GA A9Joa .1<1 T'-t31 jCjc15 -q<:, STATE OF GEORGIA DEPARTMENT OF AUDITS 254 WASHINGTON STREET ATLANTA. GEORGIA 30334 REVIEW REPORT STATE OF GEORGIA DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) YEAR ENDED JUNE 30, 1996 DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNID - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION EXIllBITS FINANCIAL STATEMENTS A COMBINED BALANCE SHEET (STATUTORY BASIS) ALL FUND TYPES AND ACCOUNT GROUPS 2 B STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS) GOVERNMENTAL FUND TYPE 3 C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND 4 STATEMENTS OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND D "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION 9 E "B" LOTTERY FOR EDUCATION 10 F NOTES TO THE FINANCIAL STATEMENTS 11 SUPPLEMENTARY INFORMATION G COMBINING BALANCE SHEET (STATUTORY BASIS) BUDGET FUND 28 H COMBINING STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS) BUDGET FUND 29 I COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND 30 J STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FIDUCIARY FUND TYPE - AGENCY FUNDS 35 SCHEDULES SCHEDULES OF APPROVED BUDGET 1 "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION 36 2 "B" LOTTERY FOR EDUCATION 39 SCHEDULES OF BUDGET TRANSFERS TO OTHERUNITS 3 "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION 40 4 "B" LOTTERY FOR EDUCATION 42 5 CASH AND CASH EQUIVALENTS 43 DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) -TABLEOFCONTENTS- SECTION I FINANCIAL SUPPLEMENTARY INFORMATION SCHEDULES 6 SCHEDULE OF GOVERNOR'S EMERGENCY FUND 44 7 SCHEDULE OF FEDERAL REVENUES 45 SCHEDULES OF ALLOTMENTS TO STATE TECHNICAL INSTITUTES 8 "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION 46 9 "B" LOTTERY FOR EDUCATION 48 10 ANALYSIS OF PRIOR YEAR'S SURPLUS FUNDS COLLECTED FROM STATE TECHNICAL INSTITUTES 49 11 RECONCILIATION OF SALARIES AND WAGES, AND TRAVEL 50 SECTIONll 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 November 1, 1996 Honorable Zell Miller, Governor Members ofthe General Assembly of Georgia Members of the State Board ofTechnical and Adult Education and Honorable Kenneth H. Breeden, Commissioner Department of Technical and Adult Education 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 F) ofthe Administrative Central Office (Oversight Unit) of the Department of Technical and, Adult Education as of and for the year ended June 30, 1996, in accoq:lance 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 Administrative Central Office (Oversight Unit) of the Department of Technical and Adult Education. 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. The financial statements referred to above include only the financial activities of the oversight unit of the Department ofTechnical and Adult Education. Financial activities of other organizational units (the various State Technical Institutes) are not included. Based on our review, with the exception ofthe matter described in the following paragraph, 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. 96ARL-5X As more fully discussed in Section IT, Findings and Improper or Questioned Costs, material discrepancies were noted in the equipment inventory records of the Administrative Central Office (Oversight Unit) of the Department of Technical and Adult Education. Equipment inventory comprises the General Fixed Assets Account Group. We were unable to determine the effects these discrepancies may have on the financial statements. Our review was made for the purpose ofexpressing 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 G through J and Schedules 1 through 11) is presented only for supplementary analysis purposes. Such information has been subjected to the inquiries and analytical procedures applied in the review ofthe financial statements and we are not aware of any material modifications that should be made thereto. RZ~ CLV:cm 96ARL-5X Claude L. Vickers State Auditor FUNANCLALSTATE~TS - 1- DEPARTMENT OF TECHNICAl.. AND ADULT EDUCATION ADMNISIRATIVE CENTRAl. OFfICE (OVERSIGHT UNm COMBINED BALANCE SHEET ARTMENT Of TECHNiCAl AND A[)ULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE coyeRSIGHT UNm STATEMENT Of FUNDS AYAlLAB!.,E AND EXPENDITURES BUOOETEUND YEAR ENDED JUNE 30 1996 EXHIBIT "C" EUN[)S AYAILAB!.,E REVENUES STATE APPROPRIATION Genentl Appropriation Amended AppropI iation GcMlmor's Emergency Fund (see SChedUle) Total State Appropriation AIIoIment1I to State Technical Institutes (see SChedule) Net State Appropriation FEDERAL REVENUES (see SChedule) Allotments to State Technicallnstilutes (see SChedUle) Net Federal Revenues OTHER REVENUES RETAINED ConlrlIct& Georgia Department d Administnltille seMces Distant Leeming Project Program Georgia Depertment d Human Re&OUR:eS PEACH Project Allotments to State Technical Institutes (see SChedUle) Union County Board d Commissioners Lifelong Leeming Center G. E. D. Testing F_ Insurance RllCOIIeries Registration F_ Reimbursements from Various Sources Total Other Revenues Retained Total Revenues CARRY.QYER FROM PRIOR YEAR Transfer from Reserved Fund Balance Construction ReserYe Trust Fund Allotments to State Technicallnstilutes (see SChedUle) Federal Financial Assistance Resolution d DisaIIl:Mller from Prior Year Total Funds Available EXPENDITURES PERSONAL SERVICES Salaries and Wages Employel's Contributions for: F.I.C.A Retirement Health Insurance Personal Liability Insurance Unemployment Compensation Insurance Workers' Compensation Insurance A&&essments by Merit System see Independent Accountanfs Combined Report on Review d Financial statements and Supplementary Information. The notes to the financial statements are an integral part d this statement. -4- TOTALS YEAR ENDED JUNE 30,1996 JUNE 30,1995 $ 205,845,937.00 $ 166,983,138.00 1,116,425.00 21,172,573.00 29,500.00 37,500.00 $ 206,991,862.00 $ 188,193,211.00 -125,779,180.85 118,786,566.41 $ 81,212,681.15 $ 69,406,644.59 $ 24,485,965.07 $ 25,091,999.28 -15,057,156.41 -15,179,238.28 $ 9,428,808.66 $ 9,912,763.00 $ 699.49 $ 47,795.00 253,332.55 0.00 -158,468.57 0.00 0.00 238,148.01 1,009,962.51 38,458.26 7,661.00 12,000.00 105,617.75 47,223.00 50,651.53 6,171.69 $ 