U\ "ioo .R\ 'tfo S<., \GG4-'l5 STATE OF GEORGIA DEPARTMENT OF AUDITS 254 WASHINGTON STREET ATLANTA. GEORGIA 30334 REVIEW REPORT STATE OF GEORGIA SOUTHEASTERN TECHNICAL INSTITUTE VIDALIA, GEORGIA YEAR ENDED JUNE 30, 1995 SOUTHEASTERN TECHNICAL INSTITUTE - TABLE OF CONTENTS - INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION EXHIBITS FINANCIAL STATEMENTS A COMBINED BALANCE SHEET (STATUTORY BASIS) ALL FUND TYPES AND ACCOUNT GROUPS 2 B STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS) GOVERNMENTAL FUND TYPE 3 C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND 4 STATEMENTS OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND D "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION 6 E "B" LOTTERY FOR EDUCATION 7 F NOTES TO THE FINANCIAL STATEMENTS 8 SUPPLEMENTARY INFORMATION G COMBINING BALANCE SHEET (STATUTORY BASIS) BUDGET FUND 24 H COMBINING STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS) BUDGET FUND 25 I COMBINING STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND 26 J COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FIDUCIARY FUND TYPE - AGENCY FUNDS 29 SCHEDULES I CASH AND CASH EQUIVALENTS 30 2 SCHEDULE OF FEDERAL REVENUES 31 3 RECONCILIATION OF SALARIES AND WAGES, AND TRAVEL 32 CLAUDE L. VICKERS STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS 254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 December 16, 1995 Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members ofthe State Board of Technical and Adult Education Members ofthe Local Board ofDirectors and Honorable Lawrence D. Siefferman, President Southeastern Technical Institute INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Ladies and Gentlemen: We have reviewed the accompanying financial statements (Exhibits A through F) of Southeastern Technical Institute as of and for the year ended June 30, 1995, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. As described in Note 1, these financial statements were prepared on a prescribed basis of accounting that demonstrates compliance with the budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. All information included in these financial statements is the representation of the management of Southeastern Technical Institute. A review consists principally of inquiries of Institute personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware ofany material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the basis ofaccounting described in Note 1. Our review was made for the purpose ofexpressing limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with the basis of accounting described in Note 1. The accompanying supplementary information (Exhibits G through J and Schedules I through 3) is presented only for supplementary analysis purposes. Such information has been 95ARL-4T subjected to the inquiries and analytical procedures applied in the review of the financial statements, and we are not aware of any material modifications that should be made thereto. Respectfully submitted, a~~ Claude L. Vickers State Auditor CLV:jy 95ARL-4T FINANCIAL STATEMENTS - 1- SOUTHEASTERN TECHNICAL INSTITUTE COMBINED BALANCE SHEET (STATUTORY BASIS) ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30 1995 EXHIBIT"A" GOVERNMENTAL FUND TYPE BUDGET FIDUCIARY FUND TYPE AGENCY ~ Cash and Cash Equivalents $ 224,012.80 $ 7,930.61 Accounts Receivable State Funds $ Federal Financial Assistance Other 0.00 0.00 27,795.60 $ 952.75 $ 27,795.60 $ 952.75 Inventories $ 64,949.85 Prepaid Items $ 0.00 Fixed Assets Equipment $ Amounts to be Provided for Payment of Accrued Compensated Absences ACCOUNT GROUPS GENERAL GENERAL FIXED LONG-TERM ASSETS DEBT TOTALS ~morandum On~} JUNE 30, 1995 JUNE 301 1994 $ 231,943.41 $ 55,927.75 $ 0.00 $ 55,749.36 0.00 4,271.33 28,748.35 8,699.44 $ 28,748.35 $ 68,no.13 $ 64,949.85 $ 98,185.25 $ 0.00 $ 2,500.00 2,525,859.82 $ 2,525,859.82 $ 2,090,237.66 $ 117,989.38 $ 117,989.38 $ 104,004.52 Total Assets $ 316,758.25 $ 8,883.36 $ 2,525,859.82 $ 117,989.38 $ 2,969,490.81 $ 2,419,575.31 LIABILITIES AND fUNDEQUITY Liabilities Accounts Payable $ Contracts Payable Deferred Revenue Tuition and Fees Funds Held for Others Compensated Absences Total Liabilities $ Fund Equity Investment in General Fixed Assets Fund Balance Reserved Inventories $ Live Work Projects Unreserved Designated Surplus Regular Lottery for Education Total Fund Equity $ Total Liabilities and Fund Equity $ 220,848.39 0.00 5,788.37 $ 8,883.36 226,636.76 $ 8,883.36 $ 220,848.39 $ 0.00 83,787.56 58,500.00 $ 117,989.38 5,788.37 8,883.36 117,989.38 5,169.25 5,530.94 104,004.52 $ 117,989.38 $ 353,509.50 $ 256,992.27 $ 2,525,859.82 $ 2,525,859.82 $ 2,090,237.66 71,450.94 14,740.52 71,450.94 14,740.52 55,855.91 9,083.38 1,494.09 2,435.94 90,121.49 $ 2,525,859.82 1,494.09 2,435.94 7,406.09 0.00 $ 2,615,981.31 $ 2,162,583.04 316,758.25 $ 8,883.36 $ 2,525,859.82 $ 117,989.38 $ 2,969,490.81 $ 2,419,575.31 See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes lo the financial statements are an integral part of this statement. 