South Georgia Technical College, Americus, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2008

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
I
SOUTH GEORGIA TECHNICAL COLLEGE AMERICUS, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
Russell W. Hinton State Auditor

SOUTH GEORGIA TECHNICAL COLLEGE - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

BASIC FINANCIAL STATEMENTS

EXHIBITS

A STATEMENT OF NET ASSETS

2

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

3

C STATEMENT OF CASH FLOWS

4

D NOTES TO THE FINANCIAL STATEMENTS

5

SUPPLEMENTARY INFORMATION

SCHEDULES

1 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND

20

2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT

(NON-GAAP BASIS) BUDGET FUND

21

3 STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING

SOURCECOMPAREDTOBUDGET

(NON-GAAP BASIS) BUDGET FUND

22

4 RECONCILIATION OF SALARIES AND TRAVEL

25

SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SOUTH GEORGIA TECHNICAL COLLEGE -TABLE OF CONTENTS -
SECTION III FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
November 25,2008

Honorable Sonny Perdue, Governor Members ofthe General Assembly of Georgia Members of the State Board of Technical and Adult Education Members of the Local Board ofDirectors
and Honorable Sparky Reeves, President South Georgia Technical College
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying basic financial statements (Exhibits A through D) of South Georgia Technical College, an organizational unit of the State of Georgia, as of and for the year ended June 30, 2008. These financial statements are the responsibility of the Technical College's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Technical College's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opmwn.
As discussed in Note 1, the financial statements of South Georgia Technical College are intended to present the financial position and changes in financial position and cash flows ofonly that portion of the business-type activities of the State of Georgia that is attributable to the transactions of South Georgia Technical College. They do not purport to, and do not, present fairly the financial position
08ARL-2TC

and changes in financial position and cash flows of the State of Georgia, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of South Georgia Technical College as of June 30, 2008, and its changes in financial position and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Management's Discussion and Analysis is not a required part ofthe basic financial statements but is supplementary information required by accounting principles generally accepted in the United States ofAmerica. We have applied certain limited procedures, which consisted principally ofinquiries of management regarding the methods of measurement and presentation of this supplementary information. However, we did not audit this information and express no opinion on it.
Our audit was conducted for the purpose offorming an opinion on the basic financial statements of South Georgia Technical College taken as a whole. The accompanying supplementary information (Schedules 1 through 4) is presented for purposes ofadditional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Respectfully submitted,
~uJ.~~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:gp 08ARL-2TC

REQUIRED SUPPLEMENTARY INFORMATION

South Georgia Technical College Management's Discussion and Analysis
The following is management's discussion and analysis of South Georgia Technical College's financial performance for the fiscal year ending June 30, 2008 with comparative data from fiscal year ending June 30, 2007. This discussion has been prepared by and is the responsibility of management.
Overview ofthe Financial Statements and Financial Analysis
This annual report consists of a series of financial statements prepared in accordance with the rules and regulations established by the Governmental Accounting Standards Board.
There are three financial statements presented: the Statement of Net Assets; the Statement of Revenues, Expenses and Changes in Net Assets; and the Statement of Cash Flows. The Statement of Net Assets used in conjunction with the Statement of Revenues, Expenses and Changes in Net Assets contains information concerning the Technical College's finances and activities as a whole and assists with providing an answer to the question "Is the Technical College as a whole better or worse off as a result of the year's activities?" These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting method used by corporations and other private sector companies. All revenues and assets are recognized when the service is provided and expenses and liabilities are recognized when others provide the goods or service, regardless of when cash is exchanged.
The Statement of Cash Flows is a valuable tool when evaluating the ability of the Technical College to meet financial obligations as they mature. This statement presents information related to cash inflows and outflows summarized by operating, noncapital financing, capital and related financing and investing activities.
This discussion and analysis of the Technical College's financial statements provides an overview of its financial activities for the year.
Statement ofNet Assets
The purpose of the Statement of Net Assets is to present to the users of the financial statements a fiscal snapshot of the Technical College at a specific point in time. The statement presents the assets, liabilities and net assets of the Technical College as of the end of the fiscal year. Assets and liabilities are reported as current and noncurrent and the difference between assets and liabilities is reported as net assets. Over a period of time the increases and decreases reflected in the Statement of Net Assets, when considered with other nonfinancial facts such as enrollment levels and the condition of the facilities, can provide a measure to aid in determining whether the Technical College's financial position is improving or deteriorating.
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Net assets are divided into two major categories. The first category, invested in capital assets, net of debt, provides information concerning the Technical College's equity in property, plant and equipment owned by the Technical College. The second category is unrestricted net assets, which are available for expenditure by the Technical College for any lawful purpose deemed necessary to operate the Technical College.

