Annual financial report, fiscal year 2008

ANNUAL FINANCIAL REPORTS
Offices of Fiscal Affairs and Internal Audit For the Year Ended: June 30, 2008
Welcome to the CD version of the Fiscal Year 2008 Annual Financial Reports of the University System of Georgia.

Annual Financial Report (GAAP Basis)

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA
"Creating A More Educated Georgia" www.usg.edu

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A Publication of the Offices of Fiscal Affairs and Internal Audit 2008 Board of Regents of the University System of Georgia

ANNUAL FINANCIAL REPORT (GAAP Basis) UNIVERSITY SYSTEM OF GEORGIA
For the Year Ended: June 30, 2008
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Consolidated Report (GAAP Basis)

Institution Reports (GAAP Basis)
q Georgia Institute of Technology q Georgia State University q Medical College of Georgia q University of Georgia q Georgia Southern University q Valdosta State University q Albany State University q Armstrong Atlantic State University q Augusta State University q Clayton State University q Columbus State University q Fort Valley State University q Georgia College and State University q Georgia Southwestern State University q Kennesaw State University q North Georgia College and State University q Savannah State University q Southern Polytechnic State University q University of West Georgia

q Abraham Baldwin Agricultural College q Dalton State College q Gainesville State College q Georgia Gwinnett College q Gordon College q Macon State College q Middle Georgia College q Atlanta Metropolitan College q Bainbridge College q Coastal Georgia Community College q Darton College q East Georgia College q Georgia Highlands College q Georgia Perimeter College q South Georgia College q Waycross College q Skidaway Institute of Oceanography q University System Office

ANNUAL FINANCIAL REPORT (Statutory Basis) UNIVERSITY SYSTEM OF GEORGIA
For the Year Ended: June 30, 2008
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All reports are in PDF format and require the free AdobeAcrobat Reader

Consolidated Report (Statutory Basis)

Institution Reports (Statutory Basis)
q Georgia Institute of Technology q Georgia State University q Medical College of Georgia q University of Georgia q Georgia Southern University q Valdosta State University q Albany State University q Armstrong Atlantic State University q Augusta State University q Clayton State University q Columbus State University q Fort Valley State University q Georgia College and State University q Georgia Southwestern State University q Kennesaw State University q North Georgia College and State University q Savannah State University q Southern Polytechnic State University q University of West Georgia

q Abraham Baldwin Agricultural College q Dalton State College q Gainesville State College q Georgia Gwinnett College q Gordon College q Macon State College q Middle Georgia College q Atlanta Metropolitan College q Bainbridge College q Coastal Georgia Community College q Darton College q East Georgia College q Georgia Highlands College q Georgia Perimeter College q South Georgia College q Waycross College q Skidaway Institute of Oceanography q University System Office

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA
ANNUAL FINANCIAL REPORTS
For the Year Ended June 30, 2008
Offices of Fiscal Affairs and Internal Audit
"Creating A More Educated Georgia" www.usg.edu

Board of Regents of The University System of Georgia
Annual Financial Reports June 30, 2008
Table of Contents
Members of the Board of Regents .................................................................................... 1 Letter of Transmittal ....................................................................................................... 2 Map of Institutions ........................................................................................................... 3 Institutions of the University System of Georgia ........................................................... 4 State Resources ............................................................................................................... 5
Management's Discussion and Analysis ...................................................................... 6
Financial Statements (GAAP Basis)
Statement of Net Assets .................................................................................................... 14 Statement of Revenues, Expenses and Changes in Net Assets ........................................ 34 Statement of Cash Flows .................................................................................................. 54 Statement of Fiduciary Net Assets.................................................................................... 56 Statement of Changes in Fiduciary Net Assets................................................................. 57
Notes to the Financial Statements
Note 1 Summary of Significant Accounting Policies .................................................. 58 Note 2 Deposits and Investments................................................................................. 67 Note 3 Accounts Receivable........................................................................................ 74 Note 4 Inventories........................................................................................................ 74 Note 5 Notes/Loans Receivable................................................................................... 74 Note 6 Capital Assets................................................................................................... 75 Note 7 Deferred Revenue............................................................................................. 76 Note 8 Long Term Liabilities ...................................................................................... 76 Note 9 Significant Commitments................................................................................ 76 Note 10 Lease Obligations............................................................................................. 77 Note 11 Retirement Plans .............................................................................................. 79 Note 12 Risk Management............................................................................................. 82 Note 13 Contingencies................................................................................................... 84 Note 14 Post Employment Benefits Other Than Pension Benefits................................ 84 Note 15 Natural Classifications with Functional Classifications .................................. 88 Note 16 Component Units ............................................................................................. 89 Required Supplementary Information...............................................................................227
Financial Statements (Statutory Basis)
Balance Sheet (Non-GAAP Basis) ...................................................................................228 Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) ...........................229 Program Revenues and Expenditures by Funding Source (Non-GAAP Basis) ...............231

BOARD OF REGENTS UNIVERSITY SYSTEM OF GEORGIA
June 30, 2008

Hugh A. Carter, Jr. .........................Atlanta State-At-Large Term Expires January 1, 2009
William H. Cleveland .......................Atlanta State-At-Large Term Expires January 1, 2009
Felton Jenkins .............................Madison State-At-Large Term Expires January 1, 2013
Donald M. Leebern, Jr. ...................Columbus State-At-Large Term Expires January 1, 2012
Robert F. Hatcher .............................Macon State-At-Large Term Expires January 1, 2013
James A. Bishop ..........................Sea Island First District Term Expires January 1, 2011
Doreen Stiles Poitevint ................Bainbridge Second District Term Expires January 1, 2011
Allan Vigil ..............................McDonough Third District Term Expires January 1, 2010
Wanda Yancey Rodwell .........Stone Mountain Fourth District Term Expires January 1, 2012

Elridge W. McMillan ...................Atlanta Fifth District Term Expires January 1, 2010
Kessel D. Stelling, Jr. .................Alpharetta Sixth District Term Expires January 1, 2015
Richard L. Tucker......................Suwanee Seventh District Term Expires January 1, 2012
W. Mansfield Jennings, Jr. ......Hawkinsville Eighth District Term Expires January 1, 2013
James R. Jolly ............................Dalton Ninth District Term Expires January 1, 2015
William H. NeSmith, Jr. .................Athens Tenth District Term Expires January 1, 2015
Willis J. Potts .............................Rome Eleventh District Term Expires January 1, 2013
Benjamin J. Tarbutton, III ........Sandersville Twelfth District Term Expires January 1, 2013
Kenneth R. Bernard, Jr. ..........Douglasville Thirteenth District Term Expires January 1, 2014

OFFICERS OF THE BOARD OF REGENTS

Allan Vigil .................................Chairman William H. Cleveland .............Vice Chairman Erroll B. Davis, Jr. ....................Chancellor

Usha Ramachandran ................... Treasurer J. Burns Newsome ....Secretary to the Board

Annual Financial Report FY 2008 1

OFFICE OF BUSINESS AND FISCAL AFFAIRS OFFICE OF INTERNAL AUDIT 270 WASHINGTON STREET, S.W. ATLANTA, GEORGIA 30334

December 16, 2008

404-656-2232 404-656-2237

Chancellor Erroll B. Davis, Jr. Board of Regents University System of Georgia
Dear Chancellor Davis:
In keeping with the by-laws of the Board of Regents, we submit to you the Annual Financial Report of the University System of Georgia for the fiscal year ended June 30, 2008.
The officers of the various institutions represented in this report have assured us that every effort has been made to reflect accurately the information considered important to all concerned parties. In the event that this report is not sufficient in detail or if there is additional information desired, this office will be glad to supply such information.
Sincerely,

____________________________ Usha Ramachandran Vice Chancellor for Fiscal Affairs and Treasurer of the Board

__________________________ Ronald B. Stark Chief Audit Officer and Associate Vice Chancellor

"Creating A More Educated Georgia" www.usg.edu
Annual Financial Report FY 2008 2

UNIVERSITY SYSTEM OF GEORGIA
Annual Financial Report FY 2008 3

Institutions of the University System of Georgia
RESEARCH UNIVERSITIES
Georgia Institute of Technology ......................................................................................... Atlanta Georgia State University..................................................................................................... Atlanta Medical College of Georgia...............................................................................................Augusta University of Georgia ..........................................................................................................Athens
REGIONAL UNIVERSITIES
Georgia Southern University ......................................................................................... Statesboro Valdosta State University .................................................................................................Valdosta
STATE UNIVERSITIES
Albany State University ...................................................................................................... Albany Armstrong Atlantic State University................................................................................Savannah Augusta State University ...................................................................................................Augusta Clayton State University .................................................................................................... Morrow Columbus State University .............................................................................................Columbus Fort Valley State University .........................................................................................Fort Valley Georgia College & State University ..........................................................................Milledgeville Georgia Southwestern State University ...........................................................................Americus Kennesaw State University ............................................................................................ Kennesaw North Georgia College & State University ...................................................................Dahlonega Savannah State University ...............................................................................................Savannah Southern Polytechnic State University ..............................................................................Marietta University of West Georgia ............................................................................................Carrollton
STATE COLLEGES
Abraham Baldwin Agricultural College ............................................................................... Tifton Dalton State College ............................................................................................................ Dalton Gainesville State College ..............................................................................................Gainesville Georgia Gwinnett College ....................................................................................... Lawrenceville Gordon College.............................................................................................................Barnesville Macon State College ............................................................................................................ Macon Middle Georgia College.....................................................................................................Cochran
TWO-YEAR COLLEGES
Atlanta Metropolitan College.............................................................................................. Atlanta Bainbridge College ....................................................................................................... Bainbridge Coastal Georgia Community College ............................................................................Brunswick Darton College .................................................................................................................... Albany East Georgia College ................................................................................................... Swainsboro Georgia Highlands College....................................................................................................Rome Georgia Perimeter College................................................................................................. Decatur South Georgia College.......................................................................................................Douglas Waycross College ........................................................................................................... Waycross
INDEPENDENT RESEARCH UNIT
Skidaway Institute of Oceanography ...............................................................................Savannah
Annual Financial Report FY 2008 4

STATE RESOURCES
The General Appropriations Act of 2008, as amended, provided a total of $2,121,723,333 to the University System of Georgia. In addition, House Bill 95 provided $20,337,799 from Tobacco funds. The amounts were as follows:

STATE APPROPRIATIONS AVAILABLE General Appropriations Act of 2008 House Bill 95
General State Funds Tobacco funds House Bill 989 General State Funds
TOTAL STATE APPROPRIATIONS AVAILABLE

$2,115,477,060 20,337,799
6,246,273

$2,142,061,132

ALLOCATIONS BY BOARD OF REGENTS Educational and General
Teaching Non-Teaching Tobacco funds Other Activities Regents Central Office Information Technology Southern Regional Education Board Rental Payments - Georgia Military College Georgia Public Telecommunications Commission Public Libraries Research Consortium Total Other Activities Special Initiative Funding Total Educational and General

$15,893,146 39,919,044 1,126,700 3,062,152 18,069,614 40,329,496 35,995,015

TOTAL ALLOCATIONS BY BOARD OF REGENTS

$1,778,128,874 148,342,948 20,337,799
154,395,167 40,856,344

2,142,061,132

$2,142,061,132

Annual Financial Report FY 2008 5

UNIVERSITY SYSTEM OF GEORGIA
Management's Discussion and Analysis

Introduction

The mission of the University System of Georgia is to contribute to the educational, cultural, economic, and social advancement of Georgia by providing excellent undergraduate general education and first-rate programs leading to associate, baccalaureate, masters, professional, and doctorate degrees; by pursuing leading-edge basic and applied research, scholarly inquiry, and creative endeavors; and by bringing these intellectual resources, and those of the public libraries, to bear on the economic development of the State and the continuing education of its citizens.

The 35 institutions in the University System were led by Chancellor Erroll B. Davis Jr. and the Board of Regents at June 30, 2008. The University System continues to thrive as shown by the following statistics:

FY2008 FY2007 FY2006

Students- StudentsFaculty Headcount FTE

11,422 11,082
9,721

270,022 235,186 259,945 225,197 253,552 218,617

Overview of the Financial Statements and Financial Analysis
The University System of Georgia is proud to present its consolidated financial statements for fiscal year 2008. These statements contain information from the 35 institutions of the University System of Georgia, the Skidaway Institute of Oceanography and the University System Office. Each institution has prepared a separate financial statement that is available on compact disc. The emphasis of discussions about these statements will be on current year data. There are three consolidated financial statements presented: the Statement of Net Assets, the Statement of Revenues, Expenses, and Changes in Net Assets, and the Statement of Cash Flows.
This discussion and analysis of the University System's financial statements provides an overview of its financial activities for the year. Comparative data is provided for fiscal 2008 and 2007.
Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the University System of Georgia as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of the University System of Georgia. The Statement of Net
Annual Financial Report FY 2008 6

Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (assets minus liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the University System. They are also able to determine how much the University System owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the University System. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the University System of Georgia's equity in property, plant and equipment owned by its institutions. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institutions within the University System, but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institutions within the University System for any lawful purpose of the respective institution.

Statement of Net Assets, Condensed

Assets: Current Assets Capital Assets, net Other Assets Total Assets

June 30, 2008
$1,334,933,811 5,920,017,303 176,728,715 7,431,679,829

June 30, 2007
$1,157,762,551 5,150,217,912 179,777,799 6,487,758,262

Liabilities: Current Liabilities Noncurrent Liabilities Total Liabilities

655,536,059 1,987,806,542 2,643,342,601

579,979,308 1,253,090,173 1,833,069,481

Net Assets: Invested in Capital Assets, net of debt Restricted - nonexpendable Restricted - expendable Capital Projects Unrestricted Total Net Assets

4,126,684,597 125,317,526 219,074,523 74,083,927 243,176,655
$4,788,337,228

3,948,707,929 127,857,042 215,423,585 53,667,781 309,032,444
$4,654,688,781

The total assets of the University System of Georgia increased by approximately $944 million. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $770 million in Capital Assets, net of accumulated depreciation and an increase of $177 million in Current Assets. The increase in Current Assets is primarily in the categories of cash and cash equivalents, receivables and prepaid items.

Annual Financial Report FY 2008 7

The total liabilities for the year increased by approximately $810 million. The primary components of this increase were increases of $594 million in lease purchase obligations and $158 million in the net other post-employment benefit (OPEB) obligation for fiscal 2008. The combination of the increase in total assets of $944 million and the increase in total liabilities of $810 million yielded a net increase in total net assets of $134 million, or 2.9%. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of related debt in the amount of $178 million, which was partially offset by a decrease of ($66) million in the category of Unrestricted Net Assets.

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the University System of Georgia, both operating and non-operating, and the expenses paid by the University System, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the University System. Generally speaking, operating revenues are received for providing goods and services to the various customers and constituencies of the institutions. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the missions of the institutions. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the University System without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operating Revenues Operating Exp enses Operating Loss

$3,049,941,627 5,389,669,907 (2,339,728,280)

$2,852,965,328 4,871,469,225 (2,018,503,897)

Nonop erating Revenues and Exp enses Income (Loss) Before other revenues, expenses, gains or losses, and special items

2,230,646,042 (109,082,238)

2,069,761,573 51,257,676

Other revenues, expenses, gains, losses, and special items Increase in Net Assets

233,818,068 124,735,830

222,159,611 273,417,287

Net Assets at beginning of y ear, as originally rep orted Prior Year Adjustments Net Assets at beginning of y ear, restated

4,654,688,781 8,912,617
4,663,601,398

4,376,286,986 4,984,508
4,381,271,494

Net Assets at End of Year

$4,788,337,228

$4,654,688,781

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Annual Financial Report FY 2008 8

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operating Revenue Tuition and Fees Federal Appropriations Grants and Contracts Sales and Services Auxiliary Other
Total Operating Revenue

June 30, 2008
$934,375,216 20,772,007
1,368,747,533 119,229,193 561,069,162 45,748,516
3,049,941,627

Nonoperating Revenue State Appropriations Grants and Contracts Gifts Investment Income Other
Total Nonoperating Revenue
Capital Gifts and Grants State Other Capital Gifts and Grants
Total Capital Gifts and Grants

2,140,048,441 66,525,949 71,774,059 41,187,570 (1,650,061)
2,317,885,958
168,145,437 66,873,578
235,019,015

Special Items

(1,200,947)

Total Revenues

$5,601,645,653

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operating Expenses Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and M aintenance Scholarships and Fellowships Auxiliary Enterprises Unallocated Expenses Patient Care (M CG only)
Total Operating Expenses
Nonoperating Expenses Interest Expense (Capital Assets)

June 30, 2008
$1,428,225,880 835,214,351 435,850,379 415,271,645 216,284,840 736,655,685 455,072,435 159,317,945 497,977,552 0 209,799,195
5,389,669,907
87,239,916

Total Expenses

$5,476,909,823

June 30, 2007
$839,004,413 17,390,952
1,298,338,449 115,843,964 500,905,604 81,481,946
2,852,965,328
1,931,813,311 64,533,847 63,500,857 59,319,097 4,915,332
2,124,082,444
197,794,495 24,316,821
222,111,316
48,295
$5,199,207,383
June 30, 2007
$1,243,360,766 716,786,462 405,219,847 359,378,722 187,227,234 734,087,541 385,913,708 146,093,867 430,608,320 76,439,730 186,353,028
4,871,469,225
54,320,871
$4,925,790,096

Annual Financial Report FY 2008 9

Statement of Cash Flows

The final statement presented by the University System of Georgia is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the University System during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the University System. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and noncapital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash Provided (used) By: Operating Activities Non-capital Financing Activities Capital and Related Financing Activities Investing Activities Net Change in Cash Cash, Beginning of Year

June 30, 2008
($1,911,843,784) 2,314,808,836 (398,439,117) 34,913,342 39,439,277 725,211,273

June 30, 2007
($1,711,860,614) 2,091,570,178 (304,343,901) 56,701,786 132,067,449 593,143,824

Cash, End of Year

$764,650,550

$725,211,273

Capital Assets

The University System of Georgia had many significant capital asset additions and renovations during fiscal 2008 including the following:

Georgia Institute of Technology: The Institute had two significant capital additions in fiscal year 2008. The Electrical Sub Station was completed this year, resulting in an addition of $39.7 million. Also, the Institute acquired a complex of buildings collectively called "North Avenue Apartments" from Georgia State University for $74.5 million, which includes an adjacent parking facility.

Georgia State University: The University's capital additions during fiscal 2008 included a $161.3 million dormitory complex, University Commons, which was acquired by capital lease, and $12.1 million for the Citizens Trust Building.

University of Georgia: The University had a significant capital asset addition in fiscal year 2008 provided by the University of Georgia Athletic Association, Inc. The new Coliseum Practice Facility was completed and placed into service early in fiscal year 2008 at a value of $29.5 million. This 120,000 square foot facility will provide substantial expansion of facilities for the men's and women's basketball teams and the women's gymnastics team. In addition,

Annual Financial Report FY 2008 10

$25.3 million in capital assets were added in the category of Construction Work in Progress for the Lamar Dodd School of Art facility.
Columbus State University: The University's capital additions during fiscal 2008 included a $12.2 million gift of the Corn Center for the Visual Arts. In addition, capital assets of $50.7 million for student housing, $9.2 million for a parking facility, and $5.9 million for office space were acquired through capital lease.
Fort Valley State University: The University added Wildcat Commons residential housing in fiscal 2008 at $43.3 million. This capital asset was acquired through capital lease.
Kennesaw State University: The University had $36.0 million in capital asset additions in fiscal year 2008, of which $7.5 million was funded by the Georgia State Financing and Investment Commission (GSFIC), primarily for completion of the Performance Hall. The University also entered into three new capital leases with the Foundation. The leases added $17.2 million to capital assets for KSU Center and additional space in Chastain Pointe and Town Point.
Savannah State University: The University entered into a capital lease for University Village housing in the amount of $29.2 million in fiscal 2008.
Abraham Baldwin Agricultural College: The College added $52.2 million in capital assets for ABAC Place and Lakeside student housing complexes acquired through capital lease in fiscal 2008.
Georgia Gwinnett College: The College added $13.7 million in capital assets in fiscal 2008 for a parking deck that was funded through a capital lease.
Middle Georgia College: The addition of the Georgia Aviation & Technical College provided an increase in net capital assets of $17.1 million. The College also added $14.9 million in capital leases for two dormitories.
South Georgia College: The College acquired two buildings totaling $16.3 million during fiscal 2008 through capital leases: Tiger Village, which is a residence hall, and Clower Center, which is a Student Activities center.
Long-Term Debt and Liabilities
The University System of Georgia had Long-Term Debt and Liabilities of $2,123,725,903, excluding related party liabilities and deferred revenue, of which $145,622,461 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt, see notes 1, 8 and 10 in the Notes to the Financial Statements.
Annual Financial Report FY 2008 11

Retiree Health Benefit Fund In fiscal 2008, the University System Office became custodian of the Board of Regents Retiree Health Benefit Fund. This fund was authorized pursuant to Official Code of Georgia Annotated Section 47-21-21 for the purpose of accumulating funds necessary to meet employer costs of retiree post-employment health insurance benefits. As a result, two fiduciary fund statements are presented immediately after the consolidated statements that were described above: the Statement of Fiduciary Net Assets and the Statement of Changes in Fiduciary Net Assets. For additional information concerning the Retiree Health Benefit Fund, see notes 1 and 14 in the Notes to the Financial Statements. Component Units In compliance with GASB Statement No. 39, the University System of Georgia has included the financial statements and notes for all required component units for fiscal 2008. System-wide, 58 component units are discretely reported in this consolidated Annual Financial Report, representing 33 of the colleges and universities. Fourteen of the component units were deemed significant for reporting purposes to the State of Georgia and are also reported in the State Comprehensive Annual Financial Report (CAFR) for fiscal 2008. The 58 component units had combined total assets of $7.1 billion and total liabilities of $3.8 billion at June 30, 2008. The assets included $3.0 billion in investments and $1.3 billion in capital assets. The liabilities included $3.2 billion in long-term liabilities. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Annual Financial Report FY 2008 12

Economic Outlook The University System of Georgia has had significant increases in state appropriations during the last three years, owing to enrollment growth, the recent creation of Georgia Gwinnett College as the 35th institution in the system, and the initiative to expand physician education in Georgia. For Fiscal year 2009 the state appropriated $2.3 billion for the institutions and other organized activities of the University System of Georgia. This represented an increase of 7.7% over fiscal year 2008 state appropriations. Additionally, the University System of Georgia received $296 million in general obligation bond funding for capital facilities for the University System institutions and related activities. The recent growth in enrollment has strengthened tuition revenues as well. Enrollment in the system continues to grow at rates higher than originally expected for the time period, with a higher than anticipated increase in FTE student enrollment. With a solid base of state funding support, and the recent growth in appropriations and non-state revenues, the University System of Georgia remains financially sound. However, the recent downturn in the economy has affected state revenues, and consequently, the funding for the University System has been reduced by 6% and is expected to increase to 8%. Institutions are making every effort to protect the core mission of teaching, research and service, make cuts strategically, and further the goal of creating a more educated Georgia.
___________________________ Usha Ramachandran Vice Chancellor for Fiscal Affairs University System of Georgia
Annual Financial Report FY 2008 13

Statement of Net Assets

UNIVERSITY S YSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

AS S ETS Current As s ets Cas h and Cas h Equivalents Short-term Inves tments Accounts Receivable, net (note 3) Receivables - Federal Financial As sis tance Margin Allocation Funds Receivables - Other Due from Component Units Inventories (note 4) Prepaid Items Other Ass ets Total Current As sets
Noncurrent As sets Noncurrent Cas h Short-Term Investments (noncurrent portion) Due from Component Units Inves tments (including real es tate) Notes Receivable, net Capital Ass ets , net (note 6) Total Noncurrent Ass ets TOTAL ASSETS
LIABILITIES Current Liabilities Accounts Payable Salaries Payable Benefits Payable Contracts Payable Depos its Deferred Revenue (note 7) Other Liabilities Depos its Held for Other Organizations Leas e Purchas e Obligations (current portion) Compens ated Abs ences (current portion) US DOE Settlement (current portion) Due to Component Units Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities (note 8) Due to Primary Government Leas e Purchas e Obligations (noncurrent) Deferred Revenue (noncurrent) and Other Noncurrent Liabilities Compens ated Abs ences (noncurrent) Net OPEB Obligation (noncurrent) (note 14) US DOE Settlement (noncurrent) Due to Component Units Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES
NET ASSETS Inves ted in Capital As s ets , net of related debt Res tricted for Nonexpendable Expendable Capital Projects Unres tricted TOTAL NET ASSETS
Annual Financial Report FY 2008 14

Univers ity Sys tem of Georgia
(Primary Government)
$755,603,168 125,963,370
63,173,734 7,231,443
148,451,748 119,315,672
22,961,093 92,179,039
54,544 1,334,933,811
9,047,382 4,150,007 1,649,017 113,861,528 48,020,781 5,920,017,303 6,096,746,018 7,431,679,829
113,107,046 20,433,945 24,368,874 14,403,231 26,854,846
215,595,548 6,730,899
84,486,875 51,234,831 94,032,405
216,830 3,932,334
138,395 655,536,059
1,743,470,557 7,747,202
73,554,472 158,241,008
529,296 1,955,898 2,308,109 1,987,806,542 2,643,342,601
4,126,684,597
125,317,526 219,074,523
74,083,927 243,176,655 $4,788,337,228

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Georgia Tech Foundation, Inc.

