South Georgia Technical College, Americus, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2009

SOUTH GEORGIA TECHNICAL COLLEGE
AMERICUS, GEORGIA
REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009
Georgia Department of Audits and Accounts 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

22

2 SUMMARY BUDGET COMPARJSON AND SURPLUS ANALYSIS REPORT

(NON~GAAP BASIS) BUDGET FUND

23

3 STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING

SOURCE COMPARED TO BUDGET

(NON-GAAP BASIS) BUDGET FUND

24

4 RECONCILIATION OF SALARIES AND TRAVEL

27

SECTION III FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite I-156 Atlanta, Georgia 30334-8400
October 27, 2009

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the State Board of Technical and Adult Education Members of the Local Board of Directors
and Honorable 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, 2009. 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 of America. 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 controls 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 opinion.
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 of only 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
09ARL-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, 2009, 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 part of the basic financial statements but is required 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 of forming 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,

RWH:as 09ARL2TC

Rus ell W. Hinton, CPA, CGFM State Auditor

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, 2009 with comparative data from fiscal year ending June 30, 2008. 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.
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, 2009

June 30, 2008

Assets Current Assets Capital Assets, Net

$

1,039

$

1,997

21,540

21,691

Total Assets

$

22,579

$_---""2-C....;3'"-"-68:c..;:..8

Liabilities Current Liabilities Noncurrent Liabilities

$

1,139

$

1,176

408

487

Total Liabilities

$

1 547

$_ _ _1'-'--66-'-'-3

Net Assets Invested in Capital Assets, Net of Debt Unrestricted

$

21,540

-508

$

21,691

334

Total Net Assets

$==~21=.0===3==2

$==2=2,1===02=5

The total assets of the Technical College decreased by approximately $1, I09,000 from the prior year. This can be mainly attributed to:

1) a decrease of approximately $691,000 in accounts receivable primarily represented by receipt from South Georgia Technical College Foundation for renovations to the James Hall Dormitory;
2) a net decrease in capital assets of$ I51,000 due primarily to net of:
a) the $326,000 completion of phase IV of James Hall dormitory renovation; b) the transfer of ownership to SGTC of the surplus building and land of $100,000 from
Georgia Department of Administrative Services; c) the net change in construction in progress of $48,000; d) a net increase of equipment and Library Collections purchases and disposals of
$94,000; and, e) a net increase in accumulated depreciation of $719,000; 3) a decrease in cash and cash equivalents of approximately $298,000; and, 4) an increase in bookstore inventory of approximately $31,000.

11

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 $116,000. The primary reasons for the decrease in total liabilities were:
1) current liabilities excluding compensated absences increase totaling approximately $42,000, predominately from an increase in accounts and salaries payable of $297,000 which was driven by a substantial decrease in Encumbrances Payable for the current year; offset by a decrease in contracts payable of $262,000 of dormitory renovations; a decrease of $3,000 in deferred revenue; and an increase of $10,000 in funds held for others; and
2) current and noncurrent portions of compensated absences decrease of approximately $158,000 due to an increase in annual leave hours taken by employees in the current year.
The combination of the decrease in total assets of approximately $1,109,000 and the decrease in total liabilities of approximately $116,000 yields a decrease in total net assets of approximately $993,000.
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.
111

Statement of Revenues, Expenses and Changes in Net Assets (Thousands of dollars)

June 30, 2009

June 30, 2008

Operating Revenues Operating Expenses

$

4,764

$

6,561

19 759

18,877

Operating Gain/Loss

$

-14,995

$

-12,316

Nonoperating Revenues and Expenses

13,687

12,202

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

$

-1,308

$

-114

Other Revenues, Expenses, Gains or Losses

315

-7

Increase (Decrease) in Net Assets

$

-993

$

-121

Net Assets at Beginning of Year

22,025

22,146

Net Assets at End of Year

$

21!032

$

222025

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, 2009 and June 30, 2008

June 30, 2009

June 30, 2008

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

$

3,637

$

2,907

64

2,554

808

907

243

185

12

8

Total Operating Revenue

$

4 764

$

6,561

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

$

8,222

$

9,974

5,311

1,555

200

640

6

28

5

Total Nonoperating Revenue

$

13 739

$

12,202

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

$

-7

$

75

224

Total Capital Grants and Gifts

$

299

$

-7

Special Item

$

16

Total Revenues

$

18.818

$

18,756

Expenses (Thousands of Dollars) For The Years Ended June 30, 2009 and June 30, 2008

