Review report, state of Georgia, Georgia Student Finance Commission, year ended June 30, 1996

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

REVIEW REPORT STATE OF GEORGIA GEORGIA STUDENT FINANCE COMMISSION YEAR ENDED JUNE 30, 1996

GEORGIA STUDENT FINANCE COMMISSION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT ACCOUNTANT'S COMBINED R1?PORT 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)

GOVERNMENTAL FUND TYPES

5

C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGET FUND

6

STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES'

COMPARED TO BUDGET

BUDGET FUND

D

"A" STUDENT FINANCE COMMISSION

10

E

"B" LOTTERY FOR EDUCATION

11

F STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS

STATE REVENUE COLLECTIONS FUND

12

G NOTES TO THE FINANCIAL STATEMENTS

13

SUPPLEMENTARY INFORMATION

H COMBINING BALANCE SHEET (STATUTORY BASIS)

BUDGET FUND

26

I COMBINING STATEMENT OF CHANGES IN FUND BALANCES

(STATUTORY BASIS)

BUDGET FUND

27

J COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGET FUND

28

K COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

FIDUCIARY FUND TYPE - AGENCY FUNDS

32

SCHEDULES

SCHEDULES OF APPROVED BUDGET

1

"A" STUDENT FINANCE COMMISSION

33

2

"B" LOTTERY FOR EDUCATION

34

3 CASH AND CASH EQUIVALENTS

35

4 SCHEDULE OF FEDERAL REVENUES

36

GEORGIA STUDENT FINANCE COMMISSION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SUPPLEMENTARY INFORMATION

SCHEDULES

5 SCHEDULE OF OTHER OPERATING EXPENSES

37

6 RECONCILIATION OF TRAVEL

38

7 SUMMARY OF SALARIES, TRAVEL, AND PER DIEM AND FEES

39

SECTION II FINDINGS AND IMPROPER OR QUESTIONED COSTS SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
October 22, 1996

Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members of the Board of Commissioners
and Honorable E. Glenn Newsome, Executive Director Georgia Student Finance Commission
INDEPENDENT ACCOUNTANTIS COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have reviewed the accompanying financial statements (Exhibits A through G) of the Georgia Student Finance Commission as of and for the year ended June 30, 1996, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. As described in Note 1, these financial statements were prepared on a prescribed basis of accounting that demonstrates compliance with the budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. All information included in these financial statements is the representation of the management of the Georgia Student Finance Commission.
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 H through K and Schedules 1 through 7) is presented only for supplementary analysis purposes. Such information has been

96ARL-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,

CLV:jy
96ARL-4

Claude L. Vickers State Auditor

FINANCIAL STATEMENTS
- 1-

GEORGIA STUDENT FINANCE COMMISSION COMBINED BALANCE SHEET (STATUTORY BASIS)
ALL FUND TYPES AND ACCOUNT GROUPS
JUNE 30.1996

ASSETS
Cash and Cash Equivalents (See Schedule)
Accounts Receivable State Appropriation Federal Financial Assistance Other
Fixed Assets Equipment
Amount to be Provided for Payment of
Accrued Compensated Absences
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accounts Payable Payroll Withholdings Funds Held for Others Compensated Absences
Total Liabilities
Fund Equity Investment in General Fixed Assets Fund Balances Reserved Lottery for Education State Revenue Collections Fund Unreserved Designated Surplus Regular Lottery for Education
Total Fund Equity
Total Liabilities and Fund Equity

GOVERNMENTAL FUND TYPES

STATE

REVENUE

BUDGET

COLLECTIONS

FIDUCIARY FUND TYPE
AGENCY

$ 15.013,887.59 $

$

0.42

38.461.67

255.116.84

$

293,578.93

4,542.26 $_---.;6;.;;56,;;,:,.::;;295=.6~1

$ 15,307,466.52 $

4,542.26 $ _.....;6;;;;56;;;:.~295~.6;.;.1

$

60,303.81

374.00

$ _ _-",60"""~677...;,,.;.;;;,.8~1

$

656,295.61

$ _---..;6;;.,;;;56..;;".""'295;;,,;.;.;.6""-1

$ 11.000,000.00 $
157.529.44 4,089,259.27 $ 15,246,788.71 $
$ 15,307,466.52 $

4,542.26
4.542.26 4,542.26 $ _.....;6;;;;5.6...2.9.;;;;5..6.;.;.1

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. -2-

ACCOUNT GROUPS

GENERAl

GENERAl

FIXED

LONG-TERM

ASSETS

DEBT

TOTALS (Memorandum Only) JUNE 30,1996 JUNE 30,1995

$ 15,674,725.46 $ 4,727,924.16

$

0.42 $

0.42

38,461.67

12,780.96

255,116.84

0.00

$

293,578.93 $

12,781.38

$

760,103.33

$

760,103.33 $

675,048.01

$

321,791.75 $

321,791.75 $

357,942.28

$

760,103.33 $

321,791.75 $ 17,050,199.47 $ 5,773,695.83

$

$

321,791.75

60,303.81 $
374.00 656,295.61 321,791.75

194,363.27 516.00
482,141.78 357,942.28

$

321,791.75 $

1,038,765.17 $ 1,034,963.33

$

760,103.33

$

760,103.33 $

675,048.01

11,000,000.00 4,542.26

0.00 8,728.53

$

760,103.33

157,529.44 4,089,259.27

30,989.38 4,023,966.58

$ 16,011,434.30 $ 4,738,732.50

$

760,103.33 $

321,791.75 $ 17,050,199.47 $ 5,773,695.83

-3-

GEORGIA STUDENT FINANCE COMMISSION COMBINED STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS)
GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30.1996

EXHIBIT"B"

FUND BALANCES - JULY 1
Reserved Unreserved
Designated Surplus
ADDITIONS
Adjustments to Prior Year's Accounts Payable Cash Receipts for the Year
Exhibit"P Excess of Funds Available over Expenditures
Exhibit "C" Reimbursement of Prior Year's Expenditures
DEDUCTIONS
Unreserved Fund Balance (Surplus) Returned to Office of Treasury and Fiscal Services Year Ended June 30,1994 Year Ended June 30,1995
Cash Disbursements for the Year Exhibit "E"
Reserved Fund Balance Carried Over from Prior Year as Funds Available
FUND BALANCES - JUNE 30
(To Exhibit "A")

