South Georgia Technical College, Americus, Georgia, management report for fiscal year ended June 30, 2015

AMERICUS, GEORGIA
MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2015
A Member College of the Technical College System of Georgia

SOUTH GEORGIA TECHNICAL COLLEGE - TABLE OF CONTENTS -

SECTION I
FINANCIAL
LETTER OF TRANSMITTAL
SELECTED FINANCIAL INFORMATION
EXHIBITS
A STATEMENT OF NET POSITION - (GAAP BASIS)
B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION (GAAP BASIS)
C STATEMENT OF CASH FLOWS - (GAAP BASIS)
D SELECTED FINANCIAL NOTES
SUPPLEMENTARY INFORMATION
SCHEDULES
1 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT
(STATUTORY BASIS) BUDGET FUND 3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET
BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND
4 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND
5 RECONCILIATION OF BUDGET TO GAAP 6 RECONCILIATION OF SALARIES AND TRAVEL

Page
2 3 4 5
22 23 24 26 28 29

SECTION II ENTITY'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, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

SECTION I FINANCIAL

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
October 5, 2015

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the State Board of the Technical College System of Georgia Members of the Local Board of Directors
and Honorable Sparky Reeves, President South Georgia Technical College
Ladies and Gentlemen:
As part of our audit of the basic financial statements of the State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2015, we have performed certain audit procedures at South Georgia Technical College. Accordingly, the financial statements and compliance activities of South Georgia Technical College were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
In addition, we have audited compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on its Federal programs for the year ended June 30, 2015.
This Management Report contains information pertinent to the financial and compliance activities of South Georgia Technical College as of and for the year ended June 30, 2015. Information contained in this report is a by-product of our audit of the basic financial statements of the State of Georgia and is the representation of management. Accordingly, we do not express an opinion or any other form of assurance on it. The particular information provided which includes a section on findings and other items reported in accordance with Commission on Colleges regulation 2.11.1, is enumerated in the Table of Contents.
This report is intended solely for the information and use of management of South Georgia Technical College, members of the Local Board of Directors, and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully,

GSG:as

Greg S. Griffin State Auditor

SELECTED FINANCIAL INFORMATION - 1 -

SOUTH GEORGIA TECHNICAL COLLEGE STATEMENT OF NET POSITION - (GAAP BASIS)
JUNE 30, 2015
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable Federal Financial Assistance Other Prepaid Items Inventories
Total Current Assets
Noncurrent Assets Capital Assets, Net
Total Assets
DEFERRED OUTFLOWS OF RESOURCES
Contributions to Defined Benefit Pension Plans
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Contracts Payable Advances Funds Held for Others Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Compensated Absences Net Pension Liability
Total Noncurrent Liabilities
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Defined Benefit Pension Plans
NET POSITION
Net Investment in Capital Assets Restricted
Expendable Unrestricted (Deficit)
Total Net Position

EXHIBIT "A"

$

985,659.76

191,852.75 883,973.18
7,489.00 142,208.27

2,211,182.96

25,440,826.69 27,652,009.65

1,095,752.64

401,225.81 38,498.61 39,107.71
559,450.10 160,236.99 444,489.38 1,643,008.60
445,896.69 8,580,531.00 9,026,427.69 10,669,436.29
2,614,063.00
25,440,826.69 5,815.55
-9,982,379.24
$ 15,464,263.00

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SOUTH GEORGIA TECHNICAL COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - (GAAP BASIS)
YEAR ENDED JUNE 30, 2015

EXHIBIT "B"

OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances Less: Allowance for Doubtful Accounts
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 Loss
NONOPERATING REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal Gifts Interest and Other Investment Income Other Nonoperating Expenses
Net Nonoperating Revenues
Loss Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State Nongovernmental Gain on Disposal of Capital Assets
Total Other Revenues, Expenses, Gains, or Losses
Decrease in Net Position
Net Position - Beginning of Year (Restated)

$ 4,426,298.06 -1,240,646.49 -7,222.00
50,582.58 337,098.13 763,369.11
8,128.00
4,337,607.39
7,833,914.86 2,943,084.99
134,291.53 2,742,478.70 1,106,781.36 2,852,563.09 1,562,312.36
19,175,426.89
-14,837,819.50
8,726,343.00
5,104,010.55 310,020.77 1,209.58 -314,654.27
13,826,929.63
-1,010,889.87
375,165.24 16,083.91 0.01
391,249.16
-619,640.71
16,083,903.71

Net Position - End of Year

$ 15,464,263.00

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SOUTH GEORGIA TECHNICAL COLLEGE STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2015
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, net
Net Cash 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 by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets
Net Cash Used by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Earnings on Investments
Net Decrease in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES:
Operating Loss Adjustments to Reconcile Operating Loss to Net Cash
Used by Operating Activities Depreciation Expense Change in Assets and Liabilities: Accounts Receivable, Net Inventories Prepaid Items Salaries Payable Accounts Payable Unearned Revenue Compensated Absences Change in Deferred Inflows/Outflows of Resources: Deferred Inflows of Resources Deferred Outflows of Resources Net Pension Liability
Net Cash Used by Operating Activities
NONCASH ACTIVITY Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts
- 4 -

EXHIBIT "C"

