Technical College System of Georgia, System Office (Oversight Unit), management report for fiscal year ended June 30, 2011

TECHNICAL COLLEGE
SYSTEM OF GEORGIA
SYSTEM OFFICE (OVERSIGHT UNIT)
MANAGEMENT REPORT
FOR FISCAL YEAR ENDED
JUNE 30,2011
Georgia Deparbment of I
Audits and Act' Russell W.Hinto~

TECH NlCAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT)
- TABLE OF CONTENTS -

SECTION I

FINANCIAL

LETTER OF TRANSMllTAL

SELECTED FINANCIAL INFORMATION

EXHIBlTS

A STATEMENTOFNETASSETS-(GAAPBASIS)

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (GAAP BASIS)

C STATEMENTOFCASHFLOWS-(GAAPBASIS)

D SELECTED FINANCIAL NOTES

SUPPLEMENTARY INFORMATION

SCHEDULES

1 BALANCE SHEET - (STATUTORY BASIS) - BUDGET FUND

18

2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT

(STATUTORY BASIS) BUDGET FUND

19

3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET

BY PROGRAM AND FUNDING SOURCE

(STATUTORY BASIS) BUDGET FUND

20

4 STATEMENT OF CHANGES TO FUND BALANCE

BY PROGRAM AND FUNDING SOURCE

(STATUTORY BASIS) BUDGET FUND

2 2

5 RECONCILIATIONOF SALARIES AND TRAVEL

2 5

SECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656.2174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1- 156
Atlanta, Georgia 30334-8400
November 1 5 , 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the State Board of the Technical College System of Georgia
and Honorable Ronald Jackson, Commissioner Technical College System of Georgia System Office (Oversight Unit)
Ladies and Gentlemen:
As part of our audit of the basic financial statements of the State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Gmgia Single Audt Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2011, we have performed certain audit procedures at Technical College System of Georgia - System Office (Oversight Unit). Accordingly, the financial statements and compliance activities of Technical College System of Georgia - System Office (Oversight Unit) 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 Technical College System of Georgia - System Office (Oversight Unit) as of and for the year ended June 30, 2011. Information contained in this report is a by-product of our audit of the basic financial statements of the State of Georgia and is the representation of management. Accordingly, we do not express an opinion or any other form of assurance on it.
This report is intended solely for the information and use of management of Technical College System of Georgia and members of the State Board of the Technical College System of Georgia and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

~ u j s e lWl . Hinton, CPA, CGFM State Auditor

SELECTED FINANCIAL INFORMATION

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT)
STATEMENT OF NET ASSETS - (GAAP BASIS)
JUNE 30,2011
ASSETS
Current Assets Cash and Cash Equ~valents Accounts Receivable State Appropriations Federal Financial Assistance Other Prepaid Items
Total Current Assets
Noncurrent Assets Capital Assets, Net
Total Assets
LIABILITIES
Current Liabil~ties Accounts Payable Salaries Payable Grants Payable Deferred Revenue Funds Held for Others Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Compensated Absences
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted
Expendable Unrestricted (Deficit)
Total Net Assets

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT)
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - (GAAP BASIS) YEAR ENDEDJUNE 3 0 , 2 0 1 1
OPERATING REVENUES
Sales and Services Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Benefits Travel Utilities Suppl~esand Other Services Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal State Local Expenses Gifts Interest Expense (Capital Assets)
Net Nonoperating Revenues
Income (Loss) Before Other Revenues. Expenses. Gains, or Losses
Capital Grants and Gtfts Loss on Disposal of Capital Assets
Increase (Decrease) i n Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXHIBIT "B"

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TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT)
- STATEMENT OF CASH FLOWS (GAAP BASIS)
YEAR ENDEDJUNE 30,2011
CASH FLOWS FROM OPERATING ACTIVITIES Sales and Sewices of Educational Departments Paymentsto Suppliers Paymentsto Employees Other Receipts (Payments)
Net Cash Provided(Used) by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes
Net Cash Flows Provided (Used) by Noncapital FinancingActivities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of Capital Assets Principal Paid on Capital Debt Interest Paid on Capital Debt
Net Cash Prov~ded(Used) by Capital and Related FinancingActivities
Net Increase (Decrease) in Cash
- Cash and Cash Equivalents Beginningof Year
- Cash and Cash Equivalents End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments to ReconcileOperating Income to Net Cash
Provided(Used) by OperatingActivities Depreciation Expense Change in Assets and Liabilities: Prepaid Items Salaries Payable Accounts Payable Compensated Absences
Net Cash Provided (Used) by OperatingActivities