Statement of Net Assets (thousands of dollars)

June 30, 2008

June 30, 2007

Assets Current Assets Capital Assets, Net

$

1,997

21,691

$

2,788

21,422

Total Assets

$_--=2.::::..>3'.!<.>68:.::.8

$_----=2_,_,4,~21~0

Liabilities Current Liabilities Noncurrent Liabilities

$

1,176

$

1,687

487

377

Total Liabilities

$_ ___,:1=,6~6=3

$_ _-=2=,0~6--=-4

Net Assets Invested in Capital Assets, Net of Debt Unrestricted

$ 21,691 334

$ 21,422 724

Total Net Assets

$=~2=2.~02~5

$=~2=2.~14~6

The total assets of the Technical College decreased by approximately $522,000 from the prior year. This can be mainly attributed to:

1) a net increase of approximately $269,000 in capital assets due primarily to the completion and capitalization of three of four phases of James Hall dormitory renovation totaling approximately $1,275,000; a net decrease in equipment purchases and disposals of approximately $358,000; and a net increase in accumulated depreciation of approximately $648,000;
2) a decrease in Accounts Receivables of approximately $714,000 primarily due to a reduction in the James Hall dormitory renovation receivable and in Federal and state receivables;
3) a decrease in cash and cash equivalents by approximately $50,000; 4) a decrease in bookstore inventory of approximately $32,000; and 5) an increase in prepaid expenses of approximately $6,000.

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This decrease in assets follows the institutional philosophy to use available resources to acquire and improve all areas of the Technical College to better serve the instruction and public service missions of the Technical College.
Total liabilities for the fiscal year decreased by approximately $401,000. The primary reasons for the decrease were in the:
1) current liabilities decrease totaling approximately $511,000, predominately from decreases in accounts payable approximately $365,000; salaries payable approximately $10,000; contracts payable approximately $172,000; and deferred revenues approximately $80,000; and an increase in funds held for others of approximately $8,000; and
2) current and noncurrent portions of compensated absences increase of approximately $218,000.
The combination of the decrease in total assets of approximately $522,000 and the decrease in total liabilities of approximately $401,000 yields a decrease in total net assets of approximately $121,000.
Statement ofRevenues, Expenses and Changes in Net Assets
The purpose of the Statement of Revenues, Expenses and Changes in Net Assets is to present the revenues received by the Technical College, both operating and nonoperating, and the expenses incurred by the Technical College, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the Technical College during the fiscal year. Changes in total net assets as presented on the Statement of Net Assets are based on the information presented in the Statement of Revenues, Expenses and Changes in Net Assets.
Operating revenues are received for providing goods and/or services to various customers and constituencies of the Technical College. Operating expenses are those expenses paid to acquire or produce the goods and/or services provided in return for the operating revenues, and to carry out the mission of the Technical College. Therefore, nonoperating revenue is received when no goods or services are provided in exchange for the revenue. With the issuance of Statement No. 35, new guidelines were established by the Governmental Accounting Standards Board (GASB), which changed the classifications of state appropriations and gifts from operating to nonoperating revenue. This change may result in an operating deficit that is offset by a nonoperating surplus.
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Statement of Revenues, Expenses and Changes in Net Assets (Thousands of dollars)

June 30, 2008

June 30, 2007

Operating Revenues Operating Expenses

$

6,561

18 877

$

5,420

16,565

Operating Gain/Loss

$ -12,316

$ -11,145

Nonoperating Revenues and Expenses

12,202

10,680

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

$

-114

$

-465

Other Revenues, Expenses, Gains or Losses

-7

1,260

Increase (Decrease) in Net Assets

$

-121

$

795

Net Assets at Beginning ofYear

22,146

21,351

Net Assets at End of Year

$

22!025

$ 22)46

The Statement of Revenues, Expenses and Changes in Net Assets reflects a decrease in the net assets at the end of the year. Some highlights of the information presented on the Statement of Revenues, Expenses and Changes in Net Assets are as follows:

-IV-

Revenue By Source (thousands of dollars) For The Years Ended June 30,2008 and June 30,2007

June 30, 2008

June 30, 2007

Operating Revenue Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Rents and Royalties Other

$

2,907

2,554

907 185
8

$

2,338

2,091

785 180 26

Total Operating Revenue

$

6.561

$

5,420

Nonoperating Revenue State Appropriations Federal Grants and ContractsNonoperating State Grants and Contracts Nonoperating Gifts Investment Income Other