$

3,167,024.62

47,000.70

763,369.11

-7,476,514.76

-7,803,098.95

-2,742,478.70

325,303.04

-13,719,394.94

8,726,343.00 -10,717.73
5,311,065.58 -314,654.27
13,712,036.58

383,065.24 -672,455.33
-289,390.09

1,209.58 -295,538.87 1,281,198.63

$

985,659.76

$ -14,837,819.50
1,562,312.36
-132,204.97 2,637.21 -1,711.00 -1,494.88
114,980.05 97,295.05 34,786.38
2,614,063.00 -197,294.64
-2,974,944.00
$ -13,719,394.94

$

16,083.91

SOUTH GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
South Georgia Technical College (Technical College) is one of twenty-four (24) 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 7 (seven) members serving staggered three-year terms who are appointed by the State Board of the Technical College System of Georgia. Appropriation of State funds is made to the Technical College System of Georgia by the General Assembly of Georgia. The System Office of the Technical College System of Georgia determines the amount of State appropriations to be received by 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 (12) 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, deferred outflow of resources, liabilities, deferred inflows of resources, net position, revenues, expenses, changes in net position and cash flows.
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. 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.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2015, the Technical College adopted Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this Statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. Implementation of this statement requires a restatement to beginning net position. The adoption of this statement has a significant impact on the Technical College's financial statements.
In fiscal year 2015, the Technical College adopted Governmental Accounting Standards Board (GASB) Statement No. 69, Government Combinations and Disposals of Government Operations. This statement provides specific accounting and financial reporting guidance for combinations in the governmental environment. This statement also requires that disclosures be made by governments about combination arrangements in which they engage and for disposals of government operations. The adoption of this statement does not have a significant impact on the Technical College's financial statements.
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SOUTH GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

In fiscal year 2015, the Technical College adopted Governmental Accounting Standards Board (GASB) Statement 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB No. 68. The objective of this statement is to improve accounting and financial reporting by addressing an issue in Statement No. 68, Accounting and Financial Reporting for Pensions, concerning transition provisions related to certain pension contributions made to defined benefit pension plans prior to implementation of statement. This statement amends paragraph 137 of Statement No. 68 which limited recognition of pension-related deferred outflows of resources and deferred inflows of resources at the transition to circumstances in which it is practical to determine the amounts of all deferred outflows of resources and deferred inflows of resources related to pensions. Adoption of this statement in conjunction with GASB No. 68 had a significant impact on the College's financial statements.
NET POSITION
The Technical College's net position is classified as follows:
Net Investment in Capital Assets: This represents the Technical College's total investment in capital assets, net of outstanding debt obligations, deferred outflows of resources and deferred inflows of resources related to those capital assets. To the extent debt has been incurred or deferred inflows of resources have been received but not yet expended for capital assets, such amounts are not included as a component of the net investment in capital assets.
Restricted - Expendable: Restricted expendable net position include resources in which the Technical College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties, except for unexpended grant funds of $5,815.55 due to grantor agencies.
Unrestricted: Unrestricted net position is the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of Investment in Capital Assets. Included in the net deficit reported is the College's Net Pension liability of $8.6 million which will be funded by appropriating resources each year as payments come due, rather than accumulating resources in advance.
The Technical College and the State of Georgia operate on a statutory basis of accounting which is similar to the cash basis of accounting. Year-end differences in encumbrance liabilities, compensated absences liabilities, etc., can create significant increases (decreases) in net position when converting from the statutory basis to the GASB basis of accounting for these financial statements.
RESTATEMENT NOTE DISCLOSURE
The Technical College made prior period adjustments due to the adoption of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, which requires the restatement of the June 30, 2014, net position. The result is a decrease in Net Position at July 1, 2014 of $10,657,017.00 attributable to a net pension liability of $11,555,475.00 less plan contribution of $898,458.00, made during the fiscal year 2014. This change is in accordance with generally accepted accounting principles.

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SOUTH GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2015

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 Corporation.

At June 30, 2015, the carrying value of deposits was $984,910.00 and the bank balance was $1,711,050.42. Of the Technical College's deposits, $1,159,617.73 were uninsured. Of these uninsured deposits, $1,159,617.73 were collateralized with securities held by the pledging financial institutions in the Technical College's name.

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable at June 30, 2015, consists of the following:

Student Tuition and Fees Federal, State and Private Funds Other

$

325,347.58

644,776.75

141,096.65

Less: Allowance for Doubtful Accounts

1,111,220.98 35,395.05

Net Accounts Receivable

$ 1,075,825.93

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SOUTH GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

NOTE 4: CAPITAL ASSETS
Following are the changes in capital assets for the year ended June 30, 2015:

Beginning Balance July 1, 2014

Additions

Reductions

Ending Balance June 30, 2015

Capital Assets, Not Being Depreciated: Land and Land Improvements Construction Work-In-Progress

$

650,667.00

28,925.00 $

14,100.00 $

$ 0.00

650,667.00 43,025.00

Total Capital Assets, Not Being Depreciated

679,592.00

14,100.00

0.00

693,692.00

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

34,552,438.51 1,801,865.91
10,615,786.65 317,901.29

297,584.00
362,763.95 1,974.40

6,461.11 68.28

34,850,022.51 1,801,865.91
10,972,089.49 319,807.41

Total Assets Being Depreciated

47,287,992.36

662,322.35

6,529.39

47,943,785.32

Less: Accumulated Depreciation: Building and Building Improvements Improvements Other Than Buildings Equipment Library Collections

