Athens Technical College, Athens, Georgia, report on review 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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ATHENS TECHNICAL COLLEGE ATHENS, GEO' R~IA

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REPORT ON REVIEW. ' T OF THE FINANCIAL STATEMENTS

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' Russell W. Hinton
State Auditor
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ATHENS TECHNICAL COLLEGE -TABLE OF CONTENTS-

FINANCIAL

INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

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BASIC FINANCIAL STATEMENTS

EXHIBITS

A STATEMENT OF NET ASSETS

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B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

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C STATEMENT OF CASH FLOWS

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D NOTES TO THE FINANCIAL STATEMENTS

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SUPPLEMENTARY INFORMATION

SCHEDULES

SCHEDULE OF FUNDS AVAILABLE AND EXPENDffiJRES

COMPARED TO BUDGET - (NON-GAAP BASIS)

BUDGET FUND

"A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION

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2 RECONCILIATION OF SALARIES AND 1RAVEL

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:,,s.ssu W. H1N111,
STATE o\UOITOR
1404) 6~2174

DEPARTMENT OF AUDITS AND ACCOUNTS
1.c;4 Wa~hrnglOn Street.SW Suite 214 AIIJnlJ. Gcorg1J 30334-8400
October 28, 2002

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the State Board ofTechmcal and Adult Education Members of the Local Board of Directors
and Honorable Kenneth C Easom. President Athens Techmcal College
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen
We have reviewed the accompanymg basic financial statements (Exh1b1ts A through D) of Athens Techmcal College, an organizational umt of the State of Georgia, as of and for the year ended June 30, 2002, in accordance with Statements on Standards for Accounting and Review Services issued by the Amencan lnslitute of Certified Public Accountants All infonnalion included in these financial statements 1s the representation of the management of Athens Techmcal College
A review consists pnnc1pally ofinqumes ofTechmcal College personnel and analytical procedures applied to financial data It 1s substantially less in scope than an audit in accordance with auditing standards generally accepted in the Umted States of Amenca, the obJect1ve of which 1s the express10n of an op1mon regarding the financial statements taken as a whole Accordingly, we do not express such an op1mon
Based on our review. we are not aware of any material mod1ficalions that should be made to the accompanying financial statements in order for them to be in conformity with accounting pnnc1ples generally accepted in the Umted States of America
As descnbed in Note 1, Athens Techmcal College adopted the prov1s1ons of Governmental Accounting Standards Board (GASB) Statement No 35, Basic Financial Statements - and Management's D1scuss1on and Ana(vs1s - for Public Colleges and Umvers111es, as amended by GASB Statement No 37, Basic Financial Statement~ - and Management's Discusswn and Analvsis for State and Local Governments, and GASB Statement No 38, Certain Fmancial Statements Note Disclosures, as of July I. 2001. to implement a new financial reporting model.
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Management's D1scuss10n and Analysis 1s not a required part ofthe basic financial statements but 1s supplementary information required by the GASB We have apphed certain hm1ted procedures, which consisted pnnc1pally ofinqumes ofmanagement regarding the methods ofmeasurement and presentat10n of this supplementary information, and we are not aware ofany matenal mod1ficat10ns that should be made thereto
Our review was made for the purpose of expressing hm1ted assurance that there are no matenal modifications that should be made to the financial statements in order for them to be in conformity with accounting pnnc1ples generally accepted in the Umted States ofAmenca The accompanying supplementary information (Schedules I and 2) 1s presented for add1t10nal analysis purposes Such information has been subJectcd to the inqumes and analytical procedures apphed m the review ofthe financial statements, and we are not aware ofany matenal mod1ficat1ons that should be made to such data.
Respectfully submitted,
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RWHas 02ARL-6T

State Auditor

REQUIRED SUPPLEMENTARY INFORMATION -I-

Athens Technical College Management's Discussion and Analysis
The following 1s a d1scuss1on and analysis of Athens Tec'hmcal College's financial performance for the fiscal year ending June 30, 2002 Please read It in conJuncl!on with the College's financial statements, which follow this secllon Due to the fact that the State of Georgia, including Athens Techmcal College, implemented the prov1smns of Governmental Accounnng Standards Board (GASB) Statements No 34 and 35 for the fiscaJ year 2002 only hm1ted fiscal year 2001 data will be presented for comparallve purposes This comparallve informallon will be reqmred in future reports
Overview ofthe Financial Statements and Financial Analysis
Tlus annuaJ report consists of a senes of financial statements prepared in accordance with the rules and regulat10ns established by the Governmental Accounting Standards Board These financ1aJ statements differ, in both form and the accounting pnnc1ple used, from the presentation of pnor financial statements
The Statement of Net Assets used m conJ uncl!on with the Statement of Revenues, Expenses and Changes in Net Assets contams mformauon concerning the College's finances and act1v1t1es as a whole and assists with providing an answer to the question "ls the College as a whole better or worse off as a result of the year's act1v1tJes?" These statements mclude all assets and hab1ht1es using the accrual basis of accountmg, which 1s s1m1lar to the accounting method used by corporallons and other pnvate sector companies All revenues and assets are recogmzed when the service 1s provided and expenses and hab1ht1es are recogmzed when others provide the goods or service, regardless of when cash 1s exchanged
The Statement of Cash Flows 1s a vaJuable tool when evaluating the ab1hty of the College to meet financial obhgauons as they mature This statement presents information related to cash mflows and outflows summanzed by operating, non-capital financing, capital and related financing and investing act1v111es
ThJS d1scuss1on and analysis of the College's financial statements proVJdes an overview of its financial actJv1t1es for the year
Statement ofNet Assets
The purpose of the Statement of Net Assets 1s to present to the users of the financial statements a fiscal snapshot of the Techmcal College at a specific point m time The statement presents the assets, hab1ht1es and net assets of the College as of the end of the fiscal year Assets and hab1ht1es are reported as current and non-current and the difference between assets and hab1hlles 1s reported as net assets. Over a penod of hme the increases and decreases reflected in the
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Statement of Net Assets, when considered with other non-financial facts such as enrollment levels and the cond1uon of the fac1hues, can provide a measure to aid m determmmg whether the Techrucal College's financial position 1s 1mprovmg or detenoratmg.

