DEKALB TECHNICAL COLLEGE CLARKSTON, GEORGIA MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2009 A Member College of the Technical College System of Georgia Ge orgia Department of Audits and Accounts Russell W. Hinton State Auditor DEKALB TECHNICAL COLLEGE - TABLE OF CONTENTS - Page SECTION I FINANCIAL LETTER OF TRANSMITTAL SELECTED FINANCIAL INFORMATION EXHIBITS A STATEMENT OF NET ASSETS-(GAAP BASIS) 2 B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - (GAAP BASIS) 3 C STATEMENT OF CASH FLOWS - (GAAP BASIS) 5 D SELECTED FINANCIAL NOTES 6 SUPPLEMENTARY INFORMATION SCHEDULES 1 BALANCE SHEET - (STATUTORY BASIS) - BUDGET FUND 18 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS) BUDGET FUND 19 3 STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET (STATUTORY BASIS) BUDGET FUND 20 4 RECONCILIATION OF SALARIES AND TRAVEL 23 SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SECTION I FINANCIAL Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 October 13, 2009 Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the State Board of Technical and Adult Education Members of the Local Board of Directors and Honorable Robin Hoffman, President DeKalb Technical College Ladies and Gentlemen: As part ofour audit ofthe basic financial statements ofthe State ofGeorgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2009, we have performed certain audit procedures at DeKalb Technical College. Accordingly, the financial statements and compliance activities of DeKalb Technical College were examined to the extent considered necessary in order to express an opinion as to the fair presentation ofthe financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996. This Management Report contains information pertinent to the financial and compliance activities of DeKalb Technical College as ofand for the year ended June 30, 2009. Information contained in this report is a by-product ofour audit ofthe basic financial statements ofthe State ofGeorgia and is the representation of management. Accordingly, we do not express an opinion or any other form of assurance on it. The particular information provided which includes a section on findings and other items reported in accordance with Commission on Colleges regulation 2.11.1, is enumerated in the Table of Contents. This report is intended solely for the information and use of management of DeKalb Technical College, members of the Local Board of Directors, and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~w~ Russell W. Hinton, CPA, CGFM State Auditor RWH:as SELECTED FINANCIAL INFORMATION - 1- DEKALB TECHNICAL COLLEGE STATEMENT OF NET ASSETS - (GAAP BASIS) JUNE 30, 2009 ASSETS Current Assets Cash and Cash Equivalents Accounts Receivable, Net Federal Financial Assistance Other Prepaid Items Inventories Total Current Assets Noncurrent Assets Capital Assets, Net Total Assets LIABILITIES Current Liabilities Accounts Payable Salaries Payable Deferred Revenue Funds Held for Others Compensated Absences Total Current Liabilities Noncurrent Liabilities Compensated Absences Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Un restricted Total Net Assets EXHIBIT"A" $ 1,431,506.54 228,337.51 639,614.96 219,037.91 549,937.74 $ 3,068,434.66 30,240,233.43 $ 33,308,668.09 $ 239,906.83 191,707.04 145,539.80 151,035.50 893,926.96 $ 1,622,116.13 677,057.09 $ 2,299, 173.22 $ 30,240,233.43 769,261.44 $ 31,009,494.87 DEKALB TECHNICAL COLLEGE EXHIBIT "B" STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - (GAAP BASIS) YEAR ENDED JUNE 30, 2009 OPERATING REVENUES Student Tuition and Fees Less: Scholarship Allowances Grants and Contracts Federal Rents and Royalties Sales and Services Other Operating Revenues Total Operating Revenues OPERATING EXPENSES Salaries Benefits Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Total Operating Expenses Operating Income (Loss) NONOPERATING REVENUES (EXPENSES} State Appropriations Grants and Contracts Federal Local Gifts Interest and Other Investment Income Other Nonoperating Expenses Net Nonoperating Revenues Income (Loss) Before Other Revenues, Expenses, Gains, or Losses Capital Grants and Gifts State Nongovernmental Loss on Disposal of Capital Assets Total Other Revenues, Expenses, Gains, or Losses Increase (Decrease) in Net Assets Net Assets - Beginning of Year Net Assets - End of Year $ 7,760,785.93 -600,096.93 126,004.83 138,531.85 3,218,519.14 35,130.35 $ 10,678,875.17 $ 17,666,868.83 3,622,152.20 93,945.29 2,878,465.96 1,093,043.39 4,828,039.13 1,684,452.48 $ 31,866,967.28 $ -21, 188,092.11 $ 15,762,361.64 5,906,890.59 108,886.07 568,284.28 12,057.13 -566, 746.11 $ 21,791,733.60 $ 603,641.49 $ 175,989.56 94,173.37 -375, 746.48 $ -105,583.55 $ 498,057.94 30,511,436.93 $ 31,009,494.87 -3- (This page left intentionally blank) DEKALB TECHNICAL COLLEGE STATEMENT OF CASH FLOWS-(GAAP BASIS) YEAR ENDED JUNE 30, 2009 CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Other Receipts (Payments) Net Cash Provided (Used) by Operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Other Nonoperating Receipts Net Cash Flows Provided (Used) by Noncapital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets Net Cash Provided (Used) by Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES Earnings on Investments Net Increase (Decrease) in Cash Cash and Cash Equivalents - Beginning of Year Cash and Cash Equivalents End of Year RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating Income (Loss) Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities Depreciation Expense Change in Assets and Liabilities: Accounts Receivable, Net Inventories Prepaid Items Salaries Payable Accounts Payable Deferred Revenue Compensated Absences Net Cash Provided (Used) by Operating Activities NONCASH ACTIVITY Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts Gifts Reducing Proceeds of Gifts and Grants for Other than Capital Purposes -5 - EXHIBIT"C" $ 6,911,932.55 132,538.14 3,120,694.94 -9,657,776.87 -17,583,780.77 -2,878,465.96 166 674.75 $ -19,788,183.22 $ 15,762,361.64 -9,363.09 6,657,438.79 -340 953.98 $ 22,069,483.36 $ 124,959.61 -1 561 154.22 $ -1436194.61 $ 12 057.13 $ 857,162.66 574 343.88 $ -21, 188,092.11 1,684,452.48 -314,889.09 -4,801.00 -26,283.60 63,348.57 10,487.74 -32, 145.70 19 739.49 $ ===-1=38='=21=5=.8=8 $ ===-=22=5=7=9=2=.1=3 DEKALB TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2009 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY DeKalb Technical College is one of thirty-three (33) State supported member colleges of postsecondary education in Georgia which comprise the Technical College System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of DeKalb Technical College as a separate reporting entity. The Technical College's Local Board of Directors is composed of eleven (11) members serving staggered three-year terms who are appointed by the State Board ofTechnical and Adult Education. Appropriation of State funds is made to the Technical College System of Georgia by the General Assembly of Georgia. The System Office of the Technical College System of Georgia determines the amount of State appropriations to be received by DeKalb Technical College. The Technical College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, DeKalb Technical College is considered an organizational unit of the Technical College System of Georgia for financial reporting purposes because ofthe significance of its legal, operational, and financial relationships as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards. NET ASSETS The Technical College's net assets are classified as follows: Invested in capital assets, net ofrelated debt: This amount represents the Technical College's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. Unrestricted net assets: Unrestricted net assets represent available resources derived from student tuition and fees, state appropriations, and sales and services of educational departments. These resources will be used for transactions relating to the educational and general operations of the 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 appropriations (surplus) of $292,229.04. Unexpended state appropriations must be refunded to the Technical College System of Georgia for remittance to the Office of Treasury and Fiscal Services. When an expense is incurred that can be paid using either restricted or unrestricted resources, the Technical College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources. -6- DEKALB TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2009 EXHIBIT "D" NOTE 2: DEPOSITS DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the Technical College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the Technical College) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu ofa surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59: 1. Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia. 2. Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia. 3. Bonds of any public authority created by the laws ofthe State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose. 4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia. 5. Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation ofthe United States government, which are fully guaranteed by the United States government both as to principal and interest, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. 6. Guarantee or insurance ofaccounts provided by the Federal Deposit Insurance Corporation. As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies, which allows agencies of the State of Georgia (and thus DeKalb Technical College), the option of exempting demand deposits from the collateral requirements. At June 30, 2009, the carrying value of deposits was $1,429,306.54 and the bank balance was $1,878,936.74. Of the Technical College's deposits, $1,628,936.74 were uninsured. Of these uninsured deposits, $1,628,936.74 were collateralized with securities held by the pledging financial institution's trust department or agent. -7- DEKALB TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2009 EXHIBIT "D" NOTE 3: ACCOUNTS RECEIVABLE Accounts receivable at June 30, 2009, consists of the following: Student Tuition and Fees Federal, State and Private Funds GSFIC Other $ 687,625.20 228,337.51 177,415.70 272,850.75 $ 1,366,229.16 Less: Allowance for Doubtful Accounts Net Accounts Receivable 498,276.69 $ 867~952.47 NOTE 4: CAPITAL ASSETS Following are the changes in capital assets for the year ended June 30, 2009: Balance July 1, 2008 Additions Reductions Balance June 30, 2009 Capital Assets, Not Being Depreciated: Land and Land Improvements $ 1,205,855.00 $ 0.00 $ 0.00 $ 1,205,855.00 Capital Assets, Being Depreciated: Building and Building Improvements Improvements Other Than Buildings Equipment Library Collections $ 31,193,306.00 $ 65,363.00 $31,127,943.00 1,030,310.00 1,030,310.00 4,658,369.02 $ 1,659,185.51 1,356,193.40 4,961,361.13 475,113.60 40 184.59 515,298.19 $ 37,357,098.62 $ 1,699,370.10 $ 1,421,556.40 $37,634,912.32 Less: Accumulated Depreciation: Building and Building Improvements Improvements Other Than Buildings Equipment Library Collections $ 3,331,360.41 $ 1,030,310.00 3,370,012.11 230,208.81 698,199.95 $ 4,029,560.36 1,030,310.00 934,722.71 $ 1,045,809.92 3,258,924.90 51,529.82 281,738.63 $ 7,961,891.33 $ 1,684,452.48 $ 1,045,809.92 $ 8,600,533.89 Total Capital Assets, Being Depreciated, Net $29,395,207.29 $ 14,917.62 $ 375,746.48 $ 29,034,378.43 Capital Assets, Net $ 30.601,062.29 $ 14 917 62 $ 375.746.48 $ 30 240 233.43 NOTE 5: DEFERRED REVENUE Deferred revenue at June 30, 2009, consists of the following: Prepaid Tuition and Fees $ 1452539.80 -8- DEKALB TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2009 EXHIBIT "D" NOTE 6: LONG-TERM LIABILITIES Long-Term liability activity for the year ended June 30, 2009 was as follows: Other Liabilities Compensated Absences Balance July 1. 2008 Additions Reductions Balance June 30. 2009 Current Portion $ 1 55124456 $ 1076734 28 $ 1 056 994 79 $ 1 570 984 05 $ 893 926 96 NOTE 7: NET ASSETS Changes in Net Asset activity for the year ended June 30, 2009 was as follows: Invested in Capital Assets Net of Related Debt Unrestricted Net Assets Total Net Assets NOTE 8: LEASE OBLIGATIONS Balance July 1. 2008 Additions Reductions Balance June 30. 