1,389,793.25 $ 269,458.97 $ 92,031,283.06 $ 79,588,866.56 $ 5,533,318.05 $ -3,440,716.25 760.35 68,284.00 0.00 $ 2,161,646.15 $ 0.00 0.00 18,756.44 0.00 118,320.00 137,076.44 $ 94,192,929.21 $ 79,725,943.00 $ 3,538,956.74 $ 3,277,109.50 181,730.46 505,272.82 431,349.42 4,018.00 15,031.61 15,977.85 8,989.48 171,625.64 460,693.61 403,778.17 20,889.00 747.00 16,356.81 8,398.80 $ 4,699,326.38 $ 4,359,598.53 DEPARTMENT OF TECHNICAL AND A[)ULT EDUCATION AQMINISTRATIVE CENTRAL OFFICE COVERSIGHT UNm STATEMENT OF FUNDS AVAiLABlE AND EXPENDITURES BVDGETFUNP YEAR ENDEP JUNE 30 1996 EXHIBIT"C" EXPENDITURES REGULAR OPERATING EXPENSES Motor Vehicle Expenses Supplies and Materials Repeirs and Maintenance Rents (Other than Reel Estate) lneurance and Bonding Other Operating Expenses PubrlC8lions and Printing Equipment Purchases EQUIPMENT Equipment Purchases l.MseIPurcha6e d EqUipment Rental d Equipment COMPUTER CHARGES OtherCo6t& SUpplies and Materials Repairs and Maintenance Software Equipment Equipment Purcha8es Per Diem, Fees and Contract& Per Diem and Fees Contract& Computer Billings, DOAS REAL ESTATE RENTALS TELECOMMUNICATIONS PER DIEM FEES AND CONTRACTS Per Diem and Fees Contract& CAPITAL 0lffiAY OtherCo6t& Grants to Counties, Cities and Civil DiYisic:ln6 Other Expen&es Per Diem, Fees and Contract& Per Diem and Fees Contract& OTHER OPERATING EXPENSES-INSTITUTIONS OlherCo6t& Other Operating Expenses Extraordinary Expenditures See Independent Accounlanfs Combined Report on ReYiew d Financial Statements and Supplemenlary Information. The notes to the financial statements are an integral part d this statement. -5- TOTALS YEAR ENDED JUNE 30, 1996 JUNE 30, 1995 $ 9,062.93 $ 6,138.61 143;291.19 162,000.25 20,068.48 16,580.04 19,719.41 18,904.50 3,095.00 2,721.00 218,322.51 184,366.18 99,410.96 61,461.78 48,245.73 8,323.21 $ 561,216.21 $ 460,495.57 $ 209,329.24 $ 189,111.40 $ 63,366.70 $ 9,743.52 95.00 0.00 8,269.98 2,382.72 $ 73,205.22 $ 10,652.70 $ 0.00 $ 7,473.00 0.00 66,515.45 56,550.39 4,597.84 124,095.72 56,609.69 29,427.03 547,383.08 15,737.37 10,439.01 253,992.64 102,590.76 $ 773,193.59$ 502,218.39 $ 423,463.04 $ 366,997.74 $ 100,574.97 $ 197,682.34 $ 52,660.58 $ 69,908.36 525,976.28 795,945.00 $ 578,636.86 $ 865,853.36 $ 86,497.28 $ 0.00 317.52 0.00 14,392.79 0.00 945,770.95 0.00 $ 1,046,978.54 $ 0.00 $ 28,515.00 $ 274.00 0.00 35,000.00 DEPARTMENT OF TECHNICAL AND AQULT EDUCATION ADMINISTRATIVE CENJRAL OfFICE !OVERSIGHT VNm STATEMENT OF fUNDS AVAILABLE AND EXPENQIJURES BUOGETFUNQ YEAR ENDED JUNE 30 1996 EXHIBIT "C' EXPENPITURES OPERATING EXPENSE5-INSrmmONS Teleccmmunicalions Per Diem, Fees and Contracts Per Diem and Fees Contracts aulCK START PROGRAM PenIonaI Services Salaries and Wages E"'Jlk1'ier's Contributions for: F.I.C.A Retirement Health Insurance PeIsonal liability Insurance Unemployment compensation Insurance Worker's compensation Insurance Assessments by the Merit System Other Costs Motor Vehicle Expenses SUpplies and Materials Repairs and Maintenance Utilities Rents (Other than Real Estate) Insurance and Bonding Grants to Counties, Cities and Civil DMsions Other Operating Expenses Publications and Printing Travel Equipment Equipment Purchases Lease! Purchase of Equipment Rental of Equipment computer Charges Software computer Billings, DOAS Real Estate Rentals Telecommunications Per Diem, Fees and Contracts Per Diem and Fees Contracts AREA SCHOOL PROGRAM OtherCo6ls Grants to Counties, Cities and Civil DMsions Other Operating Expenses Telecommunications REGENTS PROGRAM Other Costs Grants to Counties, Cities and Civil Divisions ADULT LITERACY GRANTS Other Costs SUpplies and Materials Repairs and Maintenance Grants to Counties, Cities and Civil DMsions Other Operating Expenses see Independent Accountant's combined Report on Relliew of Financial Statements and Supplementaly InfOlTnation. The notes to the financial statements are an integral part of this statement. -6- TOTALS YEAR ENDED JUNE 30,1996 JUNE 30,1995 $ 206,230.27 $ 0.00 3,610.80 0.00 58,432.00 25,182.00 $ 238,358.07 $ 118,888.00 $ 2,268,542.59 $ 1,985,325.38 55,444.37 280,021.98 283,568.49 10,915.00 661.39 11,496.15 866.64 48,094.86 246,183.86 248,166.65 12,449.00 531.00 11,626.19 793.07 8,517.65 216,786.50 39,759.60 7,816.37 64,413.01 3,956.07 12,973.34 382,714.74 64,348.60 222,023.87 12,432.93 376,883.19 50,887.51 19,705.17 46,330.15 3,753.90 82,302.90 125,262.22 61,626.31 191,058.55 482,164.14 15,644.72 69,118.32 396,636.75 1,838.53 52,046.39 123,225.47 6,661.55 308,256.57 76,942.30 120,446.90 3,518.20 265,997.05 110,633.30 3,405,989.19 1,331.84 2,629,623.33 0.00 $ 8,424,362.46 $ 7,104,153.29 $ 29,167,750.37 $ 25,501,720.13 176.63 0.00 18,389.76 0.00 $ 29,186,316.76 $ 25,501.720.13 $ 2,887,129.48 $ 2,767,457.95 $ 14,035.09 $ 71,373.21 1,867.56 0.00 6,667,431.78 6,091,410.19 55,329.30 10,614.00 DEPARTMENT Of JECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OfFICE COVERSIGHT UNm STAJEMENT Of FUNDS AVAILABLE AND expeNDITURES BUOOETFUND YEAR ENDED JUNE 30 1996 EXHIBIT"C" expeNDITURES QI!B ADULT LITERACY GRANTS Other CoItll Publiclltions lind PrInting Equipment Equipment PuraComputer Charges Software Real Estate Rentals Telecommuniclltions Per Diem, Fees lind Contracts Per Diem and Fees Contract& JOB TRAINING PARTNERSHIP ACT Other CoItll Grants to Counties, Cities and CMI DiYisions DISTANT LEARNING - SAJELLITE DISHES Other CoItll RepIIlIs and Maintenance Equipment EqUipment PurchatIes COMPUTER LABORATORIES AND SAJELLITE DISHES - ADULT LITERACY EqUipment Equipment Purchases . Computer Charges Software Telecommunications CAPITAL OUll..AY - JECHNICAL INSTITLITE SAJELLITE FACILmES Other CoItll Repairs and Maintenance Per Diem, Fees and Contracts ConlTacts EQUIPMENT - JECHNICAL INSTITLITES Other CoItll Grants to Counties, Cities and CMI Divisions Equipment EqUipment Purchases Computer Charges Software Telecommuniclltions TOTALS YEAR ENDED JUNE 30,1996 JUNE 30,1995 $ 3,843.62 $ 0.00 159,247.94 0.00 5,728.47 0.00 16,089.57 0.00 6,168.00 0.00 86,836.19 643,025.98 22,722.86 277,421.83 $ 7,659,603.50 $ 6,473,542.09 $ 1,159,172.20 $ 1,128,160.84 $ 0.00 $ 4,459.00 0.00 35,391.04 $ 0.00 $ 39,850.04 $ 554,300.00 $ 164,967.00 445,536.97 