STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS MANAGEMENT REPORT MIDDLE GEORGIA TECHNICAL COLLEGE WARNER ROBINS, GEORGIA AN ORGANIZATIONAL UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30, 2008 Russell W. Hinton State Auditor MIDDLE GEORGIA TECHNICAL COLLEGE - TABLE OF CONTENTS - 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 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 November 5, 2008 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 Ivan H. Allen, President Middle Georgia Technical College Ladies and Gentlemen: As part ofour audit ofthe basic financial statements ofthe State of Georgia 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, 2008, we have performed certain audit procedures at Middle Georgia Technical College. Accordingly, the financial statements and compliance activities of Middle Georgia Technical College were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996. This Management Report contains information pertinent to the financial and compliance activities of Middle Georgia Technical College as of and for the year ended June 30, 2008. Information contained in this report is a by-product of our audit of the basic financial statements ofthe State of Georgia and is the representation ofmanagement. 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 Middle Georgia 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, ""=D~w.-k ;uJ~l W. Hinton, CPA, CGFM State Auditor RWH:as SELECTED FINANCIAL INFORMATION - 1- MIDDLE GEORGIA TECHNICAL COLLEGE STATEMENT OF NET ASSETS - (GAAP BASIS) JUNE 30, 2008 ASSETS Current Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable, Net Federal Financial Assistance Other Inventories Total Current Assets Noncurrent Assets Capital Assets, Net Total Assets LIABILITIES Current Liabilities Salaries Payable Accounts 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 Unrestricted Total Net Assets EXHIBIT"A" $ 263,044.31 145,000.00 18,873.30 541,385.45 471,056.07 $ 1,439,359.13 19,650, 180.81 $ 21,089,539.94 $ 18,906.39 522,929.22 40,255.85 59,295.35 370,546.34 $ 1,011,933.15 382,559.07 $ 1,394,492.22 $ 19,650,180.81 44,866.91 $ 19,695,047.72 -2- MIDDLE GEORGIA TECHNICAL COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - (GAAP BASIS) YEAR ENDED JUNE 30, 2008 EXHIBIT"B" OPERATING REVENUES Student Tuition and Fees Less: Scholarship Allowances Grants and Contracts Federal Sales and Services Total Operating Revenues OPERATING EXPENSES Salaries Employee 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 State 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 Gain/Loss on Disposal of Capital Assets Total Other Revenues, Expenses, Gains or Losses Increase (Decrease) in Net Assets Net Assets - Beginning of Year, Restated Net Assets - End of Year $ 3,595,349.52 -160,448.99 1,190,912.72 2,978,294.68 $ 7,604,107.93 $ 10,577,655.34 3,333,699.18 151,698.72 1,028,829.01 876,508.34 2,134,455.36 812,232.26 $ 18,915,078.21 $ -11,310,970.28 $ 9,905,330.00 927,647.78 42,977.28 487,626.10 15,672.23 -4 800.00 $ 11,374,453.39 $ 63,483.11 $ 2,125,980.12 26,000.00 -0.01 $ 2,151,980.11 $ 2,215,463.22 17,479,584.50 $ 19,695,047.72 -3- (This page left intentionally blank) MIDDLE GEORGIA TECHNICAL COLLEGE STATEMENT OF CASH FLOWS - {GAAP BASIS) YEAR ENDED JUNE 30, 2008 CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships 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 Net Income {Loss) to Net Cash Provided {Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivable, Net Inventories Accounts Payable Salaries 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 -5- EXHIBIT"C" $ 3,436,856.03 1,189,644.44 2,920,168.51 -6,590,214.30 -10,530,760.94 -1,028,829.01 $ -10,603, 135.27 $ 9,905,330.00 29,631.99 1,472,128.59 -155,220.02 $ 11,251,870.56 $ 180,955.07 -582,318.28 $ -401,363.21 $ 15,672.23 $ 263,044.31 0.00 $ ===26=3=,0=4=4=.3=1 $ -11,310,970.28 812,232.26 -59,394.45 -112,253.96 18,401.26 -8,266.30 1,955.50 55,160.70 $ -10,603,135.27 $ 2,151,980.12 MIDDLE GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2008 EXHIBIT"D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY Middle Georgia Technical College is one of thirty-three (33) State supported