2009 $30,601,062.29 $ 14,917.62 $ 375,746.48 $ 30,240,233.43 -89,625.36 33,292.600.19 32,433.713.39 769,261.44 $ 301511 A36,93 $ 33 307 517 81 $ 32 809 459.87 $ 31 009 494 87 OPERATING LEASES DeKalb Technical College has entered into certain agreements to lease office space and equipment which are classified as operating leases (leases on assets not recorded on the balance sheet). These leases generally contain provisions that, at the expiration date of the original term of the lease, the Technical College has the option of renewing the lease on a year-to-year basis. Amounts are included only for multi-year leases and for cancelable leases for which an option to renew for the subsequent fiscal year has been exercised. Expenses for rental ofoffice space and equipment under operating leases for the year ended June 30, 2009, totaled $1,137,951.64. SUMMARY OF LEASE OBLIGATIONS Future commitments for capital leases (which here and on the Statement ofNet Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2009, were as follows: -9 - DEKALB TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2009 EXHIBIT "D" NOTE 8: LEASE OBLIGATIONS SUMMARY OF LEASE OBLIGATIONS Year Ending June 30 2010 2011 2012 2013 2014 2015 Operating Leases $ 1,187,628.40 1,179,291.60 1,166,032.96 665,528.76 294,823.56 294,823.56 Total Minimum Lease Payments $ 4,7881128.84 NOTE 9: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description DeKalb Technical College participates in the Teachers Retirement System ofGeorgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State ofGeorgia. TRS provides service retirement, disability retirement, and survivor's benefits for 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 DeKalb Technical College who are covered by TRS are required by State statute to contribute 5% oftheir gross earnings to TRS. DeKalb Technical College makes monthly employer contributions to TRS at rates adopted by the TRS Board ofTrustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2009, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2009 2008 2007 100% 100% 100% $ 922,946.25 $ 962,974.14 $ 958,416.17 - 10 - DEKALB TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2009 EXHIBIT "D" NOTE 9: RETIREMENT PLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Plan Description DeKalb Technical College participates in the Employees' Retirement System of Georgia (ERS), a single-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia. The ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 ofthe Internal Revenue Code (IRC) as a portion ofERS. The purpose of SRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC 415. The benefit structure of ERS is established by the Board of Trustees under statutory guidelines. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are "new plan" members subject to the modified plan provisions. Effective January 1, 2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). ERS members hired prior to January 1, 2009 also have the option to change their membership to the GSEPS plan. Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60. Retirement benefits paid to members are based upon a formula adopted by the Board ofTrustees for such purpose. The formula considers the monthly average of the member's highest 24 consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Post-retirement cost-of-living adjustments may be made to members' benefits provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS. Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members ofother state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The Technical College's payroll for the year ended June 30, 2009, for employees covered by ERS was $3,182,536.27. The Technical College's total payroll for all employees was $17,666,868.83. - 11 - DEKALB TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2009 EXHIBIT "D" NOTE 9: RETIREMENT PLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Funding Policy Member contribution rates are set by law. Member contributions under the old plan are 4% of annual compensation up to $4,200 plus 6% of annual compensation in excess of$4,200. Under the old plan, the Technical College pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these Technical College contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The Technical College is required to contribute at a specified percentage of active member payroll established by the Board of Trustees determined annually in accordance with actuarial valuation and minimum funding standards as provided by law. These Technical College contributions are not at any time refundable to the member or his/her beneficiary. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2009 2008 2007 100% 100% 100% $ 354,152.14 $ 328,896.38 $ 266,931.49 Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2009 financial report, which may be obtained through ERS. GEORGIA DEFINED CONTRIBUTION PLAN Plan Description DeKalb Technical College participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia. Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $3,500.00 credited to his/her account, the Board ofTrustees has - 12 - DEKALB TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2009 EXHIBIT "D" NOTE 9: RETIREMENT PLANS GEORGIA DEFINED CONTRIBUTION PLAN Benefits the option ofrequiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute. The Employees' Retirement System of Georgia issues a financial report each fiscal year which may be obtained through ERS. Contributions and Vesting Member contributions are seven and one-halfpercent (7.5%) ofgross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member. The Technical College's payroll for the year ended June 30, 2009, for employees covered by GDCP was $3,264,153.87. The Technical College's total payroll for all employees was $17,666,868.83. Total contributions made by employees during fiscal year 2009 amounted to $244,811.54 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. NOTE 10: CONTINGENCIES Amounts received or receivable from grantor agencies are subject to audit and adjustment by granter agencies. This could result in refunds to the granter agency for any expenses which are disallowed under grant terms. The amount of expenses which may be disallowed by the grantor cannot be determined at this time although DeKalb Technical College expects such amounts, if any, to be immaterial to its overall financial position. Litigation, claims and assessments filed against DeKalb Technical College (an organizational unit of the Department of Technical and Adult Education), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2009. NOTE 11: POSTEMPLOYMENT BENEFITS The Technical College participates in two State of Georgia postemployment benefit plans, the Georgia Retiree Health Benefit Fund (administered by the Department of Community Health) and the State Employees' Assurance Department - OPEB (administered by the ERS System). Separate - 13 - DEKALB TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2009 EXHIBIT "D" NOTE 11: POSTEMPLOYMENT BENEFITS financial reports that include the applicable financial statements and required supplementary information for these plans are publicly available and may be obtained from the respective system offices. Georgia Retiree Health Benefit Fund The Georgia Retiree Health Benefit Fund (GRHBF) is a cost-sharing multiple-employer defined benefit postemployment healthcare plan that covers retired employees of the State including all departments, agencies and local school systems. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries through the health insurance plan for State employees. The Official Code ofGeorgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions ofthe employees' health insurance plan (including benefits for retirees) to the Board of Community Health (Board). The contribution requirements of the plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of the health insurance coverage. Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rate is established to fund both the active and retired employee health insurance plans based on projected "pay-as-you-go" financing requirements. The combined rates for the active and retiree plans for the fiscal year ended June 30, 2009, were as follows: July 2008 - January 2009 February 2009 March 2009 - June 2009 22.165% of covered payroll for August - February Coverage 1.926% of covered payroll for March Coverage 0.000% of covered payroll for April - July Coverage No additional contribution was required by the Board for fiscal year 2009 nor contributed to GRHBF to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other postemployment benefits and are subject to appropriation. The following table summarizes the Technical College's contributions to the health insurance plans for the years ending June 30, 2009 and June 30, 2008, (dollars in thousands): Fiscal Year Percentage Contributed Required Contribution 2009 2008 100% 100% $ 1,804,007.45 $ 3,161,802.40 - 14 ~ DEKALB TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2009 EXHIBIT "D" NOTE 11: POSTEMPLOYMENT BENEFITS State Employees' Assurance