Component Units Georgia Tech Athletic As s ociation

AS S ETS Current Assets Cash and Cash Equivalents Accounts Receivable, net Receivables - Other Net Investment in Capital Leases Pledges Receivable Contributions Receivable Due From Primary Government Prepaid Items Notes and Mortgages Receivable Other Assets Total Current Assets

$7,442,000 3,033,880 4,030,989
21,898,288
1,234,948 37,640,105

$6,216,725 1,993,168 5,467,185
604,767
14,281,845

Noncurrent Assets Due from Component Units Investments (including real estate) Net Investment in Capital Leases Contributions Receivable Pledges Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

1,334,683,679 163,860,101 44,368,897
37,667,491 27,559,637 1,608,139,805 1,645,779,910

80,058,950
8,074,285 95,504,970
2,111,114 185,749,319 200,031,164

LIABILITIES Current Liabilities Accounts Payable Depo s its Deferred Revenue Other Liabilities Due to Primary Government Compensated Absences (current portion) Revenue/Mortgage Bonds payable (current) Liabilities under Split-Interest Agreements (current) Due to Component Units Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Deferred Revenue (noncurrent) Revenue/Mortgage Bonds payable (noncurrent) Liabilities under Split Interest Agreements Other Long-Term Liabilities Due to Component Units Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES

9,499,237
2,417,845 663,197
264,073 4,825,000 1,953,062
437,000 61,536,874 81,596,288
40,894,155 202,569,624
13,095,498 10,939,238 89,143,950
356,642,465 438,238,753

3,668,533 7,780,000
405,861 1,080,357
2,025,000
27,978 14,987,729
101,955,849
2,414,872
907,778 105,278,499 120,266,228

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Capital Projects Un res tricted TOTAL NET ASSETS

(245,733)
385,631,562 418,704,165
12,605,024 390,846,139 $1,207,541,157

(6,129,775)
24,098,941 64,886,682
(3,090,912) $79,764,936

Georgia Tech Res earch
Corporation
$57,657,833 30,615,886
43,231 41,340,568 129,657,518
331,674
1,618,331 1,950,005 131,607,523
2,302,375 36,584,010 44,567,685
83,454,070
0 83,454,070
1,618,331
46,535,122 $48,153,453

Annual Financial Report FY 2008 15

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Georgia Advanced Technology Ventures, Inc.

Component Units
Georgia Tech Alumni
As s ociation

Georgia Tech Facilities, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, net Receivables - Other Due from Component Units Net Investment in Capital Leases Pledges Receivable Inventories Prepaid Items Total Current Assets

$1,573,271
526,993
50,000 12,322 2,162,586

$184,643
302,380
7,948 54,406 549,377

$3,120,000 6,792,000
31,000 437,000 12,691,000
5,674,000 28,745,000

Noncurrent Assets Noncurrent Cash Due from Component Units Investments (including real estate) Net Investment in Capital Leases Pledges Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

370,933
957,061
745,443 114,277,597
116,351,034 118,513,620

448,621
448,621 997,998

35,722,000 9,085,000
248,061,000
2,617,000 8,415,000 303,900,000 332,645,000

LIABILITIES Current Liabilities Accounts Payable Contracts Payable Dep os its Deferred Revenue Other Liabilities Due to Primary Government Lease Purchase Obligations (current portion) Compensated Absences (current portion) Revenue/Mortgage Bonds payable (current) Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Lease Purchase Obligations (noncurrent) Deferred Revenue (noncurrent) Revenue/Mortgage Bonds payable (noncurrent) Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES

649,840 641,225 3,420,567 217,773
1,678,898 6,608,303 90,371,687
8,716,241 99,087,928 105,696,231

183,995 310,000
25,584 207,461 727,040
0 727,040

4,269,000 669,000
800,000 2,422,000 28,011,000 2,179,000
5,723,000
44,073,000
5,215,000 559,000
289,084,000
294,858,000 338,931,000

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Expendable Un res tricted TOTAL NET ASSETS

15,110,771
2,222,998 (4,516,380) $12,817,389

448,621
(177,663) $270,958

5,305,000
9,522,000 (21,113,000) ($6,286,000)

Annual Financial Report FY 2008 16

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Georgia State Univers ity
Foundation, Inc.

Component Units Georgia State Univers ity Res earch
Foundation, Inc.

AS S ETS Current Assets Cash and Cash Equivalents Short-term Inves tments Accounts Receivable, net Receivables - Other Due from Component Units Net Investment in Capital Leases Pledges Receivable Contributions Receivable Due From Primary Government Inventories Prepaid Items Total Current Assets

$707,639
228,251 8,667
2,912,018 4,692,227
87,050
94,861 8,730,713

$96,241,998 4,362,101
617,605 5,933,858 107,155,562

Noncurrent Assets Noncurrent Cash Short-Term Investments (noncurrent portion) Investments (including real estate) Net Investment in Capital Leases Pledges Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

338,026 29,826,142 136,542,949 164,731,097
2,134,797 60,769,373
7,264,119 401,606,503 410,337,216

1,928,092
4,099,891
9,072,492 1,189,033 16,289,508 123,445,070

LIABILITIES Current Liabilities Accounts Payable Salaries Payable Deferred Revenue Other Liabilities Deposits Held for Other Organizations Due to Primary Government Lease Purchase Obligations (current portion) Compensated Absences (current portion) Revenue/Mortgage Bonds payable (current) Liabilities under Split-Interest Agreements (current) Due to Component Units Total Current Liabilities Noncurrent Liabilities Lease Purchase Obligations (noncurrent) Deferred Revenue (noncurrent) Compensated Absences (noncurrent) Revenue/Mortgage Bonds payable (noncurrent) Liabilities under Split Interest Agreements Other Long-Term Liabilities Total Noncurrent Liabilities TOTAL LIABILITIES

4,669,063
4,533,379 735,724 945,374 759,993
11,515,000 37,769
23,196,302
8,240,033 957,767 37,738
237,197,747 214,591
246,647,876 269,844,178

2,696,580 5,933,858 4,623,769
8,667 13,262,874
91,090,710 91,090,710 104,353,584

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Un res tricted TOTAL NET ASSETS

6,293,093
74,178,687 45,185,029 14,836,229 $140,493,038

8,585,212
2,000,000 890,010
7,616,264 $19,091,486

MCG Health, Inc.
$59,207,286 28,515,148 66,839,323 77,991
327,412 8,100,474 2,132,578 165,200,212
488,374 105,104,372
94,108,364
85,541,577 2,102,540
287,345,227 452,545,439
29,861,946 3,955,191 167,868 2,248,015
15,841,149 11,872,637
270,108 64,216,914
135,000,000 6,744,043
141,744,043 205,960,957
55,366,882 20,000
468,374 190,729,226 $246,584,482

Annual Financial Report FY 2008 17

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Medical College of Georgia
Foundation, Inc.

Component Units
Medical College of Georgia PPG
Foundation

Medical College of Georgia Res earch
Institute, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Inves tments Accounts Receivable, net Receivables - Other Due from Component Units Net Investment in Capital Leases Due From Primary Government Prepaid Items Notes and Mortgages Receivable Other Assets Total Current Assets

$14,999,787 1,107,082
4,779 190,431
19,864 16,321,943

$27,478,631 24,908,399
546,827 270,108 344,393 153,341
53,701,699

$6,341,506 4,358,499
10,700,005

Noncurrent Assets Noncurrent Cash Investments (including real estate) Notes Receivable, net Net Investment in Capital Leases Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

129,016,200 122,724
1,624,036 362,838
131,125,798 147,447,741

452,539 17,829,823
26,597,213 5,943,517 1,253,712
52,076,804 105,778,503

10,993
10,993 10,710,998

LIABILITIES Current Liabilities Accounts Payable Dep os its Deferred Revenue Other Liabilities Due to Primary Government Due to Component Units Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Liabilities under Split Interest Agreements Other Long-Term Liabilities Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES

0 2,268,972
2,268,972 2,268,972

1,999,546 1,198,900
2,731,585 77,991
685,000 6,693,022
452,539 31,320,854 31,773,393 38,466,415

7,500 14,263 4,652,056
4,673,819
0 4,673,819

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Unres tricted TOTAL NET ASSETS

1,624,036
114,174,486 17,513,255 11,866,992
$145,178,769

5,943,517
61,368,571 $67,312,088

10,993
106,278 5,919,908 $6,037,179

Annual Financial Report FY 2008 18

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Medical College of Georgia Dental
Foundation

Component Units
University of Georgia
Foundation

University of Georgia Athletic Association, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Inves tments Accounts Receivable, net Receivables - Other Due from Component Units Contributions Receivable Due From Primary Government Prepaid Items Total Current Assets
Noncurrent Assets Noncurrent Cash Short-Term Inves tments (noncurrent portion) Investments (including real estate) Notes Receivable, net Contributions Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS
LIABILITIES Current Liabilities Accounts Payable Deferred Revenue Other Liabilities Deposits Held for Other Organizations Due to Primary Government Revenue/Mortgage Bonds payable (current) Due to Component Units Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Due to Primary Government Revenue/Mortgage Bonds payable (noncurrent) Liabilities under Split Interest Agreements Other Long-Term Liabilities Due to Component Units Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES
NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Unres tricted TOTAL NET ASSETS

$141,298
18,952
957,138 175,108 1,292,496
503,569 2,965,744
3,469,313 4,761,809

$1,406,499 39,664,777
2,988,077
7,206,817
78,417 51,344,587
566,387,353 57,115
12,970,206 13,999,293
1,688,239 595,102,206 646,446,793

$86,132,121
1,225,830 2,839,534
203,670 90,401,155
3,114,876
185,280,206 1,265,215
189,660,297 280,061,452

8,558 458,040 3,934,182
4,400,780
0 4,400,780
88,225 272,804 $361,029

836,070
686,085 785,774 847,156
2,839,534 126,617
6,121,236
12,341,775
6,996,749 19,338,524 25,459,760
6,875,927
294,075,724 293,560,214
26,475,168 $620,987,033

6,043,391 18,513,850
1,946,359 2,140,000
500,000 29,143,600
1,649,017 93,330,000
1,265,215 470,588
96,714,820 125,858,420
90,922,049
63,280,983 $154,203,032

Annual Financial Report FY 2008 19

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Arch Foundation for the University
of Georgia, Inc.

Component Units
University of Georgia Res earch
Foundation, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, net Receivables - Other Due from Component Units Net Investment in Capital Leases Pledges Receivable Contributions Receivable Due From Primary Government Prepaid Items Other Assets Total Current Assets
Noncurrent Assets Noncurrent Cash Due from Component Units Due from Primary Government Investments (including real estate) Net Investment in Capital Leases Contributions Receivable Pledges Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS
LIABILITIES Current Liabilities Accounts Payable Contracts Payable Depo s its Deferred Revenue Deposits Held for Other Organizations Due to Primary Government Compensated Absences (current portion) Revenue/Mortgage Bonds payable (current) Due to Component Units Total Current Liabilities Noncurrent Liabilities Deferred Revenue (noncurrent) Revenue/Mortgage Bonds payable (noncurrent) Liabilities under Split Interest Agreements Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES
NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Unres tricted TOTAL NET ASSETS

$25,694,119 1,428,776 500,000
11,357,558
38,980,453
470,588 30,296,001 11,057,819 41,824,408 80,804,861
1,086,727 345,560 333,666
1,765,953
0 1,765,953
31,108,337 46,529,570
1,401,001 $79,038,908

$22,371,760
19,811,476
2,239,791
554,694 518,162 12,377,600 57,873,483
46,127,862
1,955,898 52,301,523 154,377,287
52,636,173 5,995,912
313,394,655 371,268,138
18,138,668 5,049,038
12,305,725 5,209,442
17,517,774 28,264
3,595,000
61,843,911
1,699,635 224,582,541
18,226,887 244,509,063 306,352,974
8,351,397
2,411,877 54,151,890 $64,915,164

Georgia Southern Univers ity Foundation, Inc.
$153,630 39,796,167
34,378
1,138,733
41,122,908
1,314,719 3,282,305
418,082 117,821 5,132,927 46,255,835
58,041
50,000 20,586
418,368 546,995
140,764 140,764 687,759
418,082 28,944,692 13,496,937
2,708,365 $45,568,076

Annual Financial Report FY 2008 20

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Georgia Southern University Housing
Foundation, Inc.

Component Units
(Georgia Southern University) Southern
Boosters, Inc.

Georgia Southern University Research
and Service Foundation, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Inves tments Accounts Receivable, net Receivables - Other Due from Component Units Net Investment in Capital Leases Contributions Receivable Due From Primary Government Prepaid Items Total Current Assets

$2,256,088
12,842 418,368 2,865,009
443,116 5,995,423

$1,111,527 509,836 38,000
590,665
2,250,028

$1,645,699
1,011,426
44,457 131,453 2,833,035

Noncurrent Assets Noncurrent Cash Net Investment in Capital Leases Receivables Other Contributions Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

66,397,407 99,973,406
100,000
17,917,378 296,253
184,684,444 190,679,867

431,070 1,649,282
2,080,352 4,330,380

0 2,833,035

LIABILITIES Current Liabilities Accounts Payable Contracts Payable Deferred Revenue Deposits Held for Other Organizations Due to Primary Government Revenue/Mortgage Bonds payable (current) Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Deferred Revenue (noncurrent) Revenue/Mortgage Bonds payable (noncurrent) Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES

3,045,152 826,061 80,468
42,120 2,800,000
6,793,801
1,776,985 176,896,654
178,673,639 185,467,440

46,735 93,350
383,102 523,187
170,871 170,871 694,058

7,373 1,121,876
276,357 957,741
2,363,347
0 2,363,347

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Expendable Un res tricted TOTAL NET ASSETS

7,752,799
5,820,075 (8,360,447) $5,212,427

1,289,825
2,098,094 248,403
$3,636,322

469,688 $469,688

Annual Financial Report FY 2008 21

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Valdosta State Univers ity
Foundation, Inc.

Component Units VSU Auxiliary Services Real
Estate Foundation, Inc.

Albany State Univers ity
Foundation, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, net Receivables - Other Pledges Receivable Due From Primary Government Prepaid Items Total Current Assets

$2,493,437 12,438
366 95,328
9,216 24,859 2,635,644

$0 166,286 166,286

$7,373 21,676 29,049

Noncurrent Assets Noncurrent Cash Short-Term Investments (noncurrent portion) Investments (including real estate) Notes Receivable, net Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

14,000,186
21,132,309 124,923
34,084,765 1,185,332
70,527,515 73,163,159

74,894,200
9,607,301 1,848,556 86,350,057 86,516,343

639,398 5,158,082 2,330,691
35,408,443 1,114,075
44,650,689 44,679,738

LIABILITIES Current Liabilities Accounts Payable Other Liabilities Deposits Held for Other Organizations Due to Primary Government Lease Purchase Obligations (current portion) Revenue/Mortgage Bonds payable (current) Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Lease Purchase Obligations (noncurrent) Revenue/Mortgage Bonds payable (noncurrent) Liabilities under Split Interest Agreements Other Long-Term Liabilities Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES

649,866 220,776 111,565 104,848
5,472 1,049,705
787,816 2,930,048
8,008 42,485,736
389,011 6,891
82,485 42,972,131 45,902,179

2,086,627

856,044

2,086,627 84,429,716
84,429,716 86,516,343

225,000 2,222,835 3,303,879
34,706,747
435,025
35,141,772 38,445,651

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Capital Projects Unres tricted TOTAL NET ASSETS

5,531,367
19,171,160 662,857
1,842,993 52,603
$27,260,980

1,920,341
(1,920,341) $0

(417,409)
2,451,152 4,200,344 $6,234,087

Annual Financial Report FY 2008 22

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Arms trong Atlantic State
Univers ity Foundation, Inc.

Component Units AASU
Educational Properties Foundation, Inc.

Augusta State Univers ity
Foundation, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Inves tments Accounts Receivable, net Receivables - Other Net Investment in Capital Leases Pledges Receivable Contributions Receivable Prepaid Items Notes and Mortgages Receivable Total Current Assets

$1,130,892 17,288 57,399
1,205,579

$617,310 37,077
3,032 657,419

$2,036,618 987,332
154,647 277,643 2,077,276
426,000 5,959,516

Noncurrent Assets Noncurrent Cash Investments (including real estate) Notes Receivable, net Net Investment in Capital Leases Pledges Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

6,581,648
6,581,648 7,787,227

5,210,909
33,768,769 1,433,588
40,413,266 41,070,685

4,849,252 16,059,124
1,118,695 31,896,704
1,228,622
840,722 55,993,119 61,952,635

LIABILITIES Current Liabilities Accounts Payable Dep os its Deferred Revenue Due to Primary Government Revenue/Mortgage Bonds payable (current) Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Revenue/Mortgage Bonds payable (noncurrent) Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES

15,000
15,000 0
15,000

944,935 15,278
328,906
970,000 26,778
2,285,897
40,894,177 564,364
41,458,541 43,744,438

670,572
3,485 1,649 260,000 142,000 1,077,706
30,237,677 1,117,883
31,355,560 32,433,266

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Unres tricted TOTAL NET ASSETS

4,449,936 3,086,659
235,632 $7,772,227

(2,118,040)
(555,713) ($2,673,753)

19,418,749 6,723,453 3,377,167
$29,519,369

Annual Financial Report FY 2008 23

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Augusta State Univers ity Athletic As s ociation

Component Units
(Clayton State Univers i ty)
Walter & Emilie Spivey Foundation

Clayton State Univers ity
Foundation, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Inves tments Accounts Receivable, net Receivables - Other Pledges Receivable Prepaid Items Total Current Assets
Noncurrent Assets Noncurrent Cash Investments (including real estate) Notes Receivable, net Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS
LIABILITIES Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deferred Revenue Lease Purchase Obligations (current portion) Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Lease Purchase Obligations (noncurrent) Revenue/Mortgage Bonds payable (noncurrent) Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES
NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Unres tricted TOTAL NET ASSETS

$353,192
7,693 4,245 365,130
1,791,647 1,791,647 2,156,777
211,547 8,772
18,257 18,249 435,918 692,743 21,862 1,121,187 1,143,049 1,835,792
194,431
50,799 75,755 $320,985

$117,729
117,729
7,596,971 15,405
144,497 7,756,873 7,874,602
0
0 0 144,497
7,730,105 $7,874,602

$507,540 178,574
57,928 1,714
745,756
14,337,790 4,548,572
27,638,585 2,221,453
48,746,400 49,492,156
129,085 1,521,940
1,651,025
42,650,230 42,650,230 44,301,255
1,527,889 1,727,627 3,404,990 (1,469,605) $5,190,901

Annual Financial Report FY 2008 24

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Columbus State Univers ity
Foundation, Inc.

Component Units (Columbus State
Univers ity) Foundation Properties, Inc.

Columbus State Univers ity
Athletic Fund, Inc.

ASSETS Current Assets Cash and Cash Equivalents Accounts Receivable, net Receivables - Other Due from Component Units Pledges Receivable Due From Primary Government Inventories Prepaid Items Other Assets Total Current Assets

$0
13,748 761,236 5,285,805
41,571 150,931 6,253,291

$734,833 429,798 56,682
303,250 2,119
1,526,682

$134,959
90,344 100
23,867 2,500 2,130 3,350
257,250

Noncurrent Assets Noncurrent Cash Due from Component Units Investments (including real estate) Pledges Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

7,570,603 288,849
35,385,669 9,484,025
52,729,146 58,982,437

1,667,691 4,065,602 2,194,353
120,895,490 1,793,421
130,616,557 132,143,239

314,344 1,380,902
22,327
1,717,573 1,974,823

LIABILITIES Current Liabilities Accounts Payable Dep os its Deferred Revenue Other Liabilities Due to Primary Government Revenue/Mortgage Bonds payable (current) Liabilities under Split-Interest Agreements (current) Due to Component Units Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Revenue/Mortgage Bonds payable (noncurrent) Liabilities under Split Interest Agreements Other Long-Term Liabilities Due to Component Units Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES

485,644
1,021 333,000 279,175
116,317 41,485
1,256,642
1,239,023 303,099
4,065,602
5,607,724 6,864,366

1,883,148 116,187
2,190,878 29,835,936
1,469,916
695,922 3,974,296 40,166,283
74,985,084
242,874 75,227,958 115,394,241

60,206 27,419 243,021
121,996 452,642
288,849 288,849 741,491

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Un res tricted TOTAL NET ASSETS

26,029,589 22,317,198
3,771,284 $52,118,071

46,839,128
(30,090,130) $16,748,998

1,338,572 394,094 (499,334)
$1,233,332

Annual Financial Report FY 2008 25

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Columbus State University Alumni Association, Inc.

Component Units
Fort Valley State Univers ity
Foundation, Inc.

Georgia College & State University Alumni Association, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, net Receivables - Other Due from Component Units Net Investment in Capital Leases Pledges Receivable Contributions Receivable Inventories Prepaid Items Notes and Mortgages Receivable Total Current Assets

$45,475 8,484 564
41,385 595
96,503

$1,159,103 892,193
1,825,855 66,551
169,733 4,113,435

$282,185
50 8,111 1,748 292,094

Noncurrent Assets Noncurrent Cash Investments (including real estate) Notes Receivable, net Net Investment in Capital Leases Contributions Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

47,582 132,219
2,484 182,285 278,788

21,520,371 4,670,143 388,375
34,241,535 168,979
3,299,063 2,048,243 66,336,709 70,450,144

5,554,822
82,013 4,500
5,641,335 5,933,429

LIABILITIES Current Liabilities Accounts Payable Contracts Payable Due to Primary Government Revenue/Mortgage Bonds payable (current) Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Deferred Revenue (noncurrent) Revenue/Mortgage Bonds payable (noncurrent) Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES

7,320 654
7,974 4,940
4,940 12,914

193,591 924,664
46,212 70,000 181,876 1,416,343
61,420,930 1,360,374
62,781,304 64,197,647

679 23,803 24,482
0 24,482

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Unres tricted TOTAL NET ASSETS

2,484
64,723
198,667 $265,874

1,269,043
3,051,293 2,503,744 (571,583) $6,252,497

82,013
4,301,680 1,496,038
29,216 $5,908,947

Annual Financial Report FY 2008 26

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Georgia College & State
Univers ity Foundation, Inc.

Component Units
Georgia S outhwes tern Foundation, Inc.