2 SOUTHEASTERN TECHNICAL INSTITUTE STATEMENT OF CHANGES IN FUND BALANCE (STATUTORY BASIS} GOVERNMENTAL FUND TYPE YEAR ENDED JUNE 30, 1995 EXHIBIT B 11 11 FUND BALANCE - JULY 1 Reserved Unreserved Designated Surplus ADDITIONS Adjustments to Prior Year's Accounts Payable Excess of Funds Available over Expenditures Exhibit C 11 11 DEDUCTIONS Unreserved Fund Balance (Surplus) Returned to Georgia Department of Technical and Adult Education - Administrative Central Office Year Ended June 30, 1993 Year Ended June 30, 1994 Adjustments to Prior Year's Accounts Receivable Reserved Fund Balance Carried Over from Prior Year as Funds Available FUND BALANCE - JUNE 30 (To Exhibit A 11 11 ) BUDGET FUND YEAR ENDED JUNE 30, 1995 JUNE 30, 1994 $ 64,939.29 $ 60,517.92 7,406.09 7,786.14 $ 72,345.38 $ 68,304.06 $ 4,158.41 $ 3,251.69 30,203.19 19,997.73 $ 34,361.60 $ 23,249.42 $ 0.00 $ 7,786.14 7,406.09 0.00 96.02 8.72 9,083.38 11,413.24 $ 16,585.49 $ 19,208.10 $ 90,121.49 $ 72,345.38 See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -3- SOUTHEASTERN TECHNICAL INSTITUTE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND YEAR ENDED JUNE 30 1995 EXHIBIT"C" FUNDS AVAILABLE REVENUES STATE FUNDS Allotment from Georgia Department of Technical and Adult Education Administrative Central Office FEDERAL REVENUES (See Schedule) OTHER REVENUES RETAINED Contracts Georgia Department of Human Resources PEACH Project Georgia Institute of Technology Satellite Technology Program Fees Application Graduation Parking Registration/Continuing Education Testing Other Rents Sales and Services (Net) Tuition Other Sources Total Other Revenues Retained Total Revenues CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance Lille Work Projects Total Funds Available EXPENDITURES PERSONAL SERVICES-INSTITUTIONS Salaries and Wages Employel's Contributions for: F.1.C.A. Retirement Health Insurance Liability Insurance Unemployment Compensation Insurance Workers' Compensation Insurance OPERATING EXPENSES-INSTITUTIONS Other Costs Motor Vehicle Expenses Supplies and Materials Repairs and Maintenance utilities Insurance and Bonding See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. 4 TOTALS YEAR ENDED JUNE 301 1995 JUNE 301 1994 $ 2,272,344.30 $ 2,392,274.36 $ 507 118.75 s _ _ _1_3...,1_1_2_9_.e_e__ 1 $ 32,209.49 $ 10,766.63 13,188.22 8,094.24 12,957.00 4,911.00 2,376.00 72,525.69 11,089.00 5,692.60 17,986.53 108,720.06 364,292.53 14 145.60 12,691.00 4,668.00 0.00 61,959.87 5,050.00 31,878.18 16,328.00 46,327.00 228,700.12 2 747.60 $ 660,093.72 $ 429 210.64 $ 314391e1e.n $ 2,958,614.88 $ 9,083.38 $ _ _ _1.1..,._41_3_.2_4___ $ 3,448,700.15 $ 2,970,028.12 $ 1,685,589.21 $ 1,416,452.64 30,383.27 181,981.75 191,429.53 11,501.00 3,057.00 0.00 24,108.87 161,181.97 167,253.02 6,783.00 362.00 1 946.00 $ 2,103,941.76 $ 1,778,087.50 $ 5,493.18 $ 173,428.87 60,765.46 98,972.11 3,003.00 5,424.07 84,639.76 50,260.54 92,146.88 2,928.00 SOUTHEASTERN TECHNICAL INSTITUTE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES BUDGET FUND YEAR ENDED JUNE 30 1995 EXHIBIT"C" EXPENDITURES OPERATING EXPENSES-INSTITUTIONS OtherCo6ts Other Operating Expenses Publications and Printing Travel Equipment Equipment Purchases Rental rl Equipment Computer Charges Software Telecommunications Per Diem, Fees and Contracts Per Diem and Fees Contracts QUICK START PROGRAM Personal Services Salaries and Wages other Costs Supplies and Materials Other Operating Expenses ADULT LITERACY GRANTS Personal Services Salaries and Wages Employer's Contributions for: F.I.C.A. Retirement Health Insurance Other Costs Supplies and Materials Repairs and Maintenance utilities Other Operating Expenses Publications and Printing Travel Equipment Equipment Purchases Rental of Equipment Computer Charges Software Real Estate Rentals Telecommunications Per Diem, Fees and Contracts Per Diem and Fees EQUIPMENT-TECHNICAL INSTITUTES Equipment Equipment Purchases Total Expenditures Excess rl Funds Available 0\/el" Expenditures See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -5 - TOTALS YEAR ENDED JUNE 301 1995 JUNE 301 1994 $ 65,020.13 $ 77,788.34 17,614.76 21,886.77 21,870.82 20,730.70 50,544.65 24,045.34 12,054.99 14,548.58 16,920.61 51,412.65 11,200.62 35,395.56 47,608.32 2 450.00 96,742.02 66,000.00 $ 639149.90 $ 591 746.83 $ 6,226.00 $ 0.00 2,734.50 0.00 339.50 0.00 $ 9,300.oo s _____o"""_""oo'" $ 242,744.89 $ 172,780.54 3,545.46 5,959.16 6,307.37 2,742.93 4,880.79 5,166.00 69,590.51 13,337.46 16,283.02 68,823.69 3,163.55 6,232.76 8,495.11 0.00 126.92 4,701.68 29.80 2,204.68 58,960.08 0.00 3,223.00 0.00 9,384.56 28,597.26 5,692.43 0.00 0.00 323.08 4,151.59 1,450.17 $ 545,996.79 $ 202,901.70 $ 12~108~ $ _ _~3~77~,~~=-~~ $ 3,418,496.96 $ 2,950,030.39 30,203.19 19 997.73 $ 3,448,700.15 s ___2_.s_10__.02_s_.1_2 SOUTHEASTERN TECHNICAL INSTITUTE STATEMENT OF FUNDS AVAILABLE ANP EXPENDITURES COMPARED TO BUDGET BUDGET FUND A DEPARTMENT OF TECHNICAL AND ADULT EDUCATION YEAR ENDED JUNE 30, 1995 EXHIBITD FUNDS AVAILABLE REVENUES State Funds Federal Revenues Other Revenues Retained CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance BUDGET ACTUAL VARIANCEFAVORABLE {UNFAVORABLE) $ 2,151,289.00 $ 2,151,288.00 $ 573,610.00 507,178.75 804,709.00 660,093.72 $ 3,529,608.00 $ 3,318,560.47 $ -1.00 -66,431.25 -144,615.28 -211,047.53 0.00 9,083.38 9,083.38 $ 3,529,608.00 $ 3,327,643.85 $ _ _ _-20_...;1,_964_.1_5 EXPENDITURES Personal Services-Institutions Operating Expenses-Institutions Quick