995 EXIIlBIT "H" NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS CATEGORIZATION OF DEPOSITS 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 Agency's name, and amounts uncollateralized. Cash Deposits Carrying Amount SJ 297 082 7] Ban1c Balance S s 730 206 30 S 620 500 QQ Risk Categories ,_ _..:o>!.loolM $ s JQ9 706 30 CATEGORIZATION OF INVESTMENTS Investments are stated at cost. The carrying amount of the investment balance as of June 30, 1995, shown below is maintained in an investment pool by the Office of Treasury and Fiscal Services and is not subject to risk categorization. Type ofInvestment Carrying Amount Market Value State Investment Pool $ l 395 471 42 $ I 395 471 42 NOTE 3: OPERATING LEASES The Secretary of State has entered into certain agreements to lease real property and equipment which are classified as operating leases. These leases generally contain provisions that, at the expiration date of the original term ofthe lease, the Secretary of State has the option ofrenewing the lease on a year-to-year basis. Future minimum commitments for operating leases as of June 30, 1995, are listed below. Amounts are included only for multi-year leases and for cancellable leases for which an option to renew for the subsequent fiscal year has been exercised. Fiscal Year Ending June 30 1996 $ 280 011 00 Expenditures for rental of real property and equipment under operating leases for the year ended June 30, 1995, totaled $279,011.48. - 20- SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS JUNE 30 1995 EXHIBIT"H" NOTE 4: CHANGES IN GENERAL FIXED ASSETS In accordance with the statutory definition of moveable personal property as defined in Official Code of Georgia Annotated Section 50-16-161, only those items with an acquisition cost of $1,000.00 or greater are reflected in the General Fixed Assets Account Group. The following is a summary of changes of equipment in the General Fixed Assets Account Group during the fiscal year: Balance July 1, 1994 $ 3,334,386.24 Additions Deductions 395,458.38 274 022.01 Balance June 30, 1995 $ 3 455 822 61 NOTE 5: GENERAL LONG~TERM DEBT CHANGES IN GENERAL LONG-TERM DEBT During the year ended June 30, 1995, the following changes occurred in the compensated absences liability reported in the General Long-Term Debt Account Group: Balance July 1, 1994 $ 1,431,621.46 Additions Annual Leave Earned and Utilized (Net) Salaries Salary Related Fringe Benefits 23,946.96 1 831.94 Balance June 30, 1995 $ 1457400 36 NOTE 6: RISK MANAGEMENT Public Entity Risk Pool The State Personnel Board, Merit System ofPersonnel Administration internally administers for the State of Georgia a program of health benefits for the employees of units of government ofthe State of Georgia and units of county government and local education agencies located within the State of Georgia. This plan is funded by participants covered in the plan, by employers' contributions paid by the various units of government participating in the plan, and appropriations made by the General Assembly of Georgia. The State Personnel Board, Merit System of Personnel Administration has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the State Employees' Health Benefit Plan as established by the State Personnel Board. - 21 - SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS JUNE30 1995 EXHIBIT"H" NOTE 6: RISK MANAGEMENT Other Risk Management The Department ofAdministrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS services claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance is purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Secretary of State 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 state agencies by DOAS to provide claims servicing and claims payment. NOTE 7: 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 or rights of the State of Georgia subject only to the claims of the State's general creditors. Participant's rights under the plan are equal to those of a general creditor of the State of Georgia in an amount equal to the fair market value of the deferred account of each participant. Financial information relative to the plan is presented in the financial report ofthe State Personnel Board - Merit System ofPersonnel Administration for the year ended June 30, 1995. NOTE 8: RETIREMENT PLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Plan Description The Secretary of State participates in the Employees' Retirement System of Georgia ("ERS"), a singleemployer, defined benefit plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia. The Agency's payroll for the year ended June 30, 1995, for employees covered by ERS was $12,434,233.49. The Agency's total payroll for all employees was $13,045,631.39. - 22- SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS JUNE30 1995 EXIIlBIT "H" NOTE 8: RETIREMENT PLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Benefits The benefit structure of ERS was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions. Members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 65. Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest eight consecutive calendar quarters of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS. If 10 years of service is completed and age 60 is reached, the member may retire with a reduced benefit. Additionally, there are certain provisions allowing for retirement after 30 years of service regardless of age. Contributions Required and Contributions Made Under the old plan, member contributions consist of employee contributions paid by the employee of 1.25% of annual compensation and 4.75% of annual compensation paid by the Agency on behalfofthe employee. Under the new plan, member contributions consist solely of 1.25% of annual compensation paid by employee. The Agency also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. For the year ended June 30, 1995, the ERS employer contribution rate for the Agency amounted to 14.80"/o ofcovered payroll and included the 4.75% contributed on behalf of the employee referred to above. Contributions are also made on amounts paid for accumulated leave of retiring employees. Total contributions to the plan made during fiscal year 1995 amounted to $1,995,186.45 of which $1,839,755.02 was made by the Agency and $155,431.43 was made by employees. These contributions met the requirements ofthe plan. Funding Status and Progress Pension Benefit Obligation The amount shown as the "pension benefit obligation" is a standardized disclosure measure of the present value ofpension benefits, adjusted for the effects ofprojected salary increases and step-rate benefits, estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status ofERS on the going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due and make comparisons among employers. The measure is the actuarial present value of credited projected benefits, and is independent of the funding method used to determine contributions to the plan. - 23 - SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS JUNE 30 1995 EXIIlBIT "H" NOTE 8: RETIREMENT PLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Funding Status and Progress Pension Benefit Obligation The pension benefit obligation was computed as part ofan actuarial valuation performed as ofJune 30, 1994. Significant actuarial assumptions used in the valuation include the following: 1) The present value offuture pension benefits paid was computed using a discounted rate of 7.5 percent. This rate is also the same rate assumed to be earned on investments in the plan in future years. 2) Future pension payments reflect the following assumed salary increases as a result of inflation and merit increases: ~ Percentage 20 9.5% 25 8.5% 30 6.5% 35 6.0% 40 to 65 5.7% 3) ERS has the authority to grant cost-of-living adjustments by state statute. As ofJune 30, 1994, cost-ofliving adjustments have been included in the pension benefit obligation. The total unfunded pension benefit obligation ofERS as ofJune 30, 1994, was $310,149,000, as follows: - 24- SECRETARY OF STATE NOTES TO TIIE FINANCIAL STATEMENTS JUNE 30 1995 EXIIlBIT "H" NOTE 8: RETIREMENT PLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Funding Status and Progress Pension Benefit Obligation Pension Benefit Obligation: Retirees and Beneficiaries Currently Receiving Benefits and Terminated Employees Entitled to Benefits but Not Yet Receiving Benefits $ 2,227,653,000 Current Employees Accumulated Contributions 648,516,000 Employer-Financed Vested 1,085,190,000 Employer-Financed Nonvested 1206805 000 Total Pension Benefit Obligation $5,168,164,000 Net Assets Available for Benefits 4 858 015 000 Unfunded Pension Benefit Obligation $ 3)0 149 000 The measurement ofthe total pension benefit obligation is based on an actuarial valuation as of June 30, 1994. Net assets available for benefits were valued as of the same date. ERS does not make separate measurements of assets and pension benefit obligation for individual employers. Funding Policy The ERS funding policy provides for periodic employer contributions at actuarially determined rates that, expressed as percentages ofannual payroll, are sufficient to accumulate sufficient assets to pay benefits when due. Level percentage of payroll employer contribution rates are determined using the entry age funding method. ERS also uses the level percentage of payroll method to amortize the unfunded liability within approximately 20 years following the valuation date. Total contributions from all employers toERS for the year ended June 30, 1995, were $256,624,679.00. The Agency's contribution was actuarially determined and represented 0.72% of total contributions made by all participating employers. -25 - SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS JUNE30 1995 EXHIBIT "H" NOTES: RETIREMENTPLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Funding Status and Progress Funding Policy Significant actuarial assumptions used to compute contributions are the same as those used to compute the standardized measure ofpension obligation. Trend Information Historical trend information is presented in the financial report of ERS for the year ended June 30, 1995. This information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. GEORGIA DEFINED CONTRIBUTION PLAN Plan Description The Secretary of State participates in the Georgia Defined Contribution Plan ("GDCP") which is a singleemployer defined contribution plan established by the Georgia General Assembly in July 1993 for the purpose ofproviding retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pens.ion system. GDCP is administered by the Employees' Retirement System Board of Trustees. The Agency's payroll for the year ended June 30, 1995, for employees covered by GDCP was $438,671.62. The Agency's total payroll for all employees was $13,045,631.39. 