0.00 0.00 801,184.81 $ 999,836.97 $ 966,151.81 $ 0.00 $ 20,014,673.00 32,098,459.96 0.00 $ 32,098,459.96 $ 20,014,673.00 $ 6,790.00 $ 527,381.33 258,980.00 2,087,097.83 0.00 3,441.67 0.00 59,721.94 $ 265,770.00 $ 2,677,642.77 See Independent Accountant's Combined Report on Review d Financial statements and Supplement8ry Information. The notes to the financial statements are an integral part d this statement. -7- DEPARTMENT Of TECHNICAL ANp ADULT EOUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNm STATEMENT Of FUNDS AVAILABLE AND EXPENPiTURES BUOOETFUNp YEAR ENDEp JUNE 30 1996 expeNplJURES REPAIRS AND RENOVATIONS OlherCo8ts GnInls to Counties, CIlies anet CMI DivisionlI Olher~ Computer ChaIges Software Per Diem, F_ anct Contracts Contracts TotalOlher Total Expenditures Excess d Funds Available CMlI' Expenctitures EXHIBIT"C" TOTALS YEAR ENDED JUNE 30, 1996 JUNE 30, 1995 $ 870,4n.00 $ 0.00 717.60 0.00 979,406.40 0.00 242,000.00 0.00 $ 2,092,601.00 $ 0.00 $ 85,011,608.40 $ 66,792,239.92 $ 93,4n,532.45 $ 73,744,849.95 715,396.76 5,981 ,093.05 $ 94,192,929.21 $ 79.725,943.00 see IncIepeIldent Accounlanfs Combined Report on Review d Financial Statements anet Supplementary Infonnation. The notes to the financial statements are an integral part d this statement. 8 DEPARTMENT OF TECHNICAL AND APULT EPUCATION ADMINISTRATIVE CENTRAL OFFICE COVERSIGHT UNm STATEMENT OF FUNDS AVAILABLE AND EXPEND'TURES COMPARED TO BUDGET BUpGETFUND -A- DEPARTMENT OF TECHNICAL ANP ADULT EPUCATION YEAR ENPEP JUNE 30, 1996 EXHIBIT -0" FUNpS AVAILABLE REVENUES State Appropriation Federal Revenues other Revenues Retained CARRY=OVER FROM PRIOR YEAR Transfer from Reserved Fund Balahce BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) $ 47,204,170,00 $ 11,341.225.00 2,522,587.00 47,573,450.32 $ 9,428.808.66 1,389,793.25 369,280.32 -1.912,416.34 -1,132,793.75 $ 61.067,982,00 $ 58,392.052.23 $ -2,675,929.n 0.00 69,044,35 69,044,35 $ 61,067,982.00 $ 58,461,096,58 $ -2,606,885.42 EXPEND'TURES Personal services Regular Operating Expenses Travel EqUipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts capital Outlay Personal Services-Institutions Operating Expenses-Institutions QUick Start Program Area School Program Regents Program Adult Literacy Grants Job Training Partnership Act $ 4,822,004,00 $ 4,699,326,38 $ 682,165.00 561,216,21 248,818,00 209,32924 91.984,00 73,205.22 897,963.00 773,193.59 454,063,00 423,463,04 114,600.00 100,574,97 656,722,00 578,636.86 1,42O,m.00 1,046,978.54 46,856,00 0.00 238,863,00 238,356,07 8.484.282,00 8,424.362,46 30.227,285,00 29,186,316.76 2.926,002,00 2.887.129.48 7,932,641,00 7,659,603,50 1,822,957,00 1,159,172,20 122,6n.62 120,948.79 39,488.76 18,n8,78 124,769.41 30,599.96 14,025,03 78,085,14 373,798,46 46.856.00 506,93 59.919,54 1,040.968.24 38.8n,52 273,037.50 663,784.80 $ 61,067,982.00 $ 58,020,864,52 $ 3,047,117.48 Excess of Funds Available over Expenditures $ 440,232,06 $ _ ....._4..4...0....2..3. .2.,06= See Independent Accountanrs Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement, -9- DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAl OFFICE (OVERSIGHT UNID STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND -B- LOTTERY FOR EDUCATION YEAR ENDED JUNE 30, 1996 EXHIBIT-E- FUNDS AVAILABLE REVENUES State Appropriation CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) $ 33,639,230.00 $ 33,639,230.83 $ 0.83 2,092,601.00 2,092,601.80 0.80 $ 35,731,831.00 $ 35,731,832.63 $ 1_.63_ EXPENDITURES Computer Laboratories and Satellite Dishes - Adult literacy Capital Outlay - Technical Institute Satellite Facilities Equipment -Technical Institutes Repairs and Renovations $ 1,000,000.00 $ 999,836.97 $ 32,373,460.00 265,nO.OO 2,092,601.00 32,098,459.96 265.nO.OO 2,092,601.00 163.03 275,000,04 0.00 0.00 $ 35,731,831.00 $ 35,456,667.93 $ 27_5...;._163_.0_7 Excess of Funds Available over Expenditures $ 275,164.70 $ =====27=:5=,164====.7=0 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- DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXHIBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY The Department ofTechnical and Adult Education, an organizational unit of the State ofGeorgia, is part of the executive branch of government of the State of Georgia. The State Board of Technical and Adult Education is composed ofone member from each Congressional District in the State and five at-large members appointed by the Governor and confirmed by the Senate for five-year terms. The Commissioner is the chief executive officer ofthe Department and is selected by the State Board to serve at its pleasure. The Department does not have authority to determine the amount offunding it will receive from the State of Georgia for any given fiscal year. Such authority is vested in the General Assembly of Georgia. The Department also does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the Department of Technical and Adult Education 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 ofGeorgia. These reporting entity relationships are defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards. The Administrative Central Office ofthe Department ofTechnical and Adult Education is the "Oversight Unit" ofthe Department and performs administrative functions and provides guidance to the twenty-nine (29) State Technical Institutes which are organizational units ofthe Department ofTechnical and Adult Education. The accompanying financial statements represent only the financial position and results of operations of the Administrative Central Office ofthe Department ofTechnical and Adult Education. The financial position and results of operations of other organizational units of the Department (various State technical institutes) are not included in these financial statements. FUND ACCOUNTING The Administrative Central Office ofthe Department ofTechnical and Adult Education 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 of the State of Georgia. 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 offunds 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: - 11 - DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXIllBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FUND ACCOUNTING GOVERNMENTAL FUND TYPE 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. 