Kennesaw State Univers ity
Foundation, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, net (note 3) Receivables - Other Net Investment in Capital Leases Pledges Receivable Due From Primary Government Prepaid Items Other Assets Total Current Assets

$1,640,970
23,950 2,883,001
277,968 107,582
12,765
4,946,236

$1,438,141 2,045,953 3,795 338,380
3,826,269

$2,612,444
661,227 6,019,575
777,528 217,288 958,831 270,430 11,517,323

Noncurrent Assets Noncurrent Cash Investments (including real estate) Net Investment in Capital Leases Pledges Receivable Capital Assets, net (note 6) Other Assets Total Noncurrent Assets TOTAL ASSETS

14,680,313 14,799,068 75,741,290
6,095,260 2,349,799 113,665,730 118,611,966

2,547,016 22,577,517
253,658 21,579,342
737,764 47,695,297 51,521,566

51,218,068 25,506,264 99,666,222
1,437,637 153,939,088
8,953,066 340,720,345 352,237,668

LIABILITIES Current Liabilities Accounts Payable Contracts Payable Depo s its Deferred Revenue (note 7) Other Liabilities Deposits Held for Other Organizations Due to Primary Government Revenue/Mortgage Bonds payable (current) Liabilities under Split-Interest Agreements (current) Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities (note 8) Deferred Revenue (noncurrent) Revenue/Mortgage Bonds payable (noncurrent) Liabilities under Split Interest Agreements Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES

1,874,866
6,615,540 10,808
455,000
8,956,214
108,731,177 40,910
2,666,282 111,438,369 120,394,583

106,176 17,370
13,967 65,000
202,513
26,914,894
26,914,894 27,117,407

7,262,970 5,311,626
62,686 4,838,910
548,548
1,094,179 4,400,000
20,012 561,294 24,100,225
41,821,741 265,999,213
183,860
308,004,814 332,105,039

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Unres tricted TOTAL NET ASSETS

(10,150,484)
10,244,861 2,671,542 (4,548,536)
($1,782,617)

(2,196,027)
10,003,178 4,420,620
12,176,388 $24,404,159

2,886,803
17,675,053 6,041,295 (6,470,522)
$20,132,629

Annual Financial Report FY 2008 27

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

North Georgia College & State
Univers ity Foundation, Inc.

Component Units
Savannah State Univers ity
Foundation, Inc.

Southern Polytechnic State
Univers ity Foundation, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Inves tments Accounts Receivable, net Receivables - Other Net Investment in Capital Leases Pledges Receivable Contributions Receivable Due From Primary Government Prepaid Items Total Current Assets

$80,328
83,004 312,268
103,755 28,269
607,624

$375,634 157,567
164,012 1,478,371
40,000
152,473 2,368,057

$628,725
1,259,000 92,633
934,818 3,705
2,918,881

Noncurrent Assets Noncurrent Cash Short-Term Investments (noncurrent portion) Investments (including real estate) Net Investment in Capital Leases Contributions Receivable Pledges Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

16,430,389
29,168,600 17,456,356
157,035 20,894,497
997,882 85,104,759 85,712,383

8,103,823
27,677,084 40,000
16,672,472 1,186,153
53,679,532 56,047,589

4,227,567 3,831,343 28,621,786
132,280
465,203 37,278,179 40,197,060

LIABILITIES Current Liabilities Accounts Payable Deferred Revenue Other Liabilities Due to Primary Government Revenue/Mortgage Bonds payable (current) Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Deferred Revenue (noncurrent) Revenue/Mortgage Bonds payable (noncurrent) Liabilities under Split Interest Agreements Other Long-Term Liabilities Total Noncurrent Liabilities TOTAL LIABILITIES

3,804,130 765,986
567,064 590,000 338,769 6,065,949
6,977,216 45,995,003
25,212
52,997,431 59,063,380

1,658,494 3,853,970
110,000 5,622,464
49,110,000
49,110,000 54,732,464

479,673
970,000 1,449,673
32,463,128 542,110
33,005,238 34,454,911

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Unres tricted TOTAL NET ASSETS

9,445,969
23,570,370 4,627,000
(10,994,336) $26,649,003

5,897,903
(4,582,778) $1,315,125

2,164,844 1,813,524 1,763,781 $5,742,149

Annual Financial Report FY 2008 28

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

University of West Georgia Foundation, Inc.

Component Units
UWG Real Estate Foundation, Inc.

Abraham Baldwin Agricultural College
Foundation, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Inves tments Accounts Receivable, net Receivables - Other Net Investment in Capital Leases Pledges Receivable Due From Primary Government Prepaid Items Total Current Assets

$2,990,199 5,740,457
75,340 827,991 1,370,930
14,078
11,018,995

$4,093,756 12,819
320,513
4,427,088

$2,548,994
147,713
414,499 857
3,271 3,115,334

Noncurrent Assets Noncurrent Cash Investments (including real estate) Net Investment in Capital Leases Pledges Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

17,110,496 31,406,687
1,333,836 6,411,074 1,052,986 57,315,079 68,334,074

29,785,575
17,700 731,653 30,534,928 34,962,016

7,277,248 9,127,123
426,803 40,978,068
2,088,066 59,897,308 63,012,642

LIABILITIES Current Liabilities Accounts Payable Contracts Payable Deferred Revenue Due to Primary Government Revenue/Mortgage Bonds payable (current) Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Deferred Revenue (noncurrent) Revenue/Mortgage Bonds payable (noncurrent) Liabilities under Split Interest Agreements Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES

509,549 220,908
870,000 5,303,552 6,904,009
31,479,438 64,419
1,180,031 32,723,888 39,627,897

584,432
390,000 974,432 2,119,134 30,165,424
32,284,558 33,258,990

817,834
6,135 152,109 925,000 141,908 2,042,986
46,483,517
1,032,081 47,515,598 49,558,584

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Unres tricted TOTAL NET ASSETS

709,656
10,350,061 17,847,544
(201,084) $28,706,177

300,017
1,403,009 $1,703,026

1,806,376
7,511,572 2,285,102 1,851,008 $13,454,058

Annual Financial Report FY 2008 29

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Dalton State College
Foundation, Inc.

Component Units Gainesville State
College Foundation, Inc.

Gordon College Foundation, Inc.

AS S ETS Current Assets Cash and Cash Equivalents Accounts Receivable, net Receivables - Other Pledges Receivable Prepaid Items Total Current Assets

$1,040,606
12,724 1,687,533
196,141 2,937,004

$0
12,185 31,976
44,161

$242,805 242,805

Noncurrent Assets Noncurrent Cash Short-Term Investments (noncurrent portion) Investments (including real estate) Pledges Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

14,556,340 9,947,051 4,802,630 30,217
29,336,238 32,273,242

1,138,598
11,488,191 228,377 8,400
12,863,566 12,907,727

13,816,183 5,505,394 2,753,609
20,620,191 1,213,922
43,909,299 44,152,104

LIABILITIES Current Liabilities Accounts Payable Depo s its Due to Primary Government Revenue/Mortgage Bonds payable (current) Liabilities under Split-Interest Agreements (current) Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Revenue/Mortgage Bonds payable (noncurrent) Liabilities under Split Interest Agreements Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES

60,423 17,012
8,533
17,190 50,833 153,991
146,411 2,326,395 2,472,806 2,626,797

86,440
86,440
0 86,440

319,355
415,000 7,987
193,642 935,984
33,815,190 41,688
1,853,300 35,710,178 36,646,162

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Unres tricted TOTAL NET ASSETS

2,425,402
9,339,531 2,194,325 15,687,187 $29,646,445

8,400
3,385,860 7,720,098 1,706,929 $12,821,287

(1,665,988)
1,971,598 204,398
6,995,934 $7,505,942

Annual Financial Report FY 2008 30

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Macon State College
Foundation, Inc.

Component Units Middle Georgia
College Foundation, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Inves tments Accounts Receivable, net Receivables - Other Pledges Receivable Total Current Assets

$496,453
2,159 106,198 604,810

$210,580 300,000
16,150
526,730

Noncurrent Assets Noncurrent Cash Investments (including real estate) Net Investment in Capital Leases Pledges Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

285,734 7,124,443
81,774
32,054 7,524,005 8,128,815

32,337,408 857,518
26,258,632
9,548,829 1,829,318 70,831,705 71,358,435

LIABILITIES Current Liabilities Accounts Payable Due to Primary Government Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Revenue/Mortgage Bonds payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES

121,097 226,061 347,158
0 347,158

3,381,700 20,420
3,402,120
63,190,000 63,190,000 66,592,120

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Unres tricted TOTAL NET ASSETS

6,294,127 915,221 572,309
$7,781,657

6,784,187
799,955 569,042 (3,386,869) $4,766,315

Bainbridge College
Foundation
$123,671 109,733
233,404
0 233,404
44,231 44,231
0 44,231
109,733 79,440
$189,173

Annual Financial Report FY 2008 31

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Coastal Georgia Community College
Foundation, Inc.

Component Units
Darton College Foundation, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Inves tments Accounts Receivable, net Receivables - Other Pledges Receivable Contributions Receivable Prepaid Items Total Current Assets

$1,295,625 7,487,181
177,585 8,960,391

$269,459 250,031
18,506 168,579
491 707,066

Noncurrent Assets Short-Term Inves tments (noncurrent portion) Investments (including real estate) Pledges Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

0 8,960,391

136,982 990,096
61,988 796,010
1,985,076 2,692,142

LIABILITIES Current Liabilities Due to Primary Government Total Current Liabilities Noncurrent Liabilities Total Noncurrent Liabilities TOTAL LIABILITIES

0

0

0

0

0

0

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Capital Projects Unres tricted TOTAL NET ASSETS

4,284,665 1,396,360
894,819 2,384,547 $8,960,391

796,010
991,802 610,669 230,667
62,994 $2,692,142

East Georgia College
Foundation, Inc.
$129,725
727 28,150
158,602
943,936 175,965 123,957 1,243,858 1,402,460
1,688 1,688
0 1,688
175,965
1,059,658 165,149
$1,400,772

Annual Financial Report FY 2008 32

Statement of Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Georgia Highlands
College Foundation, Inc.

Component Units

Georgia Perimeter
College Foundation, Inc.

South Georgia College
Foundation, Inc.

Waycros s College Foundation, Inc.

ASSETS Current Assets Cash and Cash Equivalents Accounts Receivable, net Receivables - Other Net Investment in Capital Leases Pledges Receivable Prepaid Items Total Current Assets

$651,614
5,155 656,769

$189,285 7,991
197,276

$75,072 195,020 328,577
598,669

$118,587
480
498 210 119,775

Noncurrent Assets Noncurrent Cash Short-Term Investments (noncurrent portion) Investments (including real estate) Net Investment in Capital Leases Pledges Receivable Capital Assets, net Other Assets Total Noncurrent Assets TOTAL ASSETS

606,661 731,225
1,337,886 1,994,655

2,737,477
1,318,647
54,438,040 1,913,714 60,407,878 60,605,154

2,803,075 30,500
2,577,068 12,276,966
221,945 17,909,554 18,508,223

14,000 1,389,047
1,403,047 1,522,822

LIABILITIES Current Liabilities Accounts Payable Contracts Payable Due to Primary Government Revenue/Mortgage Bonds payable Total Current Liabilities Noncurrent Liabilities Revenue/Mortgage Bonds payable Total Noncurrent Liabilities TOTAL LIABILITIES

35,911 242,742 278,653
0 278,653

3,512,921 1,539,980
430,000 5,482,901
47,825,000 47,825,000 53,307,901

169,215
50,000 219,215
15,737,708 15,737,708 15,956,923

2,100 210
2,310
0 2,310

NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Unres tricted TOTAL NET ASSETS

1,017,358 699,071 (427)
$1,716,002

10,830,231
6,194,182 378,192
(10,105,352) $7,297,253

2,240,852 159,152 151,296
$2,551,300

1,273,635 122,736 124,141
$1,520,512

Annual Financial Report FY 2008 33

Statement of Revenues, Expenses and Changes in Net Assets
UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

REVENUES Operating Revenues
Student Tuition and Fees (net of allowance for doubtful accounts ) Les s: Scholars hip Allowances
Federal Appropriations Grants and Contracts
Federal State Other Sales and Services Rents and Royalties Auxiliary Enterpris es
Res idence Halls Books tore Food Services Parking/Trans portation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues Total Operating Revenues EXPENS ES Operating Expens es Salaries : Faculty Staff Employee Benefits Other Pers onal Services Travel Scholars hips and Fellows hips Utilities Supplies and Other Services Depreciation Total Operating Expens es Operating Income (los s)
NONOPERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal State Other Gifts Inves tment Income (endowments , auxiliary and other) Interes t Expens e (capital ass ets) Other Nonoperating Revenues Net Nonoperating Revenues Income before Other Revenues, Expenses , Gains , Loss es and Special Items Capital Grants and Gifts State Other Special Items Total Other Revenues , Expens es, Gains, Los s es and Special Items Increas e in Net Ass ets
NET ASSETS Net As sets -Beginning of Year, as originally reported Prior Year Adjustments Net As sets -Beginning of Year, Res tated Net As sets -End of Year

Univers ity Sys tem of Georgia
(Primary Government)
$1,184,093,147 (249,717,931) 20,772,007
723,038,779 270,019,885 375,688,869 119,229,193
3,410,767
196,006,172 79,362,172
100,575,384 52,479,349 38,641,339 68,461,966 25,542,780 42,337,749
3,049,941,627
1,061,794,577 1,500,414,171
817,966,549 8,198,561
56,060,916 190,512,967 178,290,183 1,299,490,392 276,941,591 5,389,669,907 (2,339,728,280)
2,140,048,441
18,975,101 3,018,613
44,532,235 71,774,059 41,187,570 (87,239,916) (1,650,061) 2,230,646,042 (109,082,238)
168,145,437 66,873,578 (1,200,947)
233,818,068 124,735,830
4,654,688,781 8,912,617
4,663,601,398 $4,788,337,228

Annual Financial Report FY 2008 34

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan)
Federal State Other Sales and Services Rents and Royalties Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Salaries : Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to Other Component Units Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)

Georgia Tech Foundation, Inc.

Component Units Georgia Tech Athletic As s ociation

Georgia Tech Research
Corporation

$59,881,465 4,879,994
411,395 18,224,413 83,397,267

$7,764,881
32,167,614 9,266,962 49,199,457

$0
301,812,234 16,659,334 62,748,887
7,363,605 2,215
388,586,275

2,208,712 395,506
1,306,176 80,206
32,832 1,708,169 2,070,268 7,050,366 69,285,346 84,137,581 (740,314)

12,901,921 3,004,969
3,602,578 7,008,363
8,987,612 4,732,730
12,389,256 52,627,429 (3,427,972)

138,262
5,174,733 411,744
377,569,043 383,293,782
5,292,493

NONOPERATING REVENUES (EXPENSES) Gifts Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses Capital Grants and Gifts Other Additions to permanent endowments Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets
NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

(1,921,334) (14,540,537) (10,939,238) (27,401,109) (28,141,423)
34,420,595 34,420,595 6,279,172
1,201,261,985 0
1,201,261,985 $1,207,541,157

1,339,275 498,856
(5,754,551)
(3,916,420) (7,344,392)
7,632,330 7,632,330
287,938
79,476,998 0
79,476,998 $79,764,936

1,723,482
(17,066) 1,706,416 6,998,909
80,000
80,000 7,078,909
41,074,544 0
41,074,544 $48,153,453

Annual Financial Report FY 2008 35

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

Georgia Advanced Technology Ventures, Inc.

Component Units
Georgia Tech Alumni
As s ociation

Georgia Tech Facilities, Inc.

REVENUES Operating Revenues
Gifts and Contributions Grants and Contracts
State Sales and Services Rents and Royalties Interest and Dividend Income Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Salaries: Staff
Employee Benefits Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to Other Component Units Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)

$232,299
1,325,606 327,409
12,057,297
33,940 13,976,551

$4,333,393
1,048,977 814,904 37,599 315,893
6,550,766

$0
152,000 11,368,000
1,000 11,521,000

66,792 21,208
1,009,023 6,524,638 2,967,203
9,688 295,569 10,894,121 3,082,430

3,274,435 794,000 360,239 66,722
1,442,920 126,852
735,099 6,800,267 (249,501)

1,544,000 60,000
6,227,000 7,831,000 3,690,000

NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses

58,774 (7,365,001) (7,306,227) (4,223,797)

0 (249,501)

2,162,000 (15,323,000) (13,161,000) (9,471,000)

Loss on Bond Retirement Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets
NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

0 (4,223,797)
17,041,186 0
17,041,186 $12,817,389

0 (249,501)
520,459 0
520,459 $270,958

(3,214,000) (3,214,000) (12,685,000)
6,399,000 0
6,399,000 ($6,286,000)

Annual Financial Report FY 2008 36

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts
Federal State Other Sales and Services Rents and Royalties Net Patient Service Revenue
Total Operating Revenues EXPENSES Operating Expenses
Salaries : Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to Other Component Units Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)
NONOPERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal State Other Gifts Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Combined Margin Allocation Other Nonoperating Revenues Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses
Additions to permanent endowments Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets
NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

Georgia State Univers ity
Foundation, Inc.

Component Units

Georgia State University Research
Foundation, Inc.

MCG Health, Inc.

$8,123,113 3,703,391
18,919,692 30,746,196

$0
36,183,144 2,710,164 9,820,216
48,713,524

$0
4,633,056 453,495
358,643,151 363,729,702

2,530,602 576,878
1,385,903 550,483
2,405,733 69,361
9,567,410 2,461,587
509,754 20,057,711 10,688,485
(6,359,645) (16,734,039)
(23,093,684) (12,405,199)
1,532,421 1,532,421 (10,872,778)
151,487,789 (121,973)
151,365,816 $140,493,038

1,865
1,256,720 171,763 48,315
46,847,040 48,325,703
387,821
(29,628)
489,998 460,370 848,191
0 848,191 18,243,295
0 18,243,295 $19,091,486

167,100,775
47,536,457 35,828,053
667,092
4,485,713 117,743,225 18,063,013
391,424,328 (27,694,626)
33,181,112
1,075,966 7,396,007
369,070 940,780 4,538,270 (1,090,714) (7,231,443) (957,230) 38,221,818 10,527,192
20,000 20,000 10,547,192
236,037,290 0
236,037,290 $246,584,482

Annual Financial Report FY 2008 37

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts
Federal Other Sales and Services Rents and Royalties Net Patient Service Revenue Realized/Unrealized Gains (Losses) Interest and Dividend Income Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Salaries: Staff
Employee Benefits Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to Other Component Units Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)

Component Units

Medical College of Georgia
Foundation, Inc.

Medical College of Georgia PPG
Foundation

Medical College of Georgia Research
Institute, Inc.

$4,398,340

$0

4,527

134,773 455,540
(5,351) 692,237 140,789 5,820,855

2,023,836 92,958,031
94,981,867

$0
43,822,274 12,368,513
70,101 394,674
56,655,562

584,799 182,934
296,938 122,706
7,679,522 8,866,899 (3,046,044)

9,658,072 11,794,636 1,301,586
214,760 55,856 8,640,655 658,624 3,564,981 51,765,783 87,654,953 7,326,914

3,408,888 5,735
53,226,334 56,640,957
14,605

NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses

(3,776,349)
187,154 (3,589,195) (6,635,239)

636,822 (1,399,486)
(762,664) 6,564,250

245,384
245,384 259,989

Additions to permanent endowments Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets
NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

1,865,948 1,865,948 (4,769,291)
149,948,060 0
149,948,060 $145,178,769

0 6,564,250
60,747,838 0
60,747,838 $67,312,088

0 259,989
5,777,190 0
5,777,190 $6,037,179

Annual Financial Report FY 2008 38

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

Component Units

Medical College of Georgia Dental Foundation

University of Georgia
Foundation

University of Georgia Athletic Association, Inc.

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts
Other Sales and Services Rents and Royalties Auxiliary Enterprises
Intercollegiate Athletics Clinical and Patient Fees
Total Operating Revenues EXPENSES Operating Expenses
Salaries : Staff
Employee Benefits Other Personal Services Travel Utilities Supplies and Other Services Depreciation Payments to Other Component Units Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)

$0 246,732

$11,842,554 9,945,379
3,511,796 1,326,840

7,284,461 7,531,193

26,626,569

$0
81,059,333 81,059,333

1,381,170 87,208 7,450 38,551
3,959,137
1,909,672 7,383,188
148,005

262,890 13,850 506,617
82,233 2,661,802
371,372 1,529,051 22,252,188 27,680,003 (1,053,434)

6,111,168 256,995 610,910
6,378,721
13,822,929 5,570,426 1,784,216 29,766,110 64,301,475 16,757,858

NONOPERATING REVENUES (EXPENSES) Gifts Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses
Additions to permanent endowments Special Item Transfers
Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

22,645
22,645 170,650
0 170,650 190,379
0 190,379 $361,029

(37,424,044) (1,144,009)
(389,132) (38,957,185) (40,010,619)
9,329,003 (6,638,835) 2,690,168 (37,320,451)
658,307,484 0
658,307,484 $620,987,033

124,777 1,518,393 (3,581,552)
(25,614) (1,963,996) 14,793,862
0 14,793,862
139,409,170 0
139,409,170 $154,203,032

Annual Financial Report FY 2008 39

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts
Federal State Other Sales and Services Rents and Royalties Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Salaries: Staff
Employee Benefits Travel Supplies and Other Services Depreciation Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)

Component Units

Arch Foundation for the University of Georgia, Inc.

University of Georgia Research
Foundation, Inc.

Georgia Southern University
Foundation, Inc.

$9,313,811 1,276,531

$0

$3,562,759

1,368,571

2,306,201 12,896,543

115,294,840 29,853
38,357,221 383,240
154,065,154

225,783 210,688 147,941 5,515,742

1,734,004
7,353,573 9,087,577 3,808,966

223,167 52,710
17,359,927 169,481
117,799,198 135,604,483 18,460,671

138,338 1,910,717
1,667 2,544,332 4,595,054
920,688

NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses

(1,516,223)
(1,516,223) 2,292,743

2,167,253 (8,344,937) (3,357,891) (9,535,575) 8,925,096

(3,347,804)
(3,347,804) (2,427,116)

Additions to permanent endowments Special Item Transfers
Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

5,223,429
5,223,429 7,516,172
71,522,736 0
71,522,736 $79,038,908

6,638,835 6,638,835 15,563,931
37,576,329 11,774,904 49,351,233 $64,915,164

1,788,418
1,788,418 (638,698)
46,206,774 0
46,206,774 $45,568,076

Annual Financial Report FY 2008 40

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

REVENUES Operating Revenues
Gifts and Contributions Grants and Contracts
Federal State Other Sales and Services Rents and Royalties Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Other Personal Services Supplies and Other Services Depreciation Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)

Georgia Southern University Housing
Foundation, Inc.

Component Units
(Georgia Southern University)
Southern Boosters, Inc.

Georgia Southern University Research
and Service Foundation, Inc.

$0

$1,744,776

5,697,312 60,000
5,757,312
38,915 505,513
544,428 5,212,884

43,025 176,400 303,962 2,268,163
1,077,402 20,079 909,111
2,006,592 261,571

$0 4,012,695
566,846 377,014
4,956,555
121,129 4,854,603 4,975,732
(19,177)

NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses

553,638 (5,103,067)
80,468 (4,468,961)
743,923

69,607 (38,949)
30,658 292,229

57,336
57,336 38,159

Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

0 743,923
4,468,504 0
4,468,504 $5,212,427

0 292,229
3,344,093 0
3,344,093 $3,636,322

0 38,159
382,329 49,200 431,529 $469,688

Annual Financial Report FY 2008 41

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

REVENUES Operating Revenues
Gifts and Contributions Sales and Services Rents and Royalties Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Other Operating Expense Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)

Valdosta State University
Foundation, Inc.

Component Units
VSU Auxiliary Services Real Estate Foundation,
Inc.

Albany State Univers ity Foundation, Inc.

$1,386,487 460,696
3,443,243 410,055
5,700,481
7,818 110,875
141 1,112,144 1,064,941
9,042 1,575,933 3,880,894 1,819,587

$0

$381,400

2,171,848

0

2,553,248

302,470
359,240 978,380

0

1,640,090

0

913,158

NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses

1,715,709 (2,180,010)
(57,994) (522,295) 1,297,292

441,132

(1,822,786)

32,292

0

(1,349,362)

0

(436,204)

Additions to permanent endowments Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets
NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

137,882 137,882 1,435,174
25,825,806 0
25,825,806 $27,260,980

0

0

0

(436,204)

0

7,239,040

0

(568,749)

0

6,670,291

$0

$6,234,087

Annual Financial Report FY 2008 42

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan) Rents and Royalties Realized/Unrealized Gains (Losses) Interest and Dividend Income Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Salaries : Staff
Travel Supplies and Other Services Depreciation Other Operating Expense Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)

Armstrong Atlantic State
University Foundation, Inc.

Component Units

AASU Educational Properties
Foundation, Inc.

Augusta State Univers ity
Foundation, Inc.