Department - OPEB State Employees' Assurance Department- OPEB (SEAD-OPEB) is a cost-sharing multiple-employer defined benefit postemployment plan that was created in fiscal year 2007 by the Georgia General Assembly to provide term life insurance to retired and vested inactive members of the Employees' Retirement System. Contributions by plan members are established by the Board of Trustees, up to the maximum allowed by statute (not to exceed 0.5% of earnable compensation). The Board of Trustees of the Employees' Retirement System establish employer contribution rates, such rates which, when added to members' contributions, shall not exceed 1% ofearnable compensation. For the fiscal year ended June 30, 2009, contributions of ERS "old plan" members were 0.45% of earnable compensation, 0.22% ofwhich was paid by the employer. Contributions of ERS "new plan" members were 0.23% of earnable compensation. There were no employer annual required contributions (ARC) for the fiscal years ended June 30, 2009 and June 30, 2008. NOTE 13: AFFILIATED ORGANIZATIONS The DeKalb Technical Foundation, Inc. is a legally separate, tax exempt organization whose activities primarily support DeKalb Technical College. This affiliated organization is considered to be a potential component unit of the State of Georgia in accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements ofthis affiliated organization are not included in these financial statements. Copies ofthe financial statements for the affiliated organization may be obtained from DeKalb Technical College. - 15 - (This page left intentionally blank) SUPPLEMENTARY INFORMATION - 17 - DEKALB TECHNICAL COLLEGE BALANCE SHEET (STATUTORY BASIS) BUDGET FUND JUNE 30, 2009 ASSETS Cash and Cash Equivalents Accounts Receivable Federal Financial Assistance Other Prepaid Expenditures Inventories Total Assets LIABILITIES AND FUND EQUITY Liabilities Salaries Payable Accounts Payable Encumbrances Payable Deferred Revenue Funds Held for Others Total Liabilities Fund Balances Reserved Federal Financial Assistance Sales and Services Local Grants and Contracts Live Work Projects Continuing Education Technology Fees Uncollectible Accounts Receivable Prior Year Local Funds Inventories Unreserved Surplus Total Fund Balances Total Liabilities and Fund Balances SCHEDULE "1" $ 1,552,758.84 347,217.82 787,309.78 207,776.91 549,937.74 $ ====3=,4=45=,00=1=.09= $ 191,707.04 169,687.05 1,030,230.92 141,617.80 16,000.31 $ 1,549,243.12 $ 2,635.00 211,068.56 49,293.61 25,298.46 159,752.68 250,024.67 484,712.92 11,591.98 409,151.05 292,229.04 $ 1,895,757.97 $ ======3,=4=45=,=00=1=.0=9= Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. - 18 - DEKALB TECHNICAL COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2009 SCHEDULE "2" REVENUES State Appropriation State General Funds Federal Funds Other Funds Total Revenues CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance Total Funds Available EXPENDITURES Adult Literacy Economic Development Technical Education Total Expenditures Excess of Funds Available over Expenditures FUND BALANCE JULY 1 Reserved Unreserved ADJUSTMENTS Prior Year Payables/Expenditures Prior Year Receivables/Revenues Unreserved Fund Balance (Surplus) Returned to Technical College System of Georgia Year Ended June 30, 2008 Refunds to Grantors Federal Financial Assistance Returned to Technical College System of Georgia Year Ended June 30, 2008 Prior Year Reserved Fund Balance Included in Funds Available FUND BALANCE JUNE 30 BUDGET ACTUAL VARIANCE FAVORABLE (UNFAVORABLE) $ 15,954,695.00 $ 15,954,695.00 $ 2,714,214.40 2,621,101.74 1212581988.39 11 291411.89 $ 30,927,897.79 $ 29,867,208.63 $ 0.00 -93,112.66 -967 576.50 -1,060,689.16 0.00 503 027.43 $ 3019271897.79 $ 3013701236.06 $ 503 027.43 -557 661.73 $ 2,428,935.00 $ 2,400,738.41 $ 875,000.00 740,883.86 27,623,962.79 26,181,993.40 $ 3019271897.79 $ 291323,615.67 $ $ 0.00 $ 1,046,620.39 $ 28,196.59 134,116.14 1 441 969.39 11604,282.12 1,046,620.39 1,354,540.53 192,333.36 1,463.69 -1,457.16 -192,333.36 -2,382.05 -503,027.43 $ 1,895,757.97 SUMMARY OF FUND BALANCE Reserved Federal Financial Assistance Sales and Services Local Grants and Contracts Live Work Projects Continuing Education Technology Fees Uncollectible Accounts Receivable Prior