BUDGET

STATE REVENUE COLLECTIONS

TOTALS (Memorandum Only)
YEAR ENDED JUNE 30,1996 JUNE 30,1995

$
$ 4,054,955.96 $ 4,054,955.96 $

8,728.53 $

8,728.53 $

526,259.66

4,054,955.96

4,405,962.96

8,728.53 $ 4,063,684.49 $ 4,932,222.62

$

36,505.04

$

15,193,973.03 16,310.64

$ 15,246,788.71 $

$

36,505.04 $

3,127.32

213,682.52

213,682.52

289,936.25

15,193,973.03 16,310.64

4,051,828.64 0.00

213,682.52 $ 15,460,471.23 $ 4,344,892.21

$

0.00

4,054,955.96

$

0.00

$ 4,054,955.96 $

$

0.00 $ 4,405,962.96

4,054,955.96

0.00 ~

217,868.79

217,868.79

292,470.41

0.00

514,996.97

217,868.79 $ 4,272,824.75 $ 5,213,430.34

$ 15,246,788.71 $

4,542.26 $ 15,251,330.97 $ 4,063,684.49

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-

GEORGIA STUDENT FINANCE COMMISSION STATEMENT OF FUNDS AyAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30 1996

EXHIBITC

FUNDS AVAILABLE
REVENUES
STATE APPROPRIATION General Appropriation Amended Appropriation
Total State Appropriation
FEDERAL REVENUES (see SchedUle)
OTHER REVENUES RETAINED Georgia Higher Education Assistance Corporation Georgia Student Finance Authority
Interest EamecI
SChool Evaluations
Tctal Other Revenues Retained
Total Revenues
CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance Federal Financial Assistance Georgia Higher Education Assistance Corporation Georgia Student Finance Authority Lottery for Education

TOTALS
yEAR ENDED JUNE 30,1996 JUNE 30,1995

$ 149,855,366.00 $ 112,970,008.00

44,737,152.00

-4,707,003.00

$ 194,592,518.00 $ 108,263,005.00

$

75,283.71 $

168,898.38

$ 1,896,010.00 $ 2,037,621.00 844,071.16 3,000.00
$ 4,780,702.16 $
$ 199.448,503.87 $

2,78O,4n.00 1,938,346.00
737,130.96 0.00
5,455,953.96
113,887,857.34

$

0.00 $

0.00

0.00

0.00

$-----"0.0~0 $

932.85 11,922.97 2,141.15 500,000.00
514,996.97

Total Funds Available

$ 199,448,503.87 $ 114.402,854.31

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
REGULAR OPERATING EXPENSES
Motor Vehicle Expenses Supplies and Materials Repairs and Maintenance Rents (Other than Real Estate) . Insurance and Bonding Other Operating Expenses (See Schedule) Duplicating and Rapid Copy Publications and Printing Equipment Purchases
See Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement.
-6-

$ 2,379,625.90 $
161,292.07 342,312.44 288,676.12 24,528.00
4,265.00 15,047.00 18,332.65
3,234,079.18 $

2,848,669.55
203,045.66 425,026.73 347,245.32 22,922.00
3,095.00 15,896.00 12,152.82
3,878,053.08

$

6,285.08 $

251,963.15

127,233.41

292.74

7,308.11

33,273.42

0.00

47,973.28

11,164.08

$--=..:4.8=5.,:4:9:3..:2.7.. $

5,360.43 291,162.51
33,981.02 1,569.61 8,673.13
111,302.91 7,329.07
106,896.12 7,608.71
573,883.51

GEORGIA STUDENT FINANCE COMMISSION STATEMENT OF FUNDS AYAlLABLE AND EXPENDITURES
BUpGETFUND YEAR ENDED JUNE 30 1996

EXHIBITC

EXpENplTURES
TRAVEL
EQUIPMENT
Equipment Purchases
COMPUTER CHARGES
Software Equipment
Equipment Purchases Rental of EqUipment Per Diem, Fees and Contracts Per Diem and Fees Contracts Computer Billings, DOAS
REAL ESTATE RENTALS
TELECOMMUNICATIONS
PER pIEM. FEES ANp CONTRACTS
Per Diem and Fees Contracts
QII:i2
GUARANTEED EDUCATIONAL LOANS QtherCosts Tuition and SCholarships Georgia Student Finance Authority
TUITION EQUALIZATION GRANTS QtherCosts Tuition and SCholarships Georgia Student Finance Authority
STUDENT INCENTIVE GRANTS Other Costs Tuition and SCholarships Georgia Student Finance Authority
LAW ENFORCEMENT PERSONNEL DEPENDENTS' GRANTS Other Costs Tuition and SCholarships Georgia Student Finance Authority
NORTH GEORGIA COLLEGE ROTC GRANTS Other Costs Tuition and Scholarships Georgia StUdent Finance Authority
OSTEOPATHIC MEDICAL LOANS Other Costs Tuition and Scholarships Georgia Student Finance Authority
GEORGIA MILITARY SCHOLARSHIP GRANTS other Costs Tuition and Scholarships Georgia Student Finance Authority
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-

TOTALS
yEAR ENDED JUNE 30,1996 JUNE 30,1995

$

67,500.03 $

73,365.46

$

21,874.41 $

19,562.11

$

165,546.34 $

10,912.88 986.39

0.00 12,379.02
862.28

$

190,686.91 $

$

40,948.69 $

$

318,999.72 $

128,049.16
155,714.67 0.00
80,391.68 96,850.68
8,524.99
469,531.18
44,099.96
354,153.76