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. If a member has less than $ 3,500 credit to his/her account, the Board has the option ofrequiring 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. 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. Upon termination ofemployment, the amount of the member's account is refundable upon request by the member. Total contributions made by employees during fiscal year 1995 amounted to $32,900.75 which represents 7. 50% of covered payroll. These contributions met the requirements of the plan. -26- SECRETARY OF STATE NOTES TO THE FINANCIAL STATEMENTS JUNE 30 1995 EXHIBIT "H" NOTE 9: LEAVE POLICIES Employees earn ten hours of sick leave each month with a maximum accumulation of ninety days. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment. Employees earn annual leave ranging from ten to fourteen hours each month depending upon the employees' length ofcontinuous State service with a maximum accumulation of forty five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1 - Compensated Absences. Certain employees who retire with one hundred and twenty days or more of forfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System of Georgia. 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 the Secretary of State expects such amounts, if any, to be immaterial to its overall financial position. Litigation, claims and assessments filed against the Secretary of State, if any, are generally considered to be actions against the State of Georgia. Pursuant to the Official Code of Georgia Annotated, the Department of Administrative Services maintains a program of purchased insurance and self-insurance which provides coverage for such litigation, claims and assessments. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1995. NOTE 11: BONDING INFORMATION The Secretary of State and all employees of the Secretary of State are bonded under a Public Employees Blanket Bond written by Employers Insurance of Wausau, their Bond No. 1450-00-110723, on which the premium was paid to October 1, 1995. Under this agreement the Public Employee Dishonesty Coverage insures the Agency 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 Agency 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 of their position or employment. All employees of the Secretary of State are also bonded under Commercial Crime Policies written by the United States Fire Insurance Company, their Policy Nos. 626 012292 6 and 626012294 4, on which premiums were paid to October 1, 1995. Under these additional public employee dishonesty coverages, the policies insure the Agency to a maximum of$9,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees. - 27 - SUPPLEMENTARY INFORMATION -29- SECRETARY OF STATE COMBINING BALANCE SHEET /STATUTORY BASIS} BUDGET FUND JUNE 30 1995 EXHIBIT"!" ASSETS Cash and Cash Equivalents Accounts Receivable State Appropriation Federal Financial Assistance Total Assets LIABILITIES AND FUND EQUITY Liabilities Cash Overdraft Accounts Payable Payroll Wrthholdings Total Liabilities Fund Equity Fund Balances Reserved Archives Donations Federal Financial Assistance Nurses Forum Rhodes Memorial Hall Restoration Taylor Fund Unreserved Designated Surplus Total Fund Equity Total Liabilities and Fund Equity "A" SECRETARY OF STATE "B" REAL ESTATE COMMISSION TOTAL $ 1,045,355.63 $ 1,045,355.63 $ 504,650.34 $ 18,497.60 $ 523,147.94 $ 190,786.03 $ 190,786.03 $ 695,436.37 18,497.60 713,933.97 $ 1,568,503.57 $ 190,786.03 $ 1,759,289.60 $ $ 1,435,206.81 838.62 $ 1,436,045.43 $ 82,153.54 $ 88,155.98 170,309.52 $ 82,153.54 1,523,362.79 838.62 1,606,354.95 $ 6,765.60 46,722.86 3,114.59 5,832.22 3,297.81 66,725.06 $ $ 132,458.14 $ $ 20,476.51 20,476.51 $ 6,765.60 46,722.86 3,114.59 5,832.22 3,297.81 87,201.57 152,934.65 $ 1,568,503.57 $ 190,786.03 $ 1,759,289.60 See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. - 30 - SECRETARY OF STATE COMBINING STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS\ BUDGET FUND YEAR ENDED JUNE 30 1995 EXHIBIT "J'' FUND BALANCES - JULY 1 Reserved Unreserved Designated Surplus ADDITIONS Adjustments to Prior Yea~s Accounts Payable Excess of Funds Available over Expenditures Exhibtt"K" DEDUCTIONS Unreserved Fund Balance (Surplus) Returned to Office of Treasury and Fiscal Services Year Ended June 30, 1994 Reserved Fund Balance Carried Over from Prior Year as Funds Available FUND BALANCES - JUNE 30 (To Exhibtt "I") "A" SECRETARY OF STATE "B" REAL ESTATE COMMISSION TOTAL $ 115,150.93 $ 115,150.93 345,055.01 $ $ 460,205.94 $ 48,525.56 48,525.56 $ 393,580.57 508,731.50 $ 40,322.52 $ 92,135.62 $ 132,458.14 $ 35.00 $ 20,441.51 20,476.51 $ 40,357.52 112,577.13 152,934.65 $ 345,055.01 $ 115,150.93 $ 460,205.94 $ 48,525.56 $ 48,525.56 $ 393,580.57 115,150.93 508,731.50 $ 132,458.14 $ 20,476.51 $ 152,934.65 See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. - 31 - FUND A\IAH AB! E fCBfIARV OF STAIE COMBINING STATEMENT OF A.JNP AVAILABLE- AND fXPENQm.JRES RlJQGEI Ft JNP YEAR FNPEP JUNE 30 1995 "A" SECRETARY OFSTAlE ''B'' REAL ESTATE COMMISSION EXHIBIT'1<" TOTAL STA'TEAPPROPRIATION General~ Amended Appropriation GoYemor's Emergency Fund (See Schedule) Total state Appropriation FEDERAL REVENUES 011-IER REVENUES RETAINED (See Schedule) Total R""'"""6 CARRY-PYER FRQU PRIOR VfAR Transfer from Reserved Fund Balance Archives Donations Federal Financial As&i&tance Rhodes Memorial Half Restoration Taylor Fund Total carry--0.