member colleges of postsecondary education in Georgia which comprise the Georgia Department ofTechnical and Adult Education, an organizational unit ofthe State of Georgia. The accompanying financial statements reflect the operations of Middle Georgia 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 Georgia Department of Technical and Adult Education by the General Assembly ofGeorgia. The Department's Administrative Central Office determines the amount of State appropriations to be received by Middle Georgia Technical College. The Technical College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Middle Georgia Technical College is considered an organizational unit of the Georgia Department of Technical and Adult Education for financial reporting purposes because ofthe significance ofits legal, operational, and financial relationships as defined in Section 2100 ofthe 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 $2,135.61. Unexpended state appropriations must be refunded to the Department ofTechnical and Adult Education 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 - MIDDLE GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2008 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES RESTATEMENT OF PRIOR YEAR NET ASSETS For fiscal year 2008, the Technical College restated Capital Assets, due to errors and omissions. The Technical College increased Buildings and Building Improvements by $338,532.00, increased Improvements Other Than Buildings by $41,407.34, and increased Equipment by $408,298.83. The result is an increase in Net Assets at July 1, 2007, of $788,238.17. This change is in accordance with generally accepted accounting principles. 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 ofany 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 ofthe State ofGeorgia (and thus Middle Georgia Technical College), the option of exempting demand deposits from the collateral requirements. -7- MIDDLE GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2008 EXHIBIT "D" NOTE 2: DEPOSITS DEPOSITS At June 30, 2008, the carrying value of deposits was $406,114.31 and the bank balance was $792,889.40. Ofthe Technical College's deposits, $547,889.40 were uninsured. These uninsured deposits were collateralized with securities held by the financial institution's trust department or agent in the Technical College's name. NOTE 3: ACCOUNTS RECEIVABLE Accounts receivable at June 30, 2008, consists of the following: Federal, State and Private Funds Other $ 18,873.28 551,580.56 $ 570,453.84 Less: Allowance for Doubtful Accounts 10,195.09 Net Accounts Receivable $ 560,258.75 NOTE 4: CAPITAL ASSETS Following are the changes in capital assets for the year ended June 30, 2008: -8- MIDDLE GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2008 EXHIBIT "D" NOTE4: CAPITAL ASSETS Beginning Balance July I, 2007 (Restated) Additions Reductions Ending Balance June 30, 2008 Capital Assets, Not Being Depreciated: Land and Land Improvements $ 336,141.00 Construction In Progress 88,728.30 $ 2,125,980.12 $ $ 336,141.00 88,728.30 2,125,980.12 Total Capital Assets Not Being Depreciated $ 424,869.30 $ 2,125,980.12 $ 88,728.30 $ 2,462,121.12 Capital Assets, Being Depreciated: Buildings and Buildings Improvements $20,752,596.70 $ Improvements Other than Buildings 1,444,543.06 Equipment 4,522,000.04 Library Collections 650,478.61 511,437.65 107,732.56 $ 77 876.37 295,053.35 3,823.68 $21,264,034.35 1,444,543.06 4,334,679.25 724,531.30 Total Assets Being Depreciated $27,369,618.41 $ 697,046.58 $ 298,877.03 $27,767,787.96 Less: Accumulated Depreciation: Buildings and Buildings Improvements $ 4,588,632.80 $ Improvements Other than Buildings 1,295,530.63 Equipment 3,965,003.83 Library Collections 217,205.77 491,487.45 77,066.38 170,911.41 $ 72 767.02 295,053.34 3,823.68 $ 5,080,120.25 1,372,597.01 3,840,861.90 286,149.11 Total Accumulated Depreciation $ 10,066,373.03 $ 812,232.26 $ 298,877.02 $10,579,728.27 Total Capital Assets, Being Depreciated, Net $ 17,303,245.38 $ -I 15,185.68 $ 0.01 $17,188,059.69 Capital Assets, Net $17.72811468 $ 2.010.794.44 $ 88,728.31 $ 19.650.180.81 NOTE 5: DEFERRED REVENUE Deferred revenue at June 30, 2008, consists of the following: Prepaid Tuition and Fees NOTE 6: LONG-TERM LIABILITIES $=====40""'"""25"='=5==8.'