$

9,974

$

8,931

1,555

1,265

341

640

151

28

30

5

Total Nonoperating Revenue

$

12,202

$

10,718

Capital Grants and Gifts Loss on Disposal of Capital Assets State Nongovernmental

$

-7

$

618

642

Total Capital Grants and Gifts

$

-7

$

1,260

Total Revenues

$

18.756

$

17.398

Expenses (thousands of dollars) For The Years Ended June 30,2008 and June 30,2007

June 30, 2008

June 30, 2007

Operating Expenses Instruction

$

18,877

$

16,565

Nonoperating Expenses

Other

38

Total Expenses

$

18.877

$

16.603

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The sources of operating revenue for the Technical College are tuition and fees, grants and contracts, auxiliary services, and educational activities. The increase in operating revenue of approximately $1,141,000 is directly attributable to:
1) increase in Tuition and Fees approximately $569,000; 2) increase in Grants and Contracts approximately $463,000; 3) increase in Sales and Services approximately $122,000; and 4) decrease in Rents and Other approximately $13,000, for fiscal year 2008.
Tuition and Fees increased by approximately $569,000. This is directly related to the increased credit enrollment of approximately 7% from fiscal year 2007 and the increase in the tuition rate from $31 per credit hour to $36 per credit hour beginning halfway in the fiscal year 2008.
Grants and Contracts increased by approximately $463,000 which are Federal scholarships and fellowships for students (PELL, College Work Study, and FSEOG grants).
Utilities increased by approximately $114,000 during the past year.
Personal Services expenses increased by approximately $1,030,000. This increase reflects an annual pay raise for Technical College employees of approximately 3% with the associated fringe benefits. It also reflects an increase of 6.13% to the Technical College for employer's portion ofhealth insurance premiums.
Depreciation expense decreased by approximately $163,000 and is due primarily to reduction in the equipment capital asset reduction for fiscal year 2008.
Under nonoperating revenues (expenses) state appropriations increased by approximately $1,043,000. While it appears that the Technical College received additional new money from the state, given the mandatory cost increases of various expense categories, the Technical College actually had a relatively flat funding year when all things are considered.
Statement ofCash Flows
The purpose of the Statement of Cash Flows is to provide relevant information concerning the cash receipts and payments of the Technical College during the year. It also provides information concerning the Technical College's ability to generate future cash flows and to meet its obligations as they come due. The statement is divided into five sections. The first section reports on the operating cash flows and shows the net cash used by the operating activities of the Technical College. The second section reflects cash flows from noncapital financing activities. The third section deals with cash flows from capital and related financing activities, which reflects the cash used for the acquisition and construction of capital related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The final section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Assets.
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Statement of Cash Flows (thousands of dollars)

June 30. 2008

June 30, 2007

Cash Provided (Used) By: Operating Activities Noncapital Financing Activities Capital and Related Financing Activities Investing Activities

$ -11,236 12,330 -1,173 28

$ -10,693 10,440 522 30

Net Change in Cash Cash, Beginning of Year

$

-51

$

299

452

153

Cash, End of Year

$==~40!b!=l

$==~4~5~2

Capital Assets

The James Hall construction project is a renovation of the residential facility at a cost of approximately $2,174,000 to provide private restrooms and updated motel style rooms for the students. The project was begun in fiscal year 2007. Three of four phases were completed in fiscal year 2008 at a cost of $1,848,000. The fourth and final phase is expected to be completed September 2008. Funding was a combination of GSFIC (Georgia State Financing and Investment Commission) bonds, locally generated college funds, and SGTC Foundation sources. The Technical College has earned increased revenues from the renovated rooms and has had a waiting list for the occupancies already.

Long-Term Liabilities

South Georgia Technical College had a total Long-Term Liabilities of $971,979.41 of which $484,977.12 was reflected as a current liability at June 30, 2008. This liability is for Compensated Absences which is unfunded by the State of Georgia.

For additional information on Long-Term Liabilities, see Notes 1 and 7 in the Notes to the Financial Statements.

Economic Outlook

The Technical College is unaware of any currently known fact, decision, or condition that is expected to have a significant effect on the financial position or change how the Technical College operates for the next fiscal year. As in prior years, the Technical College's overall financial position is strong. Enrollment has increased by at least 1% to 7% annually for the past 5 years and this trend is expected to continue into fiscal year 2009. State revenues are projected to be down in fiscal year 2009; as a result, state funding will be reduced by at least 6% for fiscal year 2009. As a result, the Technical College will maintain a close watch over resources to maintain the ability to react to unknown internal and external issues.