$1,401,062 437,270
1,838,332

$0 4,519,532
23 4,519,555

$869,942 661,071 1,709,197 (2,440,645) 413,298
6,399 1,219,262

351,049 688,261
501,087 1,540,397
297,935

123,047 138
920,733 1,732,892
153,271
2,930,081 1,589,474

902,538
767,507 1,670,045 (450,783)

NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses

107,337
107,337 405,272

231,533 (1,872,158) (1,640,625)
(51,151)

246,410 (1,572,790) (1,326,380) (1,777,163)

Additions to permanent endowments Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets
NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

410,189 410,189 815,461
6,956,766 0
6,956,766 $7,772,227

0 (51,151)
(2,622,602) 0
(2,622,602) ($2,673,753)

3,425,215 3,425,215 1,648,052
27,871,317 0
27,871,317 $29,519,369

Annual Financial Report FY 2008 43

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan) Sales and Services Rents and Royalties Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Salaries : Staff
Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)

Augusta State Univers ity Athletic As s ociation

Component Units (Clayton State
Univers ity) Walter & Emilie
Spivey Foundation

Clayton State Univers ity
Foundation, Inc.

$25,000
928,460 13,691 50,000 1,017,151

$0

$895,778

89,240

0

985,018

400,417
64,503 359,873 147,735 20,041 992,569 24,582

22,215
425,941 448,156 (448,156)

284,418
214,904
458,366 957,688 27,330

NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses

8,704 (80,507) (71,803) (47,221)

504,378
504,378 56,222

(230,812)
(230,812) (203,482)

Additions to permanent endowments Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets
NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

0 (47,221)
368,206 0
368,206 $320,985

0 56,222
7,818,380 0
7,818,380 $7,874,602

259,819 259,819 56,337
5,134,564 0
5,134,564 $5,190,901

Annual Financial Report FY 2008 44

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan) Sales and Services Rents and Royalties Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Salaries: Staff
Employee Benefits Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to Other Component Units Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)

Columbus State University
Foundation, Inc.

Component Units
(Columbus State University) Foundation
Properties, Inc.

Columbus State University
Athletic Fund, Inc.

$4,321,112 2,278,073
244,193 15,154 6,858,532

$1,341,505
6,218,952 344,390
7,904,847

$147,983
237,283 10,800
208 396,274

974,805 116,050 376,475
5,653,497
281,590 983,187 8,385,604 (1,527,072)

414,861 54,839
331,884 1,908,963 2,327,808
199,137 482,076 5,719,568 2,185,279

217,133
910,845 343,944 1,471,922 (1,075,648)

NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses

1,139,414
1,139,414 (387,658)

462,105 (3,278,762) (2,816,657)
(631,378)

207,051
207,051 (868,597)

Additions to permanent endowments Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets
NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

516,830 516,830 129,172
51,988,899 0
51,988,899 $52,118,071

0 (631,378)
17,380,376 0
17,380,376 $16,748,998

3,200 3,200 (865,397)
2,098,729 0
2,098,729 $1,233,332

Annual Financial Report FY 2008 45

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan) Sales and Services Rents and Royalties Realized/Unrealized Gains (Losses) Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Salaries: Staff
Employee Benefits Travel Utilities Supplies and Other Services Depreciation Other Operating Expense Payments to Other Component Units Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)

Columbus State Univers ity Alumni
Association, Inc.

Component Units

Fort Valley State University Foundation, Inc.

Georgia College & State University
Alumni Association, Inc.

$88,412 47,503
1,569 137,484

$726,882
997,642 (344,224) 1,380,300

$2,917 246,006
121,717 370,640

33,566 3,714
41,216 660
16,875 11,659 107,690 29,794

534,403 26,607 31,804
896,245 1,489,059 (108,759)

12,169 6,551 116,911 4,851 31,456
199,379 371,317
(677)

NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses Capital Grants and Gifts Federal Additions to permanent endowments Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets
NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

14,311
14,311 44,105
0 44,105
221,769 0
221,769 $265,874

783,616 (1,855,821) (1,072,205) (1,180,964)
118,451 478,458 596,909 (584,055)
6,836,552 0
6,836,552 $6,252,497

(359,591)
(359,591) (360,268)
93,313 93,313 (266,955)
6,175,902 0
6,175,902 $5,908,947

Annual Financial Report FY 2008 46

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan) Sales and Services Rents and Royalties Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Salaries: Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Other Operating Expense Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)

Georgia College & State
University Foundation, Inc.

Component Units
Georgia Southwestern Foundation, Inc.

Kennesaw State University
Foundation, Inc.

$2,306,569 474,632 358,593
3,273,169 1,014,801 7,427,764

$563,700
1,221,333 (283,264) 1,501,769

$3,538,262 125,902 97,000
19,647,185
23,408,349

163,977
363,403 323,725 473,697 89,333 1,122,874 92,044
217,464 2,846,517 4,581,247

143,353 34,789
16,029
912,269 185,038 1,653,246 2,944,724 (1,442,955)

1,962,795
57,384
1,737,093 4,756,855 3,171,627
4,662,283 16,348,037 7,060,312

NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses

(457,390) (11,285,175)
(11,742,565) (7,161,318)

(837,958) (1,279,254) (1,372,980) (3,490,192) (4,933,147)

(8,604,837)
(8,604,837) (1,544,525)

Additions to permanent endowments Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets
NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

1,333,260 1,333,260 (5,828,058)
5,871,742 (1,826,301) 4,045,441 ($1,782,617)

1,345,679 1,345,679 (3,587,468)
27,991,627 0
27,991,627 $24,404,159

3,052,369 3,052,369 1,507,844
18,624,785 0
18,624,785 $20,132,629

Annual Financial Report FY 2008 47

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

North Georgia College & State
University Foundation, Inc.

Component Units
Savannah State University
Foundation, Inc.

Southern Polytechnic State
University Foundation, Inc.

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan) Sales and Services Rents and Royalties Interest and Dividend Income Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Salaries: Staff
Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Other Operating Expense Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)
NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses
Additions to permanent endowments Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets
NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

$1,269,644
30,037 2,238,172
1,376 229,452 3,768,681
65,200 103,872 76,537
1,873 914,403 27,000
1,414,745 2,603,630 1,165,051
(1,435,612) (1,593,366)
(3,028,978) (1,863,927)
1,420,570 1,420,570 (443,357)
27,092,360 0
27,092,360 $26,649,003

$9,497
1,040,139 24,134
1,073,770
19,260 1,161,759
124,662 23,588 1,329,269 (255,499)
41,940 (4,866,536) 6,112,593 1,287,997 1,032,498
0 1,032,498
282,627 0
282,627 $1,315,125

$2,416,028 82,176
2,837,478
5,335,682
311,850
53,645 176,754
1,690,722
210,072 1,088,250 3,531,293 1,804,389
128,742 (1,608,244)
(1,479,502) 324,887
99,294 99,294 424,181
5,317,968 0
5,317,968 $5,742,149

Annual Financial Report FY 2008 48

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

University of West Georgia Foundation, Inc.

Component Units
UWG Real Estate Foundation, Inc.

Abraham Baldwin Agricultural College
Foundation, Inc.

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan) Rents and Royalties Interest and Dividend Income Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Salaries: Staff
Employee Benefits Other Personal Services Travel Supplies and Other Services Depreciation Other Operating Expense Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)
NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses
Additions to permanent endowments Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets
NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

$3,554,729 810,951 523,522
1,702,410 475,091
7,066,703
508,572 131,396
5,129 844,755 94,653
1,727,291 3,311,796 3,754,907
457,931 (1,791,389) (1,333,458) 2,421,449
198,726 198,726 2,620,175
26,086,002 0
26,086,002 $28,706,177

$0 90,000 1,536,510 1,626,510
133,328 71,000 204,328 1,422,182
30,963 (1,416,336) (1,385,373)
36,809
0 36,809 1,666,217
0 1,666,217 $1,703,026

$1,795,479
5,570,187
7,365,666
78,778
20,875
2,586,214 1,999,461
384,327 5,069,655 2,296,011
434,123 (1,945,156) (1,511,033)
784,978
311,805 311,805 1,096,783
12,357,275 0
12,357,275 $13,454,058

Annual Financial Report FY 2008 49

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

Dalton State College
Foundation, Inc.

Component Units

Gaines ville State College Foundation, Inc.

Gordon College Foundation, Inc.

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan) Rents and Royalties Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Salaries: Staff
Employee Benefits Other Personal Services Travel Utilities Supplies and Other Services Depreciation Other Operating Expense Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)
NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses
Additions to permanent endowments Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets
NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

$3,810,468 124,629 759,484
4,694,581
133,486 13,896 73,332
130 72,947 379,630 82,100 5,218 663,627 1,424,366 3,270,215
(504,958) (135,378) (640,336) 2,629,879
1,788,685 1,788,685 4,418,564
25,227,881 0
25,227,881 $29,646,445

$707,599 344,624 105,744 1,157,967
241,200
777,645 1,018,845
139,122
369,371 369,371 508,493 136,641 136,641 645,134 12,176,153
0 12,176,153 $12,821,287

$117,371
1,068,468
1,185,839
5,995
47,257 374,499 58,263 37,409 523,423 662,416
1,122,675 (733,346) 389,329 1,051,745
119,329 119,329 1,171,074
6,334,868 0
6,334,868 $7,505,942

Annual Financial Report FY 2008 50

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

Component Units

Macon State College
Foundation, Inc.

Middle Georgia College
Foundation, Inc.

Bainbridge College
Foundation

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts
Other Sales and Services Rents and Royalties
Total Operating Revenues EXPENSES Operating Expenses
Supplies and Other Services Depreciation Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)
NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses
Additions to permanent endowments Special Item Transfers
Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

$498,331
1,750 500,081
86,151 567,728 653,879 (153,798)
(537,834) (3,177)
(541,011) (694,809)
68,736 68,736 (626,073) 8,407,730
0 8,407,730 $7,781,657

$117,772 62,100
13,057
1,385,548 1,578,477
138,068 51,975 45,909 235,952 1,342,525
(20,430) (1,289,548) 3,357,132 2,047,154 3,389,679
1,907 1,012,369 1,014,276 4,403,955
362,360 0
362,360 $4,766,315

$20,229
20,229
7,147 12,180 19,327
902
1,086
1,086 1,988 40,000 40,000 41,988 147,185
0 147,185 $189,173

Annual Financial Report FY 2008 51

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

Coastal Georgia Community College
Foundation, Inc.

Component Units

Darton College Foundation, Inc.

East Georgia College
Foundation, Inc.

REVENUES Operating Revenues
Gifts and Contributions Endowment Income (per spending plan) Sales and Services Rents and Royalties
Total Operating Revenues EXPENSES Operating Expenses
Other Personal Services Scholarships and Fellowships Supplies and Other Services Depreciation Other Operating Expense Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)
NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains, or Losses
Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

$701,628 287,988
989,616
19,247
47,801
18,139 733,315 818,502 171,114
169,341 169,341 340,455
0 340,455
8,619,936 0
8,619,936 $8,960,391

$314,577
28,600 343,177
222,338
3,757
152,430 378,525 (35,348)
(42,728) (42,728) (78,076)
0 (78,076)
2,770,218 0
2,770,218 $2,692,142

$252,896
10,720
263,616
200 96,943
40,969 138,112 125,504
(71,162) (71,162) 54,342
0 54,342
1,346,430 0
1,346,430 $1,400,772

Annual Financial Report FY 2008 52

Statement of Revenues, Expenses and Changes in Net Assets, Continued

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Year Ended June 30, 2008

REVENUES Operating Revenues
Gifts and Contributions Sales and Services Rents and Royalties Interest and Dividend Income Other Operating Revenues
Total Operating Revenues EXPENSES Operating Expenses
Salaries: Staff
Travel Scholarships and Fellowships Supplies and Other Services Depreciation Other Operating Expense Payments to or on behalf of College/University
Total Operating Expenses Operating Income (loss)

Georgia Highlands College Foundation, Inc.

Component Units

Georgia Perimeter College Foundation, Inc.

South Georgia College
Foundation, Inc.

Waycross College Foundation, Inc.

$469,460 30,800
500,260

$950,405 950,405

$105,430
330,746
89,182 525,358

$34,924
30,320 65,244

265,775 5,100
174,748 9,100
125,525
580,248 (79,988)

517,420 377,607 49,782 247,093 1,191,902 (241,497)

44,222
189,067 233,289 292,069

41,630 6,144
18,629 66,403 (1,159)

NONOPERATING REVENUES (EXPENSES) Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Net Nonoperating Revenues Income before Other Revenues, Expenses, Gains/(Losses)

(55,238)
(55,238) (135,226)

400,199 (520,959) (120,760) (362,257)

(87,257) (669,740) (756,997) (464,928)

(132,689)
(132,689) (133,848)

Additions to permanent endowments Total Other Revenues, Expenses, Gains or Losses Increase in Net Assets
NET ASSETS Net Assets-Beginning of Year, as originally reported Prior Year Adjustments Net Assets-Beginning of Year, Restated Net Assets-End of Year

546,314 546,314 411,088
1,304,914 0
1,304,914 $1,716,002

36,983 36,983 (325,274)
4,941,202 2,681,325 7,622,527 $7,297,253

9,874 9,874 (455,054)
3,006,354 0
3,006,354 $2,551,300

10,529 10,529 (123,319)
1,643,831 0
1,643,831 $1,520,512

Annual Financial Report FY 2008 53

Statement of Cash Flows

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF CASH FLOWS For the Year Ended June 30, 2008

CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Federal Appropriations Grants and Contracts (Exchange) Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Collection of Loans to Students and Employees Auxiliary Enterprise Charges: Residence Halls Books tore Food Services Parking/Trans portation Health Services Intercollegiate Athletics Other Organizations Other Receipts (payments) Net Cash Provided (used) by Operating Activities
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other Than Capital Purposes Principal Paid on Installment Debt Interest Paid on Installment Debt Other Nonoperating Receipts Special Item Net Cash Flows Provided by Non-capital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Proceeds from Capital Debt Proceeds from s ale of Capital As s ets Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases Net Cash used by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Maturities of Investments Interest on Investments Purchase of Investments Net Cash Provided (used) by Investing Activities Net Increase/Decrease in Cash Cash and Cash Equivalents - Beginning of year Cash and Cash Equivalents - End of Year

Annual Financial Report FY 2008 54

June 30, 2008
$943,666,366 19,503,243
1,368,749,830 119,424,623
(2,171,659,388) (2,556,995,520)
(192,103,139) (16,758,478) 14,874,390
198,636,541 79,499,030 102,203,935 53,523,865 38,653,775 69,025,274 25,655,194 (7,743,325) (1,911,843,784)
2,140,048,441 24,265,628 142,368,295 (414,435) (197,915) 8,314,053 424,769
2,314,808,836
149,128,804 217,000
6,303,432 (418,433,108) (53,535,370) (82,119,875) (398,439,117)
24,304,020 49,968,281 (39,358,959) 34,913,342 39,439,277 725,211,273 $764,650,550

Statement of Cash Flows, Continued
UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF CASH FLOWS For the Year Ended June 30, 2008
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (loss) Adjustments to Reconcile Net Income (loss) to Net Cash Provided (used) by Operating Activities
Depreciation Change in Assets and Liabilities:
Receivables, net Inventories Other Assets Prepaid Items Notes Receivable, Net Accounts Payable Deferred Revenue Other Liabilities Compensated Absences Net OPEB Obligation
Net Cash Provided (used) by Operating Activities

June 30, 2008
($2,339,728,280)
276,941,591
(53,796,299) (2,501,611)
520,002 (472,539) (2,038,882) 21,231,721 27,387,025 (6,439,994) 8,812,474 158,241,008 ($1,911,843,784)

** NON-CASH INVESTING, NON-CAPITAL FINANCING, AND CAPITAL AND RELATED FINANCING TRANSACTIONS
Fixed assets acquired by incurring capital lease obligations Non-capital items acquired by incurring capital lease obligations Change in fair value of investments recognized as a component of interest income Special Items Change in accrued interest payable affecting interest paid Interest on capital debt paid by State Agency on behalf of University Gift reducing proceeds of Gifts and Grants received for other than capital purposes Gift of capital assets reducing proceeds of capital grants and gifts Loss on disposal of buildings not fully depreciated Cancellation of capital lease obligation

$557,381,720 $899,497
($8,780,710) ($1,625,716) ($4,203,416)
$320,865 ($101,317) ($76,597,948) $3,968,154 ($157,093)

Annual Financial Report FY 2008 55

Statement of Fiduciary Net Assets

STATEMENT OF FIDUCIARY NET ASSETS BOARD OF REGENTS RETIREE HEALTH BENEFIT FUND
June 30, 2008

ASSETS

June 30, 2008

Cash and Cash Equivalents Receivables
Employer Total Receivables

$4,374,041
2,618,873 2,618,873

Investments, at fair value TOTAL ASSETS

0 6,992,914

LIABILITIES

Benefits payable TOTAL LIABILITIES

6,702,660 6,702,660

NET ASSETS

Net assets held in trust for other postemployment benefits
TOTAL NET ASSETS

290,254 $290,254

Annual Financial Report FY 2008 56

Statement of Changes in Fiduciary Net Assets

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS BOARD OF REGENTS RETIREE HEALTH BENEFIT FUND
for the Year Ended June 30, 2008

ADDITIONS
Contributions Employer Plan member Total Contributions
Investment Income Interest/dividends
Less: Investment expense Net Investment Income Total Additions
DEDUCTIONS
Benefits Life Insurance Premium Expense Administrative expense
Total Deductions
NET INCREASE/(DECREASE)
NET ASSETS HELD IN TRUST FOR OTHER POSTEMPLOYMENT BENEFITS
Beginning of year End of year

June 30, 2008
$66,717,298 21,091,336 87,808,634
19,245 19,245
0 19,245 87,827,879
79,995,991 4,096,012 3,445,622
87,537,625 290,254
0 $290,254

Annual Financial Report FY 2008 57

UNIVERSITY SYSTEM OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations The University System of Georgia serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity The University System of Georgia is comprised of thirty-five (35) State supported member institutions of higher education in Georgia, the Skidaway Institute of Oceanography and the University System Office. The University System Office also is the custodian of a newly created Fiduciary Fund for retiree health and life insurance benefits. The accompanying financial statements reflect the operations of the University System Office as a separate reporting entity and as custodian of the Board of Regents Retiree Health Benefit Fund.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. The University System of Georgia does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, all 35 institutions, the Skidaway Institute of Oceanography and the University System Office are considered organizational units of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of their legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report. These statements (Statement of Net Assets and Statement of Revenues, Expenses, and Changes in Net Assets) are discretely presented for the 58 component units of the University System of Georgia.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999
Annual Financial Report FY 2008 58

by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University System was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University System's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
As a result of creating the Board of Regents Retiree Health Benefit Fund, the Board of Regents implemented the provisions of GASB Statement Nos. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, and 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions in fiscal 2008. The financial statements for the plan are presented directly after the University System of Georgia Enterprise Fund financial statements and include a Statement of Fiduciary Net Assets and a Statement of Changes in Fiduciary Net Assets. See Note 14 - Post Employment Benefits Other Than Pension Benefits for additional information regarding this fund.
Generally Accepted Accounting Principles (GAAP) require that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, most institutions of the University System of Georgia report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University System is considered a special-purpose government engaged only in business-type and fiduciary activities. Accordingly, the University System'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 inter-institution transactions have been eliminated.
The University System has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University System has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Annual Financial Report FY 2008 59

Investments The University System accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University System's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University System's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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.
Effective July 1, 2001, the GSFIC retains construction in progress on their books throughout the construction period on projects managed by them and transfers the entire project to the
Annual Financial Report FY 2008 60

University System of Georgia when complete. For the year ended June 30, 2008, GSFIC transferred capital additions valued at approximately $18,600,000 to the University System of Georgia. This includes projects completed during fiscal 2008 and additional expenditures for projects completed in prior years. This resulted in a cumulative total of capital additions transferred by GSFIC to the University System of approximately $2,454,900,000 as of June 30, 2008.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University System residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences 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. The University System of Georgia had accrued liability for compensated absences in the amount of $158,694,786 as of July 1, 2006. For fiscal 2008, $113,791,374 was earned in compensated absences and employees were paid $104,899,283 for a net increase of $8,892,091. The ending balance as of June 30, 2008 in accrued liability for compensated absences was $167,586,877.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The University System's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University System'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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University System may accumulate as much of the annual net income of an
Annual Financial Report FY 2008 61

institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the University System is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Restricted - E&G and Other Organized Activities Federal Loans Institutional Loans Term Endowments Quasi-Endowments
Total Restricted Expendable

$126,618,553 44,588,433 22,027,604 4,909,828 20,930,105
$219,074,523

Restricted net assets expendable Capital Projects: This represents resources for which the University System is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University System, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets include the following items which are quasi-restricted by management:

June 30, 2008

R & R Reserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted
Total Unrestricted Net Assets

$94,811,999 227,534,708
3,227,067 (82,397,119) $243,176,655

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University System's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Annual Financial Report FY 2008 62

Income Taxes The University System of Georgia, 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 University System has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Non-operating revenues: Non-operating revenues include activities that have the characteristics of non-exchange transactions, such as gifts and contributions, and other revenue sources that are defined as non-operating 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 University System, 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 non-operating revenues in the University System's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University System has recorded contra revenue for scholarship allowances.
Auxiliary Enterprise revenue reported in the Statement of Revenues, Expenses and Changes in Net Assets is reported net of $4,030,220 allowances.
Annual Financial Report FY 2008 63

Special Items Special Items reported in fiscal 2008:
Special Items:
Georgia Institute of Technology - Capital Asset Transfer Georgia State University - Capital Asset Transfer Georgia State University - Bond Defeasance Georgia Middle College - Georgia Aviation Technical College Transfer Bainbridge College - Capital Asset Transfer University System Office - Note Receivable Transfer University System Office - Authority Dissolution
Total

$7,916,649 (7,916,649) (24,710,494) 17,399,426 3,396,716 2,288,636
424,769
($1,200,947)

Georgia Institute of Technology Georgia State University, a University System of Georgia institution, transferred its University Village Student Housing Complex to Georgia Institute of Technology effective July 1, 2007. The complex contains approximately 2,000 student housing beds, 790 parking spaces, and site amenities and was renamed the North Avenue Apartments by the Institute.
Georgia Institute of Technology provided consideration for the complex totaling $45,455,494. The net book value of the capital asset transfer to Georgia Institute of Technology at July 1, 2007 was $53,372,143. The difference of $7,916,649 is reported as a Special Item on the Statements of Revenues, Expenses and Changes in Net Assets and Cash Flows.
Georgia State University Georgia State University transferred its University Village Student Housing Complex to Georgia Institute of Technology, a University System of Georgia institution, effective July 1, 2007. The complex contained approximately 2,000 student housing beds, 790 parking spaces, and site amenities.
Georgia Institute of Technology provided consideration for the complex totaling $45,455,494. The net book value of the capital asset transfer to Georgia Institute of Technology at July 1, 2007 was $53,372,143. The difference of ($7,916,649) is reported as a Special Item on the Statements of Revenues, Expenses and Changes in Net Assets and Cash Flows.
As a result of the capital asset transfer, Georgia State University was required to defease the associated bonds that were issued by GSFIC to construct the housing complex. To accomplish this requirement, a portion of the consideration reflected above was paid directly to GSFIC at the time of the asset transfer in the amount of $24,710,494. The bond defeasance is reported as a Special Item on the Statements of Revenues, Expenses and Changes in Net Assets and Cash Flows.
Georgia Middle College As of July 1, 2007, Georgia Aviation Technical College (GAVTC) merged with Middle Georgia College. It is now the Georgia Aviation campus of Middle Georgia College. As a result of this

Annual Financial Report FY 2008 64

merger, GAVTC assets and liabilities as of July 1, 2007 transferred to Middle Georgia College. The net transfer of $17,399,426 is reported as a Special Item on the Statements of Revenues, Expenses and Changes in Net Assets and Cash Flows.
Bainbridge College Bainbridge College absorbed the Early County Site of the Albany Technical College during fiscal year 2007. Per the transfer agreement, the Equipment assets for the Early County Campus were transferred in fiscal 2007 and the Land and Building assets were transferred to Bainbridge College as of July 1, 2007. The Land was transferred at its historical cost of $351,362 and the Building was transferred at its historical cost of $3,704,000 with an accumulated depreciation balance of $658,646 as of July 1, 2007. The net transfer to Bainbridge College was $3,396,716 in fiscal 2008. This amount is reported as a Special Item on the Statements of Revenues, Expenses and Changes in Net Assets and Cash Flows.
University System Office Georgia Education Authority (University), (GEA(U)), an entity outside of the Board of Regents of the University System of Georgia reporting entity, is authorized to acquire, construct and operate housing accommodations for students of any institution under the control of the Board of Regents.
In July 2007, GEA(U) met and resolved to no longer conduct business as a state authority and dispose of all its assets and liabilities. As a result of that decision, a Note Receivable that is payable from Georgia Southern University was transferred by Resolution from GEA(U) to the University System Office (USO) in the amount of $2,288,636. This amount is reported as a Note Receivable in the Statement of Net Assets and as a Special Item on the Statements of Revenues, Expenses and Changes in Net Assets and Cash Flows. Payments on the note receivable will be made by Georgia Southern University to the USO according to the original amortization schedule, which matures in 2025.
After funding a start-up amount to the Georgia Higher Education Facilities Authority, the balance of GEA(U)'s remaining assets were transferred to the USO in the form of a payment of $424,769. This amount is reported as Cash and Cash Equivalents in the Statement of Net Assets and as a Special Item on the Statements of Revenues, Expenses and Changes in Net Assets and Cash Flows.
Annual Financial Report FY 2008 65

Restatement of Prior Year Balances

The following institutions had restatements of prior year balances in fiscal 2008:

Prior Year Adjustments:

Effect on Beginning Net Assets

Georgia Institute of Technology Georgia State University Armstrong Atlantic State University Georgia College & State University Georgia Highlands College South Georgia College

$8,552,401 (3,394,948) (2,155,734) 1,826,301 2,922,516 1,162,081

Total

$8,912,617

Georgia Institute of Technology Georgia Institute of Technology has a restatement of prior year net assets increasing beginning net assets by $8,552,401. During fiscal year 2008, the Institute conducted a comprehensive review of building and infrastructure historical costs and the associated depreciation and accumulated depreciation for these assets. As a result of this review, it was determined that depreciation expense had been overstated in prior years by a net amount of $8,552,401, with buildings being overburdened by $9,540,330 and infrastructure being under burdened by $987,929.
Georgia State University Georgia State University has a restatement of prior year net assets decreasing beginning net assets by ($3,394,948). In fiscal 2008, the University determined that the University Lofts rental agreement with the Georgia State University Foundation met the criteria for capital lease treatment. This agreement commenced in fiscal 2005 and was accounted for as an operating lease through fiscal 2007. The lease treatment correction resulted in an increase to Capital Assets, net of $36,353,918, an increase to Lease Purchase Obligations liability of $39,748,866, resulting in a net decrease to Net Assets of ($3,394,948) as of July 1, 2007.
Armstrong Atlantic State University Armstrong Atlantic State University has a restatement of prior year net assets decreasing beginning net assets by ($2,155,734). This is due to the reclassification of five leases from operating to capital lease treatment, ($1,861,397); an adjustment in Accumulated Depreciation for Library Collections, ($291,440); a correction to reflect capital improvements and amortization of a Food Service contract, ($8,197) and the cancellation of outstanding checks that were related to prior years, $5,300.
Georgia College & State University Georgia College and State University has a restatement of prior year net assets, increasing beginning net assets by $1,826,301. This is due to endowments funds that were transferred from the Georgia College & State University Foundation, Inc. to Georgia College & State University.