EXHIBIT "C"

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT) SELECTED FINANCIAL NOTES JUNE 3 0 , 2 0 1 1
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

EXHIBIT "D"

The Technical College System of Georgia, an organizational unit of the State of Georgia, is part of the executive branch of government of the State of Georgia. The State Board of Technical College System of Georgia is composed of one member from each Congressional District in the State and nine a t large members appointed by the Governor and confirmed by the Senate for five-year terms. The Commissioner is the chief executive officer of the System and is selected by the State Board to serve at its pleasure.
The System 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 of Georgia. The System also does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the Technical College System of Georgia is included within the State of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the State of Georgia. These reporting entity relationships are defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reeorting Standards.
The System Office of the Technical College System of Georgia is the "Oversight Unit" of the System and performs administrative functions and provides guidance to the twenty-six (26) State Technical Colleges which are organizational units of the Technical College System of Georgia.
The accompanying financial statements represent only the financial position and results of operations of the System Office of the Technical College System of Georgia. The financial position and results of operations of other organizational units of the System (various State Technical Colleges) are not included in these financial statements.
NET ASSETS
The System Office's net assets are classified as follows:
Investedin capitalassets, net of relateddebt: This amount represents the System Office's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
- Restricted net assets expendable: Restricted expendable net assets include resources in which
the System Office is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Unrewctednet assets: Unrestricted net assets represent available resources derived from state appropriations, and sales and services of educational departments. These resources will be used for transactions relating to the educational and general operations of the System Office, and may be used at the discretion of the governing board to meet subsequent fiscal year expenses for those purposes, except for unexpended state appropriations (surplus) of $100,251.88. Unexpended state appropriations must be refunded to the Office of the State Treasurer.

NOTE 2: DEPOSITS

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT) SELECTED FINANCIAL NOTES JUNE 3 0 , 2 0 1 1

EXHIBIT "DM

The custodial credit risk for deposits is the risk that in the event of a bank failure, the System Office's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the System Office) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
1. Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia.
3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
5. Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, 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 lnsurance Corporation.
As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies, which allow agencies of the State of Georgia (and thus the System Office), the option of exempting demand deposits from the collateral requirements.
At June 30, 2011, the carrying value of deposits was $625,472.94 and the bank balance was $2,408,916.39. The entire bank balance was insured by the Federal Deposit lnsurance Corporation under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT) SELECTED FINANCIAL NOTES JUNE 30.2011
NOTE 3: ACCOUNTS RECEIVABLE
Accounts receivable at June 30, 2011, consists of the following:

EXHIBIT "D"

State Appropriations

$

Federal, State and Private Funds

Georgia State Financingand Investment Commission

87,402.27 5,370,707.10 9,336,901.09

Total Accounts Receivable

$

14,795.010.46

NOTE 4: CAPITAL ASSETS

Following are the changes in capital assets for the year ended June 30, 2011:

Beginning

Balance

July 1,2010

Transfer

Additions

Reductions

Ending Balance June 30,2011

Capital Assets, Being Depreciated: Building and Building Improvements Improvements Other Than Buildings Equipment Capital Leases

$ 15,071.763.61 527.101.00
8,592,780.63 $ -171,201.00 $ 52,477.18

$
232,630.68 $ 716,842.50 52,477.18

15,071,763.61 527,101.00
7,937,367.81 0.00

Total Assets Being Depreciated

$ 24,244,122.42 $ -171.201.00 $ 232,630.68 $ 769,319.68 $ 23,536.232.42

Less: Accumulated Depreciation: Building and Building Improvements Improvements Other Than Buildings Equipment Capital Leases
Total Accumulated Depreciation

$ 989.084.52

$ 339,114.68

$ 1,328,199.20

38.977.63

26,355.05

65,332.68

5,804,540.94 $ -171,201.00 1.019.971.10 $ 707,217.54

5,946,093.50

43,730.98

874.62 44,605.60

0.00

$ 6,876,334.07 L -171,201.00 $ 1.386.315.45 $ 751.823.14 $ 7,339.625.38

Capital Assets, Net

NOTE 5: DEFERRED REVENUE Deferred revenue at June 30, 2011, consists of the following:
Gifts - Georgia State Financingand Investment Commission $
Federal Grants and Contracts Other Deferred Revenue
Total Deferred Revenue

516,066.87 87,765.34
143,949.14
747.781.35

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT) SELECTED FINANCIAL NOTES JUNE 3 0 , 2 0 1 1