Mr. Sparky Reeves, President South Georgia Technical College

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BASIC FINANCIAL STATEMENTS - 1-

SOUTH GEORGIA TECHNICAL COLLEGE STATEMENT OF NET ASSETS JUNE 30, 2008
ASSETS
Current Assets Cash and Cash Equivalents Short-Term Investments 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 Contracts 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"

$

400,980.94

13,968.17

290,536.41 904,841.38
5,883.25 380,727.05

$ 1,996,937.20

21 ,691 '158.28 $ 23,688,095.48

$

274,788.05

19,837.31

313,323.01

16,401.53

66,383.81

484,977.12

$ 1,175,710.83

487,002.29 $ 1,662,713.12

$ 21,691 '158.28 334,224.08

$ 22,025,382.36

The notes to the financial statements are an integral part of this statement. -2-

SOUTH GEORGIA TECHNICAL COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 2008

EXHIBIT"B"

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 Gifts Interest and Other Investment Income Other Nonoperating Revenues
Net Nonoperating Revenues
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts Loss on Disposal of Capital Assets
Increase (Decrease) in Net Assets
Net Assets- Beginning of Year
Net Assets - End of Year

$ 2,959,885.22 -52,810.37
2,553,673.53 185,403.82 906,960.98 8,074.79
$ 6,561,187.97

$ 7,904,799.38 2,601 ,585.05 131,517.97 2,438,347.16 1 ,033,146.91 3,688,554.47 1,078,928.11
$ 18,876,879.05
$ -12,315,691.08

$ 9,974,246.00

1,554,561.29 640,443.67 27,650.23 4 612.60

$ 12,201 ,513. 79

$

-114,177.29

-6,983.39

$

-121,160.68

22,146,543.04

$ 22,025,382.36

The notes to the financial statements are an integral part of this statement. - 3-

SOUTH GEORGIA TECHNICAL COLLEGE STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services Payments for Scholarships and Fellowships Payments to Suppliers Payments to Employees 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 Interest 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 Prepaid Items Inventories Salaries Payable Accounts Payable Deferred Revenue Compensated Absences
Net Cash Provided (Used) by Operating Activities
The notes to the financial statements are an integral part of this statement.
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EXHIBIT"C"

$ 3,297,502.65 2,661 ,306.96 601,348.00 -2,438,347.16 -7,794,581.59 -7,696,198.69 133,286.61
$ -11,235,683.22

$ 10,006,031.91 8,096.13
2,311 '796.92 4,612.60
$ 12,330,537.56

$

353,305.75

-1,526,655.45

$ -1,173,349.70

$

27,537.78

$

-50,957.58

451,938.52

$

400,980.94

$ -12,315,691.08
1 ,078,928.11
121,387.00 -5,883.25 31,994.22 -9,906.99
-365,888.16 10,869.25
218,507.68
$ -11,235,683.22