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 ofnonnal 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 ofthe 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 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 ofavailable 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. - 12- DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXHIBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPE BUDGETFUND Except as disclosed in the following paragraphs, units of government of the State of Georgiarecord their Budget Fund revenues and expenditures in accordance with the modified accrual basis ofaccounting. 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 ofthe 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 goods and services which have not been received 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 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. 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. BUDGET Appropriation allotments to the Department of Technical and Adult Education are on the basis of budgets submitted by the Department 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. 476 ofGeorgia Laws 1995 (as approved April 21, 1995) and - 13 - DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXHIBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUDGET 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. The appropriated budget is adopted at the departmental level and covers the Budget Fund. The budget aUoeationand disbursement of these funds is made to the various technical institutes by the Administrative Central Office. CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include demand deposits with banks and other authorized financial institutions. ACCOUNTS RECEIVABLE Accounts receivable consist of appropriation allotments due from the Office of Treasury and Fiscal Services, reimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. . Accounts receivable (Other) arising from operations are reported at gross value. Based on management's evaluation that amounts uncollectible are not material, no provision has been made for such amounts. 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: CONSTRUCTION RESERVE TRUST FUND In accordance with the Official Code of Georgia Annotated Section 20-1-8, lottery funds appropriated for purposes of new capital construction not yet expended or encumbered. 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. - 14- DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXHIBIT "F" NOTE 1: SUM:MARY OF SIGNIFICANT ACCOUNTING POLICIES 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 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 Department relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulating annual and compensatory leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the Budget Fund for the current portion ofthis obligation as this amount will not be liquidated with expendable available financial resources. Funds are provided in the appropriation of State funds each year to the Department to cover the cost ofannual 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 Balance Sheet (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 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 Administrative Central Office's financial position and operations. Comparative totals have not been included on statements where their inclusion would not provide enhanced understanding ofthe Administrative Central Office'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. - 15 - DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXHIBIT "F" NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds ofthe State of Georgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral anyone or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59: (1) Bonds, bills, certificates ofindebtedness, notes, or other direct obligations ofthe United States or ofthe State of Georgia. (2) Bonds, bills, certificates ofindebtedness, notes, or other obligations ofthe counties or municipalities ofthe State of Georgia. (3) Bonds ofany public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose. (4) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws of the State of Georgia. (5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, or debt obligations issued by the Federal Land Bank:, the Federal Home Loan Bank, the Federal Intermediate Credit Bank:, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. (6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies ofthe State ofGeorgia the option ofexempting 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 Administrative Central Office or by its agent in the Administrative Central Office's name. - 16- DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXIllBIT "F" NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS CATEGORIZATION OF DEPOSITS Ca;tegory 2 - Amounts collateralized with securities (at market value) held by the pledging financial institution's trust department or agent in the Administrative Central Office'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 Administrative Central Office's name, and amounts uncollateralized. Cash Deposits Carrying Amount Bank Balances Risk Categories 2 3 $ 566 59789 $ 5 062315 87 $ 159778 34 $,====Q~QQ~ $ 4 902 537 53 NOTE 3: OPERATING LEASES The Administrative Central Office has entered into certain agreements to lease real property and equipment which are classified as operating leases (leases on assets not recorded on the balance sheet). These leases generally contain provisions that, at the expiration date of the original term of the lease, the Administrative Central Office has the option of renewing the lease on a year-to-year basis. Future minimum lease payments for operating leases as ofJune 30, 1996, 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 1997 $ 785.596.65 Expenditures for rental of real property and equipment under operating ~eases for the year ended June 30, 1996, totaled $791,537.61. NOTE 4: CAPITAL LEASES The Administrative Central Office acquires certain equipment