Net assets are d1v1ded mto three maJor categones. The first category, mvested m capital assets, net of debt, provides mformatlon concerrung the Cofiege's equity m property, plant and equipment owned by the College The next asset category 1s restncted net assets, which 1s divided mto two categones, nonexpendable and expendable. The maJonty of nonexpendable restncted net assets are only available for mvestment purposes Expendable restncted net assets are available for expenditure by the College but must be spent for purposes as determmed by donors and/or external entitles that have placed time or purpose restncuons on the use of the assets. The final category 1s unrestncted net assets, which are available for expenditure by the College for any lawful purpose deemed necessary to operate the College

Statement of Net Assets (thousands of dollars)

Assets Current Assets Capital Assets, Net

$ 2,422 14,888

Total Assets

$ 17,310

Liabilities Current L1ab1hues Non-Current L1ab1ht1es

$ 1,861 426

Total Liabilities

$ 2.287

Net Assets Invested m Capital Assets, Net of Debt Unrestncted

$ 14,888 135

Total Net Assets

$ l~ Q~J

Statement ofRevenues, Expenses and Changes in Net Assets
The purpose of the Statement of Revenues, Expenses and Changes m Net Assets 1s to present the revenues received by the College, both operatmg and nonoperatmg, and the expenses mcurred by the College, operatmg and nonoperatmg, and any other revenues, expenses, gains and losses received or spent by the College dunng the fiscal year Changes m total net assets as presented on the Statement of Net Assets are based on the mformatlon presented m the Statement of Revenues, Expenses and Changes m Net Assets.
Operatmg revenues are received for prov1dmg goods and/or services to vanous customers and constituencies of the College Operating expenses are those expenses paid to acquire or produce the goods and/or services proVJded m return for the operatmg revenues, and to carry out the

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m1ss1on of the College. Therefore, nonoperatmg revenue 1s received when no goods or services are provided m exchange for the revenue State appropnallons and gifts were classified as operatmg revenues m prev10us reports With the issuance of Statement No 35, new gu1delmes have been estabhshed by the Governmental Accountmg Standards Board (GASB) changing the class1ficat1ons of state appropnallons and gifts from operatmg to nonoperatmg revenue Tlus
a change may result man operatmg deficit that 1s offset by nonoperatmg surplus

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

Operatmg Revenues Operatmg Expenses

$ 5,829 19 677

Operallng Gam/Loss

$ -13,848

Nonoperatmg Revenues and Expenses

12,976

Income (Loss) Before Other Revenues, Expenses, Gams or Losses

$ -872

Other Revenues, Expenses, Gams or Losses

145

Increase m Net Assets

$ -727

Net Assets at Begmrung of Year, as Onginally Reported

$ 6,356

Cumulative Effect of Changes m Accountmg Pnnc1ple

9 394

Net Assets at Begmrung of Year Restated

$ 15,750

Net Assets at End of Year

$ ) s.023,

The Statement of Revenues, Expenses, and Changes m Net Assets reflects a negative year with a decrease m the net assets at the end of the year. Some h1ghhghts of the mformat1on presented on the Statement of Revenues, Expenses, and Changes m Net Assets are as follows

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Revenue by Source (thousands of dollars)

Operatmg Revenue Twtion and Fees Grants and Contracts Sales and Services of Educational Departtnents ' Other

$ 3,713 1,737 346 33

Total Operatmg Revenue

$ 5.829

Nonoperating Revenue State Appropnations Federal Grants and Contracts - Nonoperatmg Gifts Investment Income

$ 9,906 2,914 116 40

Total Nonoperating Revenue

$ 12.976

Total Revenues Operating Expenses (thousands of dollars)

$ 1 Q~

Operaung Expenses Instruction

$ 19.678

Total Operatmg Expenses

$ 19.678

The sources of operating revenue for the College are twtion and fees, grants and contracts, aux11Iary services, and educational actJV1Ues. The operating loss 1s directly related to the exclusion of the State of Georgia appropnatlon m the amount of $9,905,523 from operating revenues per GASB 35

Tu1Uon mcreased by $732,043.23. Tlus 1s directly related to the mcreased enrollment of 27% from fiscal year O1

Personal Services expenses mcreased by approxunately $1,477,000. Tlus mcrease reflects an armual pay raise for College employees of approxunately 4 5% Wlth the associated frmge benefits. It also reflects an mcreased cost to the College for add1Uonal adJunct faculty posmons required due to the mcreased enrollment m fiscal year 02

The curnulauve effects of changes m accounting pnnc1ple are the result of the College adoptmg depreciation on capital assets and changing from the budgetary basis to the GAAP basis of accountmg

Under nonoperatlng revenues (expenses) state appropnat1ons decreased by approximately $7,856

