Management report, Georgia Student Finance Commission, an organizational unit of the state of Georgia, year ended June 30, 1999

MANAGEMENT REPORT GEORGIA STUDENT FINANCE COMMISSION AN ORGANIZATIONAL UNIT OF THE STATE OF GEORGIA
YEAR ENDED JUNE 30, 1999
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

GEORGIA STUDENT FINANCE COMMISSION MANAGEMENT REPORT - TABLE OF CONTENTS -

LETTER OF TRANSMITTAL

SECTION I

SELECTED FINANCIAL INFORMATION

EXHIBITS

A ANALYSIS OF CHANGES IN FUND BALANCE

BUDGETFUND

1

SCHEDULESOFFUNDSAVAILABLEANDEXPENDITURES

COMPARED TO BUDGET

BUDGETFUND

B

"A" STUDENT FINANCE COMMISSION

2

C

"B" LOTTERY FOR EDUCATION

3

SECTION IT AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SECTION ID CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

RussELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
November 24, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly of Georgia Members ofthe Georgia Student Finance Commission
and Honorable E. Glenn Newsome, Executive Director Georgia Student Finance Commission
Ladies and Gentlemen:
As part ofour audit of the statutory basis financial statements of the State of Georgia presented in the State of Georgia Report of the State Auditor, the general purpose financial statements of the State of Georgia presented in the State ofGeorgia Comprehensive Annual Financial Report, and the issuance of a Statewide Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 1999, we have performed certain audit procedures at the Georgia Student Finance Commission. Accordingly, the financial statements and compliance activities of the Georgia Student Finance Commission were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of the Georgia Student Finance Commission as of and for the year ended June 30, 1999. The particular information provided is enumerated in the Table of Contents.
This report is intended solely for the information and use of management of the Georgia Student Finance Commission and members ofthe Commission and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~ w.4:L Russell W. Hinton State Auditor
RWH:gp

SECTION I SELECTED FINANCIAL INFORMATION

GEORGIA STUDENT FINANCE COMMISSION ANALYSIS OF CHANGES IN FUND BALANCE
BUDGET FUND YEAR ENDED JUNE 30, 1999

EXHIBIT "A"-

FUND BALANCE - JULY 1, 1998 Reserved Surplus
ADDITIONS Adjustments to Prior Year's Accounts Payable Excess of Funds Available over Expenditures Exhibit "B" Exhibit"C" Prior Year's Checks Voided
DEDUCTIONS Unreserved Fund Balance (Surplus) Returned to Office of Treasury and Fiscal Services Year Ended June 30, 1998 Adjustments to Prior Year's Accounts Receivable Reserved Fund Balance Carried Over from Prior Year as Funds Available
FUND BALANCE - JUNE 30, 1999

"A" STUDENT FINANCE COMMISSION

"B" LOTTERY
FOR EDUCATION

TOTAL

$

4,420.00 $ 2,076,394.98 $ 2,080,814.98

445.72

13,370,657.65 13,371,103.37

$

4,865.72 $ 15,447,052.63 $ 15,451,918.35

$

1,117.35 $

2,167.36 $

3,284.71

128,077.11 577.12

29,683,934.46

128,077.11 29,683,934.46
577.12

$ 129,771.58 $ 29,686,101.82 $ 29,815,873.40

$

445.72 $ 13,370,657.65 $ 13,371,103.37

6,233.37

6,233.37

4,420.00

2,076,394.98

2,080,814.98

$

4,865.72 $ 15,453,286.00 $ 15,458,151.72

$ 129,771.58 $ 29,679,868.45 $ 29,809,640.03

SUMMARY OF FUND BALANCE
Reserved Lottery for Education
Surplus

$ 9,919,658.00 $ 9,919,658.00 $ 129,771.58 19,760,210.45 19,889,982.03
$ 129,771.58 $ 29,679,868.45 $ 29,809,640.03 -1-

GEORGIA STUDENT FINANCE COMMISSION SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
"A" STUDENT FINANCE COMMISSION YEAR ENDED JUNE 30, 1999

EXHIBIT"B"

FUNDS AVAILABLE REVENUES
State Appropriation Other Revenues Retained
CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$ 33,478,570.00 $ 33,478,570.00 $

27,030.00

24,910.00

$ 33,505,600.00 $ 33,503,480.00 $

0.00 -2,120.00
-2,120.00

0.00

4,420.00

4,420.00

$ 33,505,soo.oo $ 33,507,900.00 $ _ ___,;;2;;.:.;,3;..;;o..;..o..;...o~o

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 North Georgia College Graduates Scholarship Osteopathic Medical Loans Georgia Military Scholarship Grants Work Incentive for Students Year 2000 Project
Excess of Funds Available over Expenditures