$

71,729.19 $

22,375.75

$

94,104.94 $

46,931.73 16,720.45
63,652.18

$ 3,292,641.00 $ 3,292,641.00

$ 24,600,000.00 $ 22,360,260.00

$ 3,739,557.00 $ 3,739,557.00

$

78,000.00 $

38,000.00

$

312,500.00 $

75,000.00

$

100,000.00 $

160,000.00

$

680,000.00 $

593,600.00

GEORGIA STUDENT FINANCE COMMISSION SIDEMENT OF FUNDS AyAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30, 1996

EXHIBITC

EXpENDITURES
QI/:B.
HOPE FINANCIAL AID - TUITION Personal Services Salaries and Wages Employer's COntributions for: F.l.CA. Retirement Health Insurance other Costs Supplies and Materials Repairs and Maintenance Rents (other than Real Estate) Tuition and SCholarships Georgia Student Finance Authority Other Operating Expenses (See Schedule) Publications and Printing Equipment Purchases Travel Equipment Equipment Purchases Rental of Equipment Real Estate Rental Computer Charges Software Equipment Equipment Purchases Per Diem, Fees and Contracts Per Diem and Fees Contracts Telecommunications Per Diem, Fees and Contracts Per Diem and Fees Contracts
HOPE FINANCIAL AID BOOKS other Costs Supplies and Materials
HOPE FINANCIAL AID - FEES Other Costs other Operating Expenses (See Schedule)
TUITION EQUALIZATION GRANTS other Costs Tuition and SCholarships Georgia Student Finance Authority
GEORGIA MILITARY COLLEGE SCHOLARSHIP other Costs Tuition and Scholarships
TEACHER SCHOLARSHIPS Other Costs Tuition and Scholarships Georgia Student Finance Authority
PROMISE SCHOLARSHIPS other Costs Tuition and Scholarships Georgia Student Finance Authority

TOTALS
YEAR ENDED JUNE 30, 1996 JUNE 30,1995

$

552,120.00 $

46,008.00 92,020.00 76,680.00

83,437.93 2,123.00
97.70

60,955,616.45 256,157.79 65,571.22
8,019.26 4,736.06

2,795.10 6,095.99
67,000.00

52,061.51

62,534.11

12,712.50 93,100.00 210,789.01

582,187.90 1,044.00

$-==6:3:,2:3.2:,9:0.7:.5.3~ $

202,701.00
16,891.00 33,783.00 28,152.00
28,922.94 190.00 0.00
32,773,197.41 399,316.41 20,553.55 3,978.57 6,480.18
0.00 3,765.32 24,762.96
23,781.70
51,019.92
42,319.47 36,700.00 33,137.98
354,678.68 0,00
34,084,332.09

$ 25,914,744.73 $ 13,365,173.53

$ 11,949,721.44 $ 6,757,416.28

$ 35,235,159.04 $ 20,302,594.27

$

66,585.95 $

36,895.26

$ 10,000,000.00 $

0.00

$

436,184.00 $

0,00

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.
-8-

GEORGIA STUDENT FINANCE COMMISSION STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30 1996

EXHIBIT-C

EXpENDITURES
QIl::Iei
LEPD SCHOLARSHIP other Costs Tuition and Scholarships Georgia Student Finance Authority
Total Other
Total Expenditures
Excess of Funds Available over Expenditures

TOTALS
YEAR ENDED JUNE 30,1996 JUNE 30,1995

$

162,843.00 $

69,255.00

$ 179,800,843.69 $ 104,874,724.43

$ 184,254,530.84 $ 110,351,025.67

15,193,973.03

4,051 ,828.64

$ 199,448,503.87 $ 114,402,854.31

See Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement.
-9-

GEORGIA STUDENT FINANCE COMMISSION STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
-N STUDENT FINANCE COMMISSION
YEAR ENDED JUNE 30.1996

EXHIBIT-o-

FUNDS AVAILABLE
REVENUES
State Appropriation Federal Revenues Other Revenues Retained

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$ 33,352,346.00 $ 33,352,346.00 $

2,114,073.00

75,283.71

6,331,023.00

3,936,631.00

0.00 -2,038,789.29 -2,394,392.00

$ 41,797.442.00 $ 37,364,260.71 $ -4,433,181.29

EXPENDITURES
Personal Services Regular Operating Expenses Travel Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts Guaranteed Educational Loans Tuition Equalization Grants Student Incentive Grants Law Enforcement Personnel Dependents' Grants North Georgia College ROTC Grants Osteopathic Medical Loans Georgia Military Scholarship Grants Paul Douglas Teacher Scholarship Loans

$ 5,097,032.00 $ 3,234,079.18 $

602,250.00

485,493.27

101,800.00

67,500.03

20,500.00

21,874.41

245,180.00

190,686.91

44,800.00

40,948.69

236,750.00

318,999.72

208,690.00

94,104.94

4,076,000.00

3,292,641.00

24,600,000.00

24,600,000.00

5,003,940.00

3,739,557.00

78,000.00

78,000.00

312,500.00

312,500.00

100,000.00

100,000.00

680,000.00

680,000.00

390,000.00

0.00

1,862,952.82 116,756.73 34,299.97 -1,374.41 54,493.09 . 3,851.31 -82,249.72 114,585.06 783,359.00 0.00
1,264,383.00 0.00 0.00 0.00 0.00
390,000.00

$ 41.797.442.00 $ 37,256,385.15 $

4,541,056.85

Excess of Funds Available over Expenditures

$

107,875.56 $

1.-0.7..,.8.7..-5.5..6.-

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 -

GEORGIA STUDENT FINANCE COMMISSION STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
NBN LOTTERY FOR EDUCATION
YEAR ENDED JUNE 30,1996

FUNDS AVAILABLE
REVENUES
State Appropriation Other Revenues Retained

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$ 161,240,172.00 $ 161,240,172.00 $

0,00

844,071.16

0.00 844,071.16

$ 161,240,172.00 $ 162,084,243.16 $ _ _...;844~,~07;..,;1.;,,;.1~6

EXPENDITURES
Hope Financial Aid - Tuition Hope Financial Aid - Books Hope Financial Aid - Fees Tuition Equalization Grants Georgia MHitary College Scholarship Teacher Scholarships Promise Scholarships LEPD Scholarship

$ 73,821,744.00 $ 63,232,907.53 $

22,296,240.00

25,914,744.73

14,976,198.00

11,949,721.44

36,611,990.00

35,235,159.04

336,000.00

66,585.95

10,000,000.00

10,000,000.00

3,000,000.00

436,184.00

198,000.00

162,843.00

10,588,836.47 -3,618,504.73 3,026,476.56 1,376,830.96
269,414.05 0.00
2,563,816.00 35,157.00

$ 161,240,172.00 $ 146,998,145.69 $_---..;,1..;,,4,'-024..,;;2;.:.,;,02;.;;..;;,;6...;.31,;..