through multi-year capital leases with varying terms and options. These agreements contain fiscal funding clauses in accordance with Official Code of Georgia Annotated Section 50-5-64 which prohibits the creation of a debt to the State of Georgia for the payment ofany sums under such agreements beyond the fiscal year of execution ifappropriated funds are not available. Ifrenewal ofsuch agreements is reasonably assured, however, capital leases requiring appropriation by the General Assembly of Georgia are considered noncancellable for financial reporting purposes. As ofJune 30, 1996, future minimum lease payments under capital leases are as follows: - 17 - DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXHIBIT "Fit NOTE 4: CAPITAL LEASES Fiscal Year Ending June 30 1997 1998 1999 2000 2001 $ 26,811.84 26,811.84 26,811.84 25,511.84 122.36 Total Future Minimum Lease Payments $ 106,069.72 Less: Amounts Representing Interest 3,014.64 Present Value of Future Minimum Lease Payments $ 103,055.08 NOTE 5: 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 ofchanges ofequipment for the General Fixed Assets Account Group during the fiscal year: . . Balance July 1, 1995 $17,654,079.39 Additions Deductions 121,285.11 231.633.91 Balance June 30, 1996 $17,543,730.59 - 18 - DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXlllBIT "F" NOTE 6: GENERAL LONG-TERM DEBT CHANGES IN GENERAL LONG-TERM DEBT A summary ofchanges in General Long-Tenn Debt for the year ended June 30, 1996, follows: Compensated Absences Capital Leases Total Balance July 1, 1995 $ 531,838.93 $ 76,700.00 $ 608,538.93 Additions Annual Leave Earned and Utilized (Net) Salaries and Wages Salary-Related Fringe Benefits Current Year Leases Deductions 34,923.96 -101.58 50,368.56 24,013.48 34,923.96 -101.58 50,368.56 24,013.48 Balance June 30, 1996 $ 566,661.31 $ 103,055.08 $ 669,716.39 NOTE 7: 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 ofthe State ofGeorgia, 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 ofGeorgia 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 ofmaking and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Department of Technical and Adult Education is part ofthe State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment. - 19- DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNID NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXHIBIT "F" NOTE 8: 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 ofGeorgia and county health departments, pennits 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 will be presented in the State of Georgia Comprehensive Annual Financial Report for the year ended June 30, 1996. NOTE 9: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description The Administrative Central Office participates in the Teachers Retirement System of Georgia (TRS), a costsharing multiple-employer public employee retirement system (PERS) established by the General Assembly ofGeorgia for the purpose ofproviding retirement allowances and other benefits for teachers of the State of Georgia. The Administrative Central Office's payroll for the year ended June 30, 1996, for employees covered by TRS was $3,029,536.10. The Administrative Central Office's total payroll for all employees was $5,805,499.33. Benefits TRS provides service retirement, disability retirement, and survivor's benefits for its members. A member is eligible for service retirement after the member (1) has attained the age of 60 years and has at least ten years ofcreditable service, (2) has at least 30 years of creditable service, regardless of age, or (3) has attained the age of55 years and has at least 25 years of creditable service. For those members with 30 years of ~rvice or those age 60 with at least ten years of service, retirement benefits are equal to 2% of the average of the member's tWo consecutive highest paid years ofservice multiplied by the number ofyears ofcreditable service up to 40 years. Any member who has between 25 and 30 years of creditable service and is at least 55 years ofage shall receive a benefit which is reduced by the lessor of 1/12 of 7% for each month the member is below age 60, or by 1OJio for each year or fraction thereofby which the member has less than 30 years of service. The nonnal retirement pension is payable monthly for life. Options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death. - 20- DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXIllBIT "F" NOTE 9: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Benefits Retirement benefits also include death and disability benefits whereby the disabled member or surviving spouse is entitled to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The benefit is based on member's creditable service (minimum of 10 years of service) and compensation up to the date of death or up to the time ofdisability. Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting ofemployer contributions occurs, but the member's contributions are refunded with interest. Contributions Required and Contributions Made Employees ofthe Administrative Central Office who are covered by TRS are required to pay 5% of their gross earnings to TRS. The Administrative Central Office makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees as advised by their independent actuary. For fiscal year 1996, the employer contribution rate was 11.81% for covered employees. The interest rate assumption (rate ofreturn on investments) was 7.50%. Total contributions to the plan made during fiscal year 1996 amounted to $509,266.86, ofwhich $357,788.20 was made by the Administrative Central Office and $151,478.66 was made by employees. These contributions represented 11.81% (Administrative Central Office) and 5% (employees) ofcovered payroll. Funding Status and Progress Pension Benefit Obligation The amount of the total pension benefit obligation is based on a standardized measurement established by Statement NO.5 of the Governmental Accounting Standards Board (GASB) that is required to be used for reporting purposes. The standardized measurement is the actuarial present value ofcredited projected benefits. This pension valuation method reflects