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Statement of Cash Flows

The purpose of the Statement of Cash Flows 1s to proVJde relevant information concerning the cash receipts and payments of the College dunng the year. It also proVJdes informat10n concerning the College's ab1hty to generate future cash flows and to meet its obhgat10ns as they come due The statement 1s d1V1ded mto three sections Tl\e first section reports on the operating cash flows and shows the net cash used by the operatmg act1v1t1es of the College. The second section shows the cash flows from the nonoperating actlVJ!ies of the College The final sect10n reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Statement of Cash Flows (thousands of dollars)

Cash Provided (Used) By Operating Activities Non-Capital Financing Act1v1t1es Investing Act1v1t1es Capital and Related Financing Activities

$-12,357 12,790 40 62

Net Change in Cash Cash, Begmnmg of Year

$ 535 822

Cash, End of Year

$ 1,357

Capilal Assets
The College had no s1gmficant capital asset add1t1ons for fac1ht1es in the fiscal year 2002 Projects funded by the Georgia State Financmg and Investment Corruruss1on (GSFIC) was approximately $451,877 Projected funding by the GSFIC for fiscal year 2003 will be approximately the same.
Economic 011tlook
The College 1s unaware of any currently known fact, dec1s1on, or condition that 1s expected to have a s1gmficant effect on the financial position or change how the College operates for the next fiscal year. As in pnor years, the Co11ege's overall financial position 1s strong Enrollment has increased by approximately 25% annually for the past 5 years and this trend 1s expected to continue into the next fiscal year. As a result, the College anticipates the next fiscal year will be much hke the last and the College Will mamtam a close watch over resources to maintain the ability to react to unknown internal and external issues

Kenneth C Easom, President Athens Technical College
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BASIC FINANCIAL STATEMENTS -9-

ATHENS TECHNICAL COLLEGE STATEMENT OF NET ASSETS
JUNE 30. 2002
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable Federal Financial Assistance Other Prepaid Items
Total Current Assets
Non-current Assets Capital Assets. Net
Total Assets
LIABILmES
Current Liab1ht1es Salanas Payable Payroll Withholdings Deferred Revenue Funds Held for Others Compensated Absences
Total Current L1ab111t1es
Non-current L1ab1ht1es Compensated Absences
Total Llab1llbes
NET ASSETS
Invested in Caprtal Assets, Net of Related Debt Unrestncted
Total Net Assets

EXHIBIT "A"

$ 1,357.630 41 233.743 98 828.592 34 2 204 00
$ 2,422,170 73
$ 14,887 766 34 $ 17,309,937 07

$ 230,714 53 52,139 93
804,747 12 311,466 58 461,580 12
$ 1,860,648 28

$

426 374 35

$ 2,287,022 63

$ 14,887,766 34 135 148 10

See Independent Accountant's Combined Report on Review of Basic Financial Statements and Supplementary lnforrnabon
The notes to the financial statements are an integral part of this statement - 11 -

ATHENS TECHNICAL COLLEGE
STATEMENT OF REVENUES EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED JUNE 30 2002

EXHIBIT"B"

OPERATING REVENUES
Student Tu1tron and Fees Less Scholarship Allowances
Grants and Contracts Federal
Sales and Services Other Operabng Revenues
Teta/ Operating Revenues
OPERATING EXPENSES
Salanes Benefits Travel Scholarships and Fellowships Ut1llbes
Supplies and Other SeMces Oepraaatlon
Total Operabng Expenses
Operabng Income (Loss)
NONOPERATING REVENUES /EXPENSES)
State Appropnabons Grants and Contracts
Federal State Local Gifts Interest and Other lnvesbnent Income
Net Nonoperat1ng Revenues
Income (Loss) Before Other Revenues, Expenses, Gains or Loss
Capital Grants and Gifts State
Increase (Decrease) 1n Net Assets
Net Assets Net Assets - Begmnmg of Year, as Ongmally Reported Cumulabve Effect of Changes m Accounbng Pnnople
Net Assets - Begmmng of Year Restated
Net Assets - End of Year
See Independent Accountant's Combined Report on Review of Basic Fmanoal Statements and Supplementary Information
The notes to the financial statements are an integral pert of ttus statement
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$ 3,899 653 54 -186 672 70
1,737,275 00 346,482 12 32 621 90
$ 5,829 359 86

$ 11,324,618 88 2,273 652 36 109 983 09 1,550,602 30 509,327 92 3,18209129 727 381 89
$ 19 6TT 657 73
$ -13 848 297 87

$ 9,905,523 32

2,333,072 03 579,131 69 2,000 00 116,074 79 40 260 52

$ 12,976,062 35

$

-872 235 52

$

145 262 23

$

-726 973 29

$ 6,355,797 03 9 394 090 70
$ 15 749 887 73

$ 1502291444

ATHENS TECHNICAL COLLEGE STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30 2002
CASH FLOWS FROM OPERATING ACTIVITIES
T u1tron and Fees
Grants and Contracts Sales and Services Payments lo Suppliers Payments lo Employees Payments for Scholarships and FellO\YShrps Other Receipts (Payments)
Net Cash Provided (Used) by Operabng Ac!Jvrties
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Stale Appropnabons Agency Funds Transactions Gifts and Grants Received for Other lhan Capllal Purposes
Nol Cash Flows Provided by Noncaprtel Financing Acbvlbos
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTMTIES Capital Grants and Grl'ts RecelV&d Purchases of Capllal Assets
Not Cash Used by Caprtal and Relaled Financing Acllvltles
CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments
Net lnaease/Oeaease ln Gash
Cash and Cash Equrvalents - Beginning of Year
Cash and Gash Equivalents - End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTNmES
Operabng Income (Loss) AdJustrnents to Rec:onale Operating Income to Net Cash
Provided (Used) by Operabng Act1v1lies Depredabon Expense Change m Assets and l.sab1hbes Recervables, Net Prepaid Items Salanes Payable Payroll Wllhholdings and Employer Benefits Accounts Payable Deferred Revenue Compensated Absences
Net Cash Provided (Used) by Operating Ac!Jvrt,es
See Independent Accountant's Combined Report on Review of Basic FmenCUll Statements and Supplementary Information
The notes to the finanaal statements are an integral part of this statement - 13