EXHIBIT " D

NOTE 6: LONG-TERM LIABILITIES

Long-Term liability activity for the year ended June 30, 2 0 1 1was as follows:

Leases Lease Obligations

Beginning Balance July 1.2010

$

7.601.64

Additions

Reductions

Ending Balance June 30,2011

$

7.601.64 $

0.00

Current Portion

Other Liabilities Compensated Absences

1.963.102.20 $ 832,297.78

743.103.09 2,052,296.89 $ 1,089,282.60

Total Long-TermLiabilities

$ 1,970,703.84 $ 832,297.78 $ 750,704.73 $ 2,052,296.89 $ 1,089,282.60

NOTE 7: NET ASSETS

Changes in Net Asset activity for the year ended June 30, 2 0 1 1was as follows:

Invested in Capital Assets Net of Related Debt

Beginning Balance July 1,2010

Additions

Reductions

Ending Balance June 30,2011

$ 17,360,186.71 $

240.232.32 $ 1,403,811.99 $ 16,196,607.04

Restricted Net Assets

227,806.13 13,699,461.44 13,332.769.34

594,498.23

Unrestricted Net Assets

Total Net Assets
NOTE 8: LEASE OBLIGATIONS
OPERATING LEASES
Technical College System of Georgia has entered into certain agreements to lease buildings, copiers 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 System Office has the option of renewing the lease on a year-to-year basis. Amounts are included only for multi-year leases and for cancelable leases for which an option to renew for the subsequent fiscal year has been exercised.
Expenses for rental of buildings, copiers and equipment under operating leases for the year ended June 30, 2011, totaled $1,899.236.83.

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT) SELECTED FINANCIAL NOTES JUNE 30,2011

EXHIBIT "D"

SijMMARWF LEASE OBLIGATIONS

Future commitments for noncancellable operating leases having remaining terms in excess of one year as of June 30,2011, were as follows:
Operating
Leases Year EndingJune 30:

Total Minimum Lease Payments

$

166,849.96

NOTE 9: RETIREMENT PLANS
Technical College System Office participates in various retirement plans administered by the State of Georgia under two major retirement systems: Employees' Retirement System of Georgia (ERS System) and Teachers Retirement System of Georgia. These two systems issue separate publicly available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained from the respective system offices. The significant retirement plans that Technical College System Office participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law.
Eiraployees' Retirement System of Georgia The ERS System is comprised of individual retirement systems and plans covering substantially all employees of the State of Georgia except for teachers and other employees covered by the Teachers Retirement System of Georgia. One of the ERS System plans, the Employees' Retirement System of Georgia (ERS), is a cost-sharing multiple-employer defined benefit pension plan that was established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees and has the powers and privileges of a corporation. ERS acts pursuant to statutory direction and guidelines, which may be amended prospectively for new hires but for existing members and beneficiaries may be amended in some aspects only subject to potential application of certain constitutional restraints against impairment of contract.
On November 20, 1997, the Board created the Supplemental Retirement Benefit Plan (SRBP-ERS) of ERS. SRBP-ERS was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of the SRBP-ERS is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC Section 415. Beginning January 1,1998, all members and retired former members in ERS are eligible to participate in the SRBP-ERS whenever their benefits under ERS exceed the limitation on benefits imposed by IRC Section 415.
The benefit structure of ERS is established by the Board of Trustees under statutory guidelines. Unless the employee elects 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. Members hired on or after July 1,1982 but prior to January 1,2009 are "new plan" members subject to the modified plan provisions. Effective

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT) SELECTED FINANCIAL NOTES JUNE 3 0 , 2 0 1 1

EXHIBIT "DM

January 1,2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). ERS members hired prior to January 1, 2009 also have the option to change their membership to the GSEPS plan.

Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 1 0 years of creditable service and attainment of age 6 0 or 3 0 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 2 5 years of creditable service for members under age 60.

Retirement benefits paid to members are based upon a formula adopted by the Board of Trustees for such purpose. The formula considers the monthly average of the member's highest 24 consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Post-retirement cost-of-living adjustments may be made to members' benefits provided the members were hired prior to July 1,2009. 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.

Member contribution rates are set by law. Member contributions under the old plan are 4% of annual compensation up to $4,200 plus 6% of annual compensation in excess of $4,200. Under the old plan, Technical College System Office pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these Technical College System Office contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25%of annual compensation. Technical College System Office is required to contribute at a specified percentage of active member payroll established by the Board of Trustees determined annually in accordance with actuarial valuation and minimum funding standards as provided by law. These Technical College System of Georgia contributions are not at any time refundable to the member or his/her beneficiary.