June 30, 2009

June 30, 2008

Operating Expenses Instruction

$

19,759

$

18,877

Nonoperating Expenses

Other

52

Total Expenses

$

18 877

V

The sources of operating revenue for the Technical College are tuition and fees, grants and contracts, auxiliary services, and educational activities.
Operating revenues decreased approximately $1,797,000 due primarily to:
1) Tuition and Fees increased by approximately $730,000. This is directly related to the increased enrollment of 10.4% from fiscal year 2008 and the increase in charges for credit hours from 12 to 15 credit hours beginning winter quarter 2009. A new athletic fee was also approved beginning fall quarter 2008.
2) Decrease in Federal financial aid of $2,490,000 due to change in categorization from operating revenue fiscal year 2008 to nonoperating revenue in fiscal year 2009.
3) Rents and Royalties and Sales and Services decreased by a net of $41,000 due to renovations of the dormitory building and loss of residential rooms during the renovation phase.
4) Other operating revenue increased by $4,000.
Operating expenses increased by approximately $882,000 due to:
1) Decrease in net personal services expense by approximately $468,000 due to an annual pay raise for full time College employees of approximately 2.5% offset by a substantial temporary decrease fiscal year 2009 in health benefits for employees;
2) decrease in Travel expense by $66,000 (50% reduction) due to the budgetary constraints; 3) increase in Scholarships and Fellowships expense by $1,509,000 due to an increase in the
Federal Pell Grant awards to the students in conjunction with enrollment increases for fiscal year 2009; 4) decrease in Utilities expense by approximately $38,000 due in part to the President's challenge to all employees to practice energy and water conservation; 5) increase in Supplies and other services expenses by $53,000; and 6) decrease in Depreciation expense by$ I08,000.
Other differences between current year and prior year activity on the Statement of Revenues, Expenses and Changes in Net Assets were:
I) Decrease in State appropriations by approximately $1,752,000 due to an approximate 10% budget cut mandated by the State of Georgia Governor's office;
2) receipt of Federal stimulus funds fiscal year 2009 of $53,633; 3) increase in Federal financial aid due to change in categorization from operating revenue
fiscal year 2008 to nonoperating revenue in fiscal year 2009; 4) decrease in other Federal grants of $155,000; 5) decrease in Gifts revenues of $440,000 due primarily to fiscal year 2008 James Hall
renovation; 6) decrease in interest and other investment income of $21,000; 7) receipt of $75,000 USDA grant for equipment; 8) net increase in other Nonoperating Revenues and Expenses and Capital Contributions of
$172,000; and, 9) receipt of land and former surplus building from Georgia Department of Administrative
Services of net book value of $16,088 shown as a special item transfer.
VI

Statement of Cash 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.

Statement of Cash Flows (thousands of dollars)

June 30, 2009

June 30, 2008

Cash Provided (Used) By:

Operating Activities

$

-12,944

Noncapital Financing Activities

13,627

Capital and Related Financing Activities

-987

Investing Activities

6

$

-11,236

12,330

-1, 173

28

Net Change in Cash Cash, Beginning of Year

$

-298

$

-51

401

452

Cash, End of Year Capital Assets

$===40=1

The Technical College completed its James Hall construction renovation project in early fiscal year 2009 at a cost of $2,174,000; this project provided the residential students with private restrooms and updated motel style rooms. The Technical College incurred architectural costs in fiscal year 2009 for a similar future renovation project of the Martin Hall residential facility.