the present value of estimated pension benefits that will be paid in future years as a result of employee services performed to date and is adjusted for the effects of projected salary increases and any step-rate benefits. A standardized measure of the pension benefit obligation was adopted by the GASB to enable readers ofthe PERS financial statements to assess that PERS funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among similar PERS. The total unfunded pension benefit obligation ofTRS as ofJune 30, 1995, which was the latest information available, was as follows: Total pension benefit obligation Net assets available for benefits, at cost Unfunded pension benefit obligation $ 17,442,607,000.00 15,857,066,000.00 $ 1.585.541.000.00 - 21 - DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXHIBIT "F" NOTE 9: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Funding Status and Progress Pension Benefit Obligation The measurement ofthe total pension benefit obligation is based on an actuarial valuation as ofJune 30, 1995. Net assets available for benefits were valued as ofthe same date. TRS does not make separate measurements ofassets and pension benefit obligation for individual employers. Retirement System Contributions Total contributions from all employers to TRS for the year ended June 30, 1996, were $607,274,559.00. The Administrative Central Office's contribution for the year ended June 30, 1996, of$357,788.20 was actuarially determined and represented .05.890,/0 oftotal contributions made by all participating employers. Trend Information Historical trend information is presented in the TRS June 30, 1996, financial report. This information gives an indication ofthe progress made in accumulating sufficient assets to pay benefits when due. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Plan Description The Administrative Central Office participates in the Employees' Retirement System of Georgia ("ERS"), a single-employer defined benefit plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees ofthe State ofGeorgia. The Administrative Central Office's payroll for the year ended June 30, 1996, for employees covered by ERS was $2,644,190.12. The Administrative Central Office's total payroll for all employees was $5,805,499.33. 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. Under both the old plan and new plan, members become vested after 10 years ofcreditable 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 ofyears of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. - 22- DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXHIBIT "F" NOTE 9: RETIREMENT PLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Benefits The normal retirement pension is payable monthly for life; however, options are available for distribution of the membets monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS. Contributions Required and Contributions Made As established by State statute, all full-time employees of the State ofGeorgia 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% of compensation and 4.75% of compensation paid by the Administrative Central Office on behalf of the employee. Under the new plan, member contributions consist solely of 1.25% of compensation paid by employee. The Administrative Central Office also is required to contribute at a specified percentage ofactive member payroll determined annually by actuarial valuation. For the year ended June 30, 1996, the ERS employer contribution rate for the Administrative Central Office amounted to 15.57% 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 $514,640.36, of which $411,809.85 was made by the Administrative Central Office and $102,830.51 was made by employees. These contributions met the requirements of the plan. 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. 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. - 23- DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1996 EXIllBIT "F" NOTE 9: RETIREMENT PLANS GEORGIA DEFINED CONTRIBUTION PLAN Plan Description The Administrative Central Office 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 ofTrustees. The Administrative Central Office's payroll for the year ended June 30, 1996, for employees covered by GDCP was $84,605.37. The Administrative Central Office's total payroll for all employees was $5,805,499.33. 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 of Trustees has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Contributions and Vesting Member contributions ~e seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount ofthe member's account is refundable upon request by the member. . Total contributions made by employees during fiscal year 1996 amounted to $6,345.74 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. NOTE 10: 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 offorty five days. Employees are paid for unused accumulated annual leave upon retirement or termination ofemployment. 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. - 24- DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1996 EXlllBIT "F" NOTE 11: 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 Administrative Central Office expects such amounts, if any, to be immaterial to its overall financial position. Litigation, clatins and assessments filed against the Administrative Central Office of the Department of Technical and Adult Education, if any, are generally considered to be actions against the State ofGeorgia. 