Annual Financial Report FY 2008 66

Georgia Highlands College Georgia Highlands College has a restatement of prior year net assets, increasing beginning net assets by $2,922,516. This restatement was the result of a comprehensive review of capital asset useful lives and represents a depreciation expense correction on several assets.
South Georgia College South Georgia College has a restatement of prior year net assets, increasing beginning net assets by $1,162,081. This is due to an overstatement of depreciation expense in prior years.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University System's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University System of Georgia) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying values of deposits were $341,444,805 and the bank balances were $417,669,831. Of the University System's deposits, $413,544,508 were uninsured. Of these uninsured deposits, $101,204,024 were collateralized with securities held by the financial institution's trust department or agent in the University System's name, $250,444,476 were
Annual Financial Report FY 2008 67

collateralized with securities held by the financial institution, by its trust department or agency, but not in the University System's name and $61,896,008 were uncollateralized.

B. Investments The University System maintains investment policy guidelines that are intended to foster sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to the Board of Regents investment policy. All investments must be consistent with donor intent, Board of Regents policy, and applicable federal and state laws.

The University System's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment type
Debt Securities U.S. Treasuries U.S. Agencies - Explicitly Guaranteed U.S. Agencies - Implicitly Guaranteed Corporate Debt General Obligation Bonds Municipal Obligation Mutual Bond Fund

Fair Value

Less Than 1 Year

Investment Maturity More Than
1-5 Years 6-10 Years 10 Years

$12,322,286 3,133,389
186,322,111 7,285,688 1,053,147 5,000 39,454,085
249,575,706

$300,843 1,259,471 75,064,268
171,777
5,000
$76,801,359

$7,661,253 1,861,705 109,581,922 1,279,026
149,112
36,885,616 $157,418,634

$4,179,346 2,953
1,040,051 830,210 613,059
2,568,469 $9,234,088

$180,844 9,260
635,870 5,004,675
290,976
$6,121,625

Other Investments Bond/Fixed Income Mutual Funds Equity Mutual Funds Equity Securities - Domestic Real Estate Held for Investment Purposes Real Estate Investment Fund Cash Surrender Value
Investment Pools Office of Treasury and Fiscal Services Georgia Fund 1 Georgia Extended Asset Pool

16,944,365 73,373,195 17,734,274
241,927 4,419,271
8,927
296,846,696 6,382,663

$665,527,024

Annual Financial Report FY 2008 68

Investment Pools
The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1 Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 days at June 30, 2008.
The Georgia Extended Asset Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company. Net Asset Value (NAV) is calculated daily to determine current share price, which was $2.02 at June 30, 2008. The Georgia Extended Asset Pool is an AAA rated investment pool by Standard and Poor's. The effective duration of the fund for the month of June, 2008 was .81 years.
The University System Office serves as fiscal agent for various units of the University System of Georgia and cooperative organizations. The University System Office pools the monies of these organizations with the University System Office's monies for investment purposes. The University System Office cannot allocate pool investments between the internal (University System) and external (cooperative organizations) investment pool portions. The investment pool is not registered with the SEC as an investment company. The fair value of the investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns.
The University System Office maintains investment policy guidelines for each pooled investment fund that is offered to qualified University System participants. These policies are intended to foster sound and prudent responsibility each institution has to the citizens of Georgia and which conforms to the Board of Regents investment policy. All investments must be consistent with donor intent, Board of Regents policy, and applicable Federal and state laws.
Units of the University System of Georgia and their affiliated organizations may participate in the Pooled Investment Fund program. The overall character of the pooled fund portfolio should be one of above average quality, possessing at most an average degree of investment risk.
The Regents' Investment Pool funds are described below. Investment fund balances within the University System (the Primary Government) have been eliminated in this report, with the underlying investment instruments of the pools reported instead.
Short Term Fund The Short Term fund provides a current return and stability of principal while affording a means of overnight liquidity for projected cash needs. The investment maturities of the fund will range between daily and two years.
Legal Fund The Legal fund provides an opportunity for greater income and modest principal growth to the extent possible with the securities allowed under Georgia Code 50-17-59 and 50-17-63. The average maturity of this fund will typically range between five and ten years, with a maximum of
Annual Financial Report FY 2008 69

thirty years for any individual investment. The overall character of the portfolio should be one of treasury and agency quality, possessing virtually no degree of financial risk.
Balanced Income Fund The Balanced Income fund is designed to be a vehicle to invest funds that are not subject to the state regulations concerning investing in equities. This fund is comprised of fixed income, equity and cash equivalent instruments.
The equity allocation range shall be between 30% and 40%, with a target of 35% of the total portfolio. The fixed income (bond) portion of the portfolio shall be between 60% and 70%, with a target of 65% of the total portfolio. Reserves for contingencies and stock and bond purchases are expected to comprise the balance of the fund. Reserves and excess income should be invested at all times in practical amounts. Reserves can be invested in high quality institutional money market mutual funds or other high quality, short term instruments.
Total Return Fund The Total Return fund is another pool designed to be a vehicle to invest funds that are not subject to state regulations concerning investing in equities. This pool offers the greatest percentage of overall equity exposure, with well over half of the funds typically invested in equities.
The equity allocation range shall be between 60% and 70%, with a target of 65% of the total portfolio. The fixed income (bond) portion of the portfolio shall be between 30% and 40%, with a target of 35% of the total portfolio. Reserves for contingencies and stock and bond purchases are expected to comprise the balance of the fund. Reserves and excess income should be invested at all times in practical amounts. Reserves can be invested in high quality institutional money market mutual funds or other high quality, short term instruments.
Diversified Fund The Diversified fund is designed to gain further diversification and increase exposures to assets that have lower correlation to equity and bond markets by utilizing alternative asset classes. In addition, this fund is constructed to build an optimal portfolio where return is increased and risk is reduced.
The equity allocation range shall be between 50% and 75% of the portfolio. The fixed income (bond) portion of the portfolio shall be between 20% and 40%. The portfolio may also consist of Hedge Funds, Real Estate and Venture Capital/Private Equity/Post Venture Capital.
Hedge Funds The investment approach to this asset class is to use a multi-strategy, multimanager fund of hedge funds. The Board of Regents believes that a fund of fund strategy will provide the best access to a highly diversified pool of hedge fund strategies and managers.
Real Estate The Board of Regents' approach to investing in this asset class is to use real estate investment trusts (REITs). REITs are more liquid than owning commercial real estate and diversification can be achieved by purchasing a mutual fund.
Venture Capital/Private Equity/Post Venture Capital This asset class is the riskiest and most volatile permitted investment opportunity. This asset should be considered as an additional diversification investment strategy due to the low correlation with stock and bonds.
Annual Financial Report FY 2008 70

Reserves for contingencies and stock and bond purchases are expected to comprise the balance of the fund. Reserves and excess income should be invested at all times in practical amounts. Reserves can be invested in high quality, institutional money market mutual funds or other high quality, short term instruments.

Condensed financial information for the investment pool follows:

Regents Investment Pool Statement of Net Assets
June 30, 2008

Regents Investment Pool Statement of Changes in Net Assets For the Fiscal Year Ended June 30, 2008

Assets

Investments

$

Accrued Interest/Receivables

Net Assets

$

198,521,222 399,525
198,920,747

Distribution of Net Assets External Participant Account Balance $ Internal Participant Account Balance
$

29,373,637 169,547,110 198,920,747

Additions

Pool Participant Deposits

$

Investment Income

Interest

Fair Value Decreases Less: Investment Expense

Total Additions

$

89,029,662
5,749,548 (8,396,833)
(377,394) 86,004,983

Deductions

Pool Participant Withdrawals $ (17,191,992)

Net Increase

$ 68,812,991

Net Assets

July 1, 2007

$ 130,107,756

June 30, 2008

$ 198,920,747

Investment Risks:
Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The Board of Regents policy for managing interest rate risk is contained in the investment policy guidelines for the various pooled funds:
1. In the Short Term fund, the average maturity of the fixed income portfolio shall not exceed three years.

Annual Financial Report FY 2008 71

2. In all the other pooled funds, the average maturity of the fixed income portfolio shall not exceed ten years.
3. Fixed income investments, except in the Diversified Fund, shall be limited to US government agency and corporate debt instruments that meet investment eligibility under Georgia Code 50-17-63.
4. The fixed income target allocation is defined in the investment policy guidelines for each pooled investment fund. These targets may be modified upon recommendation of the fund's investment manager and approval by the Board of Regents.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the University System of Georgia will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The University System of Georgia's policy for managing custodial credit risk for investments is:
1. The University System has appointed a federally regulated banking institution as custodian. The custodian performs its duties to the standards of a professional custodian and is liable to the University System of Georgia for claims, losses, liabilities and expenses arising from its failure to exercise ordinary care, its willful misconduct, or its failure to otherwise act in accordance with the contract.
2. All securities transactions are to be settled on a delivery vs. payment basis through an approved depository institution such as the Depository Trust Company or the Federal Reserve.
3. Repurchase agreements are to be collateralized by United States Treasury securities at 102% of the market value of the investment at all times.
At June 30, 2008, $206,778,512 of the University System of Georgia's applicable investments were uninsured and held by the investment's counterparty in the University System's name, and $15,347,415 were uninsured and held by the investment's counterparty's trust department or agent, but not in the University System's name.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University System of Georgia's policy for managing credit quality risk is contained in the investment policy guidelines for the various pooled investment funds:
1. In all pooled funds except the Diversified Fund, all debt issues must be eligible investments under Georgia Code 50-17-63. Portfolios of debt security funds also must meet the eligible investment criteria under the same code section.
2. The Diversified Fund is permitted to invest in non-investment grade debt issues up to a limit of 15% of the entire portfolio.
Annual Financial Report FY 2008 72

3. The portfolio shall be well diversified as to issuer and maturity. The University System investments subject to credit quality risk follow:

Related Debt Investments U. S. Agencies Corporate Debt General Obligation Bonds M unicipal Obligation Mutual Bond Fund

Fair Value

AAA

AA

A

BAA

Unrated

$186,322,111 7,285,688 1,053,147 5,000 39,454,085

$4,839,755 5,367,939 1,053,147
5,000

$29,934 672,645

$884,552

$344,494

$181,452,422 16,058

39,454,085

$234,120,031

$11,265,841

$702,579

$884,552

$344,494 $220,922,565

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The University System of Georgia's policy for managing concentration of credit risk is to diversify investments to the extent that any single issuer shall be limited to 5% of the market value in a particular investment fund. The following U.S. Agency investments exceeded 5% of the total reported investment amount as of June 30, 2008:

Investment:

Amount:

% of Total:

Federal National Mortgage Association Federal Home Loan Mortgage Corporation

$127,578,612

19%

$ 45,712,964

7%

Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or a deposit. The University System's policy for managing exposure to foreign currency credit risk is:

1. The Diversified Fund is the only pooled investment fund authorized to hold foreign investments. The current approved asset allocation target for international equity is 0 10% and for global fixed income is 0 10%.

2. The Diversified Fund is subject to exchange rate risk on these investments, which does ultimately impact performance.
3. The market value of all international investments is reported in United States Dollars.
4. Direct currency hedging is not permissible under the current investment policy guidelines.
At June 30, 2008, $5,074,371, or less than 1% of total investments, was invested in international equity mutual funds.

Annual Financial Report FY 2008 73

Note 3. Accounts Receivable

Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

Student Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Georgia State Financing and Investment Commission M argin Allocation Funds Due from Component Units Other
Sub Total Less Allowance for Doubtful Accounts
Net Accounts Receivable

$29,772,482 27,830,037 63,173,734 11,916,046 7,231,443
119,315,672 95,167,960
354,407,374 16,234,777
$338,172,597

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookstore Food Services Physical Plant Other
Total

$15,467,494 1,726,511 3,130,064 2,637,024
$22,961,093

Note 5. Notes/Loans Receivable
Notes/Loans receivable primarily consist of student loans made through the Federal Perkins Loan Program (the Program) and comprise substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The federal government reimburses the University System for amounts cancelled under these provisions. As the University System determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University System has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was approximately $2,500,000.

Annual Financial Report FY 2008 74

Note 6. Capital Assets

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

Restated Beg. Bal. July 1, 2007

Special Item Transfer

Additions

Reductions

End. Bal. June 30, 2008

Cap ital Assets, Not Being Depreciated: Land Capitalized Collections Construction Work-in-Progress
Total Capital Assets Not Being Depreciated

$191,399,383 31,091,438 189,573,073 412,063,894

$377,356 377,356

$5,191,251 3,178,152 222,865,347 231,234,750

$3,142 727,903 110,178,776 110,909,821

$196,964,848 33,541,687 302,259,644 532,766,179

Capital Assets, Being Depreciated: Infrastructure Building and Building Improvements Facilities and Other Improvements Equip ment Capital Leases Library Collections Capitalized Collections Total Assets Being Depreciated

170,003,510 4,918,050,624
235,436,706 1,012,534,062
666,844,895 628,258,644
1,357,776 7,632,486,217

279,920 21,440,331 4,507,279
26,227,530

53,081,858 366,456,457 10,038,823 117,894,588 264,221,282 33,917,384
110,000 845,720,392

20,581 37,243,651 1,014,101 58,586,194 2,807,845 1,932,408
101,604,780

223,344,707 5,268,703,761
244,461,428 1,076,349,735
928,258,332 660,243,620
1,467,776 8,402,829,359

Less: Accumulated Depreciation Infrastructure Buildings Facilities and Other improvements Equip ment Capital Leases Library Collections Capitalized Collections Total Accumulated Depreciation
Total Capital Assets, Being Depreciated, Net

54,622,895 1,419,336,500
80,187,508 719,161,687 54,645,966 471,235,836
444,223 2,799,634,615

279,920 2,810,371 3,008,084
6,098,375

4,832,851,602 20,129,155

5,628,053 124,026,315
6,858,543 77,587,009 35,660,924 27,150,430
30,317 276,941,591
568,778,801

315,994 15,303,578
698,986 48,199,556
681,549 1,896,683
67,096,346
34,508,434

60,214,874 1,530,869,608
86,347,065 751,557,224 89,625,341 496,489,583
474,540 3,015,578,235
5,387,251,124

Capital Assets, net

$5,244,915,496 $20,506,511

$800,013,551

$145,418,255 $5,920,017,303

Annual Financial Report FY 2008 75

Note 7. Deferred Revenue

Deferred revenue (current) consisted of the following at June 30, 2008:

June 30, 2008

Prepaid Tuition and Fees Research Other Deferred Revenue
Totals

$128,987,131 39,086,356 47,522,061
$215,595,548

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Restated Beg. Bal. July 1, 2007

Additions

Reductions

End. Bal. June 30, 2008

Leases Lease Obligations
Other Liabilities Compensated Absences Net OPEB Obligation US DOE Settlement Notes & Loans Total
Total Long Term Obligations

$1,287,965,243
158,694,786 0
952,403 2,579,034 162,226,223
$1,450,191,466

$560,398,599 113,791,374 158,241,008
272,032,382 $832,430,981

$53,658,454
104,899,283
206,277 132,530 105,238,090 $158,896,544

$1,794,705,388
167,586,877 158,241,008
746,126 2,446,504 329,020,515
$2,123,725,903

Current Portion
$51,234,831
94,032,405
216,830 138,395 94,387,630 $145,622,461

Note 9. Significant Commitments
The University System of Georgia had significant unearned, outstanding, construction or renovation contracts executed in the amount of approximately $96,800,000 as of June 30, 2008.
In addition, Clayton State University, North Georgia College & State University, Savannah State University, Georgia Gwinnett College, Gordon College, and Middle Georgia College executed rental agreements for student housing and/or other facilities during fiscal 2008; however, these agreements will not commence until fiscal 2009 or later. The rental agreements are long-term in nature, with annually renewable lease terms. The present value of the minimum lease payments over the life of the rental agreements is approximately $142,800,000.
These amounts are not reflected in the accompanying basic financial statements.

Annual Financial Report FY 2008 76

Note 10. Lease Obligations

The University System of Georgia is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property and equipment.
CAPITAL LEASES

The University System of Georgia is obligated under approximately $1,794,700,000 in capital lease liability as of June 30, 2008. Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between fiscal 2009 and 2039. Expenditures for fiscal year 2008 were approximately $140,900,000 of which $87,200,000 represented interest. Total principal paid on capital leases was approximately $53,700,000 for the fiscal year ended June 30, 2008. Of the $87,200,000 in interest expenditures, approximately $4,200,000 was added to outstanding principal during fiscal 2008. Interest rates range from 1.64 percent to 15.4 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Land Infrastructure Buildings Facilities Equipment
Total Assets Held Under Capital Lease

$14,460,922 47,145,853
1,699,344,019 399,790
47,779,098
$1,809,129,682

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.
Details for each capital lease are included with the individual institution financial reports. Major capital lease additions during fiscal 2008 are listed below:
Georgia Institute of Technology In July 2007, Georgia Institute of Technology entered into a capital lease of $74,455,494 with Georgia Tech Facilities, Inc., an affiliated organization, for a complex of buildings collectively named "North Avenue Apartments", including an adjoining parking deck. The lease term is for 25 years and expires in June, 2032. At June 30, 2008 the remaining long-term debt obligation under the lease was $76,720,452.
In January 2008, Georgia Institute of Technology entered into a capital lease of $39,705,000 with Georgia Tech Facilities, Inc., an affiliated organization, for an Electrical Sub Station. The lease term is for 30 years and expires in December 2037. At June 30, 2008 the remaining longterm debt obligation under the lease was $39,485,146.
Georgia State University In August 2007, Georgia State University entered into a capital lease valued at $161,330,000 for a new dormitory complex with an effective interest rate of 5.50% with the Georgia State

Annual Financial Report FY 2008 77

University Foundation. The University leases the University Commons for a 30 year period. The outstanding principal liability at June 30, 2008 was $158,596,107.
Columbus State University During fiscal 2008, Columbus State University entered into a capital lease of $50,706,749 whereby the University leases student housing for one year with the option to renew on a yearto-year basis for twenty-five consecutive one-year periods expiring on June 30, 2031. At the expiration of the lease, ownership transfers to the University. The outstanding liability at June 30, 2008 on this capital lease was $49,233,849.
Fort Valley State University In August 2007, Fort Valley State University entered into a capital lease of $43,334,897 at 4.544 percent with the Fort Valley State University Foundation Properties, LLC whereby the University leases a building for a thirty year period that began August 2007 and expires July 2037. The outstanding liability at June 30, 2008 on this capital lease was $44,075,713.
Savannah State University In February 2008, Savannah State University entered into a capital lease of $29,229,205 at 4.486 percent with the LLC, which is included in the discrete presentation of Savannah State University Foundation, Inc. The University leases a 660-bed housing facility, University Village, for a twenty-five year period that began February 2008 and expires June 2032. The outstanding liability at June 30, 2008 on this capital lease was $29,155,455.
Abraham Baldwin Agricultural College In July 2007, Abraham Baldwin Agricultural College recorded a capital lease of $33,247,420 at 4.459 percent with First ABAC, LLC, which is included in the discrete presentation of Abraham Baldwin Agricultural College Foundation, Inc., whereby the College leases a building for a twenty-three year period that expires August 2029. In August 2007, the College entered into a capital lease of $18,935,452 at 4.641 percent with Second ABAC, LLC, which is included in the discrete presentation of Abraham Baldwin Agricultural College Foundation, Inc., whereby the College leases a building for a thirty-year period that expires July 2037. The outstanding liability at June 30, 2008 on these capital leases was $32,300,945 and $19,249,229, respectively.
OPERATING LEASES
The University System of Georgia's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2033. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are real property, copiers and other small business equipment. System-wide real property and equipment operating lease expense for fiscal 2008 was approximately $29,500,000. System-wide future operating lease commitments total approximately $107,900,000.
Annual Financial Report FY 2008 78

Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, are as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038 2039 through 2043 Total minimum lease payments
Less: Interest Less: Executory costs Principal Outstanding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31-35

Total Capital Leases
$142,645,254 142,603,769 139,570,172 134,390,772 133,716,445 672,721,495 673,720,701 630,477,989 474,056,962 163,517,691 12,785,396
3,320,206,646 1,471,490,574
54,010,684 $1,794,705,388

Total Operating Leases
$29,433,286 11,295,837 10,091,554 8,706,747 7,892,989 13,902,648 12,303,868 10,683,585 3,627,313
$107,937,827

Note 11. Retirement Plans
Teachers Retirement System of Georgia
Plan Description The University System of Georgia participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.
Funding Policy Employees of the University System of Georgia who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The University System of Georgia makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Annual Financial Report FY 2008 79

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$122,832,156 $115,443,652 $109,977,005

Employees' Retirement System of Georgia

Plan Description The University System of Georgia participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University System of Georgia's payroll for the year ended June 30, 2008 for employees covered

Annual Financial Report FY 2008 80

by ERS was $5,732,353. The University System of Georgia's total payroll for all employees was $2,562,208,748.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University System of Georgia pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University System of Georgia also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University System of Georgia amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$602,995 $485,973 $365,620

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy The University System of Georgia makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State Statute and as advised by their independent actuary. For fiscal

Annual Financial Report FY 2008 81

year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
The University System of Georgia and the covered employees made the required contributions of $66,494,066 (8.13% or 8.15%) and $40,760,869 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description The University System of Georgia 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $7,125,252 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. The University System of Georgia and participating employees and retirees pay
Annual Financial Report FY 2008 82

premiums to either of the self-insured healthcare plan options to access benefits coverage. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person.