Excess of Funds Available over Expenditures

$ 15,086,097.47 $

15,086,097.47

See Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement. - 11 -

GEORGIA STUDENT FINANCE COMMISSION STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS
STATE REVENUE COLLECTIONS FUND
YEAR ENDED JUNE 3D, 1996

EXHIBIT"F"

CASH RECEIPTS STATE REVENUE COLLECTIONS
Nonpublic Postsecondary Educational Institution Agent's Fees Application and Renewal Fees Interest Earned Sale of Publications Total Cash Receipts
CASH AND CASH EQUIVALENTS - JULY 1, 1995
DISBURSEMENTS TRANSFERS
To Office of Treasury and Fiscal Services
CASH AND CASH EQUIVALENTS - JUNE 30.1996

$

31,637,81

133,091,68

454,68

48,498,35

$ 213,682.52

8,728.53

$ 222,411.05

$ 217,868.79 4,542.26
$ 222,411.05

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-

GEORGIA STUDENT FINANCE COMMISSION NOTES TO THE FINANCIAL STATEMENTS
JUNE 3D. 1996

EXHIBIT "G"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The Georgia Student Finance Commission, an organizational unit of the State of Georgia, is part of the executive branch of the government of the State of Georgia. The Commission was created for the purpose of improving the higher educational opportunities of citizens and persons of the State of Georgia through coordination of State student aid programs in the State of Georgia. The Board of Commissioners of the Georgia Student Finance Commission consists of seventeen (17) members. Four (4) members reside on the Board by virtue of their position in State Government. They are the Chancellor of the University System of Georgia, the Commissioner of Technical and Adult Education, the State School Superintendent and the Director of the Office of Planning and Budget. The remaining thirteen (13) members are appointed by the Governor and subject to confirmation by the Senate. The Board's duties include the establishment of policy and direction for the administration of the Guaranteed Educational Loan Program, and the selection and employment of an Executive Director for the Georgia Student Finance Commission.
The Georgia Student Finance Commission does not have authority to determine the amount of funding it will receive from the State of Georgia for any given fiscal year. Such authority is vested in the General Assembly ofGeorgia. The Commission also does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the Georgia Student Finance Commission is included within the State ofGeorgia reporting entity for financial reporting purposes because of the significance of its legal, operational and financial relationships with the State ofGeorgia. 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 Georgia Student Finance Commission 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 1995-1996. The Budget Fund is similar in nature to a General Fund as defined 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.

- 13 -

GEORGIA STUDENT FINANCE COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1996

EXHIBIT"G"

NOTE 1: SUM:MARY OF SIGNIFICANT ACCOUNTING POLICIES

FUND ACCOUNTING

GOVERNMENTAL FUND TYPES

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.

FIDUCIARY FUND TYPE

AGENCY FUNDS - The funds used to account for assets held for use by other funds, governments, or individuals.

ACCOUNT GROUPS

GENERAL FIXED ASSETS - The account group used to account for fixed assets used in governmental fund type operations. Fixed assets purchased are recorded at 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 of normal 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.

J

BASIS OF ACCOUNTING MEASUREMENT FOCUS
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Governmental funds should be accounted for using the flow of current financial resources measurement focus. 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.

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GEORGIA STUDENT FINANCE COMMISSION NOTES TO THE FINANCIAL STATE:MENTS
JUNE 30. 1996

EXHIBIT"G"

NOTE 1: Sillv1MARY 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 ofthe 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 goods and services which have not been received at the end ofthe fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion of contracts for goods and services. The recognition 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 offund 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' regulations of the State of Georgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures.
STATp 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.
FIDUCIARY FUND TYPE 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.
- 15 -

GEORGIA STUDENT FINANCE COMMISSION NOTES TO THE FINANCIAL STATE:MENTS
JUNE 30. 1996

EXlllBIT "G"

NOTE 1: Sill.1MARY OF SIGNIFICANT ACCOUNTING POLICIES

BUDGET Appropriation allotments to the Georgia Student Finance Commission are on the basis ofbudgets submitted by the Commission 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 ofthe 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. 476 of Georgia Laws 1995 (as approved April 21, 1995) and amended by Act No. 513 ofGeorgia Laws 1996 (as approved February 16, 1996). This budget is considered to be an appropriated budget and is referred to in these notes as the Amended Appropriations Act of 1995-1996.

Overexpenditure of a budget unit object class, except for the "common object classes", included in the Commission's final amended budget is in violation of Section 54 ofthe 1995-1996 Amended Appropriations Act. Expenditures ofno more than 102% ofthe stated amount for each common object class are authorized by Section 54. However, the total expenditure for the group ofcommon object classes may not exceed the sum ofthe stated amounts for the separate object classes ofthe 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 following "common object classes" exceeded the authorized expenditure level of 102% of the budgeted amount for each common object class by the amounts identified below:

"A" Student Finance Commission Equipment Telecommunications

$

964.41

$ 77,514.72

In addition, the following object class was overspent by the amount as indicated below:

"B" Lottery for Education Hope Financial Aid - Books

$ 3,618,504.73

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 Commission may deposit additional cash at any time and also may withdraw cash at any time without prior notice or penalty.

INVESTMENTS The Georgia Student Finance Commission participates in an investment pool managed by the State of Georgia's Office of Treasury and Fiscal Services (OTFS) referred to as the "Georgia Fund 1". The Commission does not have any risk exposure related to investments in derivatives or similar investments in Georgia Fund 1 as the investment policy of OTFS does not provide for investments in derivatives or similar
investments through the Georgia Fund 1.

- 16-

GEORGIA STUDENT FINANCE COMMISSION NOTES TO THE FINANCIAL STATEMENTS
JUNE 30.1996

EXlllBIT "G"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES No inventories of supplies are reported in these 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:
LOTTERY FOR EDUCAnON The residual portion ofLottery Proceeds revenue not yet expended or encumbered. This amount is retained for financial aid claims to students not submitted to the Commission as ofJune 30, 1996.
STATE REVENUE COLLECTIONS FUND The balance ofrevenues collected but not transmitted to the Office of Treasury and Fiscal Services at fiscal year end. These funds are required by the Official Code of Georgia to be transferred to the Office of Treasury and Fiscal Services and are not available for use by the Commission.
UNRESERVED FUND BALANCE In accordance with accounting practices prescribed or permitted 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 as follows.
REGULAR - An amount ofunexpended regular appropriations designated for reappropriation by the State in subsequent years.
LOTTERY FOR EDUCATION - An amount ofunexpended lottery appropriations designated for future reappropriation by the State for Lottery for Education.
COMPENSATED ABSENCES Compensated absences represent obligations of the Commission 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 of funds each year to the Commission to cover the cost of annual leave paid to terminated employees.
The liability for compensated absences at year end is reported in the General Long-Term Debt Account Group for governmental funds.