10,679,180.67 1,662,506.75 9,014,927.71 284,252.54

875,673.79 14,966.69
663,650.15 8,021.73

6,461.12 68.28

11,554,854.46 1,677,473.44 9,672,116.74 292,205.99

Total Accumulated Depreciation

21,640,867.67

1,562,312.36

6,529.40

23,196,650.63

Total Capital Assets, Being Depreciated, Net

25,647,124.69

-899,990.01

-0.01

24,747,134.69

Capital Assets, Net

$ 26,326,716.69 $ -885,890.01 $

-0.01 $ 25,440,826.69

A comparison of depreciation expense for the last three fiscal years is as follows:

Fiscal Year

Depreciation Expense

2015 2014 2013

$ 1,562,312.36 $ 1,548,781.64 $ 1,616,952.04

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SOUTH GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

NOTE 5: ADVANCES
Advances at June 30, 2015, consists of the following:

Prepaid Tuition and Fees Other Unearned Revenue

$ 484,450.10 75,000.00

Total Advances

$ 559,450.10

NOTE 6: LONG-TERM LIABILITIES
Long-Term liability activity for the year ended June 30, 2015 was as follows:

Other Liabilities Compensated Absences Net Pension Liability

Beginning Balance July 1, 2014 (Restated)

Additions

Reductions

Ending Balance June 30, 2015

$

855,599.69 $

11,555,475.00

568,067.31 $

533,280.93 $ 2,974,944.00

890,386.07 $ 8,580,531.00

Total Long-Term Obligations

$ 12,411,074.69 $

568,067.31 $ 3,508,224.93 $ 9,470,917.07 $

NOTE 7: NET POSITION
Changes in Net Position activity for the year ended June 30, 2015 was as follows:

Beginning Balance July 1, 2014

Additions

Reductions

Ending Balance June 30, 2015

Current Portion 444,489.38
444,489.38

Net Investment in Capital Assets

$ 26,326,716.69 $

-885,890.01 $

-0.01 $ 25,440,826.69

Restricted Net Position

11,473.95

5,154,593.13

5,160,251.53

5,815.55

Unrestricted Net Position

-10,254,286.93

14,601,737.33

14,329,829.64

-9,982,379.24

Total Net Position

$ 16,083,903.71 $ 18,870,440.45 $ 19,490,081.16 $ 15,464,263.00

NOTE 8: LEASE OBLIGATIONS
OPERATING LEASES
South Georgia Technical College has entered into certain agreements to lease copiers, equipment, a building and land which are classified as operating leases (leases on assets not recorded on the balance sheet). These leases generally contain provisions that, at the expiration date of the original term of the lease, the Technical College has the option of renewing the lease on a year-to-year basis. Amounts are included only for multi-year leases and for cancelable leases for which an option to renew for the subsequent fiscal year has been exercised.
Expenses for rental of copiers, equipment, a building and land under operating leases for the year ended June 30, 2015, totaled $89,241.97.

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SOUTH GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

SUMMARY OF LEASE OBLIGATIONS
Future commitments for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2015, were as follows:
Operating Leases

Year Ending June 30: 2016 2017 2018 2019 2020 2021 - 2024

$

62,286.92

46,098.24

43,480.68

42,667.43

39,225.18

324,000.00

Total Minimum Lease Payments

$

557,758.45

NOTE 9: RETIREMENT PLANS
South Georgia Technical College participates in various retirement plans administered by the State of Georgia under two major retirement systems: Employees' Retirement System of Georgia (ERS System) and Teachers Retirement System of Georgia. These two systems issue separate publicly available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained from the respective system offices. The significant retirement plans that South Georgia Technical College participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law.
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
The ERS System is comprised of individual retirement systems and plans covering substantially all employees of the State of Georgia except for teachers and other employees covered by the Teachers Retirement System of Georgia. One of the ERS System plans, the Employees' Retirement System of Georgia (ERS), is a cost-sharing multiple-employer defined benefit pension plan that was established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees and has the powers and privileges of a corporation. ERS acts pursuant to statutory direction and guidelines, which may be amended prospectively for new hires but for existing members and beneficiaries may be amended in some aspects only subject to potential application of certain constitutional restraints against impairment of contract.
On November 20, 1997, the Board created the Supplemental Retirement Benefit Plan (SRBP-ERS) of ERS. SRBP-ERS 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 the SRBP-ERS is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC Section 415. Beginning January 1, 1998, all members and retired former members in ERS are eligible to participate in the SRBP-ERS whenever their benefits under ERS exceed the limitation on benefits imposed by IRC Section 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
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SOUTH GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

January 1, 2009 are "new plan" members subject to the modified plan provisions. Effective January 1, 2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). ERS members hired prior to January 1, 2009 also have the option to change their membership to the GSEPS plan
Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon a formula adopted by the Board 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.
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, South Georgia Technical College pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these South Georgia Technical College contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. South Georgia 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 South Georgia Technical College contributions are not at any time refundable to the member or his/her beneficiary. Employer contributions required for fiscal year 2015 based on actuarial valuation were as follows:

Old Plan New Plan GSEPS

21.96% 21.96% 18.87%

Members become vested after 10 years of service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions; the member forfeits all rights to retirement benefits.