==5 Long-Term liability activity for the year ended June 30, 2008 was as follows: Other Liabilities Compensated Absences Balance July I, 2007 Additions Reductions Balance June 30, 2008 $ 697.944 71 $ 720 )30.50 $ 664 969.80 $ 753.105.41 Current Portion $ 370.546 34 NOTE 7: NET ASSETS Changes in Net Asset activity for the year ended June 30, 2008 was as follows: -9- MIDDLE GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2008 EXHIBIT "D" NOTE 7: NET ASSETS Invested in Capital Assets Net of Related Debt Unrestricted Net Assets Total Net Assets NOTE 8: LEASE OBLIGATIONS Balance Julx I, 2007 $17,728,114.68 -248,530.18 $ l:Z,472,584.50 Additions $ 2,010,794.44 18,983,361.32 $20,224,155.76 Reductions $ 88,728.31 18,689,964.23 $ 18,:Z:Z8 622 54 Balance June 30, 2008 $ 19,650,180.81 44,866.91 $ 12 625,047 72 OPERATING LEASES Middle Georgia Technical College has entered into certain agreements to lease copiers 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 of copiers under operating leases for the year ended June 30, 2008, totaled $12,930.00. SUMMARY OF LEASE OBLIGATIONS Future commitments for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows: Year Ending June 30 Operating Leases 2009 2010 2011 $ 42,284.23 29,353.92 15,805.98 Total Minimum Lease Payments $ 87.444.13 NOTE9: RETIREMENTPLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description Middle Georgia Technical College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing 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 of Georgia. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement - 10 - MIDDLE GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2008 EXHIBIT "D" NOTE 9: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description 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 Middle Georgia Technical College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Middle Georgia Technical College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, 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 2008 2007 2006 100% 100% 100% $ 612,637.17 $ 618,399.48 $ 597,906.32 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Plan Description Middle Georgia 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. Retirement benefits paid to members are based upon a formula which considers the monthly average ofthe member's highest twenty-four consecutive calendar months of salary, the number ofyears of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution ofthe 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. In addition, 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 of the Internal Revenue Code (IRC) as a portion ofERS. The purpose ofSRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC 415. - 11 - MIDDLE GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2008 EXHIBIT"D" NOTE 9: RETIREMENT PLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 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, 2008, for employees covered by ERS was $2,097,178.50. The Technical College's total payroll for all employees was $10,577,655.34. Under the old plan, member contributions consist of 6.5% of annual compensation. Of these member contributions, the employee pays the first 1.5% and the Technical College pays the remainder on behalfofthe employee. Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The Technical College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. For the year ended June 30, 2008, the ERS employer contribution rate for the Technical College amounted to 10.41 % of covered payroll. Middle Georgia Technical College did not have any employees covered by the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees. Total contributions to the plan made during fiscal year 2008 amounted to $249,812.31, of which $218,354.63 was made by the Technical College and $31,457.68 was made by employees. These contributions met the requirements of the plan. GEORGIA DEFINED CONTRIBUTION PLAN Plan Description Middle Georgia 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 ofproviding 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 