Year Local Funds Inventories Total Reserved Unreserved Surplus $ 2,635.00 211,068.56 49,293.61 25,298.46 159,752.68 250,024.67 484,712.92 11,591.98 409,151.05 $ 1,603,528.93 292,229.04 Total Fund Balance Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. -19- DEKALB TECHNICAL COLLEGE STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET (STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2009 Adult Literacy State Appropriation State General Funds Federal Funds Other Funds Total Adult Literacy Original Appropriation Final Budget Current Year Revenues Funds Available Com~ared to Budget Prior Year Carry-Over Total Funds Available Variance Positive (Negative) 598,602.00 $ 1,505,632.00 240,000.00 2,344,234.00 524,822.00 1,604,113.00 300 000.00 2,428,935 00 524,822.00 1,599,322.70 275 876.68 2,400,021.38 0.00 0.00 6 379.00 6,379.00 524,622.00 1,599,322.70 282 255.68 2,406,400.38 $ 0.00 -4,790.30 -17 744.32 -22,534.62 Economic Development Other Funds 774 900.00 $ 875,000.00 $ 729 214.36 $ 179 035.57 $ 908 249.93 $ 33 249.93 Technical Education State Appropriation State General Funds Federal Funds American Recovery and Reinvestment Act of 2009 Federal Stabilization Funds Other Federal Funds Other Funds Total Technical Education Grand Totals -All Programs 18,286,460.00 $ 15,429,873.00 $ 15,429,873.00 $ 0.00 $ 15,429,873.00 $ 0.00 0.00 922,662.00 9 635 654.00 28 844 776.00 93,835.00 1,016,266.40 11 083 988.39 27,623,962.79 93,835.00 927,944.04 10 286,320 85 26 737 972.89 0.00 0.00 317 612.86 317 612.86 93,83500 927,944.04 10 603 933.71 27 055 585. 75 0.00 -88,322.36 -480 054.68 -568 377.04 31,963,910.00 $ 30,927,897.79 $ 29,867,208.63 $ 503,027.43 $ 30,370,236.06 $ -557,661. 73 Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budAetarv statutes and reAulations of the State of Geor!:Jia, which is a comprehensive basis of accounting other than generally accepted accounting principles. -20- SCHEDULE "3" Exeenditures Compared to Budget Variance Positive Actual (Negative) Actual Funds Available Over/(Under) Expenditures Prior Period Adjustments Other Adjustments Program Fund Balances Transfers Program Fund Balances Reserve Surplus Total Fund Balance 524,763,00 1,601,056.98 274 918.43 2.400,738.41 59,00 3,056.02 25 081.57 28,196.59 59.00 $ -1,734,28 7,337.25 5,661.97 $ 0,00 1,734.28 .3 758,00 2,023.72 0.00 59.00 0.00 0.00 0.00 3 579.25 0.00 3,638.25 0.00 0.00 0.00 0.00 $ 0.00 0.00 2 856.00 2 856.00 59,00 o.oo 723.25 782.25 59.00 0.00 3 579.25 3,638.25 740 883.86 $ 134116.14 $ 167 366.07 $ -831.46 $ 0.00 $ 166 534.61 $===o=.o=o= $ 166 534.61 $ 0 00 $ ==1;,;6~6..;:5~34~,6~1~ $ 15,429,873.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 93,835.00 929,404.46 9 728 880.94 26 181 993.40 0.00 86,861.94 1 355, 107,45 1 441 969.39 0.00 -1.460.42 875 052.77 873 592.35 0.00 4,095.42 -1233.71 2 861.71 0.00 0.00 -44 732.92 -44 732.92 $ 0.00 2,635.00 829 086.14 831 721.14 0.00 0.00 0,00 0.00 2,635.00 0.00 0.00 537 639.35 291 446.79 000 2,635.00 829 086.14 0.00 540 274.35 291 446.79 $ 831 721.14 29,323,615.67 $ 1,604,282.12 $ 1,046,620.39 $ 6.53 $ -44,732.92 $ 1 001,894.00 $ o.oo $ 709 664.96 $ 292,229.04 $ 1,001,894.00 Unexpendable Reserves Uncollectible Accounts Receivable Inventories 484,712.92 409 151.05 1 895 757,97 -21 (This page left intentionally blank) DEKALB TECHNICAL COLLEGE RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2009 SCHEDULE "4" Totals per Annual Supplement Accruals June 30, 2009 June 30, 2008 Compensated Absences June 30, 2009 June 30, 2008 Lag Salaries June 30, 2009 June 30, 2008 Adjustments Agency Funds Unreconciled Variance SALARIES $ 17,620,734.64 $ TRAVEL 105,380.89 191,707.04 -128,358.47 1,270,868.46 -1,248,054.65 -159,785.98 121,116.97 -1,029.20 -329.98 -11,435.60 $ 17,666,868.83 $==9=3=,9=45=.2=9= -23- SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS DEKALB TECHNICAL COLLEGE AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2009 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-830-07-02 FS-830-07-05 FS-830-08-01 FS-83 0-08-02 Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS DEKALB TECHNICAL COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2009 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. OTHER ITEMS {NOTED FOR MANAGEMENT'S CONSIDERATION) No matters were reported.