EXHIBIT "C"

s 4 452,426 32
1,737,275 00 344 220 76
-6,109,707 54 -11,263,705 82
-1 550,602 30 32 621 90
s -12 357 471 68

$ 9,726,239 75 -76,613 83
3.14113038
s 12,790,756 30

s

183,953 90

-122 41215

s

61 541 75

$

40,260 52

$

535,086 89

822,543 52

$ 135763041

S -13,848,297 87
727,381 89
189,826 93 1,981 00
-34,557 85 -5,536 55
-32,432 67 547,357 19 96 806 25
$ -1235747168

ATHENS TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Athens Techrucal College 1s one of thirty-three (33) State supported member colleges of postsecondary education m Georgia which compnse the Georgia Department ofTechnical and Adult Education, an organ1zat1onal umt of the State of Georgia The accompanymg financial statements reflect the operations of Athens Technical College as a separate reportmg entity
The Techmcal College's Local Board of Directors 1s composed of eleven (11) members servmg staggered three-year terms who are appomted by the State Board ofTechrucal and Adult Educahon Appropnatlon ofState funds 1s made to the Georgia Department ofTechmcal and Adult Education by the General Assembly of Georgia The Department's Adm1mstrat1ve Central Office determmes the amount of State appropnat10ns to be received by Athens Techmcal College The Techmcal College does not have authonty to retam unexpended State appropnat1ons (surplus) for any given fiscal year Accordmgly, Athens Technical College 1s considered an organ1zat1onal umt of the Georgia Department of Technical and Adult Education for financial reportmg purposes because of the s1gmficance of its legal, operat10nal, and financial relatlonslups as defmed m Section 2100 ofthe Governmental Accountmg Standards Board (GASB) Codification ofGovernmental Accountmg and Fmancial Reportmg Standards
,FINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No 34, Baste Fmanctal Statements and Management Discussion and Analysisfor State and Local Governments. This was followed m November I999 by GASB Statement No 35, Basic Financial Statements and Management's Discussion and Ana(vsis for Publtc Colleges and Umversities The State of Georgia 1s reqmred to implement GASB No 34 as of and for the year ended June 30, 2002 As an organizational unit of the State of Georgia, the Technical College 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 reqmred by these standards provide a comprehensive, entity-wide perspective of the Technical College's assets, hab1ht1es, net assets, revenues, expenses, changes m net assets, cash flows, and replaces the fund group perspective previously required
The Technical College has elected to not restate Its 2001 financial statements to conform with the new financial statement presentation, therefore comparative financial mformatlon will not be presented for fiscal year 2002 Significant accountmg changes made m order to comply with the new reqmrements mclude (I) adoption of depreciation on capital assets, and (2) recognition of compensated absences Also, generally accepted accountmg pnnc1ples (GAAP) reqmres that the reportmg of summer school revenues and expenses be spill between fiscal years rather than m one fiscal year However, because the effect ofth1s change 1s not matenal, the Techmcal Colleges ofthe Georgia Department ofTechmcal and Adult Educahon will contmue to report summer revenues and expenses m the year m wluch the predommate act1V1ty takes place

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ATHENS TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT"D"