- 17 -

GEORGIA STUDENT FINANCE COM1v1ISSION NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT "G"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
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 Commission's financial position and operations. Comparative totals have not been included on statements where their inclusion would not provide enhanced understanding of the Commission's financial position and operations or would cause the statements to be unduly complex and difficult to understand. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation.
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds of the State of Georgia cannot be placed in a depository paying interest longer than ten days without the def'ository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral anyone or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.
(2) Bonds, bills, certificates ofindebtedness, notes, or other obligations ofthe counties or municipalities of the State of Georgia.
(3) Bonds ofany public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose.
(4) Industrial revenue bonds and bonds of development authorities created by the laws ofthe State of Georgia.
(5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
- 18 -

GEORGIA STUDENT FINANCE COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996

EXHIBIT"G"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (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 qf 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, 1996, 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 Commission or by its agent in the Commission's name.

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

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

Cash Deposits

Carrying Amount

Bank Balances

Risk Categories

2

3

$1509971489 $1628039501 $ 20000000 $16080395 01 $,==..;o~o~o

CATEGORIZATION OF INVESTMENTS Investments are stated at cost. The carrying amount of the investment balance as ofJune 30, 1996, shown below is maintained in an investment pool by the Office ofTreasury and Fiscal Services and is not subject to risk categorization.

Type ofInvestment

Carrying Amount

Market Value

State Investment Pool

$ 57501057 $ 575,010 57

NOTE 3: CHANGES IN GENERAL FIXED ASSETS

In accordance with the statutory definition of moveable personal property as defined in Official Code of Georgia Annotated Section 50-16-161, only those items with an acquisition cost of$l,OOO.OO or greater are reflected in the General Fixed Assets Account Group.

- 19 -

GEORGIA STUDENT FINANCE COMMISSION NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1996

EXHIBIT"G"

NOTE 3: CHANGES IN GENERAL FIXED ASSETS

The following is a summary of changes of equipment in the General Fixed Assets Account Group during the fiscal year:

Balance July 1, 1995

$ 675,048.01

Additions

85,055.32

Balance June 30, 1996

$ 76010333

NOTE 4: GENERAL LONG-TERM DEBT

CHANGES IN GENERAL LONG-TERM DEBT During the year ended June 30, 1996, the following changes occurred in the compensated absences liability reported in the General Long-Term Debt Account Group:

Balance July 1, 1995

$ 357,942.28

Additions (Deductions) Annual Leave Earned and Utilized (Net) Salaries Salary Related Fringe Benefits

-33,581.55 -2,568.98

Balance June 30, 1996

$ 32L79L75

NOTE 5: RISK MANAGEMENT

Public Entity Risk Pool

The State Personnel Board, Merit System ofPersonnel Administration administers for the State of Georgia a program ofhealth benefits for the employees ofunits ofgovernment of the State of Georgia, 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 ofPersonnel Administration has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the State Employees' Health Benefit Plan as established by the State Personnel Board.

Other Risk Management

The Department ofAdministrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets

- 20-

GEORGIA STUDENT FINANCE COMMISSION NOTES TO THE FINANCIAL STATEMENTS
JUNE 3D. 1996

EXHIBIT "G"

NOTE 5: RISK MANAGEMENT
Other Risk Management
for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts ofcommercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Commission is part ofthe State ofGeorgia reporting entity, and as such, is covered by the State ofGeorgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
NOTE 6: DEFERRED COMPENSATION PLAN
The State ofGeorgia offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan, available to employees ofthe State of Georgia and county health departments, permits such employees to defer a portion oftheir salary until future years. Participation in the plan is optional. Participants choose the option or options in which they wish to participate. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property or rights of the State of Georgia subject only to the claims of the State's general creditors. Participant's rights under the plan are equal to those of a general creditor ofthe 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 will be presented in the State of Georgia Comprehensive Annual Financial Report for the year ended June 30, 1996.
NOTE 7: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description The Georgia Student Finance Commission participates in the Employees' Retirement System of Georgia ("ERSil), a single-employer, defined benefit plan established by the General Assembly of Georgia for the' purpose ofproviding retirement allowances for employees of the State of Georgia. The Commission's payroll for the year ended June 30, 1996, for employees covered by ERS was $2,793,499.14. The Commission's total payroll for all employees was $2,931,745.90.
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 I, 1982, is an "01d 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.
- 21 -

GEORGIA STUDENT FINANCE COMf\.1lSSION NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1996

EXHIBIT"G"

NOTE 7: RETffiEMENTPLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Benefits Under both the old plan and new plan, 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. 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.
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.
Funding Status and Progress Funding status and progress information is presented in the ERS June 30, 1996, financial report which may be obtained through ERS.
Contributions Required and Contributions Made As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members ofother state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute.
Under the old plan, member contributions consist of employee contributions paid by the employee of 1.25% ofcompensation and 4.75% of compensation paid by the Commission on behalf of the employee. Under the new plan, member contributions consist solely of 1.25% ofcompensation paid by employee. The Commission also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. For the year ended June 30, 1996, the ERS employer contribution rate for the Commission amounted to 14.80% ofcovered payroll and included the 4.75% contributed on behalfofthe employee under the old plan referred to above. The employer contributions are projected to liquidate the unfunded actuarial liability within 20 years based upon the actuarial valuation ofJune 30, 1995. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.
Actuarial assumptions used by the ERS to compute actuarially determined contribution requirements are the same as those used to compute the pension benefit obligation.
Total contributions to the plan made during fiscal year 1996 amounted to $448,316.35, of which $413,397.28 was made by the Commission and $34,919.07 was made by employees. These contributions met the requirements of the plan.
- 22-

GEORGIA STUDENT FINANCE COMMISSION NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996

EXHIBIT "G"

NOTE 7: RETIREMENTPLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Trend Information Historical trend information is presented in the ERS June 30, 1996, financial report which may be obtained through ERS. 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 Georgia Student Finance Commission participates in the Georgia Defined Contribution Plan ("GDCP") which is a single-employer defined contribution plan established by the Georgia General Assembly 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 Employees' Retirement System Board of Trustees. The Commission's payroll for the year ended June 30, 1996, for employees covered by GDCP was $81,031.35. The Commission's total payroll for all employees was $2,931,745.90.
Benefits A member may retire and elect to receive periodic payments after attainment ofage 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 hislher account, the Board 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.
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 1996 amounted to $6,077.37 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
NOTE 8: LEAVB 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.