Employer contributions required for fiscal year 2 0 1 1 were based on the June 30, 2008 actuarial valuation for the old and new plans and were set by the Board of Trustees on September 18, 2008 for GSEPS as follows:

Old Plan* New Plan GSEPS

10.41% 10.41% 6.54%

* 5.66% exclusive of contributions paid by the employer on behalf of old plan members

Members become vested after 10 years of service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits.

TECH NlCAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT) SELECTED FINANCIAL NOTES JUNE 30,2011

EXHIBIT "D"

1-eachers Retirement System of Georgia The Teachers Retirement System of Georgia (TRS) is a cost-sharing multipleemployer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS.

On October 25, 1996, the Board created the Supplemental Retirement Benefit Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS
whose benefits are otherwise limited by IRC Section 415. BeginningJuly 1,1997, all members and
retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.

TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 3 0 years of creditable service, regardless of age, or after 1 0 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.

Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of one-twelfth
of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by
which the member has less than 3 0 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 1 0 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2 0 1 1 were 5.53% of annual salary. Employer contributions required for fiscal year 2 0 1 1 were 10.28% of annual salary as required by the June 30, 2008 actuarial valuation.

The following table summarizes Technical College System Office's contributions by defined benefit plan for the years ending June 30,2011, June 30,2010, and June 30,2009:

ERS

Required

Percent

Contribution

Contributed

TRS

Required

Percent

Contribution Contributed

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT) SELECTED FINANCIAL NOTES JUNE 3 0 . 2 0 1 1

EXHIBIT "DM

GEORGlA DEFINED CONTRIBIJTION PLAN

Plan Description Technical College System office participates in the Georgia Defined Contribution Plan (GDCP) which is a singleemployer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia.

Benefii A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $3,500.00 credited to his/her account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.

The Employees' Retirement System of Georgia issues a financial report each fiscal year which may be obtained through ERS.

Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member. The System Office's payroll for the year ended June 30, 2011, for employees covered by GDCP was $777,439.17. The System Office's total payroll for all employees was $15,782,069.62.

Total contributions made by employees during fiscal year 2 0 1 1 amounted to $58.315.76 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.

NOTE 10: POST-EMPLOYMENT BENEFITS

Technical College System office participates in the following State of Georgia post-employment benefit plans: the Georgia State Employees Post-employment Health Benefit Fund (administered by the Department of Community Health) and the State Employees' Assurance Department - OPEB (administered by the ERS System). Separate financial reports that include the applicable financial statements and required supplementary information for these plans are publicly available and may be obtained from the respective system offices.

Retiree health benefits were previously funded through the Georgia Retiree Health Benefit Fund (GRHBF). In 2009, the General Assembly revisited the GRHBF and enacted legislation that, effective August 31, 2009, separated the GRHBF into two new funds: the Georgia School Personnel Postemployment Health Benefit Fund and the Georgia State Employees Post-employment Health Benefit Fund. The purpose of this change was to assure employers responsible for planning and funding future retiree health costs that their contributions will be dedicated to their respective retiree populations. Funds in the GRHBF were transferred to the Georgia State Employees Post-employment Health Benefit Fund or the Georgia School Personnel Postemployment Health Benefit Fund as described in the plan financial statements. The statute that created the GRHBF is repealed effective September 1,2010.

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT) SELECTED FINANCIAL NOTES JUNE 3 0 , 2 0 1 1

EXHIBIT "Dl1

Georgia State Employees Postemployment Health Benefit Fund The Georgia State Employees Post-employment Health Benefit Fund (State OPEB Fund) is a costsharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of State organizations (including technical colleges) and other entities authorized by law to contract with the Department of Community Health for inclusion in the plan. The State OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the health insurance plan for State employees. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board).

The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of the health insurance coverage.

Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.