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING For financial reporting purposes, the Techmcal College 1s considered a special-purpose government engaged only in business-type act1v1t1es Accordingly, the Techmcal College's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting, except as noted in the preceding paragraph Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obhgatlon has been incurred All significant mtra-college transactions have been ehminated
The Techmcal College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB The Techmcal College has elected to not apply FASB pronouncements issued after the apphcablc date.
RESTATEMENT OF NET ASSETS - BEGINNING OF YEAR As a result of the adoption ofGASB Statement No 34, the Techmcal College was also required to make certain changes in accounting pnnc1ples, specifically (I) adoption of depreciation on capital assets, and (2) recording of compensated absences. GASB Statement No 34 requires certain summer semester revenues be recognized between fiscal years rather than the fiscal year in which the semester was predominantly conducted The Techmcal College has chosen to continue to record summer revenue m the year m which the semester was predominantly conducted Effective July I, 200 I, the Techmcal College's cap1tal1zat1on pohcy for eqmpment was increased from S1,000 00 to $5,000 00. Net assets at July I, 2001 were increased by $9,394,090.70 for the cumulative effect of these changes
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents mclude currency on hand and demand deposits with banks and other authonzed financial institutions.
ACCOUNTS RECEIVABLE Accounts receivable consist ofallotments due from the Georgia Department ofTechmcal and Adult Education - Admin1strative Central Office, reimbursements due from Federal, State, local, and pnvate grants and contracts, and other receivables disclosed from mformatlon available
Accounts receivable (Other) ansing from operations are reported at gross value Based on management's evaluation that amounts uncollec!Ible are not matenal, no proV1s10n has been made for such amounts
CAPITAL ASSETS Capital assets are recorded at cost at date of acqms1tlon, or fair market value at the date of capital contnbutlon The Techmcal College cap1tahzes all land and land improvements For equipment, the Techmcal College's cap1tahzatlon pohcy includes all items with a umt cost of$5,000 00 or more, and an estimated useful hfe of greater than one year. Bmldings and Bu1ldmg Improvements,
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ATHENS TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL ASSETS Improvements Other Than Buildings and Library Collect10ns that exceed $ I00,000.00 or s1gmficantly increase the value or extend the useful hfe of the asset are cap1tahzed For infrastructure, the Techmcal College's cap1tahzat1on threshold 1s $1,000,000 00. Routine repatrs and matntenance are charged to operating expense in the year m which the expense was incurred. Depreciation 1s computed using the stratght-line method over the estimated useful hves ofthe assets, generally IO to 40 years for bmldings, 15 to 25 years for infrastructure, 15 years for improvements other than bmldmgs, IO years for hbrary books, and 3 to IO years for equipment
To obtain full disclosure of capital assets acqu1Ted by the Techmcal Colleges of the Georgia Department ofTechmcal and Adult Education, 1t 1s necessary to look at the act1v1ttes ofthe Georgia State Fmancing and Investment. Comm1ss1on (GSFIC) - an organization that 1s external to both the Techmcal College and the Georgia Department of Techmcal and Adult Education. The GSFIC issues bonds for and on behalf of the State of Georgia, pursuant to powers granted to It m the Constitution of the State of Georgia and the Act creating the GSFIC. The bonds are issued for the purpose ofacqumng capital assets and this debt constitutes direct and general obhgatlons ofthe State of Georgia, to the payment of which the full faith, credit and taxing power of the State are pledged
DEFERRED REVENUES Deferred revenues include amounts received for tuition and fees and other actlVItles pnor to the end of the fiscal year but related to the subsequent accounting penod Deferred revenues also include amounts received from grant and contract sponsors that have not yet been earned
COMPENSATED ABSENCES Employee vacation pay 1s accrued for financial statement purposes when vested. The hab1hty and expense mcurred are recorded at year-end as accrued vacation payable in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets Athens Techmcal College had an accrued hab,hty for compensated absences in the amount of $791,148 22 as of July I, 2001. For fiscal year 2002, $698,858.07 was earned in compensated absences and employees were paid $602,051 82 for a net mcrease of$96,806 25 The ending balance as ofJune 30, 2002 in accrued hab1hty for compensated absences 1s $887,954 47
NON-CURRENT LIABILITIES Non-current hab1httes mclude hab1httes that will not be patd within the next fiscal year.
NET ASSETS The Techmcal College's net assets are classified as follows
Invested m capital assets, net ofrelated debt Tlus amount represents the Techmcal College's total mvestment m capital assets, net ofoutstandmg debt obhgatlons related to those capital assets To the extent debt has been incurred but not yet expended for capital assets, such amounts are not mcluded
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ATHENS TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS as a component ofmvested m capital assets, net ofrelated debt (The term "debt obhgat10ns" as used m this definition does not mclude debt of the GSFIC as discussed above)
Unrestricted net assets Unrestricted net assets represent available resources denved from student tmtlon and fees, state appropnatlons, and sales and services of educational departments These resources will be used for transactions relatmg to the educational and general operations of the Technical College, and may be used at the discretion of the governing board to meet subsequent fiscal year expenses for those purposes, except for unexpended state appropnatlons (surplus) of $980.67. Unexpended state appropnations must be refunded to the Department of Technical and Adult Educa!Jon for remittance to the Office of Treasury and Fiscal Services.
When an expense 1s mcurred that can be paid usmg either restricted or unrestncted resources, the Technical College's pohcy 1s to first apply the expense towards unrestricted resources, and then towards restricted resources
INCOME TAXES Athens Techmcal College, as a poht1cal subd1v1s10n of the State of Georgia, 1s excluded from Federal mcorne taxes under Sechon 115(1) of the Internal Revenue Code, as amended
CLASSIFICATION OF REVENUES The Technical College has classified its revenues as either operatmg or nonoperatmg revenues m the Statement of Revenues, Expenses, and Changes m Net Assets accordmg to the followmg cntena
Operating revenues Operatmg revenues mclude act1v1hes that have the charactenst1cs ofexchange transachons, such as (I) student tu11Ion and fees, net ofscholarslnp allowances, (2) Federal, state and local grants and contracts, and (3) sales and services.
Nonoperating revenues Nonoperatmg revenues mclude achv1t1es that have the charactenshcs of non-exchange transachons, such as gifts and contrlbuhons, and other revenue sources that are defined as nonoperatmg revenues by GASB No 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No 34, such as state appropnat10ns and mvestment mcome
Scholarship Allowances Student tu1hon and fee revenues, and certam other revenues from students, are reported at gross with a contra revenue account of scholarship allowances m the Statement of Revenues, Expenses, and Changes m Net Assets Certain governrnental grants, such as Pell grants, and other Federal, state or nongovernmental programs, are recorded as either operatmg or nonoperating revenues m the Technical College's financial statements To the extent that revenues from such programs are used to sahsfy tu1hon and fees and other student charges, the Technical College has recorded contra revenue for scholarship allowances
- 17 -