The Technical College received ownership in fiscal year 2009 from the Georgia Department of Administrative Services, 6.737 acres of land and an approximate 20,000 square foot building located adjacent to the existing Americus campus. The asset was transferred at no cost to the Technical College. This building will be used to expand classrooms and labs of the academic programs.

Long-Term Liabilities

South Georgia Technical College had a total Long-Term liabilities of $813,895.00 of which $406,241.64 was reflected as a current liability at June 30, 2009. This liability is for Compensated Absences which is unfunded by the State of Georgia.

vii

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 I% to 10% annually for the past 5 years and this trend is expected to continue into fiscal year 2010. State revenues are projected to be down in fiscal year 201 0; as a result, state funding will be reduced by at least 6% for fiscal year 20 I0. This will be offset by some Federal Stimulus funds. 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
V111

BASIC FINANCIAL STATEMENTS - 1-

SOUTH GEORGIA TECHNICAL COLLEGE STATEMENT OF NET ASSETS YEAR ENDED JUNE 30, 2009
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 (Deficit)
Total Net Assets

EXHIBIT "A"

$

102,625.90

13,883.84

182,112.00 322,103.19
5,820.00 412,065.21

$ 1,038,610.14

21,540,077.05 $ 22,578,687.19

$

568,979.76

22,252.38

51,091.98

13,568.10

76,577.06

406,241.64

$ 1,138,710.92

407,653.36 $ 1,546,364.28

$ 21,540,077.05 -507,754.14

$ 21,032,322.91

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

SOUTH GEORGIA TECHNICAL COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 2009

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 Expenses
Net Nonoperating Revenues
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts Federal State
Total Capital Grants and Gifts
Special Item - Transfer of Assets (See Note 15)
Total Other Revenues, Expenses, Gains, or Losses
Increase (Decrease) in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

$ 3,725,905.59 -88,824.50
64,086.84 242,993.57 808,301.21
11 673.41
$ 4?641136.12

$ 8,115,212.99
1,922,849.43 65,228.72
3,947,576.02 995,308.94
3,741,396.05 9711378.95
$ 19?581951.10
$ -1419941814.98

$ 8,221,938.00
5,310,743.51 200,218.43 6,397.32 -521335.04
$ 131686,962.22
$ -11307,852.76

$

75,000.00

223?05.59

$

298,705.59

$

16,087.72

$

314,793.31

$

-993,059.45

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, 2009
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Other Receipts (Payments)
Net Cash Provided (Used) by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Other Nonoperating Receipts
Net Cash Flows Provided (Used) by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets
Net Cash Provided (Used) by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES 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 Inventories Prepaid Items Salaries Payable Accounts Payable Deferred Revenue Compensated Absences
Net Cash Provided (Used) by Operating Activities
NONCASH ACTIVITY Special Item transfer of Capital Asset Change in Fair Value of Investments Recognized as a Component of Interest Income
The notes to the financial statements are an integral part of this statement.
-4 -

EXHIBIT"C"

$

3,826,087.43

236,030.78

1,335,103.61

-6,461,866.34

-8,270,882.33

-3,947,576.02

3381337.35

$ -121944,765.52

$

8,221,938.00

10,193.25

5,447,442.41

-52,335.04

$ 13,627,238.62

$

79,131.24

-1,0661441.03

$

-987 I309, 79

$

6 481.65

$

-298,355.04

400,980.94

$

102,625.90

$ -14,994,814.98
971,378.95
974,256.48 -31,338.16
63.25 2,415.07 294,191.71 -2,833.43 -158,084.41
$ -12,944,765.52

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY South Georgia Technical College is one of thirty-three (33) State supported member colleges of postsecondary education in Georgia which comprise the Technical College System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of South Georgia Technical College as a separate reporting entity.
The Technical College's Local Board of Directors is composed of seven (7) 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 Technical College System of Georgia by the General Assembly of Georgia. The System Office of the Technical College 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 Technical College System of Georgia for financial reporting purposes because of the significance of its legal, operational, and financial relationships as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
Legally separate, tax exempt organizations whose activities primarily support member colleges of postsecondary education in Georgia which comprise the Technical College System of Georgia (an organizational unit of the State of Georgia), are considered potential component units of the State. See Note 17 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 Technical College System of Georgia 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.
- 5-