- 23 -

GEORGIA STUDENT FINANCE CO~SSION NOTES TO THE FINANCIAL STATE!\.1ENTS
JUNE 30. 1996

EXHIBIT "G"

NOTE 8: LEAVB POLICIES
Employees earn annual leave ranging from ten to fourteen hours each month depending upon the employees' length ofcontinuous State service 'with a maximum accumulation offorty 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 offorfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System of Georgia. ,
NOTE 9: 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 Commission expects such amounts. if any. to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the Georgia Student Finance Commission. if any. are generally considered to be actions against the State of Georgia. Accordingly. significant litigation. claims and assessments pending against the State ofGeorgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30. 1996.
NOTE 10: BONDING INFORMATION
The Executive Director and all employees of the Georgia Student Finance Commission are bonded under a Public Employees Blanket Bond written by Employers Insurance ofWausau. their Bond No. 1450-02-110723. on which the premium was paid to October 1. 1996. Under this agreement the Public Employee Dishonesty Coverage insures the Commission to a maximum of$I.000.000.00 against loss sustained through fraudulent or dishonest acts by its employees. The Faithful Performance ofDuty Coverage insures the Commission to a maximum of$I.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 ofthe Georgia Student Finance Commission are also bonded under Commercial Crime Policies written by the United States Fire Insurance Company. their Policy Nos. 6260122926 and 626 012294 4. on which premiums were paid to October I. 1996. Under these additional public employee dishonesty coverages. the policies insure the Commission to a maximum of $9.000.000.00 against loss sustained through fraudulent or dishonest acts by its employees and from failure of its employees to perform faithfully.

- 24-

SUPPLEMENTARY INFORMATION - 25-

, GEORGIA STUDENT FINANCE COMMISSION COMBINING BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30. 1996

EXHIBITNHN

ASSETS Cash and Cash Equivalents Accounts Receivable
State Appropriation Federal Financial Assistance Other
Total Assets
LIABILITIES AND FUND EQUITY Liabilities
Cash Overdraft Accounts Payable Payroll Withholdings
Total Liabilities Fund Equity
Reserved Lottery for Education
Unreserved Designated Surplus Regular Lottery for Education Total Fund Equity
Total Liabilities and Fund Equity

"A" STUDENT FINANCE
COMMISSION

"B" LOTTERY FOR
EDUCATION

TOTAL

$

0.00 $ 15,115,046.91 $ 15,115,046.91

$

0.42

38,461.67

255,116.84

$

293,578.93

$

0.42

38,461.67

255,116.84

$

293,578.93

$

293,578.93 $ 15,115,046.91 $ 15,408,625.84

$

101,159.32

$

101,159.32

34,516.17 $

25,787.64

60,303.81

374.00

374.00

$

136,049.49 $

25,787.64 $

161,837.13

$ 11,000,000.00 $ 11,000,000.00

$

157,529.44

157,529.44

4,089,259.27

4,089,259.27

$

157,529.44 $ 15,089,259.27 $ 15,246,788.71

$

293,578.93 $ 15,115,046.91 $ 15,408,625.84

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 26-

GEORGIA STUDENT FINANCE COMMISSION COMBINING STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS)
BUDGET FUND YEAR ENDED JUNE 30.1996

EXHIBIT "I"

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
:. 27-

GEORGIA STUDENT FINANCE COMMISSION COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30,1996

EXHIBIT-J-

FUNDS AVAILABLE
REVENUES
STATE APPROPRIATION General Appropriation Amended Appropriation
Total State Appropriation
FEDERAL REVENUES (See Schedule)
OTHER REVENUES RETAINED Georgia Higher Education Assistance Corporation Georgia Student Finance Authority Interest Earned School Evaluations
Total Other Revenues Retained

-ASTUDENT FINANCE
COMMISSION

. -BLOTIERYFOR EDUCATION

TOTAL

$

3O,n4,366.00 $ 119,081,000,00 $ 149,855,366.00

2,5n,980,00

42,159,172,00

44,737,152,00

$

33,352,346,00 $ 161,240,172.00 $ 194,592,518,00

$

75,283,71

$

75,283,71

$

1,896,010,00

$ 1,896,010.00

2,037,621.00

2,037,621.00

$

844,071,16

844,071.16

3,000,00

3,000,00

$

3.936.631,00 $

844.071,16 $ 4,780.702,16

Total Funds Available

$

37.364.260,71 $ 162,084.243,16 $ 199,448.503.87

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

$

2,379,625,90

161,292,07 342,312,44 288,676,12
24,528,00 4,265,00 15,047,00 18,332,65

$

3.234.079,18

REGULAR OPERATING EXPENSES
Motor Vehicle Expenses Supplies and Materials Repairs and Maintenance Rents (Other than Real Estate) Insurance and Bonding Other Operating Expenses (See Schedule) Publications and Printing Equipment Purchases

$

6,285,08

251,963.15

127,233.41

292,74

7,308,11

33,273.42

47,973.28

11,164,08

$

485,493,27

See accompanying notes and Independen! Accountant's Combined Report on Review of Financial Statements and Supplementary Information,

-28-

$ 2,379,625,90
161,292.07 342,312,44 288,676,12 24,528.00
4,265.00 15,047.00 18,332,65
$ 3.234,079.18

$

6,285.08

251,963,15

127,233.41

292,74

7,308.11

33,273.42

47,973.28

11,164,08

$

485,493.27

GEORGIA STUDENT FINANCE COMMISSION COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30.1996

EXHIBIT-.r

See accompanying notes and Independent Accountant's Combined Report on Review of Financial

Statements and Supplementary Information.