Start Program Adult Literacy Grants $ 2,147,267.00 $ 2,103,941.76 $ 767,269.00 639,149.90 9,301.00 9,300.00 605,n1.oo 545,996.79 43,325.24 128,119.10 1.00 59,n4.21 $ 3,529,608.00 $ 3,298,388.45 $ _ _ _23_1,_2_1_9_.55_ Excess of Funds Available over Expenditures $ 29,255.40 $ ======29='=255=.40= See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -6- SOUTHEASTERN TECHNICAL INSTITUTE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND "B" LOTTERY FOR EDUCATION YEAR ENDED JUNE 30.1995 EXHIBIT"E" FUNDS AVAILABLE REVENUES State Funds BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) $ 122,652.00 $ 121,056.30 $ _ _ _ _-1..;.._,595_.7_0 EXPENDITURES Equipment-Technical Institutes $ 122,652.00 $ 120,108.51 $ _ _ _...;2''-543_.49_ Excess of Funds Available over Expenditures $ 947.79 $ ======94=7=.7=9 See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information. The notes to the financial statements are an integral part of this statement. -7- SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1995 EXIIlBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY Southeastern Technical Institute is one of twenty-nine (29) State supported member institutes of postsecondary education in Georgia which comprise the Georgia Department of Technical and Adult Education, an organizational unit ofthe State of Georgia. The accompanying financial statements reflect the operations of Southeastern Technical Institute as a separate reporting entity. The Institute's Local Board ofDirectors is composed ofeight (8) members serving staggered three-year terms who are appointed by the State Board of Technical and Adult Education. Appropriation of State funds is made to the Georgia Department ofTechnical and Adult Education by the General Assembly of Georgia. The Department's Administrative Central Office determines the amount of State funds to be received by Southeastern Technical Institute. The Institute does not have authority to retain unexpended State funds (surplus) for any given fiscal year. Accordingly, Southeastern Technical Institute is considered an organizational unit of the Georgia Department of Technical and Adult Education 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 Codification of Governmental Accounting and Financial Reporting Standards. FUND ACCOUNTING Southeastern Technical Institute uses funds and account groups to report on its financial position and the results ofits operations determined in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia. A fund is an independent fiscal and accounting entity with a selfbalancing set ofaccounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number offunds are maintained consistent with legal and managerial requirements. Account groups are a reporting device used to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. Funds and account groups presented in the accompanying financial statements are as follows: GOVERNMENTAL FUND TYPE BUDGET FUND - The fund used to account for activities and functions as set forth in the Amended Appropriations Act of 1994-1995. This fund also includes operations from various institutional services provided to students, faculty, and/or staff which are funded by fees charged to participants that are directly related to, but not necessarily equal to, the cost of service. The Budget Fund is similar in nature to a General Fund as identified in generally accepted accounting principles in that the Budget Fund is used to account for all activities except those required to be accounted for in some other fund. FIDUCIARY FUND TYPE AGENCY FUNDS - The funds used to account for assets held for use by other funds, governments, or individuals. - 8- SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1995 EXI-IlBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FUND ACCOUNTING ACCOUNT GROUPS GENERAL FIXED ASSETS - The account group used to account for fixed assets used in governmental fund type operations. Fixed assets purchased are recorded at cost or at estimated historical cost if historical cost is not practically determinable. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on general fixed assets. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not included in the General Fixed Assets Account Group. Material improvements adding to the value or useful life of the assets are included in the General Fixed Assets Account Group. GENERAL LONG-TERM DEBT - The account group used to report the noncurrent portions of certain governmental long-term liabilities, such as claims, judgments, and compensated absences, which will be paid from future resources. BASIS OF ACCOUNTING MEASUREMENT FOCUS The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Governmental funds should be accounted for using the flow of current financial resources measurement focus. With this measurement focus, operating statements present increases and decreases in net current assets and unreserved fund balance is a measure of available spendable resources. In accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund returns its unreserved fund balance (surplus) to the Administrative Central Office of the Department of Technical and Adult Education for remittance to the Office of Treasury and Fiscal Services in the subsequent fiscal year. GOVERNMENTAL FUND TYPE BUDGET FUND Except as disclosed in the following paragraphs, units of government of the State of Georgia record their Budget Fund revenues and expenditures in accordance with the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they are "measurable and available"). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Revenues that are accrued include primarily State funds, Federal grants and entitlements, and certain amounts earned under operating agreements with other parties. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences, claims and judgments which are recognized when the obligations are expected to be liquidated with expendable available financial resources. -9- SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1995 EXHIBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPE BUDGET FUND Contractual obligations for services which have not been performed and for goods which have not been delivered at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion of contracts for goods and services. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia, but is not consistent with generally accepted accounting principles, which provide for the recording ofencumbrances as a reservation of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles. Prior period adjustments and certain other items are reported as additions to and deductions from fund balance of the Budget Fund in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures. FIDUCIARY FUND TYPE AGENCY FUNDS Agency Funds are custodial in nature and do not measure results of operations or have a measurement focus. The modified accrual basis of accounting is utilized for recognizing assets and liabilities. BUDGET The Georgia Department of Technical and Adult Education - Administrative Central Office receives State appropriation allotments and certain Federal funds for the various technical institutes throughout the State. The appropriated budget is adopted at the departmental level and represents appropriations provided by the Amended Appropriations Act of 1994-1995. The budget allocation and disbursement of these funds is made to the various technical institutes by the Administrative Central Office. In addition, the technical institutes receive certain Federal funds and other funds directly and include these funds in the budget filed with the Administrative Central Office. CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include currency on hand and demand deposits with banks and other authorized financial institutions. Cash and Cash Equivalents also include short-term, highly liquid investments with maturity dates of three months or less from the date of acquisition. - 10- SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1995 EXHIBIT "F" NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ACCOUNTS RECEIVABLE Accounts receivable consist ofallotments due from the Georgia Department of Technical and Adult Education - Administrative Central Office, reimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. INVENTORIES Expendable supplies are recorded as expenditures at the time of purchase and are not reflected on the Combined Balance Sheet (Statutory Basis). Inventories of goods for resale are recorded as assets at cost at the time of purchase. The Institute uses the first-in/first-out method in costing-out inventories based on sales. RESERVED FUND BALANCE Reserves represent those portions of fund equity not appropriable for expenditure or legally segregated for a specific future use. The following is a brief description of the reserves reflected in the accompanying financial statements: LIVE WORK PROJECTS The accumulated balance of unexpended funds derived from student live work projects. This amount is restricted to expenditures for live work projects in subsequent fiscal years. UNRESERVED FUND BALANCE In accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund's unreserved fund balance is returned to the Georgia Department of Technical and Adult Education - Administrative Central Office for remittance to the Office of Treasury and Fiscal Services in the subsequent fiscal year as surplus, as follows: REGULAR - An amount ofunexpended general appropriations available to the State for reappropriation in subsequent years. LOTTERY FOR EDUCATION - An amount of unexpended lottery appropriations available for future reappropriation for Lottery for Education. COMPENSATED ABSENCES Compensated absences represent obligations of the Institute relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the Budget Fund for the current portion ofthis obligation as this amount will not be liquidated with expendable available financial resources. Funds are provided in the allotment of State funds each year to the Institute to cover the cost of annual leave paid to terminated employees. - 11 - SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1995 EXIIlBIT "F" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES COMPENSATED ABSENCES The liability for compensated absences at year-end is reported in the General Long-Term Debt Account Group for governmental funds. MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the Combined Balance Sheet (Statutory Basis) are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. The columns do not present information that reflects financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. COMPARATIVE DATA Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding ofthe changes in the Institute's financial position and operations. Comparative totals have not been included on statements where their inclusion would not provide enhanced understanding ofthe Institute's financial position and operations or would cause the statements to be unduly complex and difficult to understand. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation. NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State ofGeorgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59: (1) Bonds, bills, certificates ofindebtedness, notes, or other direct obligations of the United States or of the State of Georgia. (2) Bonds, bills, certificates ofindebtedness, notes, or other obligations ofthe counties or municipalities ofthe 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 ofthe bonds for this purpose. (4) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia. - 12 - SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1995 EXHIBIT "F" NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and 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 Banlcs, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. (6) Guarantee or insurance of accounts 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 allow agencies of the State of Georgia (which include technical institutes) the option of exempting demand deposits from the collateral requirements. CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 1995, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk: Category 1 - Amounts covered by depository insurance or collateralized with securities (at market value) held by the Institute or by its agent in the Institute's name. Category 2 - Amounts collateralized with securities (at market value) held by the pledging financial institution's trust department or agent in the Institute's name. Category 3 - Amounts collateralized with securities (at market value) held by the pledging financial institution, or by its trust department or agent but not in the Institute's name, and amounts uncollateralized. Carrying Amount Bank Balances Risk Categories 2 3 Cash Deposits $ 230 993 41 $ 616 556 99 $ 210 148 33 S 48 100 85 S 358307 81 NOTE 3: CHANGES IN GENERAL FIXED ASSETS In accordance with the statutory definition of moveable personal property as defined in Official Code of Georgia Annotated Section 50-16-161, only those items with an acquisition cost of $1,000.00 or greater are reflected in the General Fixed Assets Account Group. - 13 - SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1995 EXHIBIT "F" NOTE 3: CHANGES IN GENERAL FIXED ASSETS The following is a surnnuuy ofchanges ofequipment for the General Fixed Assets Account Group during the fiscal year: Balance July 1, 1994 Additions Deductions Balance June 30, 1995 $ 2,090,237.66 470,449.20 34,827.04 $ 2,525,859.82 NOTE 4: GENERAL LONG-TERM DEBT CHANGES IN GENERAL LONG-TERM DEBT During the year ended June 30, 1995, the following changes occurred in the compensated absences liability reported in the General Long-Term Debt Account Group: Balance July 1, 1994 Additions Annual Leave Earned and Utilized (Net) Salaries and Wages Salary-Related Fringe Benefits Balance June 30, 1995 $ 104,004.52 13,442.78 542.08 $ 117,989.38 NOTE 5: RISK MANAGEMENT Public Entity Risk Pool The State Personnel Board - Merit System ofPersonnel Administration internally administers for the State of Georgia a program of health benefits for the employees of units of government of the State of Georgia and units of county governments and local education agencies located with the State of Georgia. This plan is funded by participants covered in the plan, by employers' contributions paid by the various units of government participating in the plan, and appropriations made by the General Assembly of Georgia. The State Personnel Board - Merit System ofPersonnel Administration has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the State Employees' Health Benefit Plan as established by the State Personnel Board. Other Risk Management The Department ofAdministrative Services {DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental 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 services claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and - 14 - SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1995 EXHIBIT "F" NOTE 5: RISK MANAGEMENT Other Risk Management law enforcement officers' indemnification. Limited amounts ofcommercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Institute, 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 state agencies by DOAS to provide claims servicing and claims payment. NOTE 6: DEFERRED COMPENSATION PLAN The State of Georgia offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan, available to employees of the State of Georgia and county health departments, permits such employees to defer a portion oftheir salary until future years. Participation in the plan is optional. Participants choose the option or options in which they wish to participate. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property or rights of the State of Georgia subject only to the claims of the State's general creditors. Participant's rights under the plan are equal to those of a general creditor of the State of Georgia in an amount equal to the fair market value of the deferred account of each participant. Financial information relative to the plan is presented in the financial report of the State Personnel Board - Merit System of Personnel Administration for the year ended June 30, 1995. NOTE 7: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description Southeastern Technical Institute participates in the Teachers Retirement System of Georgia (TRS), a costsharing multiple-employer public employee retirement system (PERS) established by the General Assembly ofGeorgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia. The Institute's payroll for the year ended June 30, 1995, for employees covered by TRS was $1,433,989.05. The lnstitute's total payroll for all employees was $1,934,560.10. Benefits TRS provides service retirement, disability retirement, and survivor's benefits for its members. A member is eligible for service retirement after the member (1) has attained the age of 60 years and has at least ten years of creditable service, (2) has at least 30 years of creditable service, regardless of age, or (3) has attained the age of 55 years and has at least 25 years of creditable service. For those members with 30 years of service or - 15 - SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1995 EXHIBIT "F" NOTE 7: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Benefits those age 60 with at least ten years of service, retirement benefits are equal to 2% of the average of the member's two consecutive highest paid years of service multiplied by the number of years of creditable service up to 40 years. Any member who has between 25 and 30 years of creditable service and is at least 55 years ofage shall receive a benefit which is reduced by the lessor of 1/12 of7% for each month the member is below age 60, or by 7% for each year or fraction thereofby which the member has less than 30 years of service. The nonnal retirement pension is payable monthly for life. Options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death. Retirement benefits also include death and disability benefits whereby the disabled member or surviving spouse is entitled to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The benefit is based on member's creditable service (minimum of 10 years of service) and compensation up to the date of death or up to the time of disability. Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting ofemployer contributions occurs, but the member's contributions are refunded with interest. Contributions Required and Contributions Made Employees of the Institute who are covered by TRS are required to pay 5% of their gross earnings to TRS. The Institute makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees as advised by their independent actuary. For fiscal year 1995, the employer contribution rate was 11.81% for covered employees. The interest rate assumption (rate ofretum on investments) was 7.50%. Total contributions to the plan made during fiscal year 1995 amounted to $241,054.04, ofwhich $169,354.12 was made by the Institute and $71,699.92 was made by employees. These contributions represented 11.81% {Institute) and 5% (employees) of covered payroll. Funding Status and Progress Pension Benefit Obligation The amount of the total pension benefit obligation is based on a standardized measurement established by Statement No. 5 of the Governmental Accounting Standards Board (GASB) that is required to be used for reporting purposes. The standardized measurement is the actuarial present value of credited projected benefits. This pension valuation method reflects the present value of estimated pension benefits that will be paid in future years as a result of employee services performed to date and is adjusted for the effects of projected salary increases and any step-rate benefits. A standardized measure of the pension benefit obligation was adopted by the GASB to enable readers of the PERS financial statements to assess that PERS funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among similar PERS. - 16 - SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1995 EXHIBIT "F" NOTE 7: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Funding Status and Progress Pension Benefit Obligation The total unfunded pension benefit obligation ofTRS as of June 30, 1994, which was the latest information available, was as follows: Total pension benefit obligation $ 15,313,743,000.00 Net assets available for benefits, at cost 14,254,785,000.00 Unfunded pension benefit obligation $ 1,058,958.000 00 The measurement ofthe total pension benefit obligation is based on an actuarial valuation as of June 30, 1994. Net assets available for benefits were valued as of the same date. TRS does not make separate measurements of assets and pension benefit obligation for individual employers. Retirement System Contributions Total contributions from all employers to TRS for the year ended June 30, 1995, were $565,117,811.00. The Institute's