TEACHERS RETIREMENT SYSTEM OF GEORGIA

The Teachers Retirement System of Georgia (TRS) is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS.

On October 25, 1996, the Board created the Supplemental Retirement Benefit Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.

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SOUTH GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2015 were 6.00% of annual salary. Employer contributions required for fiscal year 2015 were 13.15% of annual salary as required by the June 30, 2015 actuarial valuation.
The following table summarizes the South Georgia Technical College contributions by defined benefit
plan for the years ending June 30, 2015, June 30, 2014, and June 30, 2013 (dollars in thousands):

Fiscal Year

ERS

Required

Percentage

Contribution

Contributed

TRS

Required

Percentage

Contribution

Contributed

2015 2014 2013

$ 581,186.12 $ 398,613.59 $ 407,483.43

100% 100% 100%

$ 514,566.52 $ 446,285.41 $ 410,971.91

100% 100% 100%

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2015, the South Georgia Technical College reported a liability for its proportionate share of the net pension liability for TRS and ERS totaling $8,580,531. The net pension liability was measured as of June 30, 2014. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2013. An expected total pension liability as of June 30, 2014 was determined using standard roll-forward techniques. The South Georgia Technical College's proportion of the net pension liability was based on contributions to TRS and ERS during the fiscal year ended June 30, 2014. At June 30 2014, the South Georgia Technical College's TRS proportion was 0.035623%, which was a decrease of 0.000190% from its proportion measured as of June 30, 2013. At June 30, 2014, the South Georgia Technical College's ERS proportion was 0.108783%, which was a decrease of 0.000747% from its proportion measured as of June 30, 2013.
For the year ended June 30, 2015, the South Georgia Technical College recognized pension expense of $302,354.00 for TRS and $235,233.00 for ERS. At June 30, 2015, the Technical College reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

- 12 -

SOUTH GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

TRS

Deferred

Deferred

Outflow of

Inflows of

Resources

Resources

ERS

Deferred

Deferred

Outflow of

Inflows of

Resources

Resources

Net difference between projected and actual earnings on pension plan investments

$ 1,568,968.00

$

995,812.00

Changes in proportion and differences between Technical College contributions and proportionate share of contributions

26,976.00

22,307.00

Technical College contributions subsequent to the measurement date
Total

$

514,566.52

$

581,186.12

$

514,566.52 $ 1,595,944.00 $

581,186.12 $ 1,018,119.00

South Georgia Technical College's contributions subsequent to the measurement date of June 30, 2014 for TRS and ERS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30:

TRS

ERS

2016 2017 2018 2019 2020 Thereafter

$ -398,373.00 $ -262,895.00

-398,373.00

-257,318.00

-398,373.00

-248,953.00

-398,373.00

-248,953.00

-2,452.00

0.00

0.00

0.00

Actuarial assum ptions: The total pension liability as of June 30, 2014 was determined by an actuarial valuation as of June 30, 2013 using the following actuarial assumptions, applied to all periods included in the measurement:
Teachers' Retirement System:

Inflation

3.00%

Salary increases

3.75% - 7.00% average, including inflation

Investment rate of return

7.50% net of pension plan investment expense including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females set back two years for males and set back three years for females.
The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.
- 13 -

SOUTH GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

Employees' Retirement System:

Inflation

3.00%

Salary increases

5.45% - 9.25% average, including inflation

Investment rate of return

7.50% net of pension plan investment expense including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for the periods after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back eleven years for males for the period after disability retirement.
The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.
The long-term expected rate of return on TRS and ERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class

Target Allocation

Long-Term Expected Real Rate of Return*

Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities

30.00% 39.70%
3.70% 1.60% 18.90% 6.10%

3.00% 7.00% 10.00% 13.00% 7.00% 11.00%

Total

100.00%

*Rates are shown net of the 3.00% assumed rate of inflation
Discount rate: The discount rate used to measure the total TRS and ERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and ERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the South Georgia Technical College's proportionate share of the net pension liability to changes in the discount rate: The following presents the South Georgia Technical College's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the South Georgia Technical College's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate:

- 14 -

SOUTH GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

Teachers' Retirement System:
Technical College's proportionate share of the net pension liability

1% Decrease (6.50%)

Current Discount Rate
(7.50%)

1% Increase (8.50%)

$ 8,293,811.00 $ 4,500,496.00 $ 1,376,781.00

Employees' Retirement System:
Technical College's proportionate share of the net pension liability

1% Decrease (6.50%)

Current Discount Rate
(7.50%)

1% Increase (8.50%)

$ 5,949,500.00 $ 4,080,035.00 $ 2,488,684.00

P ension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS and ERS financial reports which are publically available at www.trsga.com/publications and www.ers.ga.gov/formspubs/formspubs, respectively.