$ 534,451.00 $ 22,680.00 18,000.00 7,500.00
38,822.00 46,000.00 18,691.00 107,470.00 4,510,455.00 25,749,053.00. 500,000.00 86,000.00 337,500.00 68,500.00 100,000.00 808,368.00 540,750.00 11,360.00

470,503.98 $ 21,610.55 7,575.79 3,343.66 28,606.70 45,314.99 12,280.54 78,600.68
4,510,455.00 25,749,053.00
500,000.00 86,000.00
337,500.00 68,500.00 100,000.00
808,368.00 540,750.00
11,360.00

63,947.02 1,069.45
10,424.21 4,156.34 10,215.30
685.01 6,410.46 28,869.32
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

__ $ 33,505,600.00 $ 33,379,822.89 $

...1.;.;2;;:5;;.,:.7;_.7.;.7.;...;1..:.1..;..

$ 128,077.11 $ ===12=8=,0=7==7=.1=1 -2-

GEORGIA STUDENT FINANCE COMMISSION SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
"B" LOTTERY FOR EDUCATION YEAR ENDED JUNE 30.1999

EXHIBIT "C"

FUNDS AVAILABLE REVENUES
State Appropriation Other Revenues Retained
CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$ 215,153,022.00 $ 215,153,022.00 $

0.00

2,575,239.68

$ 215,153,022.00 $ 217,728,261.68 $

0.00 2,575,239.68
2,575,239.68

0.00

2,076,394.98

2,076,394.98

__ __ $ 215,153,022.00 $ 219,804,656.66 $

4...,;6._5__1,:,..6. 34.66

EXPENDITURES
Hope Financial Aid - Tuition Hope Financial Aid - Books Hope Financial Aid - Fees Tuition Equalization Grants Hope Scholarships - Private Colleges Georgia Military College Scholarship LEPD Scholarship Teacher Scholarships Promise Scholarships Engineer Scholarships
Excess of Funds Available over Expenditures

$ 112,503,690.00 $
34,624,650.00 26,706,354.00
7,167,088.00 28,029,000.00
771,210.00 220,530.00 3,500,000.00 1,107,000.00 523,500.00

96,350,160.71 $ 31,422,890.83 22,420,127.87
6,341,016.83 28,008,268.64
586,781.57 197,625.75 3,500,000.00 893,350.00 400,500.00

16,153,529.29 3,201,759.17 4,286,226.13 826,071.17 20,731.36 184,428.43 22,904.25 0.00 213,650.00 123,000.00

$ 215,153,022.00 $ 190,120,722.20 $ 25,032,299.80

$ 29,683,934.46 $ 29;683,934.46

-3-

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

GEORGIA STUDENT FINANCE COMMISSION AUDITEE'S RESPONSE.
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1999

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-476-98-01 FS-476-98-02

Further Action Not Warranted Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUNALENTS
Drawdown ofLottery Funds In Excess of Current Operating Needs Finding Control Number: FS-476-98-02

Current standards for the disbursement ofHOPE Scholarship funds require that transfers for HOPE scholars to participating schools be made within 24 hours ofthe receipt ofrequests. Disbursements are made on an as requested basis from the schools. Schools may, at any time throughout the school term, drawdown funds allotted to them.

Currently, the allotment process does not provide Georgia Student Finance Commission with funds on an overnight basis. Under our current standards, it is important for us to have enough funds available to provide for the disbursements to participating schools within 24 hours ofthe receipt ofrequests. Funds that are not anticipated for immediate need are kept in a Fund 1 account, or an approved financial instrument that will generate a comparable or higher interest income.

We will review the disbursements to schools for the past two years and use this analysis to develop procedures to minimize the amount oftime between the drawdown ofthe appropriation allotment and cash disbursement ofthe funds, while maintaining enough funds to disperse all requests within the 24 hour time:frame standard.

SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS
..

GEORGIA STUDENT FINANCE COMMISSION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1999
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUNALENTS Drawdown ofLottery Funds in Excess of Current Operating Needs
Finding Control Number: FS-476-99-01
Our examination noted that the Georgia Student Finance Commission requested and received Lottery for Education appropriation allotments in excess of current operating needs periodically throughout the fiscal year. As a result, the Commission earned interest totaling $2,512,009.10. Section 50-17-Sl(c) ofthe Official Code of Georgia Annotated designated the Director ofthe Office ofTreasury and Fiscal Services (OTFS) as the cash management officer for the State. In this capacity, the Director is responsible for the efficient and effective utilization ofthe State's cash resources. The Commission's practice of drawing Lottery funds from
OTFS in excess of current operating needs limits the ability ofthe Director of OTFS to maximize investment
earnings for the State's Lottery Funds.
Commission management should develop and implement policies and procedures to minimize the amount oftime between the drawdown of the appropriation allotment and the cash disbursements of Lottery funds.