contribution for the year ended June 30, 1995, of $169,354.12 was actuarially determined and represented .0003% of total contributions made by all participating employers. Trend Information Historical trend information is presented in the financial report ofTRS for the year ended June 30, 1995. This information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Plan Description Southeastern Technical Institute participates in the Employees' Retirement System of Georgia (ERS), a singleemployer 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 Institute's payroll for the year ended June 30, 1995, for employees covered by ERS was $119,108.00. The Institute's total payroll for all employees was $1,934,560.10. Benefits The benefit structure of ERS was significantly modified on July 1, 1982. Unless elected 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. All other members are "new plan" members subject to the modified plan provisions. - 17 - SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1995 EXIIlBIT "F" NOTE 7: RETIREMENT PLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Benefits Members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 65. Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest eight consecutive calendar quarters of salary, the number of years 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 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. If 10 years of service is completed and age 60 is reached, the member may retire with a reduced benefit. Additionally, there are certain provisions allowing for retirement after 30 years of service regardless of age. Contributions Required and Contributions Made Under the old plan, member contributions consist of employee contributions paid by the employee of 1.25% of annual compensation and 4. 75% of annual compensation paid by the Institute on behalf of the employee. Under the new plan, member contributions consist solely of 1.25% of annual compensation paid by employee. The Institute also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. Contributions are also made on amounts paid for accumulated leave of retiring employees. Total contributions to the plan made during fiscal year 1995 amounted to $19,140.07, of which $17,651.22 was made by the Institute and $1,488.85 was made by employees. These contributions represented 14.82% (Institute) and 1.25% (employees) of covered payroll. Funding Status and Progress Pension Benefit Obligation The amount shown as the "pension benefit obligation" is a standardized disclosure measure of the present value ofpension benefits, adjusted for the effects ofprojected salary increases and step-rate benefits, estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status ofERS on the going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among employers. The measure is the actuarial present value ofcredited projected benefits, and is independent of the funding method used to determine contributions to the plan. The pension benefit obligation was computed as part ofan actuarial valuation performed as of June 30, 1994. Significant actuarial assumptions used in the valuation include the following: (1) The present value of future pension benefits paid was computed using a discounted rate of7.5%. This rate is also the same rate assumed to be earned on investments in the plan in future years. - 18 - SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1995 EXHIBIT "F" NOTE 7: RETIREMENT PLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Funding Status and Progress Pension Benefit Obligation (2) Future pension payments reflect the following assumed salary increases as a result of inflation and merit increases: Age 20 25 30 35 40 to 65 Percentage 9.5% 8.5% 6.5% 6.0% 5.7% (3) ERS has the authority to grant cost-of-living adjustments by State statute. As of June 30, 1994, cost-of-living adjustments have been included in the pension benefit obligation. The total unfunded pension benefit obligation of ERS as of June 30, 1994, which was the latest information available, was as follows: Pension Benefit Obligation: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving benefits $ 2,227,653,000.00 Current employees: Accumulated contributions 648,516,000.00 Employer financed - vested 1,085,190,000.00 Employer financed - nonvested 1,206,805,000.00 Total pension benefit obligation $5,168,164,000.00 Net assets available for benefits, at cost 4,858,015,000.00 Unfunded pension benefit obligation $ 310.149,000.00 - 19 - SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1995 EXHIBIT "F" NOTE7: RETIREMENTPLANS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Funding Status and Progress Pension Benefit Obligation The measurement ofthe total pension benefit obligation is based on an actuarial valuation as of June 30, 1994. Net assets available for benefits were valued as of the same date. ERS does not make separate measurements of assets and pension benefit obligation for individual employers. Funding Policy The ERS funding policy provides for periodic employer contributions at actuarially determined rates that, expressed as percentages of annual payroll, are sufficient to accumulate sufficient assets to pay benefits when due. Level percentage of payroll