GSEPS 401(K) DEFINED CONTRIBUTION COMPONENT OF ERS

In addition to the ERS defined benefit pension described above, GSEPS members may also participate in the Peach State Reserves 401(k) defined contribution plan and receive an employer matching contribution. The 401(k) plan is administered by the System and was established by the Georgia Employee Benefit Plan Council in accordance with State law and Section 401(k) of the IRC. The GSEPS segment of the 401(k) plan was established by State law effective January 1, 2009. Plan provisions and contribution requirements specific to GSEPS can be amended by State law. Other general 401(k) plan provisions can be amended by the ERS Board of Trustees as required by changes in federal tax law or for administrative purposes. The State was not required to make significant contributions to the 401(k) plan prior to GSEPS because most members under other segments of the plan either were not State employees or were not eligible to receive an employer match on their contributions.

The GSEPS plan includes automatic enrollment in the 401(k) plan at a contribution rate of 1% of salary, along with a matching contribution from the State. The State will match 100% of the employee's initial 1% contribution. Employees can elect to contribute up to an additional 4% and the State will match 50% of the additional 4% of salary. Therefore, the State will match 3% against the employee's 5% total savings. Contributions greater than 5% do not receive any matching funds. GSEPS employer contributions are subject to a vesting schedule, which determines eligibility to receive all or a portion of the employer contribution balance at the time of any distribution from the account after separation from all State service. Vesting is determined based on the following schedule:

Less than 1 year

0%

1 year

20%

2 years

40%

3 years

60%

4 years

80%

5 or more years

100%

- 15 -

SOUTH GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

Employee contributions and earnings thereon are 100% vested at all times. The 401(k) plan also allows participants to roll over amounts from other qualified plans to their respective account in the 401(k) plan on approval of the 401(k) plan administrator. Such rollovers are 100% vested at the time of transfer. Participant contributions are invested according to the participant's investment election. If the participant does not make an election, investments are automatically defaulted to a Lifecycle fund based on the participant's date of birth.
The participants may receive the value of their vested accounts upon attaining age 59.5, qualifying financial hardship, or retirement or other termination of service (employer contribution balances are only eligible for distribution upon separation from service). Upon the death of a participant, his or her beneficiary shall be entitled to the vested value of his or her accounts. Distributions are made in installments or in a lump sum.
In 2015, the Technical College employer and employee GSEPS contributions were $10,080.95 and $15,519.02, respectively.
DEFINED CONTRIBUTION PLAN
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 parttime 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 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 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, 2015, for employees covered by GDCP was $800,760.64. The Technical College's total payroll for all employees was $7,833,914.86.
Total contributions made by employees during fiscal year 2015 amounted to $60,033.17 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. The Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices.
NOTE 10: POST-EMPLOYMENT BENEFITS
South Georgia Technical College participates in the following State of Georgia post-employment benefit plans: the Georgia State Employees Post-employment Health Benefit Fund (administered by the Department of Community Health) and the State Employees' Assurance Department - OPEB/Active plans (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 SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

Retiree health benefits were previously funded through the Georgia Retiree Health Benefit Fund (GRHBF). In 2009, the General Assembly revisited the GRHBF and enacted legislation that, effective August 31, 2009, separated the GRHBF into two new funds: the Georgia School Personnel Postemployment Health Benefit Fund and the Georgia State Employees Post-employment Health Benefit Fund. The purpose of this change was to assure employers responsible for planning and funding future retiree health costs that their contributions will be dedicated to their respective retiree populations. Funds in the GRHBF were transferred to the Georgia State Employees Post-employment Health Benefit Fund or the Georgia School Personnel Post-employment Health Benefit Fund as described in the plan financial statements. The statute that created the GRHBF is repealed effective September 1, 2010.
GEORGIA STATE EMPLOYEES POST-EMPLOYMENT HEALTH BENEFIT FUND
The Georgia State Employees Post-employment Health Benefit Fund (State OPEB Fund) is a costsharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of State organizations (including technical colleges) and other entities authorized by law to contract with the Department of Community Health for inclusion in the plan. The State OPEB Fund provides health insurance benefits to eligible former employees 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 group health plans, including benefits for retirees, to the Board of Community Health (Board).
The plan is currently funded on a pay-as-you go basis. That is, annual costs of providing benefits will be financed in the same year as claims occur, with no significant assets accumulating as would occur in an advance funding strategy.
The contribution requirements of 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 receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. As of January 1, 2012, for members with fewer than five years of service, contributions also vary based on years of service. As of January 1, 2012, on average, members with five years or more of service pay approximately 25% of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.
Participating employers, including but not limited to State organizations, are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected pay-as-you-go financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years.

- 17 -

SOUTH GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

The combined required contribution rates established by the Board for the active and retiree plans for the fiscal year ended June 30, 2015, were as follows:

June 2014

30.781% of covered payroll for July 2014 coverage

July 2014 - June 2015

30.454% of covered payroll for August 2014 - July 2015

No additional contribution was required by the Board for fiscal year 2014 nor contributed to the State OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for OPEB and are subject to appropriation.