The combined active and retiree contribution rates established by the Board for employers participating in the State OPEB Fund were as follows for the fiscal year ended June 30, 2011:

June 2010 July 2010 - April 2011 May 2011- June 2 0 1 1

22.165% of covered payroll for July coverage 25.586% of covered payroll for August - May coverage 22.667% of covered payroll for June - July coverage

No additional contribution was required by the Board for fiscal year 2 0 1 1 nor contributed to the State OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other post-employment benefits and are subject to appropriation.
The following table summarizes Technical College System Office's combined active and retiree contributions t o the health insurance plans for the years ending June 30, 2011, June 30, 2010 and June 30,2009:

Fiscal Year

Percentage Contributed

Required Contribution

TECH NlCAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT) SELECTED FINANCIAL NOTES JUNE 3 0 , 2 0 1 1

EXHIBIT "DM

State Employees' Assurance Department - OPEB State Employees' Assurance Department - OPEB (SEAD-OPEB) is a cost-sharing multipleemployer defined benefit post-employment plan that was created in fiscal year 2007 by the Georgia General Assembly to provide term life insurance to retired and vested inactive members of Employees', Judicial (JRS), and Legislative (LRS) Retirement Systems, amended to exclude members of JRS and LRS hired on or after July 1,2009. Pursuant to Title 47 of the OCGA, the authority to establish and amend the benefit provisions of the plan is assigned to the Boards of Trustees of the Employees' and Judicial Retirement Systems.

Contributions by plan members are established by the Boards of Trustees, up to the maximum allowed by statute (not to exceed 0.5% of earnable compensation). The Boards of Trustees of the Employees' and Judicial Retirement Systems establish employer contribution rates, such rates which, when added to members' contributions, shall not exceed 1% of earnable compensation. For the fiscal year ended June 30, 2011, contributions of ERS "old plan" members were 0.45% of earnable compensation, 0.22% of which was paid by the employer. Contributions of ERS "new plan" members and of members of the Judicial and Legislative Retirement Systems were 0.23% of earnable compensation. There were no employer annual required contributions (ARC) for the fiscal years ended June 30,2011, June 30,2010 and June 30,2009.

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 expenses which are disallowed under grant terms. The amount of expenses which may be disallowed by the grantor cannot be determined at this time although Technical College System of Georgia - System Office expects such amounts, if any, to be immaterial to its overall financial position.

Litigation, claims and assessments filed against Technical College System of Georgia -System Office (an organizational unit of the Technical College System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia ComprehensiveAnnual Financial Report for the fiscal year ended June 30, 2011.

NOTE 12: AFFILIATED ORGANIZATIONS

The Technical College System of Georgia Foundation, Inc., is a legally separate, tax exempt organization whose activities primarily support the Technical College System of Georgia. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of the affiliated organization are not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from Technical College System of Georgia - System Office.

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SUPPLEMENTARY INFORMATION

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT) BAlANCE SHEET (STATUTORY BASIS) BUDGET FUND JUNE 30.2011
Cash and Cash Equivalents Accounts Receivable
State Appropriations Federal Financial Assistance Other Prepaid Expenditures
Total Assets
LIABILITIES AND FUND EOUITY Liabilities
Salaries Payable Accounts Payable Encumbrance Payable
Total Liabilities
Fund Balances Rese~ed Federal Financial Assistance Local Grants and Contracts UnreSe~ed Surplus Total Fund Balances
Total Llabllltles and Fund Balances

SCHEDULE "1"

Statutory Basis financial information was prepared on a prescribed basis of accountingthat demonstrates compliance with budgetarystatutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generallyaccepted accounting principles.

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT)
SUMMARY BUDGET COMPARISONAND SURPLUSANALYSIS REPORT (STATUTORYBASIS) BUDGET FUND
YEAR ENDEDJUNE 30.2011

REVENUES
State Approprlation State General Funds
Federal Funds Other Funds
Total Revenues
ADJUSTMENTS AND PROGRAM TRANSFERS
CARRYQVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance
Total Funds Available
EXPENDITURES
Adult Literacy Departmental Administration Economic Development Technical Education
Total Expenditures
Excess of Funds Available over Exoenditures
FUNO BALANCE JULY 1
Reserved unreserved
ADJUSTMENTS
Prior Year Payables/Expenditures Prlor Year Receivables/Revenues Unreserved Fund Balance (Surplus)Returned
From the Technical Colleges Year Ended June 30,2010
Unreserved Fund Balance (Surplus) Returned to 0W1ceof the State Treasurer Year EndedJune 30.2010 Year Ended June 30.2011
Prlor Year Reserved Fund Balance Included In Funds Available
FUND BALANCE JUNE30
SUMMARY OF FUNO BALANCE
Reserved Federal Flnanc~aAl ssistance Local Grants and Contracts
Total Resewed
Unreserved Surplus
Total Fund Balance
Statutory Basis financial information was preparedon a prescribed basls of accountingthat demonstratescompliance with budgetary statutes and regulationsof the State of Georgia. whlch IS a comprehensive bas6 of accountingother than generally accepted accounting principles.