employer contribution rates are determined using the entry age funding method. ERS also uses the level percentage of payroll method to amortize the unfunded liability within approximately 20 years following the valuation date. Total contributions from all employers to ERS for the year ended June 30, 1995, were $256,624,679.00. The Institute's contribution for the year ended June 30, 1995, of $17,651.22 was actuarially determined and represented .0069% of total contributions made by all participating employers. Significant actuarial assumptions used to compute con\ributions are the same as those used to compute the standardized measure of pension obligation. Trend Information Historical trend information is presented in the financial report ofERS for the year ended June 30, 1995. This information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. GEORGIA DEFINED CONTRIBUTION PLAN Plan Description Southeastern Technical Institute participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia in July 1993 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. The Institute's payroll for the year ended June 30, 1995, for employees covered by GDCP was $291,414.33. The Institute's total payroll for all employees was $1,934,560.10. - 20 - SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1995 EXHIBIT "F" NOTE 7: RETIREMENT PLANS GEORGIA DEFINED CONTRIBUTION PLAN Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than$ 3,500.00 credited to his/her account, the Board of Trustees has the option of requiring 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. Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination ofemployment, the amount of the member's account is refundable upon request by the member. Total contributions made by employees during fiscal year 1995 amounted to $21,856.32 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. NOTE 8: LEAVE POLICIES Employees earn annual leave ranging from one and one-quarter days to one and three-quarter days each month depending upon the employees' length of continuous State service with a maximum accumulation of forty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1- Compensated Absences Employees earn one and one-quarter days of sick leave each month with a maximum accumulation of ninety days. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment. Certain employees who retire with one hundred and twenty days or more of forfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System of Georgia. NOTE 9: NONMONETARY TRANSACTIONS The Georgia State Financing and Investment Commission (GSFIC), a unit of State government, is responsible for the issuance of state debt and for the investment and accounting for proceeds derived from the issuance of state debt. In addition, GSFIC is authorized to acquire and construct projects for the benefit of units of State government or to contract with units of State government for the construction or acquisition of capital outlay projects. During the fiscal year ended June 30, 1995, the Georgia State Financing and Investment Commission paid $222,828.42 to various vendors for approved projects related to Southeastern Technical Institute. - 21 - SOUTHEASTERN TECHNICAL INSTITUTE NOTES TO THE FINANCIAL STATE:MENTS JUNE 30, 1995 EXHIBIT "F" NOTE 10: CONTINGENCIES Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the Institute expects such amounts, if any, to be immaterial to its overall financial position. Litigation, claims and assessments filed against Southeastern Technical Institute (as an organizational unit of the Department of Technical and Adult Education), if any, are generally considered to be actions against the State of Georgia. Pursuant to the Official Code of Georgia Annotated, the Department of Administrative Services maintains a program of purchased insurance and self-insurance which provides coverage for such litigation, claims and assessments. Accordingly, significant litigatio~, 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, 1995. NOTE 11: BONDING INFORMATION The President and all employees of Southeastern Technical Institute are bonded under a Public Employees Blanket Bond written by the Employers Insurance ofWausau, their Bond No. 1450-00-110723, on which the premium was paid to October 1, 1995. Under this agreement, the public employee dishonesty coverage insures Southeastern Technical Institute to a maximum of $1,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees. The faithful performance of duty coverage insures the Institute to a maximum of $1,000,000.00 against loss sustained from failure of its employees to perform faithfully their duties or to account properly for all monies and property received by virtue of their position or employment. All employees ofSoutheastern Technical Institute are also bonded under Commercial Crime Policies written by the United States Fire Insurance Company, their Policy Nos. 626 011675 2 and 626 012294 4, on which the premiums were paid to October 1, 1995. Under these additional public employee dishonesty coverages, the policies insure the Institute to a maximum of$9,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees. - 22- SUPPLEMENTARY INFORMATION - 23 - SOUTHEASTERN TECHNICAL INSTITUTE COMBINING BALANCE SHEET