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY South Georgia Technical College is one ofthirty-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 South Georgia Technical College as a separate reporting entity.
The Technical College's Local Board of Directors is composed of nine (9) 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 South Georgia Technical College. The Technical College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, South 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.
Legally separate, tax exempt organizations whose activities primarily support member colleges of postsecondary education in Georgia which comprise the Georgia Department ofTechnical and Adult Education (an organizational unit ofthe State ofGeorgia), are considered potential component units ofthe State. See Note 16 for additional information.
FINANCIAL STATEMENT PRESENTATION The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the Technical College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund group perspective previously required.
GAAP requires that the reporting of summer school revenues and expenses be split between fiscal years rather than in one fiscal year. Due to lack of materiality, the Technical Colleges of the Georgia Department ofTechnical and Adult Education will continue to report summer revenues and expenses in the year in which the predominate activity takes place.
BASIS OF ACCOUNTING For financial reporting purposes, the Technical College is considered a special-purpose government engaged only in business-type activities. Accordingly, the Technical College's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting, except as noted in the preceding paragraph. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-college transactions have been eliminated.
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SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING The Technical College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The Technical College has elected to not apply FASB pronouncements issued after the applicable date.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include petty cash, demand deposits and time deposits in authorized financial institutions.
SHORT-TERM INVESTMENTS Short-Term Investments consist of investments of 90 days - 13 months. This would include certificates ofdeposits or other time restricted investments with original maturities ofsix months or more when purchased. Funds are not readily available and there is a penalty for early withdrawal.
ACCOUNTS RECEIVABLE Accounts receivable consist oftuition and fee charges to students, allotments due from the Georgia Department ofTechnical and Adult Education -Administrative Central Office, reimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. Accounts receivable are recorded net of estimated uncollectible amounts.
INVENTORIES Resale inventories are valued at cost using the weighted average method.
CAPITAL ASSETS Capital assets are recorded at cost at date of acquisition, or fair market value at the date of capital contribution. The Technical College capitalizes all land and land improvements. For equipment, the Technical College's capitalization policy includes all items with a unit cost of $5,000.00 or more, and an estimated useful life of greater than one year. Buildings and Building Improvements, Improvements Other Than Buildings and Library Collections that exceed $100,000.00 or significantly increase the value or extend the useful life of the asset are capitalized. For infrastructure, the Technical College's capitalization threshold is $1 ,000,000.00. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation is computed using the straight-line method over the estimated useful lives ofthe assets, generally 10 to 40 years for buildings, 15 to 25 years for infrastructure, 15 years for improvements other than buildings, 10 years for library books, and 3 to 10 years for equipment.
To fully portray capital assets acquired by the Technical Colleges of the Georgia Department of Technical and Adult Education, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) - an organization that is external to both the Technical College and the Georgia Department of Technical and Adult Education. The GSFIC issues bonds for and on behalf of the State of Georgia, pursuant to powers granted to it in the Constitution of the State of Georgia and the Act creating the GSFIC. The bonds are issued for the
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SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL ASSETS purpose of acquiring capital assets and this debt constitutes direct and general obligations of the State of Georgia, to the payment of which the full faith, credit and taxing power of the State are pledged.
For major construction projects, GSFIC records construction in progress on its books throughout the construction period and at project completion transfers the entire project costs to South Georgia Technical College to be recorded as an asset on the Technical College's books. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to South Georgia Technical College.
DEFERRED REVENUES Deferred revenues include amounts received for tuition and fees and other activities prior to the end of the fiscal year but related to the subsequent accounting period. Deferred revenues also include amounts received from grant and contract sponsors that have not yet been earned.
COMPENSATED ABSENCES Employee vacation pay is accrued for financial statement purposes when vested. The liability and expense incurred are recorded at year-end as accrued vacation payable in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statement of Revenues, Expenses and Changes in Net Assets. South Georgia Technical College had an accrued liability for compensated absences in the amount of $753,471.73 as of July 1, 2007. For fiscal year 2008, $632,446.45 was earned in compensated absences and employees were paid $413,938.77, for a net increase of $218,507.68. The ending balance as of June 30, 2008 in accrued liability for compensated absences was $971 ,979 .41.
NONCURRENT LIABILITIES Noncurrent liabilities include liabilities that will not be paid within the next fiscal year.
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. (The term "debt obligations" as used in this definition does not include debt of the GSFIC as discussed above.)
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

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SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS fiscal year expenses for those purposes, except for unexpended state appropriations (surplus) which must be refunded to the Department ofTechnical and Adult Education for remittance to the Office of Treasury and Fiscal Services. At June 30, 2008, there was no surplus to be refunded.
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.
INCOME TAXES South Georgia Technical College, as a political subdivision ofthe State ofGeorgia, is excluded from Federal income taxes under Section 115(1) ofthe Internal Revenue Code, as amended.
CLASSIFICATION OF REVENUES The Technical College has classified its revenues as either operating or nonoperating revenues in the Statement ofRevenues, Expenses and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics ofexchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) certain Federal, state and local grants and contracts, and (3) sales and services.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary FundAccounting, and GASB No. 34, such as state appropriations and investment income.
SCHOLARSHIP ALLOWANCES Student tuition and fee revenues, and certain other revenues from students, are reported at gross with a contra revenue account of scholarship allowances in the Statement of Revenues, Expenses and Changes in Net Assets. Scholarship allowances are the difference between the stated charge for goods and services provided by the Technical College, and the amount that is paid by students and/or third parties making payments on the students' behalf. Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs, are recorded as either operating or nonoperating revenues in the Technical College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the Technical College has recorded contra revenue for scholarship allowances.

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SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

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 ofany public authority created by the laws ofthe State ofGeorgia, 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 South Georgia Technical College), the option of exempting demand deposits from the collateral requirements.
At June 30, 2008, the carrying value of the deposits was $414,324.11 and the bank balance was $1,405,588.97. Ofthe Technical College's deposits, $1,081,062.08 were uninsured. Ofthis balance $1,081,062.08 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 ofthe following:

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SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 3: ACCOUNTS RECEIVABLE

Student Tuition and Fees Federal, State and Private Funds Other

$ 271,342.10 290,536.41 648,449.58

$ 1,210,328.09

Less: Allowance for Doubtful Accounts

14,950.30

Net Accounts Receivable

$ 1.195.377.79

NOTE 4: INVENTORIES

Inventories at June 30, 2008, consists of the following:

Bookstore

$ 380.727.05

NOTES: CAPITAL ASSETS

Following are the changes in capital assets for the year ended June 30, 2008:

Balance Julx 1, 2007

Additions

Reductions

Balance June 30, 2008

Capital Assets, Not Being Depreciated:

Land and Land Improvements

$

Construction Work-In-Progress

643,930.00

$

651,052.56 $ 1,275,080.21 $ 1,848,109.92

643,930.00 78,022.85

Total Capital Assets Not Being Depreciated

$ 1,294,982.56 $ 1,275,080.21 $ 1,848,109.92 $ 721,952.85

Capital Assets, Being Depreciated: Building and Building Improvements Improvements Other Than Buildings Equipment Library Collections

$ 24,242,655.75 $ 1,650,070.00 7,793,146.95 479,722.02

1,848,109.92
74,341.67 $ 5 183.73

$ 26,090,765.67

1,650,070.00

436,770.99 7,430,717.63

1,126.62

483,779.13

$ 34,165,594.72 $ 1,927,635.32 $ 437,897.61 $ 35,655,332.43

Less: Accumulated Depreciation:

Building and Building Improvements $ 5,249,680.04 $

Improvements Other Than Buildings

1,471,366.77

Equipment

6,938,242.78

Library Collections

378,823.52

662,642.64 75,621.89
311,365.83 $ 29,297.75

$
429,787.60 1,126.62

5,912,322.68 I ,546,988.66 6,819,821.01
406,994.65

$ 14,038,113.11 $ 1,078,928.11 $ 430,914.22 $ 14,686,127.00

Total Capital Assets, Being Depreciated,

Net

$ 20,127,481.61 $ 848,707.21 $

6,983.39 $ 20,969,205.43

Capital Assets, Net

$ 21,422,464, I7 $ 2,123,787.42 $ 1855Q2331 $ 21 621,158.28

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SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 6: DEFERRED REVENUE

Deferred revenue at June 30, 2008, consists of the following:

Prepaid Tuition and Fees Gifts - GSFIC Federal Grants and Contracts

$ 10,869.25 1,173.00 4,359.28

Totals

$ 16.401.53

NOTE 7: LONG-TERM LIABILITIES

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

Current Portion

$ 753.471 73 $ 632 446.45 $ 413.938.77 $ 971 979 41 $ 484.977.12

NOTE 8: NET ASSETS

Changes in Net Asset activity for the year ended June 30, 2008 was as follows:

Invested in Capital Assets Net of Related Debt
Restricted Net Assets Unrestricted Net Assets
Total Net Assets

Balance July I, 2007

Additions

Reductions

Balance June 30, 2008

$ 21,422,464.17 $ 2,123,787.42 $ 1,855,093.31 $ 21,691,158.28

0.00

4, 748,678.49

4, 748,678.49

0.00

724,078.87 14,014,023.27 14,403,878.06

334,224.08

$ 22,146,543.04 $ 20,886,482.18 $ 21,007,642.86 $ 22 025 382 36

NOTE 9: LEASE OBLIGATIONS

OPERATING LEASES South Georgia Technical College has entered into certain agreements to lease land 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 cancellable leases for which an option to renew for the subsequent fiscal year has been exercised.

Expenses for rental ofland and equipment under operating leases for the year ended June 30, 2008, totaled $63,547.39.

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SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 10: SIGNIFICANT COMMITMENTS

South Georgia Technical College had significant unearned, outstanding, construction or renovation contracts executed in the amount of$248, 114.29 as ofJune 30, 2008. This amount is not reflected in the accompanying financial statements.

NOTE 11: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description South Georgia Technical College participates in the Teachers Retirement System ofGeorgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose ofproviding retirement allowances and other benefits for teachers ofthe State ofGeorgia. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System ofGeorgia issues a separate stand alone financial audit report and a copy can be obtained from the TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of South Georgia Technical College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. South 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%

$ 347,049.69 $ 340,296.96 $ 358,323.26

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Plan Description South 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 ofthe State of Georgia.

The benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership withERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan

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SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 11: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years ofcreditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 65. 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 25 years of service regardless of age.
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 ofthe Internal Revenue Code (IRC) as a portion ofERS. The purpose ofSRBP is to provide retirement benefits to employees covered byERS whose benefits are otherwise limited by IRC 415.
The ERS issues a financial report each fiscal year which may be obtained 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, 2008, for employees covered by ERS was $2,893,643.95. The Technical College's total payroll for all employees was $7,904,799.38.
Funding Policy 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 behalf of the 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
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SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 11: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Funding Policy College amounted to 10.16% ofcovered payroll and included the amounts contributed on behalfof the employee under 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 $330,176.79, ofwhich. $293,932.79 was made by the Technical College and $36,244.00 was made by employees. These contributions met the requirements of the plan.
Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008, financial report which may be obtained through ERS.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description South 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 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. 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.
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

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SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 11: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Contributions and Vesting Technical College's payroll for the year ended June 30, 2008, for employees covered by GDCP was $704,073.26. The Technical College's total payroll for all employees was $7,904,799.38.
Total contributions made by employees during fiscal year 2008 amounted to $52,739.20 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
NOTE 12: RISK MANAGEMENT
Public Entity Risk Pool The Department of Community Health (DCH) 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. DCH 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 of Administrative Services (DOAS) has the responsibility for the State of Georgia 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 ofthe Georgia Department ofTechnical and Adult Education, is part ofthe 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.
NOTE 13: POSTEMPLOYMENTBENEFITS
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.
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SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2008

EXHIBIT"D"

NOTE 13: POSTEMPLOYMENT BENEFITS
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 $1,538,644.00, which equaled the required contribution.
The Technical College also participates in a program of group term life insurance for retired and vested inactive eligible members ofvarious 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 14: 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 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 South Georgia Technical College expects such amounts, ifany, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against South 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 of Georgia. Accordingly, significant litigation, claims and assessments

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SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2008

EXHIBIT "D"

NOTE 14: CONTINGENCIES
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 15: NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS
The Technical College's operating expenses shown at the natural classification on the "Statement of Revenues, Expenses and Changes in Net Assets" are all classified as Instruction at the functional classification.
NOTE 16: AFFILIATED ORGANIZATIONS
In accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, an amendment ofGASB Statement No. 14, The Reporting Entity, which became effective for the year ended June 30, 2004, South Georgia Technical College Foundation, Inc., has been determined to be a legally separate, tax exempt organization whose activities primarily support South Georgia Technical College, a member college ofpostsecondary education in Georgia whose units comprise the Department ofTechnical and Adult Education (an organizational unit ofthe State ofGeorgia). The State Accounting Office has determined Component Units ofthe State ofGeorgia, as required by GASB Statement No. 39, should be assessed in relation to their significance to the State ofGeorgia. Accordingly, South Georgia Technical College has not included financial activity for South Georgia Technical College Foundation, Inc., in these financial statements.

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SUPPLEMENTARY INFORMATION - 19-

SOUTH GEORGIA TECHNICAL COLLEGE BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND JUNE 30, 2008
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Salaries Payable Accounts Payable Encumbrance Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Live Works Projects Sales and Services Technology Fees Uncollectible Accounts Receivable Inventories
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$

342,225.79

13,968.17

306,724.09 909,495.67
5,883.25 380,727.05

$ =~1=95;:;;9;.;,:;,0:,;;,24=.~02;,

$

19,837.31

161,195.14

1 ,296,928.94

10,579.25

$

1,488,540.64

$

45,143.22

151,703.84

208,230.57

14,950.30

50,455.45

$

470,483.38

$ =~1..9.5.=9=,0=24==02==

Actual amounts were 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-

SOUTH GEORGIA TECHNICAL COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP 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 Receivables/Revenues Refunds to Grantors
Federal Financial Assistance returned to Georgia Department of Technical and Adult Education Year Ended June 30, 2007
Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$

9,974,246.00 $

9,974,246.00 $

1,646,579.21

1,588,351.45

4,269,666.21

4,164,873.09

$

15,890,491.42 $

15,727,470.54 $

0.00 -58,227.76 -104,793.12
-163,020.88

0.00

158 507.65

$

15,890,491.42 $

15,885,978.19 $

158,507.65 -4 513.23

$

920,361.71 $

916,406.20 $

20,000.00

0.00

14,950,129.71

14,491,982.90

$

15,890,491.42 $

15,408,389.10 $

$

0.00 $

477,589.09 $

3,955.51 20,000.00 458146.81
482,102.32
477 589.09

223,971.00

2,743.04 -75,254.50

-57.60 -158 507.65

$

470483.38

SUMMARY OF FUND BALANCE
Reserved Live Works Projects Sales and Services Technology Fees Uncollectible Accounts Receivable Inventories
Total Fund Balance

$

45,143.22

151,703.84

208,230.57

14,950.30

50455.45

$ ==.,;:4~70~,4~8~3-~38~

Actual amounts were 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.
- 21 -

SOUTH GEORGIA TECHNICAL COLLEGE STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008

Adult Literacy State Appropriation State General Funds Federal Funds Other Funds
Total Adult Literacy