The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. All claims submitted by program participants are remitted directly to Blue Cross Blue Shield from various organizational units for verification of coverage, processing and payment through a bank account maintained for this purpose by Blue Cross Blue Shield. Blue Cross Blue Shield maintains an eligibility file based on information furnished by the various organizational units of the University System of Georgia. In addition to the two different selfinsured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.

Express Scripts is the administrator of the Board of Regents' prescription drug plan. Pharmacy drug claims will be processed in accordance with guidelines established for the Board of Regents' Prescription Drug Benefit Program. Generally, claims are submitted by participating pharmacies directly to Express Scripts for verification, processing and payment. Express Scripts maintains an eligibility file based on information furnished by Blue Cross Blue Shield on behalf of the various organizational units of the University System of Georgia.

A reconciliation of total estimated claims liabilities for employees and retirees for the fiscal years ended June 30, 2008 and June 30, 2007 is shown below:

Emp loy ees: Unpaid Claims and Claim Adjustments (Prior Year IBNR)
Incurred Claims and Claim Adjustments Expenses Provisions for Insured Events of the Current Year
Payments - Claims and Claim Adjustments Attributable To Insured Events of the Current Year and Prior Years
Unpaid Claims and Claim Adjustments (Current Year IBNR)
Retirees: Unpaid Claims and Claim Adjustments (Prior Year IBNR)
Incurred Claims and Claim Adjustments Expenses Provisions for Insured Events of the Current Year
Payments - Claims and Claim Adjustments Attributable To Insured Events of the Current Year and Prior Years
Unpaid Claims and Claim Adjustments (Current Year IBNR)

June 30, 2008

$

27,147,291

June 30, 2007

$

27,983,473

204,892,976

264,356,511

207,991,411

$

24,048,856 $

265,192,693 27,147,291

$

0$

0

90,144,273

0

83,441,613

0

$

6,702,660 $

0

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
Annual Financial Report FY 2008 83

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 University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the University System of Georgia expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Plan Description The Board of Regents Retiree Health Benefit Fund (the "Plan") is a single-employer, defined benefit, healthcare plan administered by the University System Office. The plan was authorized pursuant to Official Code of Georgia Annotated Section 47-21-21 for the purpose of accumulating funds necessary to meet employer costs of retiree post-employment health insurance benefits.
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or who become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits.
Annual Financial Report FY 2008 84

Membership of the plan consisted of the following at June 30, 2008:

June 30, 2008

Retirees and beneficiaries receiving benefits Terminated plan members entitled to but not yet receiving benefits Active plan members

18,909
0 33,794

Total

52,703

Summary of Significant Accounting Policies The financial statements of the Plan are prepared using the accrual basis of accounting. Employer contributions are recognized in the period in which they are due. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan.
Funding Policy The contribution requirements of plan members and the University System of Georgia, as employer, are established and may be amended by the Board of Regents. The Plan is substantially funded on a "pay-as-you-go" basis; however, amounts above the pay-as-you-go basis may be contributed annually, either by specific appropriation or by Board designation.
Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for eligible retirees. The employer portion of health insurance for its eligible retirees is based on rates that are established annually by the Board of Regents for the upcoming plan year. For the 2008 plan year, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the retiree.
For fiscal year 2008, the University System of Georgia contributed $66,717,298 to the plan, including $66,446,289 for current premiums or claims and an additional $271,009 to pre-fund benefits. Plan members receiving benefits contributed $21,091,336 for current premiums or claims.
Annual OPEB Cost and Net OPEB Obligation The University System of Georgia's annual other post-employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC 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 over a period not to exceed thirty years.

Annual Financial Report FY 2008 85

The following table shows the components of the University System's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the University System's net OPEB obligation to the Retiree Health Benefit Fund (dollar amounts in millions):

Annual required contribution Interest on net OP EB obligation Adjustment to annual required contribution
Annual OPEB cost (expense) Less: Contributions made
Increase in net OP EB obligation Net OP EB obligation - beginning of year Net OP EB obligation - end of year

$224.9 0.0 0.0
224.9 (66.7) 158.2
0.0 $158.2

The University System's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2008, which is the transition year for the Retiree Health Benefit Plan, were as follows (dollar amounts in millions):

Fiscal Year Ended

Annual OPEB Cost

Percentage of Annual OPEB
Cost Contributed

Net OPEB O bliga tion

2008

$224.9

29.7%

$158.2

Funded Status and Funding Progress

Actuarial Valuation
Date 7/1/2007

Actuarial Value of Assets
(a) $0

Actuarial Accrued Liability (AAL) Projected Unit
Credit (b)
$1,985,200,000

Unfunded AAL (UAAL) (b-a)
$1,985,200,000

Funded Ratio (a/b) 0.0%

Covered Payroll
(c) $2,201,804,465

UAAL as a Percentage of Covered Payroll
((b-a)/c) 90.2%

Note: The allocation and transfer of assets to the plan took place subsequent to the actuarial valuation date.

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Annual Financial Report FY 2008 86

Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. Additional information as of the latest actuarial valuation follows:

Valuation date Actuarial cost method Amortization method Asset Valuation method Remaining amortization period Actuarial assumptions: Investment rate of return* Healthcare cost trend rate* Ultimate trend rate Year of Ultimate trend rate *Includes an inflation assumption of 2.5%

July 1, 2007 Projected Unit Credit Level Dollar, Closed, 30-year Market Value of Assets 30 years
6.00% 8.50% 5.50% 2012

Annual Financial Report FY 2008 87

Note 15. Natural Classifications with Functional Classifications

The University System's operating expenses by functional classification for fiscal 2008 are shown below:

Functional Classification FY2008

Natural Classification Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation

Instruction
$730,626,574 256,842,845 290,201,517
426,300 15,442,733 9,397,345 7,910,331 68,373,974 49,004,261

Research
$244,049,824 233,893,114 124,086,079
45,207 18,963,823 2,896,190 3,285,453 163,584,408 44,410,253

Public Service
$63,695,048 133,425,447 63,414,961
444,472 6,334,695
903,075 21,389,548 141,041,340 5,201,793

Academic Support
$16,339,188 196,690,781 69,684,686
97,999 5,480,793
167,347 3,567,130 84,764,416 38,479,305

Student Services

Institutional Support

$1,152,903 116,763,072 37,212,951
128,876 2,809,005 2,728,427 1,822,078 49,121,064 4,546,464

$2,303,225 247,152,259 124,083,485
6,591,706 4,312,922
481,903 8,789,816 314,365,853 28,574,516

Total Expenses

$1,428,225,880 $835,214,351 $435,850,379 $415,271,645 $216,284,840 $736,655,685

Natural Classification Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation

Plant Operations & Maintenance
$295,148 125,495,429 48,332,153
(9,147,041) 450,208
104,960,360 129,294,769 55,391,409

Scholarships & Fellowships
$2,912 44,842 72,942 326,803
158,744,833
125,613

Functional Classification FY2008

Auxiliary Enterprises

Unallocated Expenses

$1,072,826 116,992,130 36,012,453
9,284,239 1,940,860 15,193,847 26,238,044 240,274,283 50,968,870

$0
(364,720) 364,720

MCG only Patient Care

Total Expenses

$2,256,929 73,114,252 24,865,322
325,877
327,423 108,909,392

$1,061,794,577 1,500,414,171
817,966,549 8,198,561 56,060,916
190,512,967 178,290,183 1,299,490,392 276,941,591

Total Expenses

$455,072,435 $159,317,945 $497,977,552

$0 $209,799,195 $5,389,669,907

Annual Financial Report FY 2008 88

Note 16. Component Units
Georgia Institute of Technology
Georgia Tech Foundation, Inc. Georgia Tech Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of the Georgia Institute of Technology (Institute). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the Institute in support of its programs. The Foundation board of trustees is self-perpetuating and consists of forty-five (45) elected trustees, who are alumni of the Institute and five (5) ex-officio trustees. Although the Institute does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted for support of the Institute. Because the resources held by the Foundation are used by, or for the benefit of, the Institute, the Foundation is considered a component unit of the Institute and is discretely presented in the Institute's financial statements.
The foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The foundation's fiscal year is July 1 through June 30.
During fiscal year 2008, the Foundation distributed approximately $69.3 million to the Institute for restricted and unrestricted purposes. Note 10 of this financial report provides information on related party leases between the Foundation and the Institute. Complete financial statements for the Foundation can be requested at the following address: Georgia Tech Foundation, Inc., Controller's Office, 760 Spring Street N.W., Suite 400, Atlanta, GA 30308.
Investments for Component Units:
The Georgia Tech Foundation, Inc. holds investments totaling $1.335 billion as of June 30, 2008, of which $376.96 million is the corpus of the endowment (permanently restricted). The corpus is nonexpendable, but the earnings on the investments may be spent in accordance with donor restrictions or in accordance with the Foundation's spending policy. The Foundation has established a spending policy in which up to 6% of the twelve (12) quarter average market value of the endowment funds are allocated from the earnings for expenditure. In fiscal year 2008, the Foundation allocated 5% of that average.
Investments are comprised of the following amounts at June 30, 2008:
Annual Financial Report FY 2008 89

Cash held by investment organization Government and Agency Securities Corporate Bonds Equity Securities M utual Funds Venture Capital Real Estate Diversify ing Strategies
Total Investments

Cost
$47,287,914 18,657,446 29,808,809
349,557,663 58,430,310
222,785,550 47,451,789
317,668,284 $1,091,647,765

Fair Value
$47,287,914 18,802,404 27,639,374
472,381,398 59,020,515
298,147,904 50,417,484
360,986,686 $1,334,683,679

Capital Assets for Component Units:

Georgia Tech Foundation, Inc. holds the following Capital Assets at June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation Total Capital Assets being Depreciated, Net
Capital Assets, Net

$2,553,000 2,553,000
38,051,000 7,530,000
45,581,000 10,466,509 35,114,491 $37,667,491

Long-term Liabilities for Component Units:

Changes in long-term liabilities for Georgia Tech Foundation, Inc. for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance June 30, 2007

Compensated Absences Liabilities under split interest agreement Notes and Loans Payable Revenue/Mortgage Bonds Payable Other Long Term Liabilities

$245,178 10,474,837 63,725,993 211,935,000
0

Additions
$197,272 6,391,975 52,202,000
10,939,238

Reductions
$178,377 1,818,252 54,391,119 4,540,376

Ending Balance June 30, 2008
$264,073 15,048,560 61,536,874 207,394,624 10,939,238

Amounts due within
One Year
$264,073 1,953,062 61,536,874 4,825,000

Total Long Term Liabilities

$286,381,008

$69,730,485

$60,928,124

$295,183,369

$68,579,009

Annual Financial Report FY 2008 90

Notes and Loans Payable: The Foundation has two $30 million revolving lines of credit. At June 30, 2008, $45.955 million was the total aggregate outstanding on the lines of credit. Interest is calculated using the 30-day LIBOR rate plus 0.25%, which was 2.73% at June 30, 2008. Both lines of credit expire on June 30, 2009. The Foundation expects to renew both lines of credit upon expiration.

The Foundation also has a $20 million line of credit for the purpose of funding the construction of the Nanotechnology Research Center Building on the Institute's campus. As of June 30, 2008, $15.582 million was outstanding on the line of credit. Interest is calculated using the 30day LIBOR rate plus 0.25%, which was 2.73% at June 30, 2008. The line of credit expires on June 30, 2009.

The Foundation also has available one other line of credit in the amount of $20 million. As of June 30, 2008, no amounts have been drawn on this credit facility. This line of credit expires on June 30, 2009.

Annual estimated debt service requirements to maturity for Notes and Loans Payable are as follows:

Year Ending June 30: Year

2009

1

Princip al

Notes and Loans Payable Interest

$61,536,874

$1,680,000

Total $63,216,874

Revenue Bonds Payable: Series 2001 Bond Issuance During May 2001, the Foundation borrowed $44.98 million in Series 2001A Bonds. These bonds were issued to provide funds to finance the costs of construction of the CRC, a facility that has been constructed on the Institute's campus. These bonds are general unsecured obligations of the Foundation. The interest rates on the outstanding bond principal range from 4.30% to 5.75% until maturity in November 2030. The outstanding principal on the bonds was $40.845 million at June 30, 2008.
Series 2002 Bond Issuance During January 2002, the Foundation borrowed $111.09 million in Series 2002A (tax exempt) Bonds and $73.19 million Series 2002B (taxable) Bonds. These bonds were issued to provide funds to finance the costs of the acquisition, construction and installation of an addition to the Institute's campus known as Technology Square. The Foundation leased the hotel and conference center portion of Technology Square to a third party in July, 2003. The other components of Technology Square were leased to the Board of Regents, on behalf of the Institute, under a capital lease effective July, 2004. The bonds are general unsecured obligations of the Foundation. The interest rates on the outstanding bond principal range from 4.0% to 6.60% through maturity in November 2031. The outstanding principal on the bonds was $168.04 million at June 30, 2008.
Annual debt service requirements to maturity for Georgia Tech Foundation's revenue bonds payable are as follows:

Annual Financial Report FY 2008 91

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033
Bond Discount, net

Year 1 2 3 4 5
6-10 11-15 16-20 21-25

Princip al
$4,825,000 5,060,000 5,310,000 5,600,000 5,915,000
35,170,000 45,085,000 51,900,000 50,020,000 208,885,000 (1,490,376) $207,394,624

Bonds Payable Interest
$11,437,491 11,203,637 10,945,586 10,653,001 10,339,689 46,097,954 34,575,148 21,345,317 5,509,682
162,107,505
$162,107,505

Total
$16,262,491 16,263,637 16,255,586 16,253,001 16,254,689 81,267,954 79,660,148 73,245,317 55,529,682
370,992,505 (1,490,376)
$369,502,129

Georgia Tech Athletic Association Georgia Tech Athletic Association (the Athletic Association) is a legally separate, tax-exempt component unit of the Georgia Institute of Technology (Institute). The Athletic Association administers the Institute's intercollegiate athletics program, including fund-raising to support scholarships. The 14 member association board of trustees is appointed predominantly by the President of the Georgia Institute of Technology, and consists of faculty, alumni, students, and friends of the Institute. Although the Institute does not control the timing or amount of receipts and disbursements from the Athletic Association, all of the resources are restricted to support the intercollegiate athletic program for Georgia Tech. Because these resources are used for the benefit of the Institute, the Athletic Association is considered a component unit of the Institute and is discretely presented in the Institute's financial statements.
The Athletic Association is a private nonprofit organization that reports in accordance with the accounting principles generally accepted in the United States as prescribed by the Governmental Accounting Standards Board (GASB). The financial statements are prepared in accordance with Statements of Governmental Accounting Standards (SGAS) No. 35, Basic Financial Statementsand Management's Discussion and Analysis for Public Colleges and Universities, as amended by SGAS No. 37, Basic Financial Statements-and Management's Discussion and Analysis-State and Local Governments: Omnibus-an Amendment of GASB Statements No. 21 and No. 34, and SGAS No. 38, Certain Financial Statement Note Disclosures. The Athletic Association's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Athletic Association distributed approximately $12.4 million to the Institute for athletic scholarship support and other payments that were either expense reimbursements or support for Institute programs. Complete financial statements for the Athletic Association can be obtained from the Georgia Tech Athletic Association, Attention: Mollie Simmons Mayfield, Assistant Director of Athletics, 150 Bobby Dodd Way, NW, Atlanta, GA 30332-0455.

Annual Financial Report FY 2008 92

Deposits and Investments for Component Units:

Deposits: The Athletic Association does not have a policy that addresses custodial credit risk. As of June 30, 2008, $6,135,596 of the Athletic Association's bank balance of $6,235,596 was uncollateralized and exposed to custodial credit risk.

Investments: The Athletic Association's investments are held and reported by Georgia Tech Foundation, Inc. and are represented by an $80,058,950 Due from Component Unit balance on the Statement of Net Assets.

Capital Assets for Component Units:

Georgia Tech Athletic Association had the following Capital Asset activity for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land (and other assets) Construction Work-in-Progress
Total Capital Assets Not Being Depreciated

Beginning Balances 7/1/2007
$49,946 208,675 258,621

Additions $0 0

Reductions
$42,946 208,675 251,621

Ending Balance 6/30/2008
$7,000 0
7,000

Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equip ment Total Assets Being Depreciated

126,095,186 453,078
5,708,799 132,257,063

1,272,979 542,928 188,466
2,004,373

127,368,165

996,006

5,897,265

0

134,261,436

Less: Accumulated Depreciation Buildings Facilities and Other improvements Equip ment Total Accumulated Depreciation

30,598,005 347,594
3,085,137 34,030,736

4,044,705 83,705 604,320
4,732,730

34,642,710

431,299

3,689,457

0

38,763,466

Total Capital Assets, Being Depreciated, Net

98,226,327

(2,728,357)

0

95,497,970

Capital Assets, net

$98,484,948

($2,728,357)

$251,621

$95,504,970

Long-term Liabilities for Component Units:
Changes in long-term liabilities for the Athletic Association for the fiscal year ended June 30, 2008 are shown below:

Annual Financial Report FY 2008 93

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Compensated Absences Notes and Loans Payable Revenue/Mortgage Bonds Payable Other Long Term Liabilities
Total Long Term Liabilities

$1,044,814 963,311
106,018,678 0

$0 3,495,229

$108,026,803 $3,495,229

$1,044,814 27,555
2,037,829
$3,110,198

$0 935,756 103,980,849 3,495,229
$108,411,834

$0 27,978 2,025,000 1,080,357
$3,133,335

Notes and Loans Payable: Notes Payable at June 30, 2008 represents the Athletic Association's obligation to Georgia Tech Foundation, Inc. with respect to the William C. Wardlaw Center. The effective interest rate at June 30, 2008 is 4.92%.

Annual debt service requirements to maturity for the Athletic Association's note payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028

1 2 3 4 5 6-10 11-15 16-20

Notes and Loans Payable

Princip al

Interest

Total

$27,978 29,476 30,975 32,474 33,973
198,343 255,297 327,240 $935,756

$46,376 44,998 43,510 41,917 40,249
173,091 116,455
43,516 $550,112

$74,354 74,474 74,485 74,391 74,222
371,434 371,752 370,756 $1,485,868

Revenue Bonds Payable: In December, 2001, the Development Authority of Fulton County issued the Georgia Tech Athletic Association Revenue Bonds, Series 2001 ("Series 2001 Bonds") with a par value of $112,080,000 to finance the construction of a new baseball stadium, demolish a portion of the Georgia Tech Football stadium, the construction of certain improvements thereto, other miscellaneous capital improvements, and to refinance the outstanding principal on the Series 1995 Bonds and other borrowings. The interest rates on the bonds range from 4% to 5.5% and the bonds mature in October, 2032.
On March 16, 2004, the Athletic Association entered into a master swap agreement with UBS AG, Stamford Branch ("UBS"), an investment bank, and simultaneously sold UBS, an Interest Rate Swaption ("swaption"). The swaption represents an option to enter into an interest rate swap. The swaption premium generated by this contract was an upfront payment to the Athletic Association of $2,367,000. In exchange for the swaption premium, UBS gains the right (but not the obligation) to enter into a specified swap agreement with the Athletic Association beginning
Annual Financial Report FY 2008 94

on April 1, 2012. If the swaption is exercised, the Athletic Association and UBS will swap interest rate payments. The Athletic Association will pay interest to UBS based on the stated rates in the swap agreement. UBS would then pay the Athletic Association a floating rate based on the Bond Market Association Municipal Swap Index plus 21 basis points (0.21%), which approximates the expected interest cost on the variable rate refunding bonds. At June 30, 2008, the swaption had a fair value (representing a liability) of $8,442,390, as calculated by UBS. The swaption premium is recorded as a component of bonds payable in the statement of net assets and is being amortized on a straight-line basis over the remaining life of the bonds as a component of interest expense in the statement of revenues, expenses, and changes in net assets.

Annual debt service requirements to maturity for the Athletic Association's revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033

1 2 3 4 5 6-10 11-15 16-20 21-25

Bond Discount/Swaption Premium

Princip al
$2,025,000 2,120,000 2,210,000 2,315,000 2,445,000
14,445,000 18,775,000 24,240,000 34,380,000 102,955,000
1,025,849 $103,980,849

Bonds Payable Interest
$5,233,586 5,137,911 5,045,346 4,939,956 4,814,844
21,839,294 17,503,303 12,042,725
4,639,150 81,196,115
$81,196,115

Total
$7,258,586 7,257,911 7,255,346 7,254,956 7,259,844
36,284,294 36,278,303 36,282,725 39,019,150 184,151,115
1,025,849 $185,176,964

Georgia Tech Research Corporation Georgia Tech Research Corporation and its subsidiary Georgia Tech Applied Research Corporation (referred to in the singular as GTRC in this document), are legally separate, taxexempt component units of the Georgia Institute of Technology (Institute). GTRC functions as the prime contractor for most sponsored research conducted at Georgia Tech and subcontracts with the Institute for faculty and staff services. GTRC's 12-member board of trustees is selfperpetuating and consists of senior Institute administrators, alumni, and supporters of Georgia Tech. GTRC's income and resources are restricted to support research mission objectives of the Institute. Because the resources held by GTRC are restricted for use in support of the Institute, GTRC is considered a component unit of Georgia Tech and is discretely presented in the Institute's financial statements.
The Georgia Tech Research Corporation is a private nonprofit organization that reports under GASB standards, in accordance with Statements of Governmental Accounting Standards ("SGAS") No. 35, Basic Financial Statements-and Management's Discussion and Analysis-for Public Colleges and Universities, as amended by SGAS No. 37, Basic Financial Statements-and Management's Discussion and Analysis-State and Local Governments: Omnibus-an Amendment of GASB Statements No. 21 and No. 34, and SGAS No. 38, Certain Financial Statement Note Disclosures. The financial statement presentation required by these statements provide a
Annual Financial Report FY 2008 95

comprehensive, entity-wide perspective of GTRC's assets, liabilities, net assets, revenues, expenses, and changes in net assets. The Georgia Tech Research Corporation's fiscal year is July 1 through June 30.

During fiscal year 2008, GTRC distributed approximately $377.6 million to the Institute for restricted and unrestricted purposes. Complete financial statements for GTRC can be requested at the following address: Georgia Tech Research Corporation, Director of Accounting and Reports, 505 Tenth Street, Atlanta, GA 30332-0415.

Deposits and Investments for Component Units:

Deposits: At June 30, 2008, the carrying value of deposits was $10,057,833 and the bank balance was $10,424,177. Of Georgia Tech Research Corporation's deposits, $10,224,177 were uninsured and collateralized with securities held by the Office of Treasury and Fiscal Services, but not in GTRC's name.

Investments: Georgia Tech Research Corporation's investments at June 30, 2008 were as follows:

Fair Value

Commercial Paper Equity Securities

$47,600,000 331,674

Total Investments

$47,931,674

Interest Rate Risk Interest rate risk is the risk that changes of interest rates of debt investments will adversely affect the fair value of an investment. GTRC does not have a formal policy for managing interest rate risk.
The investment in Commercial Paper matures in less than one year.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, GTRC will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. GTRC does not have a formal policy for managing custodial credit risk.
At June 30, 2008, $47,600,000 of GTRC's applicable investments were held by the investment's counterparty in GTRC's name.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. GTRC does not have a formal policy for managing credit quality risk.

Annual Financial Report FY 2008 96

The Commercial Paper investment is rated A-1+ by Standard and Poor's.

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an entity's investment in a single issuer. GTRC does not have a formal policy for managing concentration of credit risk.

Of GTRC's total investments of $47,931,674, $47,600,000, or 99%, are invested in Federal Home Loan Bank discount notes.

