Valdosta State University, Valdosta, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2002

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STATE OF GEORGIA - .DEPARTMENT OF AUDITS-AND ACCOUNTS
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VALDOSTA STATE UNIVERSITY
VALDOSTA', GEORGIA '

REPOR~ ON AUDIT

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OF THE FINANCIAL STATEMENTS

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THE

FISCAL
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YEAR.ENDED,
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JUNE

30,
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2002

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, Russell W. Hinton State Auditor
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SECTION I FINANCIAL

Rtsstu W. H,-rn,
STATE AUDITOR ,4()4 e562P4

DEPARTJ\.1ENT OF AUDITS AND ACCOUNTS
:!"4 \\.i,hm!!ton Srrcct S \\' 'iu11c 214 Atlanta, Gcorg1J 30314-8400
December 18, 2002

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board ofRegents of the Umvers1ty System of Georgia
and Honorable Ronald M Zaccan, President Valdosta State Umvers1ty
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen
We have audited the accompanymg basic financial statements (Exlub1ts A through D) of Valdosta State Umverslty, an organizational urut of the State of Georgia, as of and for the year ended June 30, 2002 These financial statements are the respons1b1hty of the Valdosta State Umvers1ty's management Our respons1b1hty 1s to express an opm1on on these financial statements based on our audit
We conducted our audit m accordance with auditing standards generally accepted m the Umted States of Amenca Those standards reqmre that we plan and perform the audit to obtam reasonable assurance about whether the financial statements are free of matenal misstatement An audit mcludes exammmg, on a test basis, evidence supportmg the amounts and disclosures m the financial statements An audit also mcludes assessmg the accounting prmc1ples used and s1gmficant estimates made by management, as well as evaluatmg the overall financial statement presentation We believe that our audit provides a reasonable basis for our opm1on
As discussed m Note 1, the financial statements of Valdosta State Umvers1ty are mtended to present the financial position and changes m financial pos1t1on (mcludmg cash flows) ofonly that portion of the business-type actw1t1es of the State ofGeorgia that 1s attnbutable to the transactions ofValdosta State Umvers1ty They do not purport to, and do not, present fairly the financial position and changes m financial pos1t1on (mcludmg cash flows) of the State of Georgia, m conformity with acc-0untmg pnnc1ples generally accepted m the Umtcd States of Amenca

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As descnbed m Note I to the financial statements, the Valdosta State Umvers1ty did not recognize June 30, 2001, encumbrances as expenses m the June 30, 2002, basic financial statements To conform to generally accepted accountmg pnnc1ples, encumbrances should be recogmzed as expenses and hab1hlles m the penod that goods and services are received The effects on the basic financial statements of tlus departure from generally accepted accountmg pnnc1ples were not reasonably determinable
In our op1ruon, except for the effects on the basic financial statements of the matter discussed m the fourth paragraph, the basic financial statements referred to above present fiurly, m all matenal respects, the financial pos1t10n of Valdosta State Umvers1ty as of June 30, 2002, and its changes m financial positJon (mcludmg cash flows) for the year then ended m conformity with accountmg pnnciples generally accepted m the Umted States of Amenca
As descnbed m Note 1, Valdosta State Uruvers1ty adopted the proV1s10ns of Governmental Accounting Standards Board (GASB) Statements No 35, Basic Fznanc1al Statements - and Management's Dzscusszon and Ana(vszs - for Publzc Colleges and Unzversztzes, as amended by GASB Statement No 37, Basic Fznanc1a/ Statements -and Management's D1scuss1011 and Anafrs1s for State and Local Governments, and GASB Statement No 38, Certam Fmancza/ Statements Note Dzsc/osures, as of July I, 2001, to implement a new financial reporting model
Management's D1scuss1on and Analysis 1s not a reqmred part ofthe basic financial statements but 1s supplementary informatJon reqmred by the GASB We have apphed certain hm1ted procedures, wluch consisted pnnc1pally ofinqumes ofmanagement regarding the methods ofmeasurement and presentallon of this supplementary information However, we did not audit tlus information and express no op1ruon on it
Our aud!t was conducted for the purpose of forming an op1ruon on the basic financial statements taken as a whole The accompanying supplementary informallon (Schedules I through 3) 1s presented for purposes of add11Jonal analysis and 1s not a reqmred part of the basic financial statements of Valdosta State Umvers1ty Such informatJon has been subJected to the auditing procedures apphed by us in the audit of the basic financial statements and, in our op1mon, based on our audit, is fairly stated m all matenal respects in relatJon to the basic financial statements taken as a whole
,_........_espectfully submltled,
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Ru ell W Hmton State Auditor
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REQUIRED SUPPLEMENTARY INFORMATION - I-

VALDOSTA STATE UNIVERSITY
Management's Discussion and Analysis

Introduction

Valdosta State Umvers1ty 1s one of the 34 mst1tut1ons of the Umvers1ty System of Georgia The Umvers1ty, located m Valdosta, Georgia, was founded m 1906 and 1s one of only two regional umversn1es w1thm the Umvers1ty system. The Umvers1ty offers nationally accredited programs m Art. Busmess, Music, Nursmg, Sports Med1cme, Speech and Language Pathology, School Psychology and Teacher Education Valdosta State Umvers1ty offers baccalaureate and masters degrees ma wide vanety ofsubJects This wide range ofeducauonal opportumlles attracts a lughly quaJ1fied faculty and a student body ofmore than 9,000 students each year The mstitut1on suffered enrollment losses after implementing the System lmllallve to move Remedial Instruction to the System's 2-year colleges However, the Umvers1ty feels that this trend has reversed as shown by the companson numbers that follow

Faculty

Students

FY2002 FY2001 FY2000

427

9,900

412

9,230

397

8,792

Overview ofthe Financial Statements and Financial Analysis

Valdosta State Umvers1ty 1s proud to present its financial statements for fiscal year 2002 The emphasis ofd1scuss1ons about these statements WIii be on current year data There are three financial statements presented the Statement of Net Assets, the Statement of Revenues, Expenses and Changes m Net Assets; and, the Statement of Cash Flows This d1scuss1on and analysis of the Umvers1ty's financial statements provides an overv1ew of its financial act1v11Ies for the year Valdosta State Umvers1ty has elected to not restate pnor penods for purposes of prov1dmg the compara!Ive data for this Management's D1scuss1on and Analysis However, m future years, when pnor penod mformatlon 1s available, a comparative analysis will be presented

Statement ofNet Assets

The Statement ofNet Assets presents the assets, hab1h11es, and net assets ofthe Umvers1ty as ofthe end of the fiscal year The Statement of Net Assets 1s a pomt of !Ime financial statement The purpose ofthe Statement ofNet Assets 1s to present to the readers ofthe fmanc1al statements a fiscal snapshot of Valdosta State Umvers1ty The Statement of Net Assets presents end-of-year data concermng Assets (current and non-current), L1ab1hties (current and non-current), and Net Assets (assets mmus hab1ht1es) The difference between current and non-current assets WIii be discussed m the notes to the financial statements

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From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations ofthe institution They are also able to determine how much the institution owes vendors, investors and lendmg institutions

Finally, the Statement ofNet Assets provides a picture ofthe net assets (assets mmus hab1hues) and their ava1lab1hty for expenditure by the 1nst1tut10n Net assets are d1v1ded into three maJor categones The first category, mvested in capital assets, net of debt, provides the mslltulion's eqmty in property, plant and eqmpment owned by the institution The next asset category 1s resmcted net assets, which 1s d1v1ded mto two categones, nonexpendable and expendable The cmpus of nonexpendable resmcted resources 1s only av3.1lable for investment purposes Expendable restncted net assets are avrulable for expenditure by the institution but must be spent for purposes as determmed by donors and/or external entitles that have placed tune or purpose resttlct:lons on the use of the assets. The final category 1s unresmcted net assets Unrestncted assets are av3.1lable to the mstitullon for any lawful purpose of the instJtullon.

Statement of Net Assets, Condensed (thousands ofdollars)

Assets Current Assets Capital Assets, Net Other Assets

$ 16,651 82,072 2,311

Total Assets

$101,034

Liabilities Current L1ab1h11es Non-Current L1ab1ht1es

$ 6,846 1,853

Total Liabilities

$ 8,699

Net Assets Invested in Capital Assets, Net of Debt Restncted - Nonexpendable Restncted - Expendable Unrestncted

$ 81,482 2,109 4,291 4,453

Total Net Assets Statement ofRevenues, Expenses and Changes in Net Assets

$ 2~ JJ~

Changes m total net assets as presented on the Statement of Net Assets are based on the activity presented m the Statement ofRevenues, Expenses and Changes m Net Assets The purpose ofthe statement 1s to present the revenues received by the 1nsUtut1on, both operatmg and nonoperating. and the expenses pa!d by the institution, operating and nonoperating, and any other revenues, expenses, gams and losses received or spent by the institution Generally speaking operallng revenues are received for providing goods and services to the vanous customers and const1tuenc1es of the

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msutuuon Operating expenses are those expenses paid to acqwre or produce the goods and services provided in return for the operating revenues, and to carry out the m1ss1on of the mstltutlon Nonoperatmg revenues are revenues received for which goods and services are not provided For example state appropnallons are nonoperatmg because they are provided by the Legislature to the instnullon without the Legislature directly receiving commensurate goods and services for those revenues

Statement of Revenues, Expenses and Changes in Net Assets, Condensed (thousands of dollars)

Operating Revenues Operatmg Expenses

$ 43,134 93,01 I

Operating Loss

$ -49,877

Nonoperating Revenues and Expenses

61,081

Increase m Net Assets

$ 11,204

Net Assets at Beginrung of Year, as Ongmally Reported

$157,758

Cumulative Effect of Changes m Accounting Pnnctple

-76.627

Net Assets at Beg1nrung ofYear Restated

$ 81,131

Net Assets at End of Year

$ 92.335

The Statement of Revenues, Expenses and Changes m Net Assets reflects a positive year with an increase m the net assets at the end of the year Some h1ghhghts of the mfonnauon presented on the Statement of Revenues, Expenses and Changes in Net Assets are as follows

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Revenue By Source (thousands of dollars)
For The Year Ended June 30, 2002
Operating Revenue Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Aux1hary Other
Total Operatmg Revenue
Nonoperatmg Revenue State Appropnatlons Grants and Contracts Gifts Investment Income Other
Total Nonoperatmg Revenue
Capital Gifts and Grants State
Total Revenues
Expenses (thousands of dollars) For The Year Ended June 30, 2002
Operatmg Expenses Instruction Pubhc Semce Acaderrnc Support Student Services Inst1tutlonal Support Plant Operations and Mamtenance Scholarslups and Fellowships Aux1hary Enterpnses Unallocated Depreciation
Total Operatmg Expenses
Nonoperatmg Expenses Interest Expense (Capital Assets)
Total Expenses
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$ I 7,460 6,406 388 18,232 648
$ 43.134
$ 48,625 4,099 19 18 15
$ 52,776
$ 8,337
$)04.247
$ 38,348 1,819 6,506 4,947
10,458 6,906 3,238 16,930 3,859 $ 93,01 I
32
S 93.043

Statement of Casi, Flows

The final statement presented by the Valdosta State Umvers1ty1s the Statement ofCash Flows The Statement of Cash Flows presents detailed mformauon about the cash ac11v1ty of the mslltullon dunng the year The statement 1s d1v1ded mto five parts The first part deals with operatmg cash flows and shows the net cash used by the operatmg act1v11Ies of the mst1tut10n The second sect10n reflects cash flows from non-capital financmg acllv111es This section reflects the cash received and spent for nonoperatmg, non-mvestmg, and non-capital financmg purposes The tlurd secllon reflects the cash flows from mvcstmg acllv1t1es and shows the purchases, proceeds, and mterest received from mvestmg act1V1t1es The fourth section deals with cash flows from capital and related financmg acllv1t1es Tlus section deals with the cash used for the acqms111on and construction of capital and related items The fifth section reconciles the net cash used to the operatmg mcome or loss reflected on the Statement of Revenues, Expenses and Changes m Net Assets

Cash Flows for the Year Ended June 30, 2002, Condensed (thousands of dollars)

Cash ProVIded (Used) By Operatmg ActlVIIIes Non-Capital Fmancmg ActlVJ!Ies Investmg Act1v11Ies Capital and Related Fmancmg Activities

$ -46,859 51,022 -4,372 -5.036

Net Change m Cash Cash, Begmnmg of Year

$ -5,245 8,025

Cash, End of Year Capital Assets

$ 2 780

The Umvers1ty had one s1gmficant capital asset addition for fac1ht1es m fiscal year 2002

The construcl!on of the Student Recreation Center was completed and transferred to the Umvers1ty from Georgia State Fmancmg and Investment Comm1ss1on m late June 2002. The bmldmg opened to students, faculty and staff m August 2002.

For additional mforrnatlon concermng Capital Assets, see Notes I, 6, 8, and 9 m the notes to the financial statements

Economic Outlook

The University 1s not aware of any currently known facts, dec1s1ons, or conchtlons that are expected to have a s1gmficant effect on the financial pos111on or results of operallons dunng this fiscal year beyond those unknown vanatlons haVIng a global effect on vutually all types ofbusmess operations. The Umverslly's overall financial position 1s strong, despite the fact that state revenues are expected to declme in the commg years Valdosta State Umvers1ty implemented a Strategic Plan dunng 2001 and as a result of that plan the Umvers1ty estabhshed a Budget Advisory Council that 1s prepanng budget reduction plans should state revenues continue to declme Even with a relallvely flat funded

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year, the Umvers1ty was able to generate a modest mcrease m Net Assets The Umvers1ty anticipates the current fiscal year w1 II be much hke last and w1 II mamtam a close watch over resources to mamtam the Umvers1ty's ab1hty to react to unknown mtemal and external issues Mr James M Bngnall served the mst1tut10n as Vice President for Busmess and Fmance through August 2002 Mr. James M Black 1s currently servmg as Intenm Vice President for Busmess and Fmance
Ronald M Zaccan, President Valdosta State Umvers1ty
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BASIC FINANCIAL STATEMENTS -9-

VALDOSTA STATE UNNERSITY
STATEMENT OF NET ASSETS JUNE 30 2002
ASSETS
Current Assets Cash and Cash Eqwvalents Short-Tenn Investments Accounts Receivable, Net Federal F1naooal As51stance Other Prepaid Items lnventones
Total Current Assets
Noncurrent Assets Investments Notes Receivable, Net Caprtal Assets, Net (See Note 6)
Total Noncurrenl Assets
Total Assets
LIABILITIES
Current l.Jab1hbes Contracts Payable Salanes Payable Payroll Wllhhold1ngs Accounts Payable Deferred Revenue Funds Held for Others Capital Leases Compensated Absences Other l.Jab1hbes
Total Current l.Jab1hbes
Noncurrent l.Jablhbes Caprtal Leases Compensated Absences
Total Noncurrent l.Jabllrbes
Total l.Jablhbes
NETASSETS
Invested in Caprtal Assets, Net of Related Debi Restnded for
Nonexpendable Expendable Unrestncted
Total Net Assets
The notes to the finaooal statements are an integral part of this statement
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EXHIBIT "A"

$

2,780,585 68

8,944,747 02

526,237 35 3,278,891 00
64,645 64 1 055,93940

$ 16,651,046 09

s

2,108,799 43

201,707 50

82,072.374 70

$ 84,382.881 63

$ 101,033,927 72

$

973,287 16

987.606 09

298,451 79

499,674 01

974,724 25

328,861 72

107,634 85

1,432,491 83

1243342 87

$

6 846 074 57

$

482,60169

1370317 79

$

1,852,919 48

$

8.698,994 05

$ 81,482 138 16
2,108,799 43 4,290,549 97 445344611

$ 92 334 93367

VALDOSTA STATE UNIVERSITY STATEMENT OF RE)(ENUES EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED JUNE 30 2002

EXHIBIT "B"

OPERAT!NG REVENUES
Student Tu,Hon and Fees Less Scholarstwp Allowances
Grants and Contracts F-ral State Nongovernmental
Rents ard Royalbes Sales and Services of Educatkmal Departments Auxiliary Enterprises
Residence Halls Bookstore Food SeMces Park.lngfrn1naportation Health Selvtces lntercolO(Jlate Athlelle& Other Organizations Other Operating Revenues
Total Operating Revenue
OPERATING EXPENSES
Salaries Faculty Staff
Emplcyee Benetlts Other Personal Servlcetl Travel Schola'"hlps ard Felowshlps Ulllllles Suppi,ea ard Other Servlcea Oepreclation
Total Operatmg Expenses
Operating lrn:ome (Loe)
NONOPERAT!NG REVENUES /EXPENSES)
State Appropriations Grants - Contracta
Federal State Nongovernmental GIiis
Interest and Other Investment Income lnteregl Expense (Cepltel Aaaets) Ottler Nonoperating Revenues
Net Nonoperattng Revenues
Income Before Other Revenues, ExpensM, Gains or Losses
Cepltal G<antl ard Glfla State
lnaeaae In Nol Assets
Net Asaels Net Aa.aets. Beglm,ng of Year, aa Ong1nal'ly Reparted Cumulative Effect of Changea In Accounting Pr1naple
Net Asaets - Beginning of Year Resta18d

s 24,700 336 73
-7 240,934 79
6 405 074 13 139311 30 98
20 577 36 387 979 13
3,999,900 49 4,580 415 14 4 603,676 63
845,083 79 1,322,428 04 2,518,785 06
362,568 16 82721184
s 4311341525 so
s 27,544,657 43
23 065 046 19 13,716,727 05
196,329 29 731,15110 4,491,890 33 3 274 585 47 15,284,010 20 4 706 446 82
s 93,011,043 68
$ -49,878,518 08
$ 48 825446 57
2,028,385 75 1,599,461 57
473,343 25 19,067 23 17 636 20 -32 378 87 14 874 81
$ 52 744,038 51
s 2 867 518 43
8 336 865 44
$ 11,204,383 87
s 157 758,063 38
-76,627,533 58
$ 81,130,549 80

Net Assets End of Year The notes to the financial statements are an Integral part of this statement
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$ 92 33-41933 67

VALDOSTA STATE VNI\IEBSITY STATEMENT OE CASH FLOWS
YEAR ENPEP JUNE 30 2002

CASH FLOWS FROM OPERATING ACTMTIES Turtion and Fees Grants and Comnlcts
ttoo=- Sates and S8MC8S of Educabonal Departments
PPaeyymmeenmtss EmplO','OOS Payments for Scholarships and Feltc:,,whlps Loan!I ls!lued to Student! and EmployNS Collecbon of Loans to Student! and Employees A.wu.liery Entefl)nle Charge.a
- -R8SKSence Halls
Bookstore Food SeMces Parklng/TransportabOn
lnl8rcolleg1818 AlhleOco Other Organizations Other ~ (Payment5)
Net Ca>h PTtN\ded (Used) by Oporabng Ac1M11M
CASH FLOWS FROM NONCAPITAL FINANCING ACTMTIES StateAppropnatlons Agency Funds Transact,onS Gifts and GrtiltS ReceNOd lo! Other ttian Capital Purl)OIM Olher Noooperabng Rece,pts
Net Cash Flows Provodod (U,od) by Noncapotal Flnanang AdJvftJea
CASH FLOWS FROM CI\PITAL -'HD REL-'TED FINANCING -'CTMTIES Cap,1al Grants and Gifts Roceived Pun:hases of ~ I Aasots
Pnncrpal Paid on Capital Debt Ind Lease tnterest Paid on C8pltat Debt and Le&e
Net Cash P - (\Jlod) by Capoal and R - F,nanang Adlvit1es
CASH FLOWS FROM INVESTING -'CTMTIES Interest on lnvestrneutl Purchase of lnvestmenta
Net Cash Provided (lJaed) by lnvmllng Ad,vrt,es
Nat lnaNN/(Decreasa) m Cash
Gash and Ca!lh Equiv lents - June 30, 2001 Less Short-Term lrrvestmeuta
Cash and C8sl1 Equrvlllenta - Begmning o1 Year
Cash and Cash EqulVllentl End of Year

RECONCILIATION OF OPER>.TING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTMTIES
Qoora1Jng Income (Loss) Ad]U!ltment!I to Recondle Net tncome (Loss) to Ne1 Gash
Provoded (Used) by Opora1Jng AdMbOS Depreaabon
.,_,.,,,.. Change In Assets and Liabihttes Accounts Rec:eTV8bleS Net

-ng -,dllems

Notes Recervabes Net

Aa:cunlS Pa,able

Salaries Payable

Payroll

and Employer Matchlng Benefrts

DefltrTed Revenue

Other U11bllibea

Compensated Absences

Net Cash Provided (Used) by Opemng AdMbe8 The notes to the flnlndel statements are an 1rrtegral part of this statement
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EXHIBIT"C"

s 17 556 138 21 e 554 846 74
387,979 13 -36 491 349 17 -49 939 Q09 01
-3 881,023 82 -14 016 18 43 318 71
4 04189716 .ti 604 523 15 .ti 603,678 83
845,083 79 1322428~ 2 519 222 56
356 187 19 6118"285
s ~859 i51!02

s ,48 62!5,4-46 57
-1 484 -427 92 3,&4613" 22
14 874 61
s 51 022 02Q 48

s

638 0,49 69

-5 378 8"3 83

-283 205 09

-32 378 87

$ -5 036 377 90

$

487,305 TT

-4 858 971 45

s -4 371 66!5 68

s -524517012

s i4 689 800 37 ..e 854 04.tl !57

s B 025 75!5 BO

s 2 780 585 88

s -49 876 518 08
4 706 446 82
.93 29!5 36 -97,287 14 28,4 232 13 29,302 53
-3 283 27 es
54,208 70 15,587 83 482 593 01 530,566 !51 387 981 68
s ~6 !59156 02

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS Valdosta State Umvers1ty serves the state, and nat10nal comrnumues byprov1dmg its students with academic instruction that advances fundamental knowledge, and by d1ssemmatmg knowledge to the people of Georgia and throughout the country
REPORTING ENTITY Valdosta State Uruvers1ty 1s one oftlurty-four (34) State supported member mstltut10ns ofh1gher education m Georgia which compnse the Umvers1ty System ofGeorgia, an orgaruzatlonal urut ofthe State of Georgia The accompanymg financial statements reflect the operations of Valdosta State Umvers1ty as a separate reportmg entity.
The Board of Regents has const1tut1onal authonty to govern, control and manage the Umvers1ty System ofGeorgia Tins authonty includes but 1s not llIIllted to the power to designate management, the ab1hty to significantly mfluence operations, the authonty to control mslltutlons' budgets, the power to determine allotments of State funds to member 1nst1tut1ons and the authonty to prescnbe accountmg systems and adm1mstrat1ve pohc1es for member mstltutlons Valdosta State Umvers1ty does not have authonty to retam unexpended State appropnat1ons (surplus) for any given fiscal year. Accordmgly, Valdosta State Uruvers1ty 1s considered an orgaruzatlonal unit ofthe Board ofRegents of the Umvers1ty System of Georgia reportmg entity for financial reportmg purposes because ofthe s1gmficance of its legal, operallonal, and financial relatlonslups WIth the Board ofRegents as defined m Section 2100 of the Governmental Accounting Standards Board (GASB) Cod1ficat1on of Governmental Accounllng and Financial Reporting Standards
FINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No 34, Basic Fmancwl Statements and Management Discusswn and Analysisfor Stare and Local Governments Tlus was followed in November 1999 by GASB Statement No 35, Basic Financial Statements and Management's Discusswn and Ana(vsis for Public Colleges and Umversllles The State of Georgia 1s required to implement GASB Statement No 34 as of and for the year ended June 30, 2002 As an organ1zallonal unit of the State of Georgia, the Uruverslty 1s also reqmred to adopt GASB Statements No 34 and No 35 as amended by GASB Statements No 37 and No. 38 The financial statement presentation requued by GASB Statements No 34 and No 35 as amended by GASB Statements No 37 and No 38 provides a comprehensive, ent1ty-w1de perspecllve of the Umvers1ty's assets, hab1ht1es, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund group perspecllve previously reqmred
The Umvers1ty has elected to not restate Its 2001 financial statements to conform with the new financial statement presentation, therefore comparal!ve financial information will not be presented for fiscal year 2002 S1gn1ficant accounting changes made in order to comply with the new reqmrements include (I) adoption of depreciation on capital assets, and (2) recogn1tlon of compensated absences Generally Accepted Accountmg Pnnc1ples (GAAP) requires that the
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VALDOSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT PRESENTATION reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year Due to the lack ofmatenahty, lnslltuttons ofthe Umvers1ty System ofGeorgia will con11nue to report summer revenues and expenses in the year in which the predominate acllv1ty takes place
At June 30, 200 I, encumbrances (contractual obl!gattons for goods and seTVJces not received at fiscal year end) were recorded as expenditures by the Umvers1ty instead ofreservallons of fund balance as reqmred by generally accepted accounting prmc1ples For fiscal year 2002, the Umvers1ty changed its method ofrecording encumbrances such that encumbrances at June 30, 2002 were not recorded as expenses Th.is change 1s m accordance with generally accepted accounting pnnc1ples
No adJustments however, have been made on the fmanc1al statements to restate the fund balance at July I, 2001 for the June 30, 2001 encumbrances recorded as expenditures m fiscal year 2001. The net effect of the above accounllng treatment resulted m an understatement of expenses on the accompanying financial statements for pnor year encumbrances which should have been reflected as expenses m the penod when goods and services were received
BASIS OF ACCOUNTING For financial reporllng purposes, the Umvers1ty 1s considered a special-purpose government engaged only m busmess-type actlVIlles Accordingly, the Umvers1ty's financial statements have been presented usmg the economic resources measurement focus and the accrual basis of accounting, except as noted m the preceding paragraphs Under the accrual basis, revenues are recogmzed when earned, and expenses are recorded when an obhgatton has been incurred. All s1gmficant mtraumvers1ty transactions have been elnmnated.
The Umvers1ty has the opllon to apply all Financial Accounllng Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts With GASB The Umvers1ty has elected to not apply FASB pronouncements issued after the applicable date
RESTATEMENT OF NET ASSETS - BEGINNING OF YEAR As a result of the adoption of GASB Statement No 34, the Umvers1ty was also reqmred to make certam changes in accountmg pnnc1ples, specifically (I) adopllon ofdeprec1allon on capital assets, and (2) recording of compensated absences GASB Statement No 34 requires certam summer semester revenues be recognized between fiscal years rather than the fiscal year in which the semester was predommantly conducted The Umvers1ty System ofGeorgia has chosen to contmue to record summer revenue in the year m wluch the semester was predonunantly conducted. Net assets at July I, 2001 were reduced by $76,627,533 56 for the cumulallve effect of these changes.

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VALDOSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS/SHORT-TERM INVESTMENTS Cash and Cash Eqmvalents consist of petty cash, demand deposits and time deposits m authonzed financial mst1tut1ons, and cash management pools that have the general charactenst1cs of demand deposit accounts
INVESTMENTS The Umvers1ty accounts for its mvestments at fair value m accordance with GASB Statement No 31, Accounting and Financial Reportingfor Certain Investments andfor External Investment Pools Changes m unrealized gain (loss) on the carrymg value of mvestrnents are reported as a component of mvestrnent mcome m the statements of revenues, expenses, and changes m net assets
ACCOUNTS RECEIVABLE Accounts receivable consists oftu1lion and fee charges to students and auxiliary enterpnse seMces provided to students, faculty and staff, the maJonty of each res1dmg m the State of Georgia Accounts receivable also mclude amounts due from the FederaJ government, state and local governments, or pnvate sources, m connecuon with reimbursement ofallowable expenditures made pursuant to the Uruvers1ty's grant and contracts. Accounts receivable are recorded net of estunated uncollectible amounts
INVENTORIES Consumable supplies are earned at the lower of cost or market on either the first-m, first-out ("FIFO") basis.
Resale Inventones are valued at cost usmg the average-cost basis
NON-CURRENT CASH AND INVESTMENTS Cash and mvestrnents that are externally restncted and cannot be used to pay current llab1llt1es are classified as non-current assets m the statements of net assets
CAPITAL ASSETS Capital assets are recorded at cost at the date of acqu1S1Uon, or fair market value at the date of donation m the case of gifts For eqmpment, the Umvers1ty's cap1tahzat1on policy mcludes all Items with a unit cost of $5,000 00 or more, and an estunated useful hfe of greater than one year Renovations to bmldmgs, mfrastructure, and land improvements that exceed $100,000 00 and s1gruficantly mcrease the value or extend the useful hfe of the structure are cap1tal1zed Routme repairs and mamtenance are charged to operatmg expense m the year m which the expense was mcurred Deprec1auon 1s computed usmg the straight-line method over the eslimated useful hves of the assets, generally 40 to 60 years for bmldmgs, 20 to 25 years for mfrastructure and land improvements, IO years for hbrary books, and 3 to 7 years for equipment.

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VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE l SUMMARY OF SIGNIFICANT ACCOUNTING POLJCIES
CAPITAL ASSETS To obtam the total picture of plant additions m the Umvers1ty System, 1t 1s necessary to look at the activities of the Georgia State Fmancmg and Investment Cornm1ss1on (GSFIC) - an orgaruzat1on that 1s external to the System GSFIC issues bonds for and on behalfofthe State ofGeorgia, pursuant to powers granted to 11 m the Constitution ofthe State of Georgia and the Act creatmg the GSFIC The bonds so issued constitute direct and general obligations of the State of Georgia, to the payment of which the full fruth, credit and taxmg power of the State are pledged
Effective July 1, 2001, the GSFIC retams construction m progress on their books throughout the construction penod and transfers the entire proiect to Valdosta State Umvers1ty when complete For the year ended June 30, 2002, GSFIC transferred capital additions valued at $8,336,865 44 to Valdosta State Umvers1ty
DEFERRED REVENUES Deferred revenues mclude amounts received for tu1t1on and fees and certam aux1hary actlVJtles pnor to the end of the fiscal year but related to the subsequent accountmg penod Deferred revenues also mclude amounts received from grant and contract sponsors that have not yet been earned
COMPENSATED ABSENCES Employee vacation pay 1s accrued at year-end for financial statement purposes The hab1hty and expense mcurred are recorded at year-end as accrued vacation payable m the Statement of Net Assets, and as a component of compensation and benefit expense m the Statements of Revenues, Expenses, and Changes m Net Assets Valdosta State Umvers1ty had accrued hab1hty for compensated absences m the amount of $2,414,827 94 as of July 1, 2001 For Fiscal Year 2002, $1,947,249 25 was earned m compensated absences and employees were paid $1,559,267.57, for a net mcrease of$387,981 68.
NON-CURRENT LIABILITIES Non-current hab1hlles mclude (1) hab1hlles that will not be prud w1tlun the next fiscal year, (2) capital lease obhgat1ons with contractual matunlles greater than one year, and (3) other hab1hlles that, although payable w1tlun one year, are to be paid from funds that are classified as non-current assets
NET ASSETS The Umvers1ty's net assets are classified as follows
Invested m capital assets, net ofrelated debt Tlus represents the Umvers1ty's total mvestment m capital assets, net of outstandmg debt obhgat1ons related to those capital assets To the extent debt has been mcurred but not yet expended for capital assets, such amounts are not mcluded as a component ofmvested m capital assets, net ofrelated debt (The term "debt obhgat10ns" as used m this defirutlon does not mclude debt of the GSFIC as discussed above)
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VALDOSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS Restrzcted net assets - nonexpendable Nonexpendable restncted net assets consist of endowment and s1m1lar type funds m which donors or other outside sources have stipulated, as a condition ofthe gift mstrument, that the pnnc1pal 1s to be mamtamed mv1olate and m perpetuity, and mvested for the pmpose of producmg present and future mcome, which may either be expended or added to pnnc1pal The Uruvers1tymay accumulate as much ofthe annual net mcome ofan mst1tut1onal fund as 1s prudent under the standard established by Code Section 44-15-7 ofAnnotated Code ofGeorgia
Restrzcted net assets - expendable Restncted expendable net assets mclude resources m which the Uruvers1ty 1s legally or contractually obhgated to spend resources m accordance with restnctlons imposed by external third parties
Unrestricted net assets Unrestncted net assets represent resources denved from student tuJtlon and fees, state appropnatlons, and sales and serv:Ices of educational departments and awnhary enterpnses. These resources are used for transactions relating to the educational and general operat10ns of the Uruvers1ty, and may be used at the d1screbon of the governmg board to meet current expenses for those purposes, except for unexpended state appropnatlons (smplus) of $1,501 19. Unexpended state appropnatlons must be refunded to the Board of Regents of the Umvers1ty System of Georgia - Admm1strat1ve Central Office for renuttance to the Office of Treasury and Fiscal Serv:Ices These resources also mclude aux1hary enterpnses, wluch are substantially self-supporting act1v1t1es that proVJde services for students, faculty and staff
When an expense 1s mcurred that can be pmd usmg either restncted or unrestncted resources, the Umvers1ty's pohcy 1s to first apply the expense towards unrestncted resources, and then towards restncted resources.
INCOME TAXES Valdosta State Umvers1ty, as a pohtlcal subd1v1S1on ofthe State ofGeorgia, 1s excluded from Federal mcome taxes under Section 115(1) of the Internal Revenue Code, as amended
CLASSIF1CATION OF REVENUES The Umvers1ty has classified its revenues as either operatmg or non-operatmg revenues m the Statement of Revenues, Expenses, and Changes m Net Assets accordmg to the followmg cntena
Operating revenues Operating revenues mclude act1v1ues that have the charactensllcs ofexchange transactions, such as (I) student tuition and fees, net ofscholarslup allowances, (2) sales and services of auxiliary enterpnses, (3) most Federal, state and local grants and contracts and Federal appropnauons, and (4) mterest on mst1tut1onal student Joans

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VALDOSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CLASSIFICATION OF REVENUES Non-operating revenues Non-operaung revenues mclude act1v1t1es that have the charactensttcs of non-exchange transact10ns, such as gifts and contnbutions, and other revenue sources that are defined as non-operating revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendab/e Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No 34, such as state appropnatlons and investment mcome
SCHOLARSHIP ALLOWANCES Student twt10n and fee revenues, and certam other revenues from students, are reported at gross with a contra revenue account of scholarslnp allowances m the Statement of Revenues, Expenses and Changes m Net Assets Scholarslnp allowances are the difference between the stated charge for goods and services provided by the Umvers1ty, and the amount that 1s paid by students and/or third partles makmg payments on the students' behalf Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs, are recorded as either operating or nonoperatmg revenues m the Umvers1ty's financial statements. To the extent that revenues from such programs are used to satisfy tu1t1on and fees and other student charges, the Umvers1ty has recorded contra revenue for scholarslnp allowances.
NOTE 2 CASH AND CASH EQUIVALENTS, OTHER DEPOSITS. AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belongmg to the State of Georgia (and thus Valdosta State Umvers1ty) cannot be placed ma depository paymg mterest longer than ten days without the depository prov1dmg a surety bond to the State In heu of a surety bond, the depository may pledge as collateral any one or more of the followmg secuntles as enumerated m the Official Code of Georgia Annotated Section 50-17-59
1. Bonds, bill, certificates ofmdebtedness, notes, or other direct obhgat1ons ofthe Umted States or ofthe State of Georgia
2 Bonds, bills, certificates of mdebtedness, notes, or other obhgatlons of the counties or mun1c1pal1t1es of the State of Georgia
3 Bonds ofany pubhc authonty created by the laws of the State ofGeorgia, prov1dmg that the statute that created the authonty authonzed the use of the bonds for tins purpose.
4 lndustnal revenue bonds and bonds of development authonttes created by the laws of the State of Georgia

- 19 -

VALDOSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"D"

NOTE 2 CASH AND CASH EOUNALENTS, OTHER DEPOSITS, AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES 5 Bonds, bills, certificates of mdebtedness, notes, or other obhgallons of a subs1d1ary coiporatlon of the Uruted States government, which are fully guaranteed by the Umted States government both as to pnnc1pal and mterest, or debt obhgatlons 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 Assoc1at1on, and the Federal National Mortgage Association

6 Guarantee or msurance ofaccounts provided by the Federal Deposit Insurance Coiporat1on

As authonzed m the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted pohc1es wluch allow agencies of the State of Georgia (and thus Valdosta State Uruvers1ty), the option of exemptmg demand deposits from the collateral reqmrements

The Treasurer ofthe Board ofRegents 1s responsible for all details relative to furmslung the reqmred depository protection for all uruts of the Uruvers1ty System of Georgia

CATEGORIZATION OF DEPOSITS The Uruvcrs1ty's cash deposits are categonzed by nsk as follows

Category I - Amounts covered by depository insurance or collaterahzed with secunlles (at fau value) held by the Uruvers1ty or by its agent m the Uruvers1ty's name.

Category 2 - Amounts collateral1zed with secunues (at fair value) held by the pledgmg financial mslltullon's trust department or agent m the Uruvers1ty's name.

Category 3 - Amounts collateral1zed with secuntJes (at fair value) held by the pledgmg financial mshtuhon, or by tts trust department or agent but not m the Umvers1ty's name, and amounts uncollateralized

Cash Deposits as of June 30, 2002 are as follows:

Cash Depos,ts

Canymg
Amount

Bank
BAiances

Risk Catcgones
2

s 2235 285 66 s 69t7 934 10 s 122 841 50 s_ _..,,.Qpo,... s 679S 092 60

CATEGORIZATION OF INVESTMENTS The Umvers1ty's mvestments are categonzed as to credit nsk w1thm the three categones descnbed below

- 20 -

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 2 CASH AND CASH EQUIVALENTS. OTHER DEPOSITS, AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS Category I - Insured or registered, or secunues held by the Umvers1ty or its agent m the
Umvers1ty's name

Category 2 - Unmsured and unregistered, with secunt1es held by the counter party's trust department or agent m the Umvers1ty's name

Category 3 - Unmsured and unregistered, with secunues held by the counter party, or by its trust department or agent, but not m the Umvers1ty's name

At June 30, 2002, the Umvers1ty's mvestments consisted of the following

Investments Not SubJect to Categonzatlons. Board of Regents
Short-Term Fund Total Return Fund Office of Treasury and F1scaJ Services Georgia Extended Asset Pool

$ 95,902 81 5,938,205 18
5,019.438 46

TotaJ Investments

$ I 1,053.546 45

Funds mvested m an mvestment pool managed by another governmental entity are not reqmred to be categonzed smce the Umvers1ty did not own any specific, identifiable mvestrnent secunues of the pool

NOTE 3 ACCOUNTS RECEIVABLE

Accounts receivable consisted of the followmg at June 30, 2002.

Student Tmtlon and Fees Aux1hary Enterpnses and Other Operatmg Act1v1t1es FederaJ, State, and Pnvate Funds Other

$ 120,16974 511,690 44
3,205,388 57 102,996 89

$ 3,940,245 64

Less Allowance for Doubtful Accounts

135.117 29

Net Accounts Receivable

$ 3.805. I28.35

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VALDOSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE 4 INVENTORIES

lnventones consisted of the followmg at June 30, 2002

Bookstore Food Services Physical Plant

$ 826,625 36 173.428 70 55.885 34

Total

S ),055,939.40

NOTE 5 NOTES/LOANS RECEIVABLE

Notes/Loans receivable at June 30, 2002, pnmanly consist ofstudent loans made through the Federal Perkms Loan Program (the Program) The Program provides for cancellation of a loan at rates of
I 0% to 30% per year up to a maximum of I00% 1fthe participant comphes with certam prov1s1ons The Federal government reimburses the Uruvers1ty for amounts cancelled under these provis10ns As
the Umvers1ty determmes that loans are uncollecllble and not ehgible for reimbursement by the Federal government, the loans are wntten off and assigned to the U.S. Department of Education

NOTE 6 CAPITAL ASSETS

The balance at July I, 2001 was adJusted for accounting changes requued in 1mplement:mg GASB Statements 34 and 35 as disclosed m Note I Following are the changes in capital assets for the year ended June 30, 2002:

- 22 -

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 6 CAPITAL ASSETS

Adjusted Balance Jul~ 1 200!

Asld1t12n~

Reductions

Balance
June 30. 2002

Capital Assets, Not Being Depreciated Land and Land lmprovemcnts Construcnon Work-In-Progress

s 1,605,486 21 s 000 2,294,576 57

S 1,605,486 21
2,294 576.57

Total Capital Assets Not Being Depreciated

s s I 6Q5 486 21 2.;l94,576 57

S 3 900 062 78

Capital Assets, Bemg Dqmciated Infrastructure Building and Building Improvements fac1l1ttes and Other Improvements Equipment Capital Leases Library Collecuons

s 3,262,296 00

80,966,551 51 S I0,075,214 92

4,882,165 00 14,637,605 28

s 281,090 34

2,065,98 I 6 I

333,152 41

14 743.4l7 78 1,014 006 44

s 3,262,296 00
91,041,766 43
4,882,165 00
I,439,301 46 13,479,394 16
2,399,134 02
7 888 OQ 15 749,556 22

s Sl20,558,037 18 S ll.7034(i4.II

I ~7,1894~ Sl30 814,311 83

Less Accumulated Deprec1ahon Infrastructure

s s 1,373,074 88

Buildings and Building Improvements 26,948.39 I 17

Fac1ht1es and Other Improvements

2,214,956 15

Equipment

7,854,995 77

Capital Leases

381,002 58

Library Collect1ons

1061032200

S 49 382.742 55 s

135,622 80 2,259,945 36
276,401 40
1,132,596 06 s
54,758 20
847 123 00
4,706,446 s;: s

s 1,508,697 68
29,208,336 53 2,491,357 55
1,439,301 46 7,548,290 37 435,760 78
7,888.00 11 449 557,oo
s \.447 189 46 52,!al,999,91

Total Capital Assets, Being Depreclllled,

Net

s s s 71 IZ5,294,63 6 997,017 29

Capital Assets, Net

s 72 780 780 84 s 9 291 593 86 S

O00 S 78 l 72 311 92
ooo s s2 022 ;u; zo

NOTE7 DEFERRED REVENUE

Deferred revenue consisted of the followmg at June 30, 2002

Prepaid Tu1t10n and Fees Other Deferred Revenue
Totals

$ 54,464 72 920.259 53
$ 974 724,2,5,

NOTE 8 LONG-TERM LIABILITIES

Long-term hab1hty act1v1ty for the year ended June 30, 2002, was as follows

- 23 -

VALDOSTASTATEUNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE 8 LONG-TERM LIABILITIES

Leases Lease Obhgauons
Other L1ab1hhcs Compensated Absences
Total Long-Tenn Obhgahons

Balance Ju]y I 2001
s 520,289 22
HJH2724
$ ~ 2J~ JIZ 16

Addmons
$ 333,152 41
J,947 H9 2~
$ , isa ~111 Mi

Rcductmns
s 263,205 09
1.~~2.i~1 ~z
$ I B2~ ~zi ~

Balance
June 30 2002
s 590,236 54
2,o~.B09 ~l
s JJ2J~~ l!i

Current
Port19n
$ 107,634 85
1,4~i~2! B~
s I ~~g I~6 !iS

NOTE 9 LEASE OBLIGATIONS

CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expmng in vanous years between 2002 and 2011 Expenses for fiscal year 2002 were $295,583.76 ofwlnch $32,378.67 represented mterest. Total pnnc1pal paid on capital leases was $263,205 09 for the fiscal year ended June 30, 2002 Interest rates range from 5.035 percent to 8 15 percent The followmg 1s a summary of the carrymg values of assets held under capital lease at June 30, 2002

Land Bu1ldmgs Eqwpment

$ 182,141 73 1,775,531 48 5.700 03

Totals

S 1,963 373,24

Certain capital leases proVIde for renewal and/or purchase ophons Generally purchase options at bargain pnces of one dollar are exercisable at the expuat:Ion of the lease terms

Valdosta State Uruvers1ty also has vanous capital leases for eqwpment with an outstandmg balance at June 30, 2002 in the amount of$5,322.42

OPERATING LEASES Valdosta State Uruvers1ty's cancellable opcratmg leases proVJde for renewal options for penods from one to three years at the1r fair rental value at the hme of renewal All agreements are cancelable 1f the State of Georgia does not proVIde adequate funding, but that 1s considered a remote poss1b1hty In the normal course ofbusiness, operating leases are generally renewed or replaced by other leases Operahng leases are generally payable on a monthly basis Examples of property under operating leases are copters, other small busmess eqmpment and bwldmgs

Cancellable operating lease rental expenses m 2002 were $425,400.00 for real property

- 24-

VALDOSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 9 LEASE OBLIGATIONS

SUMMARY OF LEASE OBLIGATION Future conumtments for capital leases (which here and on the Statement ofNet Assets mclude other mstallment purchase agreements) and for noncancellable operatmg leases havmg remauung terms m excess of one year as of June 30, 2002, were as follows

Capital Leases

Year Endmg June 30. 2003 2004 2005 2006 2007 2008 through 2012

$ 145,271.28 145,271 28 124,871 28 82,304 73 49,920 00 199,680 00

Total Mm1mum Lease Payments

$ 747,318.57

Less. Interest Pnnc1pal Outstandmg NQTE IO RETIREMENT PLANS

157,082 03
$ 590,236,54

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Valdosta State Umvers1ty part1c1pates m the Teachers Rellrement System of Georgia (TRS), a costshanng muluple-employer defined benefit pension plan estabhshed by the General Assembly of Georgia for the purpose of prov1dmg rellrement allowances and other benefits for teachers of the State ofGeorgia TRS provides service retirement, d1sab1hty retirement, and survivor's benefits for its members m accordance With State statute The Teachers Rellrement System of Georgia issues a separate stand alone financial audit report and a copy can be obtamed from the Georgia Department of Audits and Accounts

Funding Policy Employees of Valdosta State Umvers1ty who are covered by TRS are reqmred by State statute to contnbute 5% of their gross earnmgs to TRS. Valdosta State Umvers1ty makes monthly employer contnbullons to TRS at rates adopted by the TRS Board ofTrustees m accordance with State statute and as adVJsed by their mdependent actuary For fiscal year 2002, the employer contnbullon rate was 9 24% for covered employees Employer contnbullons for the current fiscal year and the precedmg two fiscal years are as follows

- 25 -

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE IO RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy

Fiscal Year

Percentage Contnbuted

Required Contnbut10n

2002 2001 2000

100% 100% 100%

S 2,912,449 91 $ 3,650,334 35 $ 3,883,892 97

REGENTS RETIREMENT PLAN

Plan Description The Regents Retirement Plan, a smgle-ernployer defined contnbul!on plan, 1s an optJonal rel!rement plan established and adm1rustered by the Board of Regents of the Umvers1ty System of Georgia, under which It may purchase annuity contracts for the purpose of prov1dmg retirement and death benefits for eligible faculty and pnnc1pal adm1mstrators Benefits depend solely on amounts contnbuted to the plan plus mvestment earnings Benefits are payable to part1c1pal!ng employees or their benefic1anes m accordance With the terms of the annuity contracts

Funding Polley Member contnbut1on requirements are established by the Board of Trustees of the Teachers RetJrement System Employer contnbutlons are established by statute and may be amended only by the General Assembly ofthe State ofGeorgia The employer contnbutes 9 62% ofthe parllc1pal!ng employee's earnable compensallon. Employees contnbute 5% of their eamable compensation Amounts attnbutable to all plan contributions are fully vested and non-forfe1table at all times

Valdosta State Uruvers1ty and the covered employees made the reqmred contnbut1ons of $1,354,852.98 (9 62%) and $704,002.60 (5%), respecl!vely

GEORGIA DEFINED CONTRIBUTION PLAN

Plan Description Valdosta State Umvers1ty participates m the Georgia Defined Contnbut10n Plan (GDCP) which 1s a smgle-employer defined contnbutJon plan estabhshed by the General Assembly ofGeorgia for the purpose ofprov1dmg retJrement coverage for State employees who are temporary, seasonal, and partllme and are not members of a pubhc retJrement or pens10n system GDCP 1s adnurustered by the Board of Trustees of the Employees' Retirement System of Georgia

- 26 -

VALDOSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 10 RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Benefits A member may retire and elect to receive penod1c payments after atta1Dment ofage 65 The payment will be based upon mortality tables and 1Dterest assumptions to be adopted by the Board ofTrustees Ifa member has less than$ 3,500 00 credited to his/her acc011Dt, the Board ofTrustees has the option ofrequmng a lump sum d1stnbut1on to the member ID lieu ofmak1Dg penod1c payments. Upon the death of a member, a lump sum d1stnbut1on equaling the amount credited to his/her account will be prud to the member's designated beneficiary Benefit prov1s10ns are established by State statute
Contributions and Vesting Member contnbut1ons are seven and one-halfpercent (7.5%) ofgross salary There are no employer contnbutlons. Contnbut10n rates are established by State statute EamlDgs are credited to each member's account ID a manner established by the Board of Trustees Upon temunatlon of employment, the amount of the member's account 1s refundable upon request by the member
Total contnbutions made by employees dunng fiscal year 2002 amounted to $86,235 88 which represents 7 5% of covered payroll. These contnbut10ns met the requirements of the plan
NOTE 11 RISK MANAGEMENT
Valdosta State Umvers1ty 1s a part1c1pant ID the Board of Regents of the Umvers1ty System of Georgia Health Benefits Plan, winch 1s a self-msurance program of health and dental benefits for employees and retirees of the Umvers1ty System of Georgia Valdosta State Umverslly and part1c1patmg employees and retrrees pay premmms to the Health Benefits Plan for this health msurance coverage The Health Benefits Plan 1s IDCluded m the financial statements ofthe Board of Regents of the Umvers1ty System of Georgia - Adm1mstrat1ve Central Office All uruts of the Umvers1ty System of Georgia share the nsk of loss for clrums of the Health Benefits Plan The Health Benefits Plan 1s considered a self-suslalmng nsk fund that provides health coverage for its members up to a maximum lifetime benefit of$2,000,000 00 per person and dental coverage up to an annual maximum of$1,000.00 per person The Board of Regents has contracted with Blue Cross Blue Slneld ofGeorgia to process claims m accordance with the Health Benefits Plan as established by the Board of Regents
The Department of Adm1mstrat1ve Services (DOAS) has the respons1b1hty for the State of Georgia ofmakmg and carrymg out dec1s1ons that will m1D1m12e the adverse effects of accidental losses that mvolve State goveniment assets The State believes 11 1s more economical to manage its nsks 1Dtemally and set aside assets for clrum settlement Accordmgly, DOAS processes clrums for nsk of loss to winch the State 1s exposed, 1Dciudmg general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' mdernmficat1on Lrm1ted amounts of commercial insurance are purchased applicable to property, employee and
-27 -

VALDOSTA STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 11 RISK MANAGEMENT
automobile liability, fidelity and certam other nsks Valdosta State Umvers1ty, as an organizational umt of the Board of Regents of the Umvers1ty System of Georgia, 1s part of the State of Georgia reportmg entity, and as such, 1s covered by the State of Georgia nsk management program admm1stered by DOAS Premmms for the nsk management program are charged to the vanous state organizations by DOAS to proV!de claims serv1cmg and chums payment
A self-msured program of professional liability for !ls employees was established by the Board of Regents of the Umvers1ty System of Georgia under powers authonzed by the Official Code of Georgia Annotated Section 45-9-1 The program insures the employees to the extent that they are not immune from liability agamst personal hab1hty for damages ansmg out of the performance of theu duties or m any way connected therewith. The program 1s adm1mstered by DOAS as a SelfInsurance Fund
NOTE 12 CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result m refunds to the grantor agency for any expenditures which are disallowed under grant terms The amount ofexpenditures wluch may be disallowed by the grantor cannot be determmed at this time although Valdosta State Umvers1ty expects such amounts, 1fany, to be 1mmatenal to its overall financial position.
Litigation, claims and assessments filed against Valdosta State Umvers1ty (an organizational umt of the Board of Regents of the Umvers1ty System of Georgia), 1fany, are generally considered to be actions against the State of Georgia Accordmgly, s1gmficant htlga!Jon, claims and assessments pendmg against the State of Georgia are disclosed m the State of Georgia Comprehensive Annual Fmancial Report for the fiscal year ended June 30, 2002
NOTE 13 POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code ofGeorgia Annotated Section 20-331, the Board of Regents of the Umvers1ty System of Georgia has established group health and life insurance programs for regular employees ofthe Umvers1ty System ofGeorgia It 1s the pohcyofthe Board ofRegents to permit employees of the Umvers1ty System of Georgia eligible for retirement or that become permanently and totally disabled to contmue as members of the group health and hfe msurance programs Employees who are ehgible for retirement or d1sab1hty under the cntena estabhshed by the Teachers Retirement System of Georgia and who have at least ten years ofservice with the Umvers1ty System of Georgia are ehgible for these post-employment health and life msurance benefits. Organ1zallonal units of the Board of Regents of the Umvers1ty System of Georgia pay the employer portion for group insurance for affected md1V1duals

- 28 -

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE 13 POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS

As ofJune 30, 2002, there were 311 employees who had reured or were disabled that were rece1vmg these post-employment health and Life msurance benefits For the year ended June 30, 2002, Valdosta State Umvers1ty recognized as mcurred $921,231 61 of expenses, wluch was net of $420,300 75 of paruc1pant contnbuuons.

NOTE 14 NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS

The Umvers1ty"s operatmg expenses by functional class1ficaUon are shown below

Statement of Opcrabng Expenses - Natural vs Functxmal Oass1ficauons Ftt the ftseal Year Fndcd June: 30, 2002

E~!mil C1us1firanoo

N.11.tural Clus1fisaum
Sa1anes Faculty Staff
EmplO)'CC Benefits Other Pmonal S<rv>ccs Travel Schol"'lups and
Felio,.,rups Ubllbes Suppheo md Other
Servn: Dq,rttu,tl<m
Total Opminns Expen5cs

In:iqyctJgn

Pubhc
Semce

Acad<rmc
Support

Student
Srnuxs

tnsbbJbonil
Support

s S 26,357,669 78
2,720,62244 6,839,900 24
208,829 71

%,295 60 545,059 94 154,014 05
59,474 41

s 237,205 40
3,815,740 13 949,980 80
249,605 50

s

150 00

2,739,841 38

722.972 79

82,138 37

s 360,985 29
5,553,873 30
2,633,089 48
190.329 29 69,nl 33

214,005 17 473,235 46

10,722 00 24,419 06

57,976 64

401.343 63 245,936 89

1,533,343 46
s 38 347 606 26

116.684 n
847 \2100
s IH1H6n77

1.2 I8,549 08
s 6W22197

1.344.240 23
s 4947 31911

996,416 60
S IP 457 745 Rl

Natural Clw1fic,,non
Sabnes Faculty Staff
Employoc Benefits Other P=onal Serv>cos Travel Scholmh1ps and
Fellowships Ubhbes Supplies md Other
Servi= Depr=atJm
Total Opminng Expm,os

Plant
Opminons and
Mamtmaoa:

~m:is;tmn-1 Qmifignsm

Scholarstup,
and Ecllowsb1DS

Awnlwy
Enrgpnscs

Unallocated Deprccygop

Total Opennng Expenses

s 3,364,467 59
150,481 94

s 492,551 36
4,325,441 41
2,266,287 75

4,983 68 2,I85,834 29

s 3,211,6n 97

56,348 10
648,141 56 287,183 13

S 27,544 85743
23,065,046 19 13,716,727 05
196.329 29 731,151 10
4,491,890 33 3.274,585 47

1,200,063 34

20.312 66

8,854,400 06
s 3 s,2,323 s2

15,284,010 20
4 706,446 82

s 6~8~~ s 3~37~6J s 16 2311353 37 s J8~2 32J ~ s 931111 WJ 88

-29-

SUPPLEMENTARY INFORMATION - 31 -

VALDOSTA STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO
BUDGET - INON-GAAP BASIS! RESIDENT INSTRUCTION
YEAR ENDED JUNE 30. 2002

SCHEDULE "1"

REVENUES
State Appropnabons Other Revenues Retained

BUDGET

ACTUAL (1)

VARIANCEFAVORABLE (UNFAVORABLE)

$ 48,089,478 00 $ 48,089,478 00 $

000

70 157 772 00

32,197,940 26

-37,959.831 74

$ 118,24725000 $ 80,287.41826 $ -37 959 831 74

EXPENDITURES
Personal SeMces Education. General and Departmental Setvrces Sponsored Operallons
Operallng Expenses Educa11on, General and Departmental SeMces Sponsored Operabons
Cap,tal Outlay Speoal Fundrng lnlbative

$ 55,487.214 00 $ 55,596,199 99 $

2,382,457 00

1,860,493 76

11,973,446 00 45,061,355 00
2,997,473 00 345,305 00

12 126,096 55 8,828,688 14 1,946,887 23
339.67518

-108,985 99 521,963 24
-152 650 55 36,232,666 86
1,050,585 77 5 629 82

$ 118,247 250 00 $ 80,698 040 85 $ 37,549,209 15

Excess of Revenues over Expendrtures

S -41 0 622 59 $ _ _ _-4.;.1;,;;0.,;6;;;;22;;;..;;;59.,

(1) Actual amounts were prepared on a presaibed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgra, which rs a comprehensive bas,s of accounbng other than generally accepted accounbng pnnoples

See notes to the finanoal statements

-33-

VALDOSTA STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO
BUDGET - INON-GAAP BASIS) LOTTERY FOR EDUCATION YEAR ENDED JUNE 30 2002

SCHEDULE "2"

REVENUES State AppropnatJons

BUDGET

ACTUAL (1)

VARIANCEFAVORABLE (UNFAVORABLE)

$

535 422 oo s 535,422 oo s _ _ _ _ _ _o_o_o
1

EXPENDITURES
Equ:pment, Technology and Construction Trust Fund
Special Funding lntt1a1Jves

$ 401,874 00 $ 401,404 20 $

133,548 00

131 993 80

469 80 155420

$ 535,422 oo $ 533.398 oo s _ _ _ _2~.0_2_4_oo_

Excess of Revenues over Expendrturas

$

2 024 oo s _____2..o;:;2.;.4,..oo_

(1) Actual amounts were prepared on a prescribed basis of accounbng that demonstrates compliance with
budgetary statutes and regulabons of the State of Georgia, which 1s a comprehensive basis of accounbng other than generally accepted accounting pnnciples

See notes to the financial statements

- 34 -

VALDOSTA STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30. 2002

SCHEDULE "3"

Totals per Annual Supplement
Accruals June 30. 2002 June 30. 2001
Compensated Absences June 30. 2002 June 30. 2001
AdJUSlments Shared Services on Jointly Staffed Personnel Savannah Stale University Bngnatll, James M

SALARIES $ 50.224.405 08 $

TRAVEL 731,15110

987,606 09 -899.694 30

2.603,631 79 -2,243.221 50

-62 823 54 $ 50,6091003 62 S~...,;7.,3=1._1_,51.;...;..;10.,

See notes lo the financial statements

- 35 -

SECilONII CURRENT YEAR FINDINGS AND QUESTIONED COSTS

VALDOSTA STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR E:t-.'DED JUNE 30, 2002
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
ACCOUNTING CONTROLS (OVERALL) Inadequ_ate Closing Procedures Finding Control Number FS-551-02-01
Dunng fiscal year 2002, the Board of Regents of the Umvers1ty System ofGeorgia converted umts of the Umvers1ty System from the College Umvers1ty Fmancial Accounting (CUFA) legacy system to the new GeorgiaFIRST System {Fmancial, Information and Reporting Systems for Tomorrow) In November of 2001, Valdosta State Umvers1ty placed this accounting system into product10n
The management of Valdosta State Umvers1ty 1s responsible for 1mplementmg procedures to establish and maintain adequate control over the operation. u11hzat1on and mtegnty of their data processed wnh the Georg1aF/RST System We encountered problems with the financial data presented by the Umversny The Umversity's failure to establish and adhere to a final closing for the year ended June 30, 2002, created a situation where data presented for review was mcomplete Extensive audit procedures were necessary to determme the vahd1ty of the mformal!on proVIded
To reduce the nsk ofreporting mcomplete informauon, the Umvers1ty should work with the Board of Regents Central Office to develop procedures that will result m complete reportmg of all financial data m a more efficient and timely manner