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

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 of deposits or other time restricted investments with original maturities of six months or more when purchased. Funds are not readily available and there is a penalty for early withdrawal.
ACCOUNTS RECEIVABLE Accounts receivable consist of tuition and fee charges to students, 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 of the assets, generally 10 to 40 years for buildings, 15 to 25 years for infrastructure, 15 years for improvements other than buildings, IO years for library books, and 3 to 10 years for equipment.
To fully portray capital assets acquired by the Technical Colleges of the Technical College System of Georgia, 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

-6-

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CAPITAL ASSETS and the Technical College System of Georgia. 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 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, 2009, 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 $971,979.41 as of July 1, 2008. For fiscal year 2009, $678,411.68 was earned in compensated absences and employees were paid $836,496.09, for a net decrease of $158,084.41. The ending balance as of June 30, 2009 in accrued liability for compensated absences was $813,895.00.
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 of related 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.)

-7-

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NET ASSETS Unrestricted net assets: Unrestricted net assets represent available resources derived from student tuition and fees, state appropriations, and sales and services of educational departments. These resources will be used for transactions relating to the educational and general operations of the Technical College, and may be used at the discretion of the governing board to meet subsequent fiscal year expenses for those purposes, except for unexpended state appropriations (surplus) which must be refunded to the Technical College System of Georgia for remittance to the Office of Treasury and Fiscal Services. At June 30, 2009, 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 of the State of Georgia, is excluded from Federal income taxes under Section 115(1) of the Internal Revenue Code, as amended.
CLASSIFICATION OF REVENUES The Technical College has classified its revenues as either operating or nonoperating revenues in the Statement of Revenues, Expenses and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include actlv1ttes that have the characteristics of exchange 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 Fund Accounting, 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.
-8-

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "D"

NOTE 2: DEPOSITS
DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the Technical College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the Technical College) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
1. Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia.
3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
5. Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the 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 of accounts provided by the Federal Deposit Insurance Corporati on.
As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies, which allows agencies of the State of Georgia (and thus South Georgia Technical College), the option of exempting demand deposits from the collateral requirements.
At June 30, 2009, the carrying value of the deposits was $115,834.74 and the bank balance was $498,050.79. Of the Technical College's deposits, $207,738.23 were uninsured. Of this balance $207,738.23 were collateralized with securities held by the pledging financial institution's trust department or agent.

-9 -

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "D"

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable at June 30, 2009, consists of the following:

Student Tuition and Fees Federal, State and Private Funds GSFIC Other

$ 79,552.33 182,112.00 219,574.35 37,976.81

$ 519,215.49

Less: Allowance for Doubtful Accounts

15,000.30

Net Accounts Receivable

$ 504,215.19

NOTE 4: INVENTORIES

Inventories at June 30, 2009, consists of the following:

Bookstore

$ 412,065.21

NOTE 5: CAPITAL ASSETS

Following are the changes in capital assets for the year ended June 30, 2009:

- IO -

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "D"

NOTE 5: CAPITAL ASSETS

Beginning Balance Julx 1. 2008

Special Items

Additions

Reductions

Ending Balance June 30, 2009

Capital Assets, Not Being Depreciated: Land and Land Improvements $ 643,930.00 $ Construction Work-lnProgress

6,737.00

$ 650,667.00

$ 78,022.85

125,592.41

Total Capital Assets Not Being Depreciated $ 721.952.85 $

6 737.00 $ 125.592.41

$ 776,259.41

Capital Assets, Being Depreciated:

Building and

Building Improvements $26,090,765.67 $

Improvements Other Than

Buildings

1,650,070.00

Equipment

7,430,717.63

Library Collections

483,779.13

93,507.17 $ 326,137.04

$26,510,409.88

428,824.66 $ 318,788.88

1 678.74

17 445.54

1,650,070.00 7,540,753.41
468,012.33

Total Capital Assets Being Depreciated

$ 35,655,332.43 $ 93507.17 $ 756 640.44 $ 336,234.42 $36,169,245.62

Less: Accumulated Depreciation:

Building and

Building Improvements $ 5,912,322.68 $

Improvements Other Than

Buildings

1,546,988.66

Equipment

6,819,821.01

Library Collections

406,994.65

84,156.45 $ 593,769.22

$ 6,590,248.35

65,104.00

284,988.65 $ 318,788.88

27,517.08

17 445.54

1,612,092.66 6,786,020.78
417,066.19

Total Accumulated Depreciation

$14,686,127.00 $ 84,156.45 $ 971,378.95 $ 336.234.42 $ 15,405,427.98

Total Capital Assets, Being Depreciated, Net

$ 20,969,205.43 $

9.350.72 $ -214,738.51 $

0.00 $20,763,817.64

Capital Assets, Net

$ 21 691 158 28 $ 16 087 72 $ -89 146 10 $ 78 022 85 $ 21 540 077.05

NOTE 6: DEFERRED REVENUE

Deferred revenue at June 30, 2009, consists of the following:

Prepaid Tuition and Fees

$ 13,568.10

NOTE 7: LONG-TERM LIABILITIES

Long-Term liability activity for the year ended June 30, 2009, was as follows:

Other Liabilities Compensated Absences

Balance Jul:t 1, 2008

Additions

Reductions

Balance June 30, 2009

Current Portion

$ 971,979.41 $ 678,41.L.6.8 $ 836,426 02 $ 813,895,00 $ 406,241.64

- 11 -

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "D"

NOTE 8: NET ASSETS

Changes in Net Asset activity for the year ended June 30, 2009 was as follows:

Invested in Capital Assets Net of Related Debt
Restricted Net Assets Unrestricted Net Assets Total Net Assets
NOTE 9: LEASE OBLIGATIONS

Balance Jul)'. 1, 2008 $21,691,158.28
0.00 334,224.08 $ 22,025,382.36

Additions $ -73,058.38
5,575,048.78 12,876,049.56
$ 18 378'32 26

Reductions $ 78,022.85
5,575,048.78 13,718,027.78 $ 12,311,092.41

Balance June 30, 2009 $21,540,077.05
0.00 -507,754.14 $ 21,Q32,322,21

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 of land and equipment under operating leases for the year ended June 30, 2009, totaled $80,690.88.

NOTE 10: SIGNIFICANT COMMITMENTS

South Georgia Technical College had significant unearned, outstanding, construction or renovation contracts executed in the amount of $9,407.59 as of June 30, 2009. 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 of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

- 12 -

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "D"

NOTE 11: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

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 2009, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2009 2008 2007

100% 100% 100%

$ 369,857.26 $ 347,049.69 $ 340,296.96

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 of the State of Georgia.

The ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of SRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC 415.

The benefit structure of ERS is established by the Board of Trustees under statutory guidelines. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are "new plan" members subject to the modified plan provisions. Effective January 1, 2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). ERS members hired prior to January 1, 2009 also have the option to change their membership to the GSEPS plan.

- 13 -

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "D"

NOTE 11: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of l Oyears of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon a formula adopted by the Board of Trustees for such purpose. The formula considers the monthly average of the member's highest 24 consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Post-retirement cost-of-living adjustments may be made to members' benefits provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The Technical College's payroll for the year ended June 30, 2009, for employees covered by ERS was $2,923,566.47. The Technical College's total payroll for all employees was $8,115,212.99.
Member contribution rates are set by law. Member contributions under the old plan are 4% of annual compensation up to $4,200 plus 6% of annual compensation in excess of $4,200. Under the old plan, the Technical College pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these Technical College contributions are included in the members' accounts for refund purposes and are used in the computation of the members' eamable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The Technical College is required to contribute at a specified percentage of active member payroll established by the Board of Trustees determined annually in accordance with actuarial valuation and minimum funding standards as provided by law. These Technical College contributions are not at any time refundable to the member or his/her beneficiary.
Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

- 14 -

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "D"

NOTE 11: RETIREMENT PLANS

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Funding Policy Fiscal Year

Percentage Contributed

Required Contribution

2009 2008 2007

100% 100% 100%

$ 322,873.89 $ 293,932.79 $ 319,119.91

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2009 financial report, which may be obtained through ERS.