Original AJ2eroeriation

Final Budget

Funds Available Com eared to Budget

Current Year Revenues

Prior Year Ca!!l-Over

Total Funds Available

Variance Positive {Negative}

$

563,862.00 $

563,862.00 $

563,862.00 $

269,881.00

267,386.50

267,386.50

75,000.00

89113.21

75 715.00

$ 908,743.00 $ 920,361.71 $ 906,963.50 $

0.00 $ 0.00 0.00
0.00 $

563,862.00 $ 267,386.50
75 715.00
906,963.50 $

0.00 0.00 -13 398.21
-13,398.21

Economic Development Other Funds

$

20:000.00 $

20,000.00 $

0.00 $

0.00 $

0.00 $ -20,000.00

Technical Education State Appropriation State General Funds Federal Funds Other Funds
Total Technical Education

$ 9,640,171.00 1,313,220.27 3,639,939.00

9,410,364.00 $ 1,379,192.71 4,160,553.00

9,410,364.00 $

0.00 $

1,320,964.95

0.00

4 089158.09 158,507.65

$ 14,793,330.27 $ 14,950,129.71 $ 14,820,507.04 $ 158,507.65 $

9,410,384.00 $ 1 ,320,964.95 4 247 665.74
14,979,014.69 $

0.00 -58,227.76 87112.74
28,864.98

Grand Totals -All Programs

$ 15,722,073.27 $ 15,890,491.42 $ 15,727,470.54 $ 158,507.65 $ 15,885,978.19 $ -41513.23

Actual amounts were 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.
-22-

SCHEDULE "3"

E!!!!!nditures Com!!!!red to Budget

Variance

Positive

Actual

(Negative!

Actual Funds Available
Over/( Under) Expenditures

Prior Period Adjuslmenls

Other Adjustmenls

Program Fund
Balances

Transfers

Pr29ram Fund Balances
Reserve J!!!2l!!L

Total Fund Balance

$

563,862.00 $

267,386.50

85,157.70

$

916,406.20 $

0.00 $ 0.00 3,955.51
31955.51 $

0.00 $ 0.00 -9 442.70
-9,442.70 $

0.00 0.00 0.00
0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

-9,442.70

9442.70

0.00 _____QJ1Q_

0.00

0.00 $ -9,442.70 $ 9,442.70 $

0.00 $ ---2;22. $

0.00

$

0.00 $

20.000.00 $

0.00 $

0.00 $

0.00 $

0.00 $

s_ _ s_ _ 0.00

..,:O:;;;.OO:::, $____..2.!!!!.

..,:O:;::.OO:::,

$

9,410,424.00 $

1,320,964.95

3, 760,593.95

$ 14.491.982.90 $

-40.00 $ 58,227.76 399,959.05
458.146.81 $

-40.00 $ 0.00
487 071.79

40.00 $ 0.00
-72,551.46

487 031.79 $ -72 511.46 $

$ 15,408,389.10 $ 482,102.32 $

477,589.09 $ -72,511.46 $

0.00 $

0.00 $

0.00

0.00

0.00 414 520.33

0.00 $ 4141520.33 $

0.00 $

0.00 $

0.00 $

0.00

0.00

0.00

0.00

0.00

-9442.70 405,077.63 _____QJ1Q_ 405077.63

-9.442.70 $ 405 077.63 $ ---2;22. $ 405,077.63

0.00 $ 405,077.63 $

0.00 $ 4051077.63 $ ___,2;22, $ 405,077.63

Unexpendable Reserves Uncollectible Accounls Receivable Inventories

14,950.30 50.455.45
$ 470.483.38

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SOUTH 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
Lag Salaries June 30, 2008 June 30, 2007
Unidentified Variance

SALARIES $ 7,777,792.76 $

TRAVEL 130,999.36

19,837.31 -29,744.30

782,006.56 -637,654.54

-15,668.80 8,520.83
-290.44

518.61

$ 7,904,799.38 $====1=31:.!.,5=1=7=.9=7

-25-

SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SOUTH GEORGIA TECHNICAL COLLEGE AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

SEE AUDITOR'S COMMENTS

FS-842-07-01 Further Action Not Warranted

(1)

FS-842-07-02 Previously Reported Corrective Action Implemented

AUDITOR'S COMMENTS

(1) Findings/internal control deficiencies of this nature, that are not deemed significant deficiencies or material weaknesses and do not require reporting in the audit report in accordance with Statements on AuditingStandards (SAS) 112, will be communicated in a management letter.

SECTION III FINDINGS AND QUESTIONED COSTS

SOUTH GEORGIA TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
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.