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 12: BONDING INFORMATION The Commissioner and all employees ofthe Administrative Central Office of the Department of Technical and Adult Education are bonded under a Public Employees Blanket Bond written by Employers Insurance of Wausau, 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 Administrative Central Office to a maximum of$I,OOO,OOO.OO against loss sustained through fraudulent or dishonest acts by its employees. The Faithful Performance of Duty Coverage insures the Administrative Central Office to a maximum of $1,000,000.00 against loss sustained from failure ofits employees to perform faithfully their duties or to account properly for all monies and property received by virtue oftheir position or employment. All employees ofthe Administrative Central Office are also bonded under Commercial Crime Policies written by the United States Fire Insurance Company, their Policy Nos. 626 012292 6 and 626 012294 4, on which premiums were paid to October 1, 1996. Under these additional public employee dishonesty coverages, the policies insure the Administrative Central Office to a maximum of $9,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees and from failure ofits employees to perform faithfully. - 25- I I I I I I I I I I I I I I I I I I I I I I I I I I I SUPPLEMENTARY INFORMATION - 27- ASSETS Cash and Cash Equivalents Accounts Receivable 8tateAppropriation Federal Financial Assistance Other DEPARTMENT OF TECHNICAl AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNID COMBINING BALANCE SHEET (STATUTORY BASIS) BUDGET FUND JUNE 30,1996 -A- DEPARTMENT OF TECHNICAl AND ADULT EDUCATION -B- LOITERYFOR EDUCATION TOTAl $ 3,178,382.43 $ 3,178,382.43 $ 6,580,389,32 $ 2,610,189.02 7,182,327.78 $ 16,372,906.12 $ 4,223,855,26 $ 450,00 4,224,305.26 $ 10,804,244.58 2,610,189,02 7,182,m.78 20,597,211.38 Total Assets $ 16,372,906.12 $ 7,402,687.69 $ 23,775,593.81 LIABILITIES AND FUND EaUITY Liabilities Cash Overdraft Accounts Payable Contracts Payable Allotments Due to Other Units Payroll Withholdings Total Uabilities Fund Equity Fund Balance Reserved Construction Reserve Trust Fund Federal Financial Assistance Unreserved Designated Surplus Regular Lottery for Education Total Fund Equity Total Liabilities and Fund Equity $ 2,823,674.00 8,729,375.13 $ 15,651,69 3,919,108.91 9,951.40 $ 15,497,761.13 $ $ 3,768,760.61 109,768.42 3,135,997.61 7,014,526.64 $ 2,823,674.00 12,498,135.74 125,420.11 7,055,106.52 9,951.40 22,512,287.77 $ 275,000.00 $ 275,000.00 $ 36,048.47 36,048.47 839,096.52 113,161.05 839,096.52 113,161.05 $ 875,144.99 $ 388,161.05 $ 1,263,306.04 $ 16,372,906.12 $ 7,402,687,69 $ 23,775,593.81 See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. -28- DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) COMBINING STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 1996 EXHIBIT-H- See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information. -29- DEPARTMENT OF TECHNICAL AND AQULT EDUCATION AQMINISTRATIVE CENJRAL OfFICE fOVERSIGHT UNID COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES . BUDGET FUND YEAR ENDED JUNE 30 1996 EXHIBIT"l" FUNDS AVAILABLE REVENUES STATE APPROPRIATION General Appropriation Amended Appropriation GcNemo!'sEmergencyFund Total State Appropriation Allotments to State Technical Institutes Net state Appropriation FEDERAL REVENUES Allotments to State Technical Institutes Net Federal Revenues OTHER REVENUES RETAINED Contracts Georgia Department of Administrative Services Distant Leaming Project Program Georgia Department of Human Resources PEACH Project Allotments to state Technical Institutes G.E.D. Testing Fees Insurance Recollefies Registration Fees Reimbursements from Various Sources Total Other Revenues Retained Total Revenues CARRy-oVER FROM PRIOR YEAR Transfer from Reserved Fund Balance Construction Reserve Trust Fund Allotments to State Technical Institutes Federal Financial Assistance Resolution of Disallowed Costs Total cany.Qller from Prior Year Total Funds Available EXPENDITURES PERSONAL SERVICES Salaries and Wages Employe~s Contributions for: F.I.C.A. Retirement Health Insurance Personal Liability Insurance Unemployment Compensation Insurance Workers' Compensation Insurance Assessments by Merit System "An DEPARTMENT OF TECHNICAL AND ADULT EDUCATION "B" LOTTERY FOR EDUCATION TOTAL $ 166,597,224.00 $ 39,248,713.00 $ 205,845,937.00 106,425.00 1,010,000.00 1,116,425.00 29,500.00 29,500.00 $ 166,733,149.00 $ 40,258,713.00 $ 206,991,862.00 -119,159,698.68 -6,619,482.17 -125,n9,180.85 $ 47,573,450.32 $ 33,639,230.83 $ 81,212,681.15 $ 24,485,965.07 -15,057,156.41 $ 24,485,965.07 -15,057,156.41 $ 9,428,808.66 $ 9,428,808.66 $ 699.49 $ 699.49 253,332.55 -158,468.57 238,148.01 1,009,962.51 38,458.26 7,661.00 253,332.55 -158,468.57 238,148.01 1,009,962.51 38,458.26 7,661.00 $ 1,389,793.25 $ 1,389.793.25 $ 58,392,052.23 $ 33,639,230.83 $ 92,031,283.06 $ 5,533,318.05 $ 5;533,318.05 -3,440,716.25 -3,440,716.25 $ 760.35 760.35 68,284.00 68,284.00 $ 69,044.35 $ 2,092,601.80 $ 2,161,646.15 $ 58,461 ,096.58 $ 35?31,832.63 $ 94,192,929.21 $ 3,536,956.74 181,730.46 505,272.82 431,349.42 4,018.00 15,031.61 15,977.85 8,989.48 $ 4,699,326.38 $ 3,536,956.74 181,730.46 505,272.82 431,349.42 4,018.00 15,031.61 15,977.85 8,989.48 $ 4,699,326.38 see accompanying notes and Independent Accountanrs Combined Report on Review of Financial Statements and Supplementary Information. -30 - DEPARTMENT Of TECHNICAL ANp AC!ULT EpucATION APMINISTRATIVE CENTRAL OfFICE !OVERSIGHT UNm COMBINING STATEMENT Of FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND YEAR ENDED JUNE 30,1996 EXHIBIT *1" DEPARTMENT Of TECHNICAL AND A[)UlT EPUCADON AOMINISTRADVE CENTRAL OfFICE /oVERSIGHT UNm COMBINING STATEMENT Of FUNDS AVAILABLE AND EXPENPITURES BUOOETFUNQ YEAR ENDED JUNE 30 1996 EXHIBIT "I" EXPENPITURES Q!!:lEB QUICK START PROGRAM PeI80naI Services 5al8ries and Wages EmpIoyeI's ContribUtions for: F.I.C.A Retirement Health Insurance Personal Liability Insurance unemployment Compensation Insurance WOIIIel's Compensation Insurance As&essments by the Merit Sy$tem OlherCosts Motor Vehicle Expenses Supplies and Materials Repalnl and Maintenance Utilities Rents (Other than Real Estate) Insurance and Bonding Grants to Counties, Cities and Civil Divisions Other Operating Expenses Publications and Printing TIlMlI EqUipment EqUipment Purchases L.easeIPurchase d Equipment Rental d Equipment Computer Charges Software Computer Billings, DOAS Real Estate Rentals Telecommunications Per Diem, Fees and ContractS Per Diem and Fees Contracts AREA SCHOOL PROGRAM Other Costs Grants to Counties, Cities and Civil Divisions Olher Operati~ Expenses Telecommunications REGENTS PROGRAM Other Costs Grants to Counties, Cities and Civil Divisions ADULT LITERACY GRANTS Other Costs SUpplies and Materials Repairs and Maintenance Grants to