GEORGIA DEFINED CONTRIBUTION PLAN

Plan Description 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 of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia.

Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $3,500.00 credited to his/her account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.

The Employees' Retirement System of Georgia issues a financial report each fiscal year which may be obtained through ERS.

Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member. The Technical College's payroll for the year ended June 30, 2009, for employees covered by GDCP was $854,044.24. The Technical College's total payroll for all employees was $8,115,212.99.

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "D"

NOTE 11: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Contributions and Vesting Total contributions made by employees during fiscal year 2009 amounted to $64,059.64 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 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 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 Department of Community Health contracted with United Healthcare to process medical claims and Medco to process prescription drug claims 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 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 processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Technical College, as an organizational unit of the Technical College System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
NOTE 13: POSTEMPLOYMENT BENEFITS
The Technical College participates in two State of Georgia postemployment benefit plans, the Georgia Retiree Health Benefit Fund (administered by the Department of Community Health) and the State Employees' Assurance Department - OPEB (administered by the ERS System). Separate financial reports that include the applicable financial statements and required supplementary information for these plans are publicly available and may be obtained from the respective system offices.

- 16 -

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT D 11 11

NOTE 13: POSTEMPLOYMENT BENEFITS

Georgia Retiree Health Benefit Fund The Georgia Retiree Health Benefit Fund (GRHBF) is a cost-sharing multiple-employer defined benefit postemployment healthcare plan that covers retired employees of the State including all departments, agencies and local school systems. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries through the health insurance plan for State employees. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the employees' health insurance plan (including benefits for retirees) to the Board of Community Health (Board).

The contribution requirements of the plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of the health insurance coverage.

Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rate is established to fund both the active and retired employee health insurance plans based on projected "pay-as-you-go" financing requirements. The combined rates for the active and retiree plans for the fiscal year ended June 30, 2009, were as follows:

July 2008 - January 2009 February 2009 March 2009 - June 2009

22.165% of covered payroll for August - February Coverage 1.926% of covered payroll for March Coverage 0.000% of covered payroll for April - July Coverage

No additional contribution was required by the Board for fiscal year 2009 nor contributed to GRHBF to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other postemployment benefits and are subject to appropriation.

The following table summarizes the Technical College's contributions to the health insurance plans for the years ending June 30, 2009 and June 30, 2008, (dollars in thousands):

Fiscal Year

Percentage Contributed

Required Contribution

2009 2008

100% 100%

$ 915,758.94 $ 1,538,644.00

- 17 -

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "D"

NOTE 13: POSTEMPLOYMENT BENEFITS
State Employees' Assurance Department - OPEB State Employees' Assurance Department - OPEB (SEAD-OPEB) is a cost-sharing multipleemployer defined benefit postemployment plan that was created in fiscal year 2007 by the Georgia General Assembly to provide term life insurance to retired and vested inactive members of the Employees' Retirement System.
Contributions by plan members are established by the Board of Trustees, up to the maximum allowed by statute (not to exceed 0.5% of eamable compensation). The Board of Trustees of the Employees' Retirement System establish employer contribution rates, such rates which, when added to members' contributions, shall not exceed 1% of eamable compensation. For the fiscal year ended June 30, 2009, contributions of ERS "old plan'' members were 0.45% of eamable compensation, 0.22% of which was paid by the employer. Contributions of ERS "new plan" members were 0.23% of eamable compensation. There were no employer annual required contributions (ARC) for the fiscal years ended June 30, 2009 and June 30, 2008.
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 granter agency for any expenses which are disallowed under grant terms. The amount of expenses which may be disallowed by the grantor cannot be determined at this time although South Georgia Technical College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against South Georgia Technical College (an organizational unit of the Technical College System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2009.
NOTE 15: SPECIAL ITEM
In the fiscal year 2009, the Department of Administrative Services State Surplus Center transferred 6.737 acres of land and a 27,000 square foot building to South Georgia Technical College. The original cost of the land and building of $100,244.17 and the accumulated depreciation on the building of $84,156.45 was added to the capital asset records of the Technical College. A net gain of $16,087.72 from the transfer is reported as a special item on the Statement of Revenues, Expenses and Changes in Net Assets.
NOTE 16: 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.
- 18 -