Capital Assets for Component Units:

Georgia Tech Research Corporation had the following Capital Asset activity for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Capitalized Collections Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated

Beginning B al an ce s 7/1/2007
$240,735 0
240,735

Addi ti o n s
$0 32,098 32,098

Re du cti on s $0 0

En di n g B al an ce 6/30/2008
$240,735 32,098
272,833

Capital Assets, Being Depreciated: Building and Building Improvements Equipment T otal Assets Being Depreciated

21,133 3,498,102 3,519,235

74,100 270,957 345,057

206,762 206,762

95,233 3,562,297 3,657,530

Less: Accumulated Depreciation Buildings Equipment T otal Accumulated Depreciation

3,056 2,086,929 2,089,985

3,348 408,396 411,744

189,697 189,697

6,404 2,305,628 2,312,032

T otal Capital Assets, Being Depreciated, Net

1,429,250

(66,687)

17,065

1,345,498

Capital Assets, net

$1,669,985

($34,589)

$17,065

$1,618,331

Georgia Advanced Technology Ventures, Inc. Georgia Advanced Technology Ventures, Inc. (GATV) is a Georgia non-profit organization formed to support Georgia Institute of Technology's technology transfer and economic development mission and its Advanced Technology Development Center (ATDC) incubator program. GATV provides capital and operating support for technology transfer and economic activities including ATDC incubator facilities and services to ATDC affiliated companies.
GATV is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB

Annual Financial Report FY 2008 97

presentation for external financial reporting purposes in these financial statements. Georgia Advanced Technology Ventures fiscal year is July 1 through June 30.

During the year ended June 30, 2008, Georgia Advanced Technology Ventures, Inc. distributed $295,569 to the Institute for operating expenses. Complete financial statements for GATV can be requested at the following address: Georgia Advanced Technology Ventures, Inc., Treasurer's Office - Attention: Joel Hercik, Lyman Hall, Room 315, Atlanta, GA 30332-0257.

Investments for Component Units:

Georgia Advanced Technology Ventures, Inc. holds investments in the amount of $957,061. These funds are invested in Georgia Venture Partners, LLC.

Capital Assets for Component Units:

Georgia Advanced Technology Ventures, Inc. holds the following Capital Assets as of June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Infrastructure M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$11,428,530 11,428,530
107,659,415 3,411,274 1,047,396
112,118,085 9,269,018
102,849,067 $114,277,597

Long-term Liabilities for Component Units:

Changes in long-term liabilities for the GATV for the fiscal year ended June 30, 2008 are shown

below:

Beginning

Ending

Amounts due

Balance

Balance

within

July 1, 2007

Additions

Reductions

June 30, 2008

One Year

Capital Lease Obligations Notes and Loans Payable

$85,145,694 8,047,352

$6,371,037 3,883,669

$1,145,044 1,535,882

$90,371,687 10,395,139

$0 1,678,898

Total Long Term Liabilities

$93,193,046

$10,254,706

$2,680,926

$100,766,826

$1,678,898

Annual Financial Report FY 2008 98

Capital Lease Obligations: Georgia Advanced Technology Ventures, Inc. has three long-term capital leases. The leases are for Centergy One Building, Floors 1-3 with an interest rate of 6.25%, Centergy One Building, Floors 4-5 with an interest rate of 7.75%, and Technology Enterprise Park with an interest rate of 8.224%. The balances for these leases total $90,371,687 at June 30, 2008, which includes $1,593,351 in capitalized interest payable.

Future minimum lease payments under the capital leases and the net present value of future minimum lease payments are as follows at June 30, 2008:

Year ending June 30:

2009

1

2010

2

2011

3

2012

4

2013

5

2014 through 2018

6-10

2019 through 2023

11-15

2024 through 2028

16-20

2029 through 2033

21-25

2034 through 2038

26-30

Total minimum lease payments

Less: Interest

Principal Outstanding

Capital Leases
$6,811,817 6,958,532 7,103,045 7,251,074 7,398,582
38,467,746 38,153,078 42,220,348 46,924,028 19,254,482 220,542,732 130,171,045 $90,371,687

Notes and Loans Payable: Georgia Advanced Technology Ventures, Inc. has four notes payable and a line of credit arrangement with The University Financing Foundation, Inc. (TUFF). Three of the notes payable are secured by Technology Enterprise Park land and the fourth is unsecured. Interest rates on the notes payable range from 6.00% to 7.53%. The notes payable balances at June 30, 2008 total $8,795,139, which includes $91,795 in capitalized interest payable. The credit arrangement with TUFF includes advances at June 30, 2008 of $1,600,000, out of a total credit limit of $1,900,000. Principal is payable within 30 days of demand by TUFF. Interest on the credit line is prime plus 2%.
Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Annual Financial Report FY 2008 99

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Princip al

Notes and Loans Payable Interest

$1,678,898 229,092 270,110 299,086 330,531
2,009,506 1,299,453 2,001,348 2,053,070
224,045 $10,395,139

$434,381 440,374 446,538 452,894 459,465
2,416,843 2,724,484 3,084,971 2,481,836
193,469 $13,135,255

Total
$2,113,279 669,466 716,648 751,980 789,996
4,426,349 4,023,937 5,086,319 4,534,906
417,514 $23,530,394

Georgia Tech Alumni Association Georgia Tech Alumni Association (Alumni Association) is a legally separate, tax-exempt component unit of the Georgia Institute of Technology (Institute). The Alumni Association acts primarily as a point of contact with the Institute's alumni, prospective students, and friends for outreach and development. The forty-three member Alumni Association board of trustees is self-perpetuating and consists of alumni and friends of the Institute. Although the Institute does not control the timing or amount of receipts from the Alumni Association, the majority of resources or income thereon that the Alumni Association holds and invests is restricted to support the Alumni Association's mission of serving and promoting the alumni of the Institute. Because resources held by the Alumni Association are used by, or for the benefit of, the Institute, the Alumni Association is considered a component unit of the Institute and is discretely presented in the Institute's financial statements.
The Alumni Association is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Alumni Association's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Alumni Association distributed $735,099 to the Institute primarily for employee salary and insurance costs. Complete financial statements for the Alumni Association can be obtained from the Georgia Tech Alumni Association, Attention: Controller, 190 North Avenue, Atlanta, GA 30313.
Capital Assets for Component Units:
Georgia Tech Alumni Association holds the following Capital Assets as of June 30, 2008:

Annual Financial Report FY 2008 100

Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
T otal Capital Assets being Depreciated
Less T otal Accumulated Depreciation
T otal Capital Assets being Depreciated, Net
Capital Assets, Net

June 30, 2008
$718,980 788,253
1,507,233
1,058,612
448,621
$448,621

Georgia Tech Facilities, Inc. Georgia Tech Facilities, Inc. (Facilities) is a legally separate, tax-exempt component unit of the Georgia Institute of Technology (Institute). Facilities constructs research and auxiliary buildings and other structures for use by the Institute and then leases the completed buildings/structures to the Institute. The eight-member Facilities board is appointed by the President of the Georgia Institute of Technology and consists of alumni and friends of Georgia Tech. Although the Institute does not control the timing or amount of receipts and disbursements for Facilities, its resources and income are restricted to support the construction activities of the Institute. Because these restricted resources held by Facilities can only be used by, or for the benefit of, the Institute, Facilities is considered a component unit of Georgia Tech and is discretely presented in the Institute's financial statements.

Georgia Tech Facilities, Inc. is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. Facilities fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $6,227,000 to the University for both restricted and unrestricted purposes. Complete financial statements for Facilities can be obtained from the following address: Georgia Tech Facilities, Inc., Treasurer's Office, Lyman Hall, Room 315, Atlanta, GA 30332-0257, Attention: Joel Hercik.

Investments for Component Units:

Georgia Tech Facilities, Inc.'s investments at June 30, 2008 were as follows:

Government and Agency Securities Corporate Bonds

Cost
$4,500,000 2,500,000

Fair Value
$4,346,880 2,445,120

Total Investments

$7,000,000

$6,792,000

Annual Financial Report FY 2008 101

Capital Assets for Component Units:

Georgia Tech Facilities, Inc. holds the following Capital Assets as of June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$598,000 1,419,000 2,017,000
1,200,000 1,200,000
600,000 600,000 $2,617,000

Long-term Liabilities for Component Units:

Changes in long-term liabilities for Facilities for the fiscal year ended June 30, 2008 are shown

below:

Beginning

Ending

Amounts due

Balance

Balance

within

July 1, 2007

Additions

Reductions

June 30, 2008

One Year

Capital Lease Obligations Revenue/Mortgage Bonds Payable

$9,492,000 210,125,000

$0 199,990,000

$2,098,000 115,308,000

$7,394,000 294,807,000

$2,179,000 5,723,000

Total Long Term Liabilities

$219,617,000 $199,990,000 $117,406,000

$302,201,000

$7,902,000

Capital Lease Obligations: Effective April 15, 2007, Facilities entered into an installment sale agreement with the Institute for telecommunications equipment and installation. The agreement commences on the date the equipment was accepted and is renewable at the option of the Institute annually on July 1 for five successive one-year terms. The total extended term of the agreement will be approximately 63 months, to July 15, 2011.
To finance the equipment, Georgia Tech Facilities, Inc entered into a Master Lease and Sublease Agreement with SunTrust Leasing Corporation (as Lessor) and the Development Authority of Fulton County (as lessee) in the amount of $9,734,000. The outstanding principal balance of the obligation as of June 30, 2008 is $7,394,000.
Annual debt service requirements to maturity for capital lease obligations are as follows:

Annual Financial Report FY 2008 102

Year ending June 30:

2009

1

2010

2

2011

3

2012

4

Total minimum lease payments Less: Interest

Principal Outstanding

Capital Leases
$2,430,000 2,430,000 2,430,000 607,000 7,897,000 503,000
$7,394,000

Revenue Bonds Payable: Georgia Tech Facilities, Inc. has nine bond issues outstanding with balances totaling $285,405,000. The proceeds from the bond issues were used to acquire or construct (for the benefit of Georgia Institute of Technology) the Habersham Building, which houses the Ivan Allen College, Bioengineering and Biosciences Building, Family Housing Complex, Klaus Parking Deck, the Molecular Science and Engineering Building, the Electrical Substation, and the North Avenue Apartments. Interest rates on the bonds range from 2.625% to 5.25%. Facilities also has some variable rate demand bonds. For 2008A and 2008C Bonds, Facilities has interest rate swap agreements. Facilities retains an independent entity to provide periodic valuations of the interest rate swaps. At June 30, 2008, the value of the swaps total is ($2,422,000) and is reported as an Other Liability (current) on the Statement of Net Assets.

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Bond/Swaption Premiums

Princip al

Bonds Payable Interest

$5,723,000 6,880,000 7,217,000 7,536,000 7,880,000
45,174,000 58,568,000 69,295,000 54,913,040 22,218,960 285,405,000
9,402,000 $294,807,000

$12,217,660 12,484,332 12,218,336 11,921,126 11,587,541 52,349,919 40,808,158 26,329,350 11,541,969 2,154,425
193,612,816
$193,612,816

Total
$17,940,660 19,364,332 19,435,336 19,457,126 19,467,541 97,523,919 99,376,158 95,624,350 66,455,009 24,373,385
479,017,816 9,402,000
$488,419,816

Georgia State University
Georgia State University Foundation, Inc. Georgia State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Georgia State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The 37 member board of the Foundation, of which 6 members are ex-
Annual Financial Report FY 2008 103

officio, is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources that the Foundation holds and invests are restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $509,754 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Foundation's Office at One Park Place South, Suite 533, Atlanta, GA 30303 or from the Foundation's website at www.gsu.edu.
Prior Period Adjustment:
During the year ended June 30, 2008 the Foundation determined that it had incorrectly classified two properties leased to the University as property and equipment instead of as direct financing leases. The 2007 consolidated financial statements have therefore been restated to properly present these assets as Net Investments in Capital Leases. The effect of the restatement was a decrease in unrestricted net assets as of June 30, 2007 of $121,973, a decrease in property and equipment of $35,697,615, and an increase in net investment in capital leases of $35,575,642.
Investments for Component Units:
Georgia State University Foundation, Inc. holds endowment and other investments in the amount of $166.4 million. The Foundation determines the spendable amounts for endowment funds using a total return formula and makes no spending allocations to restricted funds from the operating portfolio. Income from the operating portfolio is used to fund the Foundation's administrative activities pursuant to an unrestricted spending policy. The Trustees of the Foundation adopted an endowment spending policy that provides for the allocation of endowment funds at the rate of 70% of the previous year's allocation plus 30% of the current year's market values at a spending rate of 4.5% of the market value of the endowment funds. A 1% management fee is used to fund the Foundation's administrative activities. The balance of the return is applied to the value of the endowment funds.
Investments are comprised of the following amounts at June 30, 2008:
Annual Financial Report FY 2008 104

Money Market Accounts Equity Securities Mutual Funds Real Estate
Total Investments

Cost
$53,537,924 64,349,345 37,191,485 3,744,498
$158,823,252

Fair Value
$53,537,924 70,825,752 36,644,994 5,360,421
$166,369,091

Capital Assets for Component Units:

Georgia State University Foundation, Inc. holds the following Capital Assets as of June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$7,227,900 7,227,900
71,321,399 981,351
72,302,750 18,761,277 53,541,473 $60,769,373

Long-term Liabilities for Component Units:

Changes in long-term liabilities for Georgia State University Foundation, Inc. for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within One Year

Compensated Absences Liabilities under split interest agreement Capital Lease Obligations Revenue/Mortgage Bonds Payable Other Long Term Liabilities

$33,520 260,992 9,722,456 250,674,710 5,812,394

$4,218

$0 8,632 722,430 1,961,963 5,812,394

$37,738 252,360 9,000,026 248,712,747
0

$0 37,769 759,993 11,515,000

Total Long Term Liabilities

$266,504,072

$4,218

$8,505,419

$258,002,871

$12,312,762

Annual Financial Report FY 2008 105

Capital Lease Obligations: Alpharetta Campus Facilities Capital Lease On September 23, 1998, $10,600,000 of revenue bonds were issued by the Development Authority of Alpharetta, Georgia, (the "Development Authority") for the purpose of financing the costs of acquiring, constructing and installing educational facilities which are located in the City of Alpharetta and are to be leased by the Foundation. The bonds are special limited obligation bonds payable by the Development Authority from lease payments made to it by the Foundation. The lease obligates the Foundation, on a limited recourse basis, to make lease payments sufficient to pay 83.5% of principal and interest on the bonds with the balance to be paid by the Development Authority. The Foundation in turn subleased the facilities to the Board of Regents of the University System of Georgia (the "Board of Regents") for the use of the University. The liability of the Foundation is limited to the interest of the Foundation in the project and the rents, profits, issues, products and proceeds thereof. The City of Alpharetta is obligated to make 100% of the principal and interest payments on the bonds to the extent rental payments derived from the project are insufficient for such purposes. The Foundation has entered into a lease with the University on this property. As the lease is classified as a capital lease by the University, the Foundation has recorded the asset as a net investment in capital leases on the Statement of Net Assets.
Rialto Center Facilities Capital Lease During 1994, the Foundation purchased and has since renovated facilities currently occupied by the University's School of Music. The project included the purchase and renovation of two existing office buildings. The Foundation also entered into a long term land lease for the renovation and use of an existing performing arts theater, the Rialto Theater. The project was financed through contributions to the Foundation and through bonds issued by the Downtown Development Authority of the City of Atlanta (the "Authority"), the proceeds of which were loaned to The University Financing Foundation ("TUFF"). The Foundation has entered into long term lease commitments with TUFF to provide for the debt service payments on the bonds and other bond financing related expenses. The Foundation then leases the facilities to the University through a series of one year renewable lease agreements. At the end of the lease period or the retirement of the bonds, whichever occurs first, the title to the two office buildings will pass to the Foundation. Therefore, the Foundation has classified this lease as a capital lease and has recorded it as an asset under property and equipment in the consolidated statements of financial position. During 2004, the 1994 bonds issued by the Authority were refunded to obtain savings in debt service and to obtain funds for improvements to the Rialto Theater. Accordingly, the Authority entered into a new loan agreement with TUFF and a new agreement with the Foundation as the guarantor of the bonds. The guarantee is expressly limited to the unrestricted income and unrestricted assets of the Foundation. The terms of the long-term lease commitment between TUFF and the Foundation were modified to reflect the new interest rate of the bonds, the additional proceeds available for capital improvements, the additional bond financing related expenses and the extension of the term of the lease through November 1, 2015.
Annual debt service requirements to maturity for capital lease obligations are as follows:
Annual Financial Report FY 2008 106

Year ending June 30:

2009

1

2010

2

2011

3

2012

4

2013

5

2014 through 2018

6-10

2019 through 2023

11-15

Total minimum lease payments

Less: Interest

Principal Outstanding

Capital Leases
$1,214,618 1,212,585 1,209,232 1,208,651 1,210,863 4,700,743 691,415 11,448,107 2,448,081 $9,000,026

Interest expense related to the capital lease obligation for Alpharetta for the year ending June 30, 2008 totaled $281,064.

Interest expense related to the TUFF lease obligation for Rialto for the year ending June 30, 2008 totaled $212,029.

Rialto Ground Lease Pursuant to the lease agreement between the Foundation and TUFF, the lease payments include the cost of an underlying ground lease on the Rialto Theater property. At the end of the lease term, TUFF will transfer all interests in the ground lease to the Foundation. The Foundation has the option to renew the ground lease with the owner through December 31, 2045, once the Authority bond obligations are satisfied.

Future minimum lease payments under the ground lease as of June 30, 2008 are as follows:

Ground Lease

Year ending June 30:

2009

1

$69,410

2010

2

69,410

2011

3

69,410

2012

4

69,410

2013

5

69,410

2014 through 2016

6-8

167,741

Total

$514,791

Revenue Bonds Payable: Student Recreation Center Bonds On October 15, 1998, $33,430,000 of revenue bonds were issued by the Atlanta Development Authority ("ADA") with the proceeds loaned to the Foundation for the purpose of financing the acquisition, construction, improvement and equipping of a student recreation center for the benefit of the University. The bonds are special limited obligation bonds of the ADA, payable from funds received from the Foundation pursuant to a promissory note between the ADA and the Foundation. The Foundation leases the facilities to the Board of Regents for the use of the University. The Foundation's liability on the note is limited to its interest in the project and the rents and revenues from the project, including amounts received pursuant to the rental agreement with the Board of Regents. Payment of principal and interest on the bonds are insured by AMBAC Assurance Corporation. Principal payments are to be made annually until October 1, 2018. Interest is paid semi-annually through 2018 at a rate specified in the revenue bonds

Annual Financial Report FY 2008 107

ranging from 3.60% to 4.60%. Interest expense for the year ended June 30, 2008 totaled $1,085,059.

Piedmont Ellis Bonds On September 8, 2005, a total of $161,330,000 revenue bonds (tax-exempt $158,410,000 and taxable $2,920,000) were issued by the ADA on behalf of the Foundation with the proceeds used for the purpose of financing the acquisition, construction and equipping of certain land, buildings and personal property to be used as a student housing project. The project has 1,994 beds, including community activity facilities, site amenities and parking for 786 vehicles. There was a 22 month construction schedule for the project which was completed and opened for occupancy for the fall semester of 2007. The real property upon which the project is located is owned by the Board of Regents and leased to the Foundation pursuant to a Ground Lease. After construction was completed, the Foundation leased the facility to the Board of Regents on an annually renewable basis for a term of 33 years for the use and benefit of the University. Moody's Investors Services Inc. has assigned the series 2005 Bonds the rating of "Aaa" based upon the issuance of the policy by the Bond Insurer. Principal payments are to be made annually starting September 1, 2009 and ending September 1, 2036. Interest is paid semi-annually through 2036 at a rate specified in the revenue bonds ranging from 3.875% to 5.0%. Interest expense for the year ended June 30, 2008 totaled $7,762,468.

Panther Place Bonds On May 31, 2007, $58,385,000 of revenue bonds (tax-exempt $49,175,000 and taxable $9,210,000) were issued by the ADA on behalf of the Foundation with the proceeds used to finance the costs of acquiring land, buildings, improvements, machinery, fixtures, furnishings, equipment and other real and personal property to be used for office space. SunTrust Banks, Inc. as the seller and the current tenant may remain in the building for up to five years. Upon expiration of the lease or early termination by SunTrust Banks, Inc. the Foundation will lease the property to the Board of Regents on an annually renewable basis. The Foundation began making semi-annual interest payments on January 1, 2008 at a rate of 4.289% on tax-exempt bonds and 5.409% on taxable bonds. Interest expense for the year ended June 30, 2008 totaled $3,186,562.

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal
$11,515,000 13,045,000 13,375,000 13,805,000 22,865,000 28,585,000 27,515,000 31,680,000 40,440,000 40,250,000
243,075,000 5,637,747
$248,712,747

Bonds Payable Interest
$11,385,338 11,253,067 11,092,477 10,878,877 10,252,053 47,235,109 39,310,737 30,526,309 19,285,184 5,331,090
196,550,241
$196,550,241

Total
$22,900,338 24,298,067 24,467,477 24,683,877 33,117,053 75,820,109 66,825,737 62,206,309 59,725,184 45,581,090
439,625,241 5,637,747
$445,262,988

Annual Financial Report FY 2008 108

Interest Rate Swap Agreement: On May 29, 2007, the Foundation entered into an interest rate swap agreement related to the Panther Place revenue bond issue utilized to purchase the SunTrust building. The Foundation has accounted for the interest rate swap agreement in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. By using a derivative financial instrument to hedge exposure to a change in interest rates, the financing is exposed to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the additional funds, which creates repayment risk for the financing. The financing policy also requires that all derivative contracts be governed by an International Swaps and Derivatives Association Master Agreement. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The bond financing was constructed with an interest rate swap contract to convert the variable rate bonds into a synthetic fixed rate debt at the time the debt was offered, with the intent to reduce borrowing costs. Interest rate swaps used with the issuance of tax-exempt debt must be recorded as assets or liabilities in the statements of financial position, depending on whether the swap is in a gain or a loss position, at fair value. Unrealized gains or losses for a given period must be reflected in the earnings for that period. In volatile environments, this can result in large differences from one period to the next.
The swap provider, Ambac Financial Services, calculated the fair value in accordance with generally accepted accounting principles in the United States of America using a proprietary valuation model, which they developed and had tested by external auditors. The model calculates future cash flows by projecting forward rates, and then discounts those cash flows at their present value. All rates used in valuation are mid-market levels (mid-way between bid and ask) or are model based mid-market levels when mid-market levels are not available. The fair value provided takes certain factors into consideration, including the liquidity of the swap market and the uniqueness of the deal structure. The fair value of the interest rate swap agreement is recognized in the accompanying Statement of Net Assets at $4,533,379 and is reported as "Other Liabilities" at June 30, 2008 and as "Interest Expense" in the Statement of Revenues, Expenses and Changes in Net Assets for the year ended June 30, 2008.
Georgia State University Research Foundation, Inc. Georgia State University Research Foundation, Inc. (Research Foundation) is a legally separate, tax-exempt component unit of Georgia State University (University) and was established to contribute to the scientific, literary, educational, and charitable functions of the University in securing gifts, contributions, and grants from individuals, private organizations, and public agencies, and in obtaining contracts with such individuals or entities for the performance of sponsored research, development, or other programs by the various colleges, schools, departments or other units of the University. Most of the research grants awarded to the Research Foundation are subcontracted to the University, which is responsible for the fiscal administration of the grants.
The Research Foundation's results for fiscal 2008 include Science Park, LLC (the "Company"), a component unit of the Research Foundation, which was organized as a not-for-profit limited liability company on August 9, 2006 with its sole member the Research Foundation. The Company was created to develop a 248,806 square foot science research facility (the "Project"). Upon completion of the Project, the Company will lease the facility to the Board of Regents of
Annual Financial Report FY 2008 109

the University System of Georgia for the use and benefit of Georgia State University. No financial activity occurred prior to July 1, 2007.
The ten member board of the Research Foundation is self-perpetuating and consists of faculty and administrators of the University. Because the resources held by the Research Foundation can only be used by or for the benefit of the University, the Research Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Research Foundation is considered a special-purpose government entity engaged only in business-type activities and is required to follow all applicable GASB pronouncements. The Research Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Research Foundation paid to the University $45,828,253 in grant revenue and $1,018,787 for support of research activities. Complete financial statements for the Research Foundation can be obtained from the office of the Georgia State University Research Foundation, Inc., Alumni Hall, 30 Courtland Street, Suite 219, Atlanta, GA 30303.
Deposits and Investments for Component Units:
Deposits:
The custodial credit risk for deposits is the risk that in the event of a bank failure, the Research Foundation's deposits may not be recovered. 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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, 2008, the Research Foundation's carrying amount of deposits was $7,566,660, and the bank balance was $7,952,968. Of the bank balance, $100,000 was covered by FDIC insurance at June 30, 2008, and $5,920,793 was collateralized by the State of Georgia pledging
Annual Financial Report FY 2008 110

pool which thereby guarantees collateralization of any uninsured bank deposit balances. The remaining uncollateralized balance of $1,932,175 consists of cash equivalents held by investment custodians.