ATHENS TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE 2 CASH AND CASH EQUIVALENTS AND OTHER DEPOSITS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belongmg to Athens Technical College (and thus the State of Georgia) cannot be placed ma depository pa)'lng mterest longer than ten days without the deposllory 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 secunties as enumerated m the Official Code of Georgia Annotated Section 50-17-59
I Bonds, bill, certificates ofindebtedness, notes, or other direct obhgal!ons ofthe Umted States or of the State of Georgia
2. Bonds, bills, certificates of mdebtedness, notes, or other obhgatlons of the counlles or mun1c1pal1t1es of the State of Georgia
3. Bonds of any pubhc authonty created by the Jaws ofthe State ofGeorgia, prov1dmg that the statute that created the authonty authonzed the use of the bonds for this purpose.
4 Industnal revenue bonds and bonds of development authont1es created by the laws of the State of Georgia
5. Bonds, bills, certificates of mdebtedness, notes, or other obhgatlons of a subsidiary corporation ofthe Umted States government, which are fully guaranteed by the Umted States government both as to prmc1pal and mterest, or debt obhgallons 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 Nal!onal Mortgage Association.
6 Guarantee or msurance ofaccounts provided by the Federal Deposit Insurance Corporation
As authonzed m the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted pohc1es, wlu.ch allow agencies ofthe State ofGeorgia (and thus Athens Technical College), the option of exemptmg demand deposits from the collateral reqmrements
CATEGORIZATION OF DEPOSITS The Tech1:.11cal College's cash deposits are categonzed by nsk as follows.
Category 1 - Amounts covered by depository msurance or collaterahzed with secuntles (at fau value) held by the Technical College or by its agent m the Techrucal College's name.
Category 2 - Amounts collaterahzed with secunl!es (at fair value) held by the pledgmg financial institution's trust department or agent m the Technical College's name.

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ATHENS TECHI\TJCAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EX'HIBIT "D"

NOTE 2: CASH AND CASH EOUNALENTS AND OTHER DEPOSITS

CATEGORIZATION OF DEPOSITS Category 3 - Amounts collaterahzed with secuntles (at fair value) held by the pledgmg financial
mstltutlon, or by its trust department or agent but not m the Techmcal College's name, and amounts uncollaterahzed

At June 30, 2002, the Technical College's cash deposits were as follows

Cash Deposlls

Cany111g ATTKJunt

Bank
Balances

Risk Categoacs
2

s 1356 szo 41 s 2352 s.,o 4" s 200 ooo oo s, 152 s2n 42 s.___.o_.oo.,

NOTE 3 CAPITAL ASSETS

The balance of capital assets at July 1, 2001, was adJusted for accountmg changes reqmred m 1mplementmg GASB Statements 34 and 35 as disclosed m Note 1. Followmg are the changes m capital assets for the year ended June 30, 2002:

Adjusted
Balance
lub:: I 2Q:QI

Ad~1112 ~

Bgluct12n~

Balance June 3Q iQQ2

Capital Assets, Not Bemg Depreciated

Land and Land Improvements

s 2 167 947.00

s 2,167947QQ

Capital Assets, Bemg Depreciated Bu1ld1ng and Bu1ldmg Improvements Improvements Other Than Buildings Equipment Library Collections

S 14,165,555 00
981,754 00
1,747,363 12 s
J 32Q 7QS 9Q

S 15,21s 378 Q2 s

267,674 38 i67,674 '8

s 14,165,555 00 981,754 00 2,015,037 50 I 32Q 7QS 90
S J8,483,052 4Q

Less Accumulated Deprec1a11on Bu1ldmgs and Bu1ldmg Improvements S Improvements Other Than Bu1ldmgs Equipment Library CollectJons

2,449,238 80 s 732,316 35 1,259,978 37
594,317 6S

s $ Q3S 8S I J7 s

341,485 99 44,675 40 209,149 91
J32,010 S9
727 381 89

$ 2,790,724 79 776,991 75
1,469,128 28 726 388 24
$ S 763,233 06

Total CapUJI Assets, Bemg Dcprcctated,

Net

s 13,J79Si68S s

Capua! Assets, Net

s 15 J:lZ :lZJ s.s_ s

s ::!S9,707 I s
:152 ZOZ ~l s

QQQ s 1i,119 819,34
ggg S-1A.SZ Z~~ J~

- 19 -

ATHENS TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 4 DEFERRED REVENUE
,
Deferred revenue at June 30, 2002, consists of the following

Preprud Tmt10n and Fees Grants and Contracts - Federal Grants and Contracts - State - GSFIC

$ 547,357.19 73,436 03 I 83,953 90

Totals

$ 804,747.12

NOTE 5 LONG-TERM LIABILITIES

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

Other L1abil1t1es Compensated Absences

Balance
July l. 2001

Add1t1ons

Reductions

Balance
June 30. 2002

Current
Ponmo

s 72114622 s 6988S897 s 60205182 s 88795447 s 461S80t2

NOTE 6 LEASE OBLIGATIONS

OPERATING LEASES Athens Techrucal College has entered mto certam agreements to lease copiers which are classified as operating leases (leases on assets not recorded on the balance sheet). These leases generally contrun proV1s1ons that, at the expiration date ofthe ongmal term of the lease, the Techmcal College has the option of renewmg the lease on a yf'.ar-to-year basis Amounts are included only for multi-year leases and for cancellable leases for wluch an option to renew for the subsequent fiscal year has been exercised

Expenses for rental of copiers under operatmg leases for the year ended June 30, 2002, totaled $33,453 71