SOUTH GEORGIA TECHNICAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2009

EXHIBIT "D"

NOTE 17: AFFILIATED ORGANIZATIONS
In accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, an amendment of GASB Statement No. 14, The Reporting Entity, 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 of postsecondary education in Georgia whose units comprise the Technical College System of Georgia (an organizational unit of the State of Georgia). The State Accounting Office has determined Component Units of the State of Georgia, as required by GASB Statement No. 39, should be assessed in relation to their significance to the State of Georgia. Accordingly, South Georgia Technical College has not included financial activity for South Georgia Technical College Foundation, Inc., in these financial statements.

- 19 -

(This page left intentionally blank)

SUPPLEMENTARY INFORMATION

SOUTH GEORGIA TECHNICAL COLLEGE BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND JUNE 30, 2009
ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Contracts Payable Salaries Payable Accounts Payable Encumbrances Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Federal Financial Assistance Sales and Services Live Work Projects Continuing Education Technology Fees Uncollectible Accounts Receivable Inventories
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$

15,309.65

216,348.21 117,529.14
5,820.00 412,065.21

$ =====7=6=7,0=7=2.=21=

$

51,091.98

22,252.38

324,888.48

96,444.89

13,450.50

$

508,128.23

$

3,080.54

18,127.97

58,757.55

6,594.59

106,927.58

15,000.30

50,455.45

$

258,943.98

$ =====7=6=7,0=7=2.=21=

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.

SOUTH GEORGIA TECHNICAL COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2009

SCHEDULE "2"

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

REVENUES

State Appropriation State General Funds
Federal Funds Other Funds

$

8,221,938.00 $ 8,221,938.00 $

1,451,223.77

1,418,076.05

516241500.00

4,9341404.52

0.00 -33, 147.72 -690,095.48

Total Revenues

$ 15,297,661.77 $ 14,574,418.57 $

-723,243.20

CARRY-OVER FROM PRIOR YEAR

Transfer from Reserved Fund Balance

0.00

405 077.63

405,077.63

Total Funds Available

$ 151297,661.77 $ 14,9791496.20 $

-3181165.57

EXPENDITURES

Adult Literacy Economic Development Technical Education

$

895,643.09 $

882,495.20 $

70,000.00

60,617.41

14,332,018.68

13,781,842.48

13,147.89 9,382.59
550,176.20

Total Expenditures

$ 151297,661.77 $ 14)24,955.09 $

5721706.68

Excess of Funds Available over Expenditures

$

0.00 $

254,541.11 $

254 541.11

FUND BALANCE JULY 1

Reserved

470,483.38

ADJUSTMENTS

Prior Year Payables/Expenditures Prior Year Receivables/Revenues Prior Year Reserved Fund Balance Included in Funds Available

3,080.54 -64,083.42 -405 077.63

FUND BALANCE JUNE 30

SUMMARY OF FUND BALANCE
Reserved Federal Financial Assistance Sales and Services Live Work Projects Continuing Education Technology Fees Uncollectible Accounts Receivable Inventories

$

3,080.54

18,127.97

58,757.55

6,594.59

106,927.58

15,000.30

50,455.45

Total Fund Balance

$ ===25=8::!::,9=4=3=.9=8

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.
- 23 -

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, 2009

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Comeared to Budget

Prior Year Carry-Over

Total Funds Available

Variance Positive (Negative)