'

29-

GEORGIA STUDENT FINANCE COMMISSION COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30,1996

EXPENDITURES
OTHER
NORTH GEORGIA COLLEGE ROTC GRANTS Other Costs Tuition and Scholarships Georgia Student Finance Authority
OSTEOPATHIC MEDICAL LOANS Other Costs Tuition and Scholarships Georgia Student Finance Authority
GEORGIA MILITARY SCHOLARSHIPS GRANTS Other Costs Tuition and Scholarships Georgia Student Finance Authority
HOPE FINANCIAL AID TUITION Personal Services Salaries and Wages Employer's Contributions for: F.I.C.A. Retirement Health Insurance Other Costs Supplies and Materials Repairs and Maintenance Rents (Other than Real Estate) Tuition and Scholarships Georgia Student Finance Authority Other Operating Expenses (See Schedule) Publications and Printing Equipment Purchases Travel Equipment Equipment Purchases Rental of Equipment Real Estate Rental Computer Charges Software Equipment Equipment Purchases Per Diem, Fees and Contracts Per Diem and Fees Contracts Telecommunications Per Diem, Fees and Contracts Per Diem and Fees Contracts

"A" STUDENT FINANCE
COMMISSION

IIB" LOTIERYFOR EDUCATION

TOTAL

$

312,500.00

$

312,500.00

$

100,000.00

$

100,000.00

$

680,000.00

$

680,000.00

$

552,120.00 $

552,120.00

46,008.00 92,020.00 76,680.00

46,008.00 92,020.00 76,680.00

83,437.93 2,123.00 97.70

83,437.93 2,123,00 97.70

60,955,616.45 256,157,79 65,571.22 8,019.26 4,736.06

60,955,616.45 256,157.79 65,571.22 8,019.26 4,736,06

2,795.10 6,095.99 67,000.00

2,795.10 6,095.99 67,000.00

52,061,51

52,061.51

62,534.11

62,534.11

12,712.50 93,100.00 210,789.01

12,712.50 93,100.00 210,789.01

582,187.90 1,044.00

582,187.90 1,044.00

$ 63,232,907.53 $ 63,232,907.53

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
-30 -

GEORGIA STUDENT FINANCE COMMISSION COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30,1996

EXHIBIT"J"

EXPENDITURES
OTHER
HOPE FINANCIAL AID -BOOKS Other Costs Supplies and Materials
HOPE FINANCIAL AID - FEES Other Costs Other Operating Expenses (See Schedule)
TUITION EQUALIZATION GRANTS Other Costs Tuition and Scholarships Georgia Student Finance Authority
GEORGIA MILITARY COLLEGE SCHOLARSHIP Other Costs Tuition and Scholarships Georgia Student Finance Authority
TEACHER SCHOLARSHIPS Other Costs Tuition and Scholarships Georgia Student Finance Authority
PROMISE SCHOLARSHIPS Other Costs Tuition and Scholarships Georgia Student Finance Authority
LEPD SCHOLARSHIP Other Costs Tuition and Scholarships Georgia Student Finance Authority
Total Other
Total Expenditures
Excess of Funds Available over Expenditures

"A" STUDENT FINANCE
COMMISSION

"B" LOTTERY FOR EDUCATION

TOTAL

$ 25,914,744,73 $ 25,914,744.73 $ 11,949,721,44 $ 11,949.721,44

$ 35,235,159.04 $ 35,235,159,04

$

66.585,95 $

66,585,95

$ 10,000.000,00 $ 10.000.000.00

$

436,184.00 $

436.184.00

$

162.843,00 $

162,843.00

$

32.802.698,00 $ 146.998,145,69 $ 179,800.843,69

$

37,256,385,15 $ 146.998,145,69 $ 184,254,530,84

107.875,56

15,086.097.47

$

37.364,260.71 $ 162,084.243,16 $ 199,448,503.87

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 31 -

GEORGIA STUDENT FINANCE COMMISSION COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUNDS YEAR ENDED JUNE 30. 1996

EXHIBIT"K"

FUND
Georgia Nonpublic Postsecondary Education Commission Surety Bond Tuition Guaranty Trust Fund

ASSETSI LIABILITIES JULY 1,1995

ADDITIONS

DELETIONS

ASSETSI LIABILITIES JUNE 30,1996

$

14,558.05 $

455.22 $

8.25 $

467,583.73

205,728.55

32,021.69

15,005.02 641,290.59

$ 482,141.78 $ 206,183.77 $ 32,029.94 $ ======6=5=6,:=29=5=.6=1

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 32-

GEORGIA STUDENT FINANCE COMMISSION SCHEDULE OF APPROVED BUDGET "A" STUDENT FINANCE COMMISSION YEAR ENDED JUNE 30. 1996

SCHEDULE "1"

FUNDS AVAILABLE
REVENUES
State Appropriation Federal Revenues Other Revenues Retained

ORIGINAL

AMENDED

APPROPRIATION APPROPRIATION

TOTAL

$ 30,774,366.00 $ 2,114,073.00 6,331,023.00

2,577,980.00 $

33,352,346.00 2,114,073.00 6,331 ,023.00

$ 39,219,462.00 $

2,577,980.00 $ ====41::!::i,7=9::O::!7,=44=:2=.0=0

EXPENDITURES
Personal Services Regular Operating Expenses Travel Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts Guaranteed Educational Loans Tuition Equalization Grants Student Incentive Grants Law Enforcement Personnel
Dependents' Grants North Georgia College ROTC Grants Osteopathic Medical Loans Georgia Military Scholarship Grants Paul Douglas Teacher Scholarship Loans

$

5,097,032.00

602,250.00

101,800.00

20,500.00

245,180.00

44,800.00

236,750.00

208,690.00

4,076,000.00

22,304,520.00 $

5,003,940.00

38,000.00 70,000.00 100,000.00 680,000.00 390,000.00

$
2,295,480.00 40,000.00
242,500.00

5,097,032.00 602,250.00 101,800.00 20,500.00 245,180.00 44,800.00 236,750.00 208,690.00
4,076,000.00 24,600,000.00
5,003,940.00
78,000.00 312,500.00 100,000.00 680,000.00 390,000.00

$ 39,219,462.00 $

2,577,980.00 $ ======4::i::!1,==79=7=,4=4=2=.0=0

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 33-

GEORGIA STUDENT FINANCE COMMISSION SCHEDULE OF APPROVED BUDGET "B" LOTTERY FOR EDUCATION YEAR ENDED JUNE 30. 1996

SCHEDULE "2"