ofthe 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. Ifa member has less than $3,500.00 credited to his/her account, the Board ofTrustees has the option ofrequiring a lump sum distribution to the member in lieu ofmaking 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. - 12 - MIDDLE GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2008 EXHIBIT "D" NOTE 9: RETIREMENT PLANS GEORGIA DEFINED CONTRIBUTION PLAN Benefits The Employees' Retirement System ofGeorgia 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, 2008, for employees covered by GDCP was $965,816.89. The Technical College's total payroll for all employees was $10,577,655.34. Total contributions made by employees during fiscal year 2008 amounted to $72,436.36 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. NOTE 10: POSTEMPLOYMENT BENEFITS The Technical College participates in the Georgia Retiree Health Benefit Fund ("GRHBF") which is a cost-sharing multiple-employer defined benefit postemployment healthcare plan that covers retired employees ofthe State of Georgia. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries. Pursuant to Title 45, Chapter 18 of O.C.G.A., the authority to establish and amend the benefit provisions of the plan is assigned to the Board of Community Health ("Board"). Financial statements and required supplementary information for GRHBF are included in the publicly available financial report of the Department of Community Health. The Technical College contributes to the fund based upon amounts recommended by the Board and set forth in the Appropriations Act. This contribution rate is established to fund both the active and retired employee components of the health insurance plan based on projected pay-as-you-go financing requirements. The combined rate for the active and retiree components ofthe plan (payas-you-go basis) for the fiscal year ended June 30, 2008, was 18.534% of covered payroll. An additional contribution of4.309% ofcovered payroll was required by the Board for fiscal year 2008; eleven months ofthis additional contribution will be deposited into the OPEB fund to prefund retiree benefits (such additional contribution amounts are determined annually). The Technical College's contribution to the health insurance plan for the fiscal year ended June 30, 2008, was $2,108,278.73, which equaled the required contribution. - 13 - MIDDLE GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2008 EXHIBIT"D" NOTE 10: POSTEMPLOYMENT BENEFITS The Technical College also participates in a program of group term life insurance for retired and vested inactive eligible members of various retirement systems. The State Employees' Assurance Department ("SEAD-OPEB") is a single-employer defined benefit postemployment plan. Pursuant to Title 47 ofthe Official Code ofGeorgia Annotated, the authority to establish and amend the benefit provisions of the plan is assigned to the Boards of Trustees of the Employees' and Judicial Retirement Systems. Financial statements and required supplementary information for SEAD-OPEB are included in the publicly available financial report ofthe Employees' Retirement System. The Technical College is required to contribute the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters ofGASB Statement 45. The ARC for the year ended June 30, 2008, was zero (0). NOTE 11: RISK MANAGEMENT Public Entity Risk Pool The Department of Community Health (OCH) administers for the State of Georgia a program of health benefits for the employees of units of government of the State of Georgia, units of county governments, and local education agencies located with the State ofGeorgia. This plan is funded by participants covered in the plan, by employers' contributions paid by the various units ofgovernment participating in the plan, and appropriations made by the General Assembly of Georgia. OCH contracted with United Healthcare to process medical claims. For prescription drug claims, DCH contracted with Express Scripts, Incorporated through December 31, 2007 and contracted with Medco, Incorporated beginning January 1, 2008. All claims are to be processed in accordance with the State Employees' Health Benefit Plan as