The following table summarizes South Georgia Technical College combined active and retiree contributions to the health insurance plans for the years ending June 30, 2015, June 30, 2014 and June 30, 2013:

Fiscal Year

Percentage Contributed

Required Contribution

2015 2014 2013

100%

$

100%

$

100%

$

2,034,934.12 1,918,787.87 1,916,407.70

STATE EMPLOYEES' ASSURANCE DEPARTMENT
State Employees' Assurance Department-OPEB (SEAD-OPEB) and State Employees' Assurance Department-Active (SEAD-Active) are cost-sharing multiple-employer defined benefit post-employment plans that were created in fiscal year 2007 by the Georgia General Assembly to provide term life insurance to eligible members of Employees' (ERS), Judicial (JRS), and Legislative (LRS) Retirement Systems. SEAD-OPEB provides benefits for retired and vested inactive members, and SEAD-Active provides benefits for active members. Effective July 1, 2009, no newly hired members of any State public retirement system are eligible for term life insurance under SEAD. Pursuant to Title 47 of the OCGA, benefit provisions of the plan were established and can be amended by State statute.
Contributions by plan members are established by the ERS Board of Trustees, up to the maximum allowed by statute (not to exceed 0.5% of earnable compensation). The ERS Board of Trustees establishes employer contribution rates, such rates which, when added to members' contributions, shall not exceed 1% of earnable compensation. Contributions for fiscal year 2015 were based on June 30, 2011, actuarial valuations as follows:

SEADOPEB

SEADActive

Total SEAD

Member Rates: ERS Old Plan Less: Offset Paid by Employer Net ERS Old Plan ERS New Plan, JRS, and LRS

0.45% -0.22% 0.23% 0.23%

0.05% -0.03% 0.02% 0.02%

0.50% -0.25% 0.25% 0.25%

Employer Rates

0.00%

0.00%

0.00%

- 18 -

SOUTH GEORGIA TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2015

EXHIBIT "D"

The ERS Board of Trustees voted and approved that the SEAD-OPEB contribution would be paid from existing assets of the Survivors Benefit Fund (SBF) instead of requiring payment by the employers. The contributions by SBF made on-behalf of South Georgia Technical College for fiscal year 2013 were estimated to be $6,323.16. There were no required employer contributions for the fiscal years ended June 30, 2014 or June 30, 2015.
According to the policy terms covering the lives of members, insurance coverage is provided on a monthly, renewable term basis, and no return premiums or cash value are earned. The net assets represent the excess accumulation of investment income and premiums over benefit payments and expenses and are held as a reserve for payment of death benefits under existing policies.
For SEAD-Active the amount of insurance coverage is equal to 18 times monthly earnable compensation frozen at age 60. For members with no creditable service prior to April 1, 1964, the amount decreases from age 60 by a half of 1% per month until age 65 at which point the member will be covered for 70% of the age 60 coverage. Life insurance proceeds are paid in lump sum to the beneficiary upon death of the member.
For SEAD-OPEB the amount of insurance for a retiree with creditable service prior to April 1, 1964, is the full amount of insurance under SEAD-Active in effect on the date of retirement. The amount of insurance for a service retiree with no creditable service prior to April 1, 1964, is 70% of the amount of insurance under SEAD-Active at age 60 or at termination, if earlier. Life insurance proceeds are paid in lump sum to the beneficiary upon death of the retiree.
NOTE 11: 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, 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, 2015.
NOTE 12: AFFILIATED ORGANIZATIONS
The South Georgia Technical College Foundation, Inc. is a legally separate, tax exempt organization whose activities primarily support South Georgia Technical College. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GASB Statement No. 61, The Financial Reporting Entity: Omnibus - an amendment of GASB Statements No. 14 and No. 34, and GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of the affiliated organization are not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from South Georgia Technical College Foundation, Inc.

- 19 -

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SUPPLEMENTARY INFORMATION - 21 -

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Salaries Payable Accounts Payable Contracts Payable Encumbrance Payable Advances
Total Liabilities
Fund Balances Reserved Federal Financial Assistance Sales and Services Live Work Projects Continuing Education Technology Fees Uncollectible Accounts Receivable Inventories Bookstore
Total Fund Balances
Total Liabilities and Fund Balances

SOUTH GEORGIA TECHNICAL COLLEGE BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30, 2015

SCHEDULE "1"

$

1,211,587.80

256,454.61 429,855.38
7,489.00 142,208.27

$

2,047,595.06

$

38,498.61

344,027.35

39,107.71

176,599.42

513,300.74

1,111,533.83

5,815.55 379,028.75 125,458.74
41,851.80 271,778.73
35,395.05 50,455.45 26,277.16
936,061.23

$

2,047,595.06

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 22 -

SOUTH GEORGIA TECHNICAL COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2015

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 Technical College System of Georgia Year Ended June 30, 2014
Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$

8,726,343.00 $

1,916,066.08

7,268,052.95

17,910,462.03

8,726,343.00 $ 1,334,502.90 5,835,800.24
15,896,646.14

0.00 -581,563.18 -1,432,252.71
-2,013,815.89

0.00 17,910,462.03

1,066,211.64 16,962,857.78

1,066,211.64 -947,604.25

815,450.00 110,000.00 16,985,012.03

17,910,462.03

$

0.00

770,472.75 59,587.54
15,170,101.66
16,000,161.95
962,695.83 $

44,977.25 50,412.46 1,814,910.37
1,910,300.08
962,695.83

1,144,840.14

-10,768.48 -83,020.67

-11,473.95 -1,066,211.64

$

936,061.23

SUMMARY OF FUND BALANCE
Reserved Federal Financial Assistance Sales and Services Live Work Projects Continuing Education Technology Fees Uncollectible Accounts Receivable Inventories Bookstore
Total Fund Balance
Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 23 -