NOTE 7 RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Athens Techmcal College part1c1pates m the Teachers Retirement System ofGeorgia (TRS), a costshanng multlple-employer defined benefit pension plan estabhshed by the General Assembly of Georgia for the purpose of proVIdmg retirement allowances and other benefits for teachers of the State of Georgia TRS provides service retirement, d1sab1htyretlrement, and survivor's benefits for

- 20 -

ATHENS TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE? RETIREMENTPLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Its members in accordance with State statute The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Athens Technical College who are covered by TRS are required by State statute to contribute 5% ofthe1r gross earnings to TRS. Athens Techrucal College makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by the1r independent actuary For fiscal year 2002, the employer contribution rate was 9.24% for covered employees Employer contnbullons for the current fiscal year and the preceding two fiscal years are as follows

Fiscal Year

Percentage Contnbuted

Requ1red Contnbutlon

2002 2001 2000

100% 100% 100%

$ 718,606 09 $ 806,080 90 $ 804,722 13

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Plan Description Athens Technical College part1c1pates in the Employees' Retirement System of Georgia (ERS), a single-employer defined benefit pension plan established by the General Assembly ofGeorgia for the purpose of providing ret1rement allowances for employees of the State of Georgia

The benefit structure ofERS 1s defined by State statute and was s1gmficantly modified on July I, 1982 Unless elected otherwise, an employee who currently mamtains memberslup with ERS based upon State employment that started pnorto July I, 1982, 1s an "old plan" member subJect to the plan prov1s1ons in effect pnor to July I, 1982. All other members are "new plan" members subJect to the modified plan prov1s10ns

Under both the old plan and new plan, members become vested after IO years of creditable service A member may retire and receive normal ret1rement benefits after completion of 10 years of creditable service and attamment of age 65 If IO years of service 1s completed and age 60 1s reached, the member may retire with a reduced benefit Add1t1onally, there are certam prov1S1ons allowing for retirement after 25 years of service regardless of age

- 21 -

ATHENS TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"D"

NOTE 7 RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Piao Description Retuement benefits paid to members are based upon a formula which considers the monthly average of the member's lughest twenty-four consecul!ve calendar months of salary, the number of years of creditable service, and the member's age at rel!rement Postrellrement cost-of-livmg adJustments are also made to member's benefits The normal retirement pension 1s payable monthly for life, however, opl!ons are available for d1stnbut1on of the member's monthJypens1on at reduced rates to a designated beneficiary upon the member's death Death and d1sab1lity benefits are also available through ERS.
In add11Ion, the ERS Board of Trustees created the Supplemental Rellrement Benefit Plan (SRBP) effecllve January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan m accordance with Section 415 of the Internal Revenue Code (IRC) as a portion ofERS The purpose ofSRBP 1s to provide rel!rement benefits to employees covered by ERS whose benefits are otherwise limited by !RC 415.
The ERS issues a financial report each fiscal year which may be obtamed through ERS
Funding Policy As established by State statute, all full-lime employees of the State of Georgia and its political subd1vis1ons, who are not members ofother state retirement systems, are eligible to part1c1pate m the ERS Both employer and employee contnbutlons are established by State statute. The Techmcal College's payroll for the year ended June 30, 2002, for employees covered by ERS was $837,745 74 The Techmcal College's total payroll for all employees was $11,324,618 68
Under the old plan, member contnbut1ons consist of 6 25% of armual compensation Of these member contnbutlons, the employee pays the first I 5% and the Techmcal College pays the remainder on behalf of the employee Under the new plan, member contnbutions consist solely of 1.5% of armual compensal!on paid by employee. The Techmcal College also 1s reqmred to contnbute at a specified percentage of active member payroll determmed armually by actuanal valuallon For the year ended June 30, 2002, the ERS employer contnbutlon rate for the Techmcal College amounted to 10 49% of covered payroll and mcluded the amounts contnbuted on behalf of the employee under the old plan referred to above Employer contnbut10ns are also made on amounts paid for accumulated leave to rel!nng employees.
Total contnbut1ons to the plan made dunng fiscal year 2002 amounted to $100,457 65, ofwluch $87,891.46 was made by the Techmcal College and $12,566 19 was made by employees These contnbul!ons met the requirements of the plan

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ATHENS TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE 7 RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Actuarial and Trend Information Actuanal and h1stoncal trend mfonnatlon 1s presented m the ERS June 30, 2002, financial report which may be obtamed through ERS
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description Athens Techmcal College part1c1pates in the Georgia Defined Contnbuhon Plan (GDCP) winch 1s a single-employer defined contnbutlon plan established by the General Assembly of Georgia for the purpose ofproviding retirement coverage for State employees who are temporary, seasonal, and parttime and are not members of a public retirement or pension system. GDCP 1s adm1mstered by the Board of Trustees of the Employees' Retrrement System of Georgia
Benefits A member may retire and elect to receive penod1c payments after attamment ofage 65 The payment wIII be based upon mortality tables and interest assumpt10ns to be adopted by the Board ofTrustees Ifa member has less than$ 3,500 00 credited to !us/her account, the Board ofTrustees has the opt10n ofreqwnng a lump sum d1stnbut1on to the member in lieu ofmakmg penod1c payments Upon the death of a member, a Jump sum d1stnbut1on equalmg the amount credited to his/her account will be prud to the member's designated beneficiary Benefit prov1S1ons are estabhshed by State statute
The Employees' Retirement System of Georgia issues a financrnl report each fiscal year which may be obtaJned through ERS
Contributions and Vesting Member contnbullons are seven and one-halfpercent (7 .5%) of gross salary There are no employer contnbullons Contnbuhon rates are established by State statute Earnings are credited to each member's account in a manner estabhshed by the Board of Trustees Upon termination of employment, the amount of the member's account 1s refundable upon request by the member The Techmcal College's payroll for the year ended June 30, 2002, for employees covered by GDCP was $1,874,522 76 The Techmcal College's total payroll for all employees was $11,324,618.68
Total contnbutlons made by employees dunng fiscal year 2002 amounted to $140,589 52 which represents 7.5% of covered payroll These contnbuuons met the requirements of the plan