established by the Department of Community Health. Other Risk Management The Department ofAdministrative Services (DOAS) has the responsibility for the State ofGeorgia ofmaking and carrying out decisions that will minimize the adverse effects ofaccidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Technical College, as an organizational unit of the Georgia Department of Technical and Adult Education, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment. - 14 - MIDDLE GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2008 EXHIBIT "D" NOTE 12: CONTINGENCIES Amounts received or receivable from granter 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 granter cannot be determined at this time although Middle Georgia Technical College expects such amounts, ifany, to be immaterial to its overall financial position. Litigation, claims and assessments filed against Middle Georgia Technical College (an organizational unit of the Department of Technical and Adult Education), if any, are generally considered to be actions against the State ofGeorgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2008. NOTE 13: AFFILIATED ORGANIZATIONS The Middle Georgia Technical College Foundation, Inc. is a legally separate, tax exempt organization whose activities primarily support Middle Georgia Technical College. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of this affiliated organization are not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from Middle Georgia Technical College. - 15 - (This page left intentionally blank) SUPPLEMENTARY INFORMATION - 17 - MIDDLE GEORGIA TECHNICAL COLLEGE BALANCE SHEET (STATUTORY BASIS) BUDGET FUND JUNE 30, 2008 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Federal Financial Assistance Other Inventories Total Assets LIABILITIES AND FUND EQUITY Liabilities Salaries Payable Accounts Payable Benefits Payable Encumbrances Payable Deferred Revenue Total Liabilities Fund Balances Reserved Departmental Sales and Services Federal Financial Assistance Live Works Projects Prior Year Local Funds Uncollectible Accounts Receivable Inventories Unreserved Surplus Total Fund Balances Total Liabilities and Fund Balances SCHEDULE "1" $ 226,347.34 145,000.00 19,047.92 530,714.07 471,056.07 $ ====1=,3=92=,=1=65=.4=0= $ 18,906.39 465,240.71 62,866.30 277,346.61 24,987.00 $ 849,347.01 $ 123,342.85 36.67 153,344.54 203,311.13 10,195.09 50,452.50 2,135.61 $ 542,818.39 $ ====1,=39=2=,1=65=.=40= 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 - MIDDLE GEORGIA TECHNICAL COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008 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 ADJUSTMENTS Prior Year Payables/Expenditures Prior Year Reserved Fund Balance Included in Funds Available FUND BALANCE JUNE 30 BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) $ 9,905,330.00 $ 9,905,330.00 $ 934,789.48 914,975.28 6.708,223.33 6,632,520.45 $ 17,548,342.81 $ 17,452,825.73 $ 0.00 -19,814.20 -75 702.88 -95,517.08 0.00 347 934.56 $ 17,548,342.81 $ 17,800,760.29 $ 347 934.56 252 417.48 $ 1,325,968.14 $ 1,325,968.16 $ 2,552,836.10 2,457,191.50 13,669,538.57 13,548,286.24 $ 17,548,342.81 $ 17 331 445.90 $ $ 0.00 $ 469,314.39 $ -0.02 95,644.60 121,252.33 216 896.91 469 314.39 408,582.15 12,856.41 -347 934.56 $ 542 818.39 SUMMARY OF FUND BALANCE Reserved Departmental Sales and Services Federal Financial Assistance Live Works Projects Prior Year Local Funds Uncollectible Accounts Receivable Inventories Total Reserved Unreserved Surplus $ 123,342.85 36.67 153,344.54 203,311.13 10,195.09 50 452.50 $ 540,682.78 2 135.61 Total Fund Balance $ =====5=4=2._8..,1,..8.