FUNDS AVAILABLE REVENUES
State Appropriation

ORIGINAL

AMENDED

APPROPRIATION APPROPRIATION

TOTAL

$ 119,081,000.00 $ 42,159,172.00 $ 161,240,172.00

EXPENDITURES
Hope Financial Aid - Tuition Hope Financial Aid - Books Hope Financial Aid - Fees Tuition Equalization Grants Georgia Military College Scholarship Teacher Scholarships Promise Scholarships LEPD Scholarship

$ 52,195,950.00 $ 21,625,794.00 $ 73,821,744.00

14,417,200.00

7,879,040.00

22,296,240.00

7,906,850.00

7,069,348.00

14,976,198.00

31,125,000.00

5,486,990.00

36,611,990.00

336,000.00

336,000.00

10,000,000.00

10,000,000.00

3,000,000.00

3,000,000.00

100,000.00

98,000.00

198,000.00

$ 119,081,000.00 $ 42,159,172.00 $ 161,240,172.00

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 34-

GEORGIA STUDENT FINANCE COMMISSION CASH AND CASH EQUIVALENTS JUNE 30,1996

SCHEDULE "3"

NONINTEREST BEARING ACCOUNTS
SunTrust Bank, Atlanta, Georgia
INTEREST BEARING ACCOUNTS
NationsBank of Georgia, N. A.,
Atlanta, Georgia
SunTrust Bank, Atlanta, Georgia
Funds on Deposit with Office of Treasury and Fiscal Services State Investment Pool

$ -187,252.61

$

168,070.61

15,118,896.89

575,010.57 15,861,978.07

$ 15,674,725.46

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 35-

GEORGIA STUDENT FINANCE COMMISSION SCHEDULE OF FEDERAL REVENUES YEAR ENDED JUNE 3D. 1996

PROGRAM
Education, U. S. Department of State Postsecondary Review Direct

CFDA NUMBER
84.267

SCHEDULE "4"
AMOUNT
$ 75,283.71

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 36-

GEORGIA STUDENT FINANCE COMMISSION SCHEDULE OF OTHER OPERATING EXPENSES
YEAR ENDED JUNE 30, 1996

SCHEDULE "5"

REGULAR OPERATING EXPENSES Advertising and Promotion Board Meeting Expense Freight, Express and Storage Registration Fees Subscriptions and Dues Training Expenses
OTHER Hope Financial Aid - Tuition other Costs Advertising and Promotion Registration Fees Subscription and Dues Training Expense
Hope Financial Aid - Fees Other Costs Student Activity Fees

"A" STUDENT FINANCE
COMMISSION

"B" LOTIERYFOR
EDUCATION

TOTAL

$

1,154,39

4,947.86

8,218.14

7,785.25

9,169.70

1,998.08

$

1,154.39

4,947.86

8,218.14

7,785.25

9,169.70

1,998.08

$ ====3=3=,2=7=3,=4=2

$ ......=3=3=,2=7=3.=4=2

$

252.400.21 $

252.400.21

2,813,94

2,813.94

210.14

210.14

733.50

733,50

$

256,157.79 $ ====2=56:1:'1=5;.;,7:.;,,7==9

$ 11,949,721.44 $ 11,949,721.44

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information,
- 37-

GEORGIA STUDENT FINANCE COMMISSION RECONCILIATION OF TRAVEL YEAR ENDED JUNE 30. 1996
Total per Annual Supplement Accruals June 30, 1995 June 30,1996
Total per Report

SCHEDULE "6"
$ 72,611.09
-1,276.29 901.29
$ 72,236.09

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 38-

GEORGIA STUDENT FINANCE COMMISSION SUMMARY OF SALARIES, TRAVEL, AND PER DIEM AND FEES
YEAR ENDED JUNE 30, 1996

SCHEDULE '7"

BUDGET FUND
"A" STUDENT FINANCE COMMISSION
"B" LOTTERY FOR EDUCATION Hope Financial Aid - Tuition . Regular Computer Charges
AGENCY FUND
GEORGIA NONPUBLIC POSTSECONDARY EDUCATION COMMISSION Tuition Guaranty Trust Fund

SALARIES

TRAVEL

PER DIEM AND FEES

$ 2,379,625.90 $

67,500.03 $

71,729.19

$ 552,120.00 $ $ 552,120.00 $

4,736.06 $ 4,736.06 $

582,187.90 12,712.50
594,900.40

$

9,193.50

$ 2,931,745.90 $

72,236.09 $ 675,823.09

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 39-

SECTION II FINDINGS AND IMPROPER OR QUESTIONED COSTS

GEORGIA STUDENT FINANCE COMMISSION SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS
YEAR ENDED JUNE 30, 1996

STATUS OF PRIOR YEAR FINDINGS AND IMPROPER OR OUESTIONED COSTS

The status offindings disclosed in the review report for the year ended June 30, 1995, is categorized below:

Audit Control Number

Status of Finding

476-95-01

Corrective Action Implemented .

CURRENT YEAR

BUDGET PREPARATIONIEXECUTION Overexpenditure of Budget Unit Object Classes Financial Statements Audit Control Number 476-96-01

The total approved budget for the Georgia Student Finance Commission provided for expenditures of $41,797,442.00 in Budget unit "A", and $161,240,172.00 in Budget Unit "B". A comparison of anticipated funds available and budgeted expenditures to actual funds available and expenditures by object class indicated that the following "common object classes" exceeded the authorized expenditure level of 102% of the budgeted amount for each common object class by the amounts identified below:

"A" Student Finance Commission Equipment Telecommunications

$

964.41

$ 77,514.72

In addition, the following object class was overspent by the amount as indicated below:

"B" Lottery for Education Hope Financial Aid - Books

$ 3,618,504.73

These overexpenditures are in violation of Section 54 of the Amended Appropriations Act of 1995-1996. These overexpenditures were caused by the Commission's failure to monitor the expenditure of funds against the budgeted expenditures by object class.

The Georgia Student Finance Commission should review its internal control procedures over budget operations, design procedures which would prohibit the expenditure offunds in excess of budget approval, and implement those procedures to strengthen the controls over the budget function.