561,409,00 $ 250,370.00 153 068.00
964,847,00 $

484,486.00 243,089.09 168,068,00
895,643,09

484,486.00 $ 243,089.09 154 920.11
882,495,20

0,00 $ 000 0.00
0.00

484,486.00 243,089.09 154 920,11
882,495.20

0.00 000 -13 147.89
-13,147.89

Economic Development Other Funds

0.00 $

70,000.00 $

67,212.00 $

0.00 $

67,212.00 $

-2,788.00

Technical Education State Appropriation State General Funds Federal Funds American Recovery and Reinvestment Act of 2009 Federal Stabilization Funds Other Federal Funds Other Funds
Total Technical Education

9,122,493.00 $

7,737,452.00 $

7,737,452.00 $

0.00 $

7,737,452.00 $

0.00

o.oo
986,041.61 4 511 329.00

$

14 619 863.61

53,633.00 1,154,501.68 5 386 432.00
14 332 018.68

53,633.00 1,121,353.96 4 712 272.41
13 624 711. 37

0.00 0.00 405 077.63
405 077.63

53,633.00 1,121,353.96 5 117 350.04
14 029189.00

000 -33, 147.72 -269 081.96
-302 229 68

Grand Totals All Programs

$

15,584,710.61 $ 15,297,661.77 $ 14,574,418.57 $

405,077.63 $ 14,979,496.20 $

-318, 165.57

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.

SCHEDULE "3"

Ex(2enditures Com(2ared to Budget

Variance

Positive

Actual

(Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Program Fund
Balances

Transfers

Pro9ram Fund Balances

Reserve

Surplus

Total Fund Balance

484,486.00 $ 243,089.09 15492011

$

aa2:49s.20 $

0.00 0.00 13 147.89
13 147.89

0.00

0.00 $

0.00

0.00 $

0.00 $

0.00 $ 000 $

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 _____QJ1Q__

0.00 _QJ1Q_

0.00

0.00

0.00 $

0.00 $

0.00 $ ~ $

0.00 $ ~ $

0.00

60,617.41 $

9,382.59 $

6,594.59 $

0.00 $

0.00 $ 6,594 59

0.00 $ 6,594.59

0.00 $

6,594.59

$ 7,737,452.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $ 0.00 $

0.00

53,633.00 1,121,353.96 4,869,403.52
13 781 842.48

0.00 33,147.72 517 028.48
550 176.20

0.00 0.00 247 946.52
247 946.52

0.00 3,080.54 -64 083.42
-61 002.88

0.00 0.00 -50.00
-50.00

0.00 3,080.54 183 813.10

0.00 0.00 ______MQ_

0.00 3,080.54 183 813.10

0.00 0.00 _QJ1Q_

0.00 3,080.54 183813.10

186 893.64 $ ~ $ 186 893.64

0.00 $ 186 893.64

$ 14,724,955.09 $

572,706.68 $

254,541.11 $ -61,002.88 $

-50.00 $ 193,488.23 $ ~ $ 193,488.23

0.00 $ 193,488.23

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

15,000.30 50,455.45
$ 258 943.98

25

(This page left intentionally blank)

SOUTH GEORGIA TECHNICAL COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2009

SCHEDULE "4"

Totals per Annual Supplement
Accruals June 30, 2009 June 30, 2008
Compensated Absences June 30, 2009 June 30, 2008
Lag Salaries June 30, 2009 June 30, 2008
Agency Funds
Unidentified Variance

SALARIES

TRAVEL

$

8,233,067.69 $

65,347.23

22,252.38 -19,837.31

658,411.20 -782,006.56

-9,928.14 15,668.80
-2,415.07

-118.51

$

8,115,212.99 $===65=,2=2=8=,7=2

SECTION II FINDINGS AND QUESTIONED COSTS

SOUTH GEORGIA TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2009 .
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.