Counties, Cities and Civil Divisions Other Operating Expenses Publications and Printing EqUipment EqUipment Purchases Computer Charges Software Real Estate Rentals TeIecornmunications Per Diem, Fees and Contracts Per Diem and Fees Contracts see accompanying note6 and Independent Accountanfs Combined Report on RevieW d Financial Statements and SUpplementary Information. -32 - "An DEPARTMENT OF TECHNICAl AND ADULT EDUCATION "B" LOTTERY FOR EDUCATION TOTAl $ 2,268,542.59 55,444.37 280,021.98 283,568.49 10,915.00 661.39 11,496.15 868.64 8,517.65 216,786.50 39,759.60 7,816.37 64,413.01 3,956.07 12,973.34 382,714.74 64,348.60 222,023.87 482,164.14 15,844.72 69,118.32 123,225.47 6,661.55 308,256.57 76,942.30 3,405,989.19 1,331.84 $ 8,424,362.46 $ 29,167,750.37 176.63 18,389.76 $ 29,186,316.76 $ 2,887,129.48 $ 14,035.09 1,867.56 6,667,431.78 55,329.30 3,843.62 159,247.94 5,728.47 16,089.57 6,168.00 86,836.19 643,025.98 $ 7,659,603.50 $ 2,268,542.59 55,444.37 280,021.98 283,568.49 10,915.00 661.39 11,496.15 868.64 8,517.65 216,786.50 39,759.60 7,816.37 64,413.01 3,956.07 12,973.34 382,714.74 64,348.60 222,023.87 482,164.14 15,844.72 69,118.32 123,225.47 6,661.55 308,256.57 76,942.30 3,405,989.19 1,331.84 $ 8,424,362.46 $ 29,167,750.37 176.63 18,389.76 $ 29,186,316.76 $ 2,887,129.48 $ 14,035.09 1,867.56 6,667,431.78 55,329.30 3,843.62 159,247.94 5,728.47 16,089.57 6,168.00 86,836.19 643,025.98 $ 7,659,603.50 DEPARTMENT OF TECHNICAL AND ADULT EQUCADON APMINISJRATlYE CENTRAL OFfiCE !OVERSIGHT UNm COMBINING STATEMENT Of FUNDS AVAILABLE AND EXPENDITURES BUDGETFUNQ YEAR ENDED JUNE 30 1996 EXHIBIT.,.' EXPENDITURES QlliEB JOB TRAINING PARTNERSHIP ACT OtherCo8ts Gnmls to Counties, Cities and eMl Divisions COMPUTER LABORATORIES AND SATELLITE DISHES ADULT LITERACY EqUipment EqUipment Purchases Computer Charges Software CAPITAL OUTLAY TECHNICAL INSTITUTE SATELLITE FACILmES Per Diem, Fees and ConInIcts ConInIcts EQUIPMENT TECHNICAL INSTmJTES OtherCo8ts Grants to Counties, Cities and eMl Divisions EqUipment Equipment Purchases REPAIRS AND RENOVADONS OtherCo8ts Grants to Counties, Cities and eMl Divisions Other Expenses Computer Charges Software Per Diem, Fees and Contracts ConInIcts Total Other Total Expenditures Excess ~ Funds Available 0IIeI' Expenditures "AN DEPARTMENT OF TECHNICAL ANOADULT EDUCADON "8" LOTTERY FOR EDUCATION TOTAL S 1,159,172.20 S 1,159,172.20 $ 554,300.00 $ 445,536.97 S 999,836.97 $ 554,300.00 445,536.97 999,836.97 $ 32,098,459.96 $ 32,098,459.96 $ 6,790.00 $ 258,980.00 $ 265,770.00 $ 6,790.00 258,980.00 265,770.00 $ 870,477.00 $ 717.60 979,406.40 242,000.00 $ 2,092,601.00 $ 870,477.00 717.60 979,406.40 242,000.00 2,092,601.00 $ 49,554,940.47 $ 35,456,667.93 $ 85,011,608.40 $ 58,020,864.52 $ 35,456,667.93 $ 93,477,532.45 440,232.06 275,164.70 715,396.76 $ 58,461,096.58 S 35?31,832.63 $ 94,192,929.21 See accompanying notes and Independent Accountanfs combined Report on Review ~ Financial statements and Supplementary Information. -33 - 'b~ C.:A.,,,-l<.. rO) -:)~ J I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNID STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FIDUCIARY FUND TYPE - AGENCY FUNDS YEAR ENDED JUNE 30, 1996 Postsecondary Activities Accounts ASSETSI LIABILITIES JULY1,1995 ADDITIONS DEDUCTIONS ASSETSI LIABILITIES JUNE 30, 1996 $ ===44===:,035==:,1:=8 $ 252,898.97 $ 237,333,69 $ ===59===,600=::.46= see accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information, -35- DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNID SCHEDU~E OF APPROVED BUDGET -A- DEPARTMENT OF TECHNICAL AND ADULT EDUCATION YEAR ENDEe JUNE 30, 1996 FUNDS AVAILABLE REVENUES State Appropriation Federal Revenues Other Revenues Retained CARRY-QVER FROM PRIOR YEAR Transfer from Reserved Fund Balance EXpENDITURES Personal 5ervices Regular Operating Expenses Travel EqUipment COrnputerCharges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts capital OutJay Personal Services-Institutions Operating Expenses-Institutions QUick Start Program Area SehooI Program Regents Program Adult LIteracy Grants Job Training Partnership Act ORIGINAL APPROPRIATION AMENDED APPROPRIATION GOVERNOR'S EMERGENCY FUND $ 166,597,224,00 $ 19,283,411.00 14,297,198,00 $ 2OO,1n,833.00 $ 0,00 106,425.00 $ 54,954.00 17,237,328,00 17,398,707.00 $ 29,500,00 29,500.00 $ 2OO,1n,833,OO $ 17,398,707,00 $ =====29:=,=500=:=,0..0.. $ 4,126,803,00 $ 413,225,00 120,500.00 15,000.00 837,200,00 365,610,00 195,000,00 510,000,00 0.00 114,178,595,00 22,447,798,00 6,544,505,00 29,779,795.00 2,957,857.00 17,685,945.00 0,00 48,570.00 -3,m.oo 22,000,00 18,544.00 -82,732.00 -93,095.00 29,472.00 6,829,222.00 $ 7,931,214.00 2,500,000,00 -257,213,00 -45,217.00 501,219.00 10,000,00 10,000,00 9,500,00 $ 2OO,1n,833,OO $ 17,398,707.00 $ ======29==,500==:,00= see accompanying notes and Independent Aceountanrs Combined Report on Review of Financial Statements and Supplementary InCormation, -36- BUDGET ADJUSTMENTS TOTAL APPROVED BUDGET LESS: BUDGET TRANSFERS TO OTHER UNITS TOTAL $ 166,733,149.00 $ 119,528,979.00 $ 47,204,170.00 $ 18,564,679.00 37,903,044.00 26,561,819.00 11,341,225.00 20,934,063.00 52,468,589.00 49,946,002.00 2,522,587.00 $ 39,498,742.00 $ 257,104,782.00 $ 196,036,800.00 $ 61,067,982.00 332,223.00 332,223.00 332,223.00 0.00 $ 39,830,965.00 $ 257,437,005.00 $ 196,369,023.00 $ 61,067,982.00 $ 646,631.00 $ 4,822,004.00 $ 4,822,004.00 272,217.00 682,165.00 682,165.00 106,318.00 248,818.00 248,818.00 58,440.00 91,984.00 91,984.00 143,495.00 897,963.00 897,963.00 88,453.00 454,063.00 454,063.00 12,695.00 114,600.00 114,600.00 117,250.00 656,722.00 656,722.00 1,671,777.00 1,671,777.00 $ 251,000.00 1,420,777.00 3,686,848.00 124,704,665.00 124,657,809.00 46,856.00 20,120,223.00 50,509,235.00 50,270,372.00 238,863.00 171,183.00 9,215,688.00 731,406.00 8,484,282.00 704,703.00 30,227,285.00 30,227,285.00 13,362.00 2,926,002.00 2,926,002.00 3,080,195.00 21 ,276,859.00 13,344,218.00 7,932,641.00 8,937,175.00 8,937,175.00 7,114,218.00 1,822,957.00 $ 39,830,965.00 $ 257,437,005.00 $ 196,369,023.00 $ 61,067,982.00 - 37- I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I DEPARTMENT OF TECHNICAL AND ADULT EOUCATION ADMINISTRATIVE CENTRAL OFFICE