Investments: The Research Foundation's investments at June 30, 2008 are presented below. All investments are presented by investment type.

Fair Value

Investment Maturity 1-5 Years

Investment type Debt Securities
Mutual Bond Fund

$907,151 $907,151

$907,151 $907,151

Other Investments Bond/Fixed Income Mutual Funds Equity Securities - Domestic Equity Securities - International Real Estate Investment Fund
Investment Pools Office of Treasury and Fiscal Services Georgia Fund 1

535,162 1,495,167
934,011 228,400
90,603,430 $94,703,321

The above investments are included in the Statement of Net Assets as follows:

Cash and Cash Equivalents Investments unrestricted Investments restricted expendable Total investments

$90,603,430 3,484,293 615,598
$94,703,321

All investments with the exception of equity securities of $28,665 and investment pools of $90,603,430 at June 30, 2008, are held by the Georgia State University Foundation on behalf of the Research Foundation and are held by outside investment managers.

Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The Research Foundation's policy for managing interest rate risk is divided between short-term and long-term investments. Short-term investments will have a maximum maturity of eighteen months to five years depending on the type of investment. Longterm investments are managed using a planning timeline of five years or more and overall risk measurements rather than specific maturity limits.

Annual Financial Report FY 2008 111

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Research Foundation's investment policies are consistent with the investment policies of Georgia State University Foundation. The Research Foundation does not have a formal policy related to credit quality risk of investments.

The Research Foundation's investments as of June 30, 2008 are presented below. All investments are presented by investment type and fixed income securities are presented by credit quality ratings.

Related Debt Investments Mutual Bond Fund

Fair Value

AAA

$907,151 $907,151

$541,160 $541,160

AA

A

BBB

BB

B

Unrated

$35,712 $35,712

$57,760 $57,760

$61,152 $61,152

$64,332 $64,332

$146,670 $146,670

$365 $365

The Georgia Fund 1 investment is rated AAAm by Standard & Poor's.

Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the Research Foundation will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The Research Foundation does not have a formal policy for managing custodial credit risk for investments.

At June 30, 2008, $4,099,891 of the Research Foundation's applicable investments were uninsured and held by the Research Foundation's counterparty in the Research Foundation's name.

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an entity's investment in a single issuer. The Research Foundation's policy for managing concentration of credit risk is divided amongst investment types as follows for the year ended June 30, 2008:

Domestic equities

44%

Alternative investments 22%

Bonds

16%

Real estate

11%

International equities

7%

Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or a deposit. The Research Foundation's investments are not exposed to foreign currency risk as securities denominated in currencies other than the U.S. dollar are not permissible by the Research Foundation's investment policy.

Annual Financial Report FY 2008 112

Capital Assets for Component Units:

Georgia State University Research Foundation, Inc. had the following Capital Asset activity for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land (and other assets) Construction Work-in-Progress
Total Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Total Assets Being Depreciated
Less: Accumulated Depreciation Buildings Facilities and Other improvements Total Accumulated Depreciation

Beginning Balances 7/1/2007
$1,643,990
1,643,990
3,947,210 307,186
4,254,396
595,713 277,867 873,580

Additions
$0 1,592,461 1,592,461

Reductions $0 0

Ending Balance 6/30/2008
$1,643,990 1,592,461 3,236,451

2,626,988 2,626,988

6,574,198

307,186

0

6,881,384

170,386 1,377
171,763

766,099

279,244

0

1,045,343

Total Capital Assets, Being Depreciated, Net Capital Assets, net

3,380,816 $5,024,806

2,455,225 $4,047,686

0

5,836,041

$0

$9,072,492

Long-term Liabilities for Component Units:

Changes in long-term liabilities for Georgia State University Research Foundation, Inc. for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Revenue/M ortgage Bonds Payable

$0

$91,090,710

$0

$91,090,710

$0

Total Long Term Liabilities

$0

$91,090,710

$0

$91,090,710

$0

$90,205,000 Bond Issue -- The Series 2007 Bonds are being issued pursuant to a Trust Indenture and Security Agreement dated as of December 1, 2007 (the "Indenture"), between the Atlanta Development Authority (the "Authority") and Branch Banking and Trust Company, Wilson, North Carolina as trustee (the "Trustee"). The Authority will loan proceeds of the sale of the Series 2007 Bonds to the Company, pursuant to the terms and provisions of a Loan Agreement dated as of December 1, 2007 (the "Loan Agreement"), between the Authority and the Company. The Company's obligations under the Loan Agreement will be evidenced by a Promissory Note dated as of December 1, 2007 (the "Promissory Note").

Annual Financial Report FY 2008 113

The Company will use proceeds of the Series 2007 Bonds to (i) finance or refinance, in whole or in part, the cost of the acquisition, construction and equipping of approximately 248,806 square foot research facility (the "Project") to be located in a new Georgia State University Science Park on the campus of the University; (ii) fund a debt service reserve fund for the Series 2007 Bonds; (iii) fund capitalized interest for the Series 2007 Bonds; and (iv) pay costs of issuance of the Series 2007 Bonds.

Term bonds under the Loan Agreement bear interest payable semiannually on January 1 and July 1 at fixed rates ranging from 4.75% to 5.25% depending on the schedule of bond maturities. Serial bonds under the loan agreement bear interest payable semi-annually on January 1 and July at the rate of 4.50% until July 1, 2014 when the interest rates increases to 5.00%. Principal payments are due on July 1 beginning in 2011 and continuing until 2039.

The following is a summary as of June 30, 2008, of principal and interest payments due under all borrowings during each of the next five years ending June 30 and five-year increments thereafter:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038 2039
Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31

Principal
$0 0
1,470,000 1,535,000 1,605,000 9,270,000 11,830,000 15,075,000 19,210,000 24,540,000 5,670,000 90,205,000
885,710 $91,090,710

Bonds Payable Interest
$4,482,350 4,482,350 4,482,350 4,416,200 4,347,125 20,492,500
17,931,500 14,685,562 10,533,125 5,218,250
283,500 91,354,812
$91,354,812

Total
$4,482,350 4,482,350 5,952,350 5,951,200 5,952,125
29,762,500 29,761,500 29,760,562 29,743,125 29,758,250
5,953,500 181,559,812
885,710 $182,445,522

Medical College of Georgia
MCG Health, Inc. MCG Health, Inc. (Company) is a legally, separate tax-exempt component unit of Medical College of Georgia (College). The Company is organized to further the health sciences, patient care, research, and education mission of the Medical College of Georgia Hospital and Clinics (Hospital). The Hospital, which is owned by the Board of Regents of the University System of Georgia (Regents), consists of 632 licensed bed acute care hospital and related outpatient care facilities principally located in Augusta, Georgia. Because of the special relationship with the College, the Company is considered a component unit and is discretely presented in the College's financial statements.

Annual Financial Report FY 2008 114

The Company utilized the accrual basis of accounting using the economic resources measurement focus. Pursuant to, and as permitted by GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the Company has elected to apply the provisions of all relevant pronouncements of the Financial Accounting Standards Board (FASB), including those issued after November 30, 1989, that do not conflict with or contradict GASB pronouncements. The Company's fiscal year is July 1 through June 30.

Complete financial statements for the Company can be obtained from the Administrative Office at 1120 15th Street, Augusta, Georgia 20912.

Deposits and Investments

Deposits: At June 30, 2008, $63,631,153 of MCG Health, Inc.'s deposits were uninsured, uncollateralized, or collateralized by securities held by the pledging institution or by its trust department or agent in other than the Company's name.

Investments: At June 30, 2008, MCG Health, Inc. maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms with Board of Regents policy. All investments are consistent with donor intent, Board of Regents policy, and applicable federal and state laws.

A summary of investments follows:
Fair Value

Less Than 1 Year

Investment Maturity 1-5 Years 6-10 Years

More Than 10 Years

Investment type Debt Securities
U.S. Treasuries U.S. Agencies
Explicitly Guaranteed Implicitly Guaranteed Corporate Debt Mortgage Backed Securities (Commercial)
Municipal Obligation

$15,799,141

$0 $15,799,141

308,415 62,257,572 23,508,290 19,213,833 3,058,662 $124,145,913

6,481,177 3,456,527
719,589
$10,657,293

51,744,862 20,051,763 6,372,495 1,770,332 $95,738,593

$0

$0

251,084

308,415 3,780,449

1,159,759 $1,410,843

10,961,990 1,288,330 $16,339,184

Other Investments Money Market Funds Equity Securities - Domestic Equity Securities - International Joint Venture

79,659,511 22,703,501
355,464 863,495
$227,727,884

Annual Financial Report FY 2008 115

Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. MCG Health, Inc. does not have a formal policy for managing interest rate risk.

Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the Company will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The Company does not have a formal policy for managing custodial credit risk for investments.

As of June 30, 2008, $147.2 million of the Company's applicable investments are held by the investment managers in the Company's name.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Company's policy for managing credit quality risk is as follows: The Company's assets may be invested only in investment grade bonds rated AA (or equivalent) or better. The Company's assets may be invested only in commercial paper rated A1 (or equivalent) or better. Fixed income maturity restrictions are as follows: Maximum maturity for any single security is five years, and weighted average portfolio maturity may not exceed 3 years. Securities comprising money market funds must be rated investment grade by Standard and Poor's and/or Moody's.

The investments subject to credit quality risk at June 30, 2008 are rated as follows:

Fair Value

AAA

AA

A

BAA

Related Debt Investments U. S. Agencies - Implicitly Guaranteed Corporate Debt M ortgage Backed Securities (Commercial) M unicipal Obligation

$62,257,572 23,508,290 19,213,833 3,058,662

$62,257,572 2,304,173 18,165,282 631,242

$0 9,128,334
675,346 2,427,420

$0 11,353,162
373,205

$0 722,621

$108,038,357

$83,358,269

$12,231,100 $11,726,367

$722,621

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. Except for U.S. Government and agency obligations, each fixed income investment manager's portfolio should contain no more than 5% of any single issue, at cost. Individual U.S. Treasury securities may represent up to 30% of the total investment portfolio, while the total allocation of U.S. Treasury notes and bonds may represent up to 100% of the Company's aggregate bond position.

As of June 30, 2008, the following MCG Health, Inc.'s applicable investments exceed 5% of its total investment balance: Federal Home Loan Bank 14.8%, Federal National Mortgage Association 6.2%, and Federal Home Loan Mortgage Corporation 5.5%.

Annual Financial Report FY 2008 116

Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or a deposit. The Company does not have a policy for managing exposure to foreign currency risk.

MCG Health, Inc. holds investments totaling $355,464 or 0.2% in International equity securities. Foreign currency risk is considered negligible related to this holding in comparison to total investments.

Capital Assets for Component Units:

MCG Health, Inc.'s capital asset activity for the year ending June 30, 2008 was as follows:

Capital Assets, Not Being Depreciated: Land (and other assets) Construction Work-in-Progress
Total Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Total Assets Being Depreciated

Beginning Balances 7/1/2007
$7,138,554 10,692,641 17,831,195

Additions
$581,676 24,415,032 24,996,708

Reductions
$0 18,579,924 18,579,924

Ending Balance 6/30/2008
$7,720,230 16,527,749 24,247,979

3,936,122 21,147,609 124,090,086 17,930,364 167,104,181

279,541 6,055,847 34,409,205
40,744,593

3,917,908 17,930,364 21,848,272

4,215,663 27,203,456 154,581,383
0 186,000,502

Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Capital Leases Total Accumulated Depreciation

393,352 7,752,867 96,248,220 6,030,191 110,424,630

178,480 3,309,006 10,677,017 3,898,510 18,063,013

(6,147,962) 9,928,701 3,780,739

571,832 11,061,873 113,073,199
0 124,706,904

Total Capital Assets, Being Depreciated, Net Capital Assets, net

56,679,551 $74,510,746

22,681,580 $47,678,288

18,067,533 $36,647,457

61,293,598 $85,541,577

Long-term Liabilities for Component Units:
On April 1, 2008, the Company issued a total of $135,000,000 of Development Authority of Richmond County Revenue Bonds, Series 2008A and 2008B (the Bonds). Proceeds from the Bonds are to be used to fund certain construction and renovation projects and to purchase new and replacement equipment. The proceeds were also used to refund outstanding capital lease obligations and to pay certain costs associated with the issuance of the Bonds.
Prior to the issuance of the Bonds on April 1, 2008, the Company's long-term debt consisted primarily of capital lease obligations. Other Long-Term Liabilities represents the self-insured
Annual Financial Report FY 2008 117

portion of professional liability risks. Accrued professional liability costs are determined actuarially.

Changes in long-term liabilities for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Compensated Absences Capital Lease Obligations Revenue/Mortgage Bonds Payable Other Long Term Liabilities
Total Long Term Liabilities

$11,190,803 11,672,954
0 9,298,000
$32,161,757

$2,775,205 3,954,764 135,000,000
68,699
$141,798,668

$2,093,371 15,627,718
374,641
$18,095,730

$11,872,637 0
135,000,000 8,992,058
$155,864,695

$11,872,637
2,248,015 $14,120,652

The Bonds initially bear interest at weekly rates determined by the remarketing agent as the lowest rate of interest which, in the judgment of the remarketing agent, would cause the Bonds to have a market value as of the date of determination equal to the principal amount thereof, taking into account prevailing market conditions. In the event that the remarketing agent fails to determine an applicable interest rate, the interest rate to be used shall equal 100% of the S&P Weekly Index plus twenty-five basis points or 100% of the One Month London Interbank Offered Rate (LIBOR) plus twenty-five basis points, depending on the income tax treatment of the resulting interest in the gross income of the beneficial owner of the Bonds. In no event, the interest rate on the Bonds will exceed the lesser of 15% per annum and the maximum rate permitted by law. The Company may, under certain conditions, elect to convert all of the Bonds of a Series from a weekly rate to a daily rate or other variable rate described in the Bond indenture. For the period from April 1, 2008 to June 30, 2008, the annual effective variable interest rate incurred on the Bonds was 1.872%.
Each Bond Series is secured by irrevocable letters of credit. All principal and interest payments are drawn from the letter of credit and are reimbursed by the Company under the terms of separate reimbursement agreements with the issuers of the letters of credit. Each letter of credit is currently set to expire on March 31, 2011, unless extended.
The bond indenture and letter of credit reimbursement agreements contain certain terms and restrictive covenants typical of such agreements, including maintenance of certain debt service levels, limitations on indebtedness, maintenance of certain days' cash on hand, and maintenance of a certain ratio of debt service coverage.
With respect to the 2008 capital lease refunding, funds were deposited in an irrevocable trust to provide for the debt service of the lease payable, and, therefore, all related amounts have been removed from the Company's balance sheet. The deposits into the trust have been or will be used to pay all scheduled principal and interest payments on the leases through 2013. The refunding transaction resulted in an accounting loss totaling approximately $849,000 which is reported as a nonoperating item in the accompanying statement of revenues, expenses, and changes in net assets.
Annual Financial Report FY 2008 118

Concurrent with the issuance of the Bonds, the Company entered into a variable-to-fixed interest rate swap (the Swap). The intention of the Swap is to effectively convert the Company's variable interest rate on the Bonds into a synthetic fixed rate of 3.302%.

The Bonds and the Swap mature on July 1, 2037. The initial notional amount of the Swap is $135,000,000. The notional value of the Swap declines in conjunction with payments of Bond principal such that the outstanding balance of the Series 2008A and 2008B Bonds and the notional amount of the Swap remain equal at all times. Under the Swap, the Company pays the counterparty interest at a fixed rate of 3.302% and receives interest payments at a variable rate computed at 68% of LIBOR.

As of June 30, 2008, the Swap had a fair value of $81,085 (favorable to the Company), as computed using the zero-coupon method.

As of June 30, 2008, the Company was exposed to credit risk in the amount of the fair value of the Swap. The Swap counterparty was rated AA by Fitch Ratings and Standard & Poor's and Aaa by Moody's Investors Service as of June 30, 2008. To mitigate the potential for credit risk, various levels of collateralization by the counterparty may be required should the counterparty's credit rating be downgraded and the fair value of the Swap be in a position due to the Company at a level above certain thresholds specified in the Swap agreement. Collateral would be posted with a third party custodian. The Swap exposes the Company to basis risk should the relationship between LIBOR and prevailing market rates change significantly, changing the synthetic rate on the Bonds from the intended synthetic rate of 3.302%. As of June 30, 2008, the prevailing market rate was an aggregate 1.706%, whereas 68% of LIBOR was 1.688%.

The Company or the counterparty may terminate the Swap if the other party fails to perform under the terms of the agreement. If the Swap is terminated, the variable rate Bonds would no longer carry a synthetic fixed interest rate. Also, if at the time of termination the Swap has a negative fair value (unfavorable to the Company), the Company would be liable to the counterparty for a payment equal to the Swap's fair value.

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal
$0 0
3,225,000 3,335,000 3,450,000 19,050,000 22,475,000 26,510,000 31,270,000 25,685,000 $135,000,000

Bonds Payable Interest
$4,481,362 4,481,400 4,401,019 4,291,266 4,177,625
19,047,976 15,580,617 11,491,328 6,666,955 1,367,146 $75,986,694

Total
$4,481,362 4,481,400 7,626,019 7,626,266 7,627,625
38,097,976 38,055,617 38,001,328 37,936,955 27,052,146 $210,986,694

Annual Financial Report FY 2008 119

Medical College of Georgia Foundation, Inc. Medical College of Georgia Foundation, Inc. (the "Foundation") is a legally separate, tax-exempt component unit of Medical College of Georgia (College). The Foundation acts primarily as a fundraising organization to supplement the resources that are available to the College in support of its programs. The Foundation functions as an independent corporation governed by its articles of incorporation, by-laws, and its Board of Directors. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources and income that the Foundation holds and invests are restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports on a modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Under this basis, revenue and the related assets are recognized when collected rather than when earned and expenses are generally recognized when paid rather than when incurred. Consequently, contributions receivable from donors, investment income receivables, accounts payable to vendors and accrued expenses are not included in the consolidated financial statements. The modified cash basis reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $7.7 million to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 919 15th Street, FI-1036, Augusta, Georgia 30912 or from the Foundation's website at www.mcgfoundation.org.

Investments for Component Units:

Investments are comprised of the following amounts at June 30, 2008:

Cost

Fair Value

Cash held by investment organization Certificates of Deposit Fixed Income Equity Securities Real Estate Alternative Strategies

$601,027 1,107,082 21,968,337 53,006,141 6,052,808 24,881,753

$601,027 1,107,082 21,417,184 62,669,078 6,683,254 37,645,657

Total Investments

$107,617,148

$130,123,282

Capital Assets for Component Units:
Medical College of Georgia Foundation, Inc. held the following Capital Assets as of June 30, 2008:

Annual Financial Report FY 2008 120

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

June 30, 2008
$1,510,594 1,510,594
271,318 271,318 157,876 113,442 $1,624,036

Long-term Liabilities for Component Units:
At June 30, 2008, Medical College of Georgia Foundation's long-term liabilities consisted of a $2,268,972 liability due under a split-interest agreement.
The Medical College of Georgia Physicians Practice Group Foundation The Medical College of Georgia Physicians Practice Group Foundation (PPG) is a legally separate, tax-exempt component unit of Medical College of Georgia (College). PPG acts primarily as a non-profit organization for the purpose of enhancing the clinical, research, and educational missions of the College and billing and collecting for medical services provided to patients. Revenues are obtained primarily from physician fees charged to patients at Medical College of Georgia Hospital and Clinics, which is operated by Medical College of Georgia Health, Inc. PPG Properties, LLC is a limited liability company formed in 2001 by PPG to manage real estate rental properties. PPG Alternative Collections, LLC is a limited liability company formed in 2003 by PPG to bill and collect for anesthesia services provided to patients. Georgia Esoteric and Molecular Labs, LLC was formed in 2004 by PPG to operate a specialized pathology laboratory with genetic or molecular testing capabilities. MCG-PPG Cancer Research Center, LLC was formed in 2004 by PPG to construct, own, and operate a portion of a building to house a cancer research center on the campus of the College. PPG is the sole partner and has sole voting control of each LLC. Because PPG's purpose is to support the clinical, research, and educational missions of the College, it is considered a component unit of the College and is discretely presented in the College's financial statements.
PPG is a private non-profit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations with the exceptions as noted below. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. PPG's consolidated financial statements have been prepared substantially on the basis of cash receipts and cash disbursements with the exception of the following: interest earned on investments, salary supplements due to the College, incentive compensation, and retirement plan contribution expense are accounted for using the accrual method of accounting. Additionally, four-year scholarships funded for College students are expensed in the year awarded, and property and equipment are capitalized and depreciated.

Annual Financial Report FY 2008 121

Other adjustments required under accounting principles generally accepted in the United States of America for the accrual basis of accounting have not been reflected in the accompanying financial statements, including the equity method of accounting for PPG's investments in a joint venture. The equity method of accounting requires that the carrying value of investments meeting certain criteria be adjusted to reflect the investor's share of the investee's income and losses with the income or losses included in the statement of activities.

The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The PPG's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, PPG distributed $51.8 million to the College for salaries and departmental support. Complete financial statements for the PPG can be obtained from the Administrative Office at 1499 Walton Way, Suite 1400, Augusta, Georgia 30901.

Investments for Component Units:

PPG invests in mutual funds, equity securities, and debt securities which are measured at fair value. For investments other than common stock and mutual funds, classification between current and non-current is determined based upon individual investment maturity dates. Investments in common stock and mutual funds are actively traded and are classified as current. Investment income or loss (including realized gains and losses, interest, and dividends) is included in the nonoperating revenue section of the accompanying Statement of Revenues, Expenses, and Changes in Net Assets.

Investments are comprised of the following amounts at June 30, 2008:

Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds Joint Ventures/Partnerships
Total Investments

Cost
$8,925,480 10,455,931 13,676,616
7,882,842 585,000
$41,525,869

Fair Value
$8,966,200 10,131,452 15,529,745
7,525,825 585,000
$42,738,222

Capital Assets for Component Units:

PPG held the following Capital Assets as of June 30, 2008:

Annual Financial Report FY 2008 122

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

June 30, 2008
$3,269,355 3,269,355
2,422,416 6,249,455 8,671,871 5,997,709 2,674,162 $5,943,517

Long-Term Liabilities for Component Units:

Changes in long-term liabilities for component units for the fiscal year ended June 30, 2008 are

shown below:

Beginning

Ending

Amounts due

Balance

Balance

within

July 1, 2007

Additions

Reductions

June 30, 2008

One Year

Notes and Loans Payable Other Long Term Liabilities
Total Long Term Liabilities

32,689,063 558,885
$33,247,948

683,209 106,346

32,005,854 452,539

685,000

$0

$789,555

$32,458,393

$685,000

Notes and Loans Payable: During 2004, the MCG-PPG Cancer Research Center, LLC (CRC) entered into a loan agreement with the Development Authority of Richmond County (the Authority), whereby the Authority issued bonds in the aggregate amount of $32,870,000 plus a premium of $498,784 and lent the proceeds thereof to CRC for the purpose of providing funds to finance the cost of construction of a portion of a cancer research center building on the campus of MCG. The premium is amortized semi-annually over the term of the loan. The loan agreement provides for semi-annual interest payments at interest rates ranging from 2.5 percent to 5.0 percent. Principal payments are due annually beginning December 2006 and continuing through December 2034. The outstanding principal balance of the loan payable as of June 30, 2008 was $31,550,000. The loan is secured by certain personal property constituting a portion of the building recorded as net investment in capital lease in the Statement of Net Assets.
Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Annual Financial Report FY 2008 123

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal

Notes and Loans Payable Interest

$685,000 705,000 725,000 745,000 765,000
4,240,000 5,125,000 6,465,000 8,210,000 3,885,000 31,550,000
455,854 $32,005,854

$1,384,150 1,365,798 1,344,953 1,321,829 1,296,600 6,029,418 5,064,346 3,723,904 1,969,857
190,267 23,691,122
$23,691,122

Total
$2,069,150 2,070,798 2,069,953 2,066,829 2,061,600
10,269,418 10,189,346 10,188,904 10,179,857
4,075,267 55,241,122
455,854 $55,696,976

PPG administers a deferred compensation plan for various current and former MCG faculty members. Deferred compensation is reported in Other Long Term Liabilities in the Statement of Net Assets and represents the accounts held on behalf of these members in the amount of $452,539 at June 30, 2008.
Medical College of Georgia Research