$

5,815.55

379,028.75

125,458.74

41,851.80

271,778.73

35,395.05

50,455.45

26,277.16

$

936,061.23

SOUTH GEORGIA TECHNICAL COLLEGE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2015

Adult Literacy State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Adult Literacy
Economic Development Other Funds
Technical Education State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Technical Education
Totals By Program

Original Appropriation

Amended Appropriation

Final Budget

Current Year Revenues

$

382,000.00 $

442,000.00 $

442,000.00 $

442,000.00

305,500.00 128,000.00

269,450.00 100,000.00

273,450.00 100,000.00

246,850.00 81,622.75

815,500.00

811,450.00

815,450.00

770,472.75

50,010.00

60,000.00

110,000.00

49,684.75

8,262,023.00
1,449,000.00 7,500,000.00
17,211,023.00

8,284,343.00
1,078,343.20 7,189,051.25
16,551,737.45

8,284,343.00
1,642,616.08 7,058,052.95
16,985,012.03

8,284,343.00
1,087,652.90 5,704,492.74
15,076,488.64

$

18,076,533.00 $

17,423,187.45 $

17,910,462.03 $ 15,896,646.14

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 24 -

SCHEDULE "3"

Funds Available Compared to Budget

Prior Year

Adjustments and

Total

Carry-Over

Program Transfers

Funds Available

Variance Negative

Expenditures Compared to Budget

Variance

Actual

Positive

Excess of Funds Available
Over Expenditures

$

0.00 $

7,503.85 0.00

7,503.85

9,902.79

0.00 $ 0.00 0.00 0.00
0.00

442,000.00 $ 254,353.85
81,622.75 777,976.60
59,587.54

0.00 $ -19,096.15 -18,377.25 -37,473.40
-50,412.46

442,000.00 $ 246,850.00
81,622.75 770,472.75
59,587.54

0.00 $ 26,600.00 18,377.25 44,977.25
50,412.46

0.00 7,503.85
0.00 7,503.85
0.00

0.00
3,970.10 1,044,834.90
1,048,805.00

0.00
0.00 0.00
0.00

8,284,343.00
1,091,623.00 6,749,327.64
16,125,293.64

0.00
-550,993.08 -308,725.31
-859,718.39

8,284,343.00
1,081,837.35 5,803,921.31
15,170,101.66

0.00
560,778.73 1,254,131.64
1,814,910.37

0.00
9,785.65 945,406.33
955,191.98

$ 1,066,211.64 $

0.00 $ 16,962,857.78 $

-947,604.25 $ 16,000,161.95 $

1,910,300.08 $

962,695.83

- 25 -

SOUTH GEORGIA TECHNICAL COLLEGE STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2015

Adult Literacy State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Adult Literacy
Economic Development Other Funds
Technical Education State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Technical Education
Total Operating Activity
Prior Year Reserves Not Available for Expenditure Inventories Uncollectible Accounts Receivable

Beginning Fund Balance July 1

Fund Balance Carried Over from
Prior Period as Funds Available

Return of Fiscal Year 2014
Surplus

Prior Period Adjustments

$

0.00 $

0.00 $

7,503.85 0.00

-7,503.85 0.00

7,503.85

-7,503.85

9,902.79

-9,902.79

0.00 $ 0.00 0.00 0.00
0.00

0.00 0.00 0.00 0.00
0.00

0.00 3,970.10 1,044,834.90 1,048,805.00 1,066,211.64

0.00 -3,970.10 -1,044,834.90 -1,048,805.00 -1,066,211.64

0.00 0.00 0.00 0.00 0.00

0.00 0.00 -93,789.15 -93,789.15 -93,789.15

50,455.45 28,173.05

0.00 0.00

0.00 0.00

0.00 0.00

Budget Unit Totals

$

1,144,840.14 $

-1,066,211.64 $

0.00 $

-93,789.15

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 26 -

SCHEDULE "4"

Other Adjustments

Early Return Fiscal Year 2015
Surplus

Excess of Funds Available
Over Expenditures

Ending Fund Balance June 30

Analysis of Ending Fund Balance

Reserved

Surplus

Total

$

0.00 $

-7,503.85 0.00

-7,503.85

0.00

0.00 $ 0.00 0.00 0.00
0.00

0.00 $ 7,503.85
0.00 7,503.85
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 0.00 0.00 0.00
0.00

0.00 -3,970.10 -7,222.00 -11,192.10 -18,695.95

0.00 0.00 0.00 0.00 0.00

0.00 9,785.65 945,406.33 955,191.98 962,695.83

0.00 5,815.55 844,395.18 850,210.73 850,210.73

0.00 5,815.55 844,395.18 850,210.73 850,210.73

0.00 0.00 0.00 0.00 0.00

0.00 5,815.55 844,395.18 850,210.73 850,210.73

0.00 7,222.00

$

-11,473.95 $

0.00 0.00

0.00 0.00

50,455.45 35,395.05

50,455.45 35,395.05

0.00 $

962,695.83 $

936,061.23 $ 936,061.23 $

0.00 0.00

50,455.45 35,395.05

0.00 $

936,061.23

Summary of Ending Fund Balance Reserved
Federal Financial Assistance Sales and Services Live Work Projects Continuing Education Technology Fees Uncollectible Accounts Receivable Inventories Bookstore
Total Ending Fund Balance - June 30

$

5,815.55 $

379,028.75

125,458.74

41,851.80

271,778.73

35,395.05

50,455.45

26,277.16

$ 936,061.23 $

0.00 $ 0.00 $

5,815.55 379,028.75 125,458.74
41,851.80 271,778.73
35,395.05 50,455.45 26,277.16
936,061.23

- 27 -

SOUTH GEORGIA TECHNICAL COLLEGE RECONCILIATION OF BUDGET TO GAAP
YEAR ENDED JUNE 30, 2015

SCHEDULE "5"

Presented below is a reconciliation of the fund balance of the Budget Fund, as reported on Schedule 1, to Net Position of business-type activities, as reported on Exhibit A.