=39= 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 - MIDDLE GEORGIA TECHNICAL COLLEGE STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET (STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008 Adult Literacy State Appropriation State General Funds Federal Funds Other Funds Total Adult Literacy Original Appropriation Final Budget Funds Available Com!!!red to Bu!!9et Current Year Revenues Prior Year carry-Over Total Funds Available Variance Positive (Negative) $ 678,956.00 $ 678,956.00 $ 678,956.00 $ 0.00 $ 678,956.00 $ 0.00 566,920.00 451,176.19 451,176.19 0.00 451,176.19 0.00 43,508.00 195835.95 195,835.95 0.00 195,835.95 0.00 $ 1,289,364.00 $ 1,325,968.14 $ 1,325,968.14 $ 0.00 $ 1.325,968.14 $ 0.00 Economic Development Other Funds $ 1650683.00 $ 2 552 836.10 $ 2 552 836.10 $ 0.00 $ 2.552.836.10 $ 0.00 Technical Education State Appropriation State General Funds Federal Funds Other Funds Total Technical Education $ 9,270,592.00 $ 9,226,374.00 $ 9,226,374.00 $ 0.00 $ 419,636.00 483,613.29 463,799.09 36.70 2,188,262.00 3 959 551.28 3883648.40 347897.86 $ 11,878,490.00 $ 13,669 538.57 $ 13 574 021.49 $ 347934.56 $ 9,226,374.00 $ 463,835.79 4,231,746.26 0.00 -19,777.50 272,194.98 13 921 956.05 $ 252 417.48 Grand Totals - All Programs $ 14,818,557.00 $ 17,548,342.81 $ 17,452,825.73 $ 347,934.56 $ 17,800.760.29 $ 252.417.48 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. -20- SCHEDULE "3" Exe!nditures Coml!!!red to Budget Variance Positive Actual (Negative) Actual Funds Available Over/(Under) Expenditures Prior Period Adjustments Other Adjustments Program Fund Balances Transfers P~ram Fund Balances Total Fund Reserve ......!!m!!!L Balance $ 678,956.01 $ 451,176.19 195,835.96 $ 1,325,968.16 $ -0.01 $ 0.00 -0.01 -0.02 $ -0.01 $ 0.00 $ 0.00 $ -0.01 $ 0.01 $ 0.00 $ 0.00 $ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.01 0.00 0.00 -0.01 _..QM_ 0.00 ____Q,QQ_ 0.00 -0.02 $ 0.00 $ 0.00 $ -0.02 $ 0.02 $ 0.00 $ ~ $ 0.00 $ 2,457191.50 $ 95644.60 $ 95,644.60 $ 8 972.10 $ 0.00 $ 104 616.70 $__.2J!!l..$ 104616.70 $ ----l!.l!!!.. $ 104616.70 $ 9,226,374.00 $ 0.00 $ 463,799.12 19,814.17 3 858,113.12 101 438.16 $ 13 548,286.24 $ 121 252.33 $ 0.00 $ 36.67 373,633.14 373669.81 $ 300.00 $ 1,835.62 1748.69 3,884.31 $ $ 17,331,445.90 $ 216,896.91 $ 469,314.39 $ 12,856.41 $ 0.00 $ 300.00 $ 0.00 1,872.29 0.00 375,381.83 0.00 $ 3n554_12 $ -0.01 $ 0.00 $ 299.99 $ 0.00 36.67 1,835.62 ..Q.01 375381.82 _Q,_QQ_ ..Q.02 $ 375418.49 $ 2,135.61 $ 299.99 1,872.29 375,381.82 377,554.10 0.00 $ 462,170.80 $ 0.00 $ 480,035.19 $ ~ $ 482,170.80 Unexpendable Reserves Uncollectible Accounts Receivable Inventories 10,195.09 50452.50 $ 542.818.39 -21- (This page left intentionally blank) MIDDLE GEORGIA TECHNICAL COLLEGE RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2008 SCHEDULE "4" Totals per Annual Supplement Accruals June 30, 2008 June 30, 2007 Compensated Absences June 30, 2008 June 30, 2007 Agency Funds SALARIES $ 10,570,672.93 $ TRAVEL 153,630.07 18,906.39 -27, 172.69 605,911.36 -590,662.65 -1,931.35 $ 10,577,655.34 $===15=1==,6=9=8.=72= - 23 - SECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS MIDDLE GEORGIA TECHNICAL COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2008 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. OTHER ITEMS (FOR MANAGEMENT'S CONSIDERATION) CAPITAL ASSETS Middle Georgia Technical College did not initially reconcile the capital asset amounts reported in the financial statements to the Capitals Ledger and to the Capital Asset Listing. After taking into account the GAAP entries that affected the capital asset amounts reported, a variance of$788,238.17 existed between the financial statements and the Capitals Ledger and Capital Asset Listing. The Technical College researched this variance and determined that it was the result of capital asset financial statement errors made in prior years. A corrected reconciliation was provided and an adjustment was made to the GAAP statements to correct the capital asset amounts reported. Management should ensure that all amounts reported on the financial statements are properly reconciled to the general ledger. EXPENDITURES/LIABILITIES/DISBURSEMENTS Several encumbrances included in the encumbrance payable amount reported on the budget basis financial statements related to prior budget periods. A review ofprior budget period encumbrances outstanding revealed $3,656.69 of invalid encumbrances. These invalid encumbrances related to both State and Federal funds. An adjustment was made to remove these invalid encumbrances and properly reflect surplus. Management should ensure that the encumbrances payable are reviewed and maintained in such a way as to ensure that encumbrances reported on the budget basis financial statements are valid.