BUDGET

ACTUAL

SCHEDULE "2"
VARIANCE FAVORABLE (UNFAVORABLE)

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT)
STATEMENT OF FUNDS AVAllABLE AND EXPENDITURES COMPARED TO BUDGEl BY PROGRAM AND FUNDINGSOURCE (STATUTORY BASIS) BUDGET FUND YEAR ENDEDJUNE 30,2011

Adult Literacy State Appropriation State General Funds Federal Funds FederalFunds Not Specifically Idenofled Other Funds
Total Adult Literacy
Departmental Administration State Appropriation State General Funds Federal Funds Federal Funds Not Speclflcally ldentlfied Amerlcan Rbcovery and RelnvestmentAct of 2009 Federal Funds Not Speclfically ldentified Other Funds
Total Departmental Administration
Economic Development State Appropriation State General Funds Federal Funds Federal Funds Not Speclfically ldentified Other Funds
Total Economic Development
Technical Education State Appropriation State General Funds Federal Funds Federal Funds Not Spectf~callyldenttfied American Recoveryand RelnvestmentAct of 2009 Federal Funds Not Speclfically ldentlfied Other Funds
Total Technical Education
Totals By Program

Original Approorlation

Amended Appropriation

Final Budget

Current Year Revenues

Statutory Basis financial information was prepared on a prescribed bass of accounting that demonstrates compliance with budgetarystatutes and regulations of the State of Georaa, which is a comprehens~vebasis of accounting other than generally accepted accounting principles.

SCHEDULE "3"

Prior Year Carry-Over

Funds Available Compared to Budget

Adjustments and

Total

Program Transfers

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negat~ve)

Excess (Deficlency) of Funds Available
Over/(Under) Expenditures

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT)
STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND YEAR ENDEDJUNE 30.2011

Adult Literacy State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Adult Literacy
Departmental Administration State Appropr~at~on State General Funds Federal Funds Federal Funds Not Speclflcally Identified Arnerlcan Recovery and Reinvestment Act of 2009 Federal Funds Not Speclfically ldentrfied Other Funds
Total DeDartmentalAdministration
Economic Development State Appropriat~on State General Funds Federal Funds Federal Funds Not Speclfically ldentified Other Funds
Total Econom~cDevelopment
Technical Education State Appr~prlatI~n State General Funds Federal Funds Federal Funds Not Speclfically ldentlfied American Recoveryand ReinvestmentAct of 2009 Federal Funds Not Speclfically ldentlfled Other Funds
Total Technical Educat~on
Total OperatingActivity
Prior Year Reserves Not Available for Ewpenditure Inventories Refundsto Grantors Other Reserves
Budget Unit Totals

Beginn~ngFund
Balance/(Deficit) July 1

Fund Balance Carried Over from
Prior Percod as Funds Available

Return of FiscalYear 2010
Surplus

Prior Period Adjustments

Statutory Basis financial information was prepared on a prescr~bedbasts of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia. which IS a comprehensive basls of accounttng other than generally accepted accounting prlnc~ples.

SCHEDULE "4"

Other Adjustments

Early Return of Fiscal Year 2 0 1 1
Surplus

Excess (Dehc~ency) of Funds Avatlable
Over/(Under) Expenditures

Ending Fund
Balance-/(.Deficit.)
June 30

Analysis of Endlng Fund Balance

Fiscal Year 2011

Reserved

Surplus/(Dehcit)

Total

Summary of EndingFund Balance Reserved
Federal Financial Assistance Local Grants and Contracts Unrese~ed Sur~lus
Total EndingFund Balance -June3 0

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TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT)
RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDEDJUNE 30.2011

SCHEDULE "4"

Totals per Annual Supplement

Compensated Absences June 30,2011 June 30,2010

Salaries Payable June 30,2011 June 30,2010

Adjustments

Shared Services on Jointly Staffed Personnel

Central Georgia Technical College

Brown Jr.,

Stephen A.

Sandersville Technical College

Brown Jr.,

Stephen A.

Southeastern Technical College

Jackson,

Vincent

Southern Crescent Technical College

Brown Jr.,

Stephen A.

Agency Funds

SALARIES

TRAVEL

$ 15,757,739.90 $ 660.383.71

SECTION Ill FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

TECHNICAL COLLEGE SYSTEM OF GEORGIA SYSTEM OFFICE (OVERSIGHT UNIT)
SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30,2011
FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS No matters were reported. FEDERAL AWARD FINDINGS AND OUESTIONED COSTS No matters were reported. OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION) No matters were reported.