Total Fund Balances - Budget Fund - Non-GAAP Basis (Schedule "1")

$

936,061.23

Amounts reported for Business-Type Activities in the Statement of Net Position are different because:

Capital Assets used in Business-Type Activities are not reported in the Budget Fund.

25,440,826.69

Uncollectible accounts receivable are reported as an asset and reserved fund balance in the Budget Fund and as a contra-asset account on the Statement of Net Position.

-35,395.05

Georgia State Financing and Investment Commission (GSFIC) projects are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of GSFIC Activity

$

578,470.76

578,470.76

0.00

Agency Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Agency Fund Activity

$

220,748.80

-220,748.80

0.00

The budgetary basis of accounting implemented by the State of Georgia recognizes expenditures when encumbered. The following adjustments were made to eliminate this activity for reporting on the Statement of Net Position. Payables reported in the Budget Fund that are based on encumbrances are eliminated for GAAP reporting. Reimbursement from grantors reported as revenues in the Budget Fund that are for expenditures based on encumbrances are deferred for GAAP reporting. Total Net Effect of Encumbrance Activity

$

176,599.42

-64,601.86

111,997.56

Certain Liabilities are not due and payable in the current period and therefore are not reported as liabilities in the Budget Fund. Compensated Absences Payable
Certain assets, deferred outflows of resources, liabilities and deferred inflows of resources are not reported in the in the Budget Fund Defined Benefit Pension Plan Total Liabilities

$

-890,386.07

-10,098,841.36

-10,989,227.43

Net Position of Business-Type Activities (Exhibit "A")

$ 15,464,263.00

The supplementary information presented on Schedules 1, 2, 3, and 4 was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. The information was derived from, and relates directly to, the same information used to prepare the financial statements. However, the budgetary statutes and regulations of the State of Georgia require reporting of certain information that is not in accordance with generally accepted accounting principles. Presented on this schedule is a reconciliation of the fund balance of the Budget Fund, as reported on Schedule 1, to Net Position of business-type activities, as reported on Exhibit A.
- 28 -

SOUTH GEORGIA TECHNICAL COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2015

SCHEDULE "6"

Totals per Annual Supplement
Accruals June 30, 2015 June 30, 2014
Lag Salaries June 30, 2015 June 30, 2014
Compensated Absences June 30, 2015 June 30, 2014
Adjustments Payment to Crisp County School System Instructor Travel Not Processed Through Accounts Payable Before PeopleSoft Closure Agency

SALARIES $ 7,804,204.86 $

TRAVEL 135,901.95

38,498.61 -39,993.49

-38,498.61 39,993.49

675,025.83 -648,653.33

3,337.50

166.18 -1,776.60

$ 7,833,914.86 $

134,291.53

- 29 -

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

SOUTH GEORGIA TECHNICAL COLLEGE ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-842-14-01 FA-842-14-02

Previously Reported Corrective Action Implemented Partially Resolved See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

SPECIAL TESTS AND PROVISIONS Return of Title IV Funds U.S. Department of Education Student Financial Assistance Cluster Program (CFDA 84.SFA) Finding Control Number: FA-842-14-02

The Technical College is monitoring instructors' timeliness of reporting of students' withdrawal dates and is performing Return of Title IV calculations more frequently. A new Student Information System exception report was created by the IT Department and is now automatically generated and reviewed on a daily basis by the Registrar and Financial Aid Director. This allows Technical College personnel to identify withdrawn students miscoded in the Student Information System in an effort to correct keying errors in a timely manner. In addition, the Technical College is awaiting a response from the U.S. Department of Education in regards to the resolution of this finding.

SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

SOUTH GEORGIA TECHNICAL COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2015
COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES
The auditor is required to communicate to management and those charged with governance control deficiencies identified that, in the auditor's judgment, constitute significant deficiencies or material weakness.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Internal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below:
FINANCIAL STATEMENT FINDS AND QUESTIONED COSTS
No matters were reported.
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.
OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)
Accounting Controls Overall Observation: Our review of the established internal control structure associated with significant financial applications at the Technical College revealed design deficiencies in logical access controls intended to protect information from unauthorized access, manipulation and corruption. The details related to these deficiencies have been provided to management of the Technical College in accordance with Official Code of Georgia Annotated 50-6-9.
Recommendation: Management should review and enhance their policies and procedures to ensure the integrity and accuracy of the information used within the financial statements and as part of awarding financial assistance to students. Additionally, management should ensure proper separation of duties as it relates to financial and student financial assistance processes.