- 23 -

ATHENS TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "D"

NOTE 8 RISK MANAGEMENT

Public Entity Risk Pool The Department of Comrnumty Health adm1msters for the State of Georgia a program of health benefits for the employees of uruts of government of the State of Georgia, umts of county governments, and local educalion agencies located With the State of Georgia This plan 1s funded by part1c1pants covered m the plan, by employers' contnbulions paid by the vanous umts ofgovernment part1c1patmg m the plan, and appropnat10ns made by the General Assembly of Georgia The Department ofCommumty Health has contracted With Blue Cross Blue Shield ofGeorgia to process medical claims and Express Scnpts, Incorporated to process prescnplion drug claims m accordance with the State Employees' Health Benefit Plan as established by the Department of Comrnumty Health
Other Risk Management The Department of Adm1mstrat1ve Services (DOAS) has the respons1b1hty for the State of Georgia ofmakmg and carrymg out dec1s1ons that will m1mm1ze the adverse effects of accidental losses that mvolve State government assets The State believes 11 1s more economical to manage its nsks mternally and set aside assets for claim settlement. Accordmgly, DOAS processes claims for nsk of loss to which the State 1s exposed, mcludmg general hab1hty, property and casualty, workers' compensalion, unemployment compensalion, and law enforcement officers' mdemmficat1on L1miled amounts of commercial msurance are purchased applicable to property, employee and automobile hab1hty, fidelity and certain othernsks The Technical College, as an organ1zalional unit of the Georgia Department of Techmcal and Adult Education, 1s part of the State of Georgia reportmg entity, and as such, 1s covered by the State of Georgia nsk management program adm1rustered by DOAS. Preltllums for the nsk management program are charged to the vanous state organ1zalions by DOAS to provide claims servicmg and claims payment.
NOTE9 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 expenses which are disallowed under grant terms The amount of expenses wluch may be disallowed by the grantor cannot be determmed at tlus lime although Athens Technical College expects such amounts, 1f any, to be 1mrnatenal to its overall financial pos1t1on
L111gallon, claims and assessments filed agamst Athens Techmcal College (an orgamzallonal unit of the Department of Technical and Adult Educallon), 1f any, are generaJly considered to be actions agamst the State of Georgia Accordmgly, s1gmficant h11gat1on, claims and assessments pendmg agamst the State of Georgia are disclosed m the State of Georgia Comprehensive Annual Fmancrnl Report for the fiscal year ended June 30, 2002

-24-

ATHENS TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "D"

NOTE IO NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS
The Techrucal College's operating expenses shown at the natural class1ficat10n on the "Statement of Revenues, Expenses and Changes m Net Assets" are all classified as Instruction at the functional classification.

25 -

'
SUPPLEMENTARY INFORMATION - 27 -

ATHENS TECHNICAL COLLEGE SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET - (NON-GAAP BASIS) BUDGET FUND
"A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION YEAR ENDED JUNE 30. 2002

SCHEDULE "1"

FUNDS AVAILABLE REVENUES
Stale Appropnabon Federal Revenues Other Revenues Retained
CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance

' BUDGET

ACTUAL (1)

VARIANCE FAVORABLE (UNFAVORABLE)

$ 9,907,605 00 $ 9,907.605 00 $

3,556,271 90

2,418,137 19

5,241,874 00 4 90174977

$ 18,705,750 90 $ 17,227,491 96 $

000 -1,138,134 71
-340 124 23
-1.478,258 94

000

205,658 52

205,658 52

$ 18:705,75090 $ 17,433,15048 $ -1,272,60042

EXPENDITURES
Personal Services - lnsl1tut1ons Operabng Expenses - lnsbtulrons Adult Literacy Grants Job Training Partnership Ad Capria! Outlay

$ 12,709,817 00 $ 12,095,275 45 $

3,939,179 00

3,316,045 37

1,446,827 90

1,371,232 47

473,794 00

298,957 07

13613300

136,099 05

614,541 55 623,133 63
75,595 43 174,836 93
33 95

s s s _ _ 18,105.75090 11.211,50941

1'-',4"-'sa=,1'-'4..;_1--'4-"-9

Excess of Funds Ava:lable over Expendrtures

$ 215 541 07 $ ~-=-2:;,1;..;;5;,;54;,.;..;.1,..0,..7

(1) Actual amounts were prepared on a prescnbed bas:s of accounting that demonstrates compl:ance with budgetary statu1es and regulabons of the Stale of Georg:a, which 1s a comprehens,ve baSJs of account:ng other than generally accepted accounting pnnaples
- 29 -

ATHENS TECHNICAL COLLEGE
RECONC\LIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30 2002

SCHEDULE "2"

Totals per Annual Supplement
Accruals June 30, 2001 June 30, 2002
Compensated Absences June 30, 2001 June 30, 2002
Agency Funds

SALARIES

TRAVEL

'

$ 11,263,606 23 $ 110,528 29

-265,272 58 230,714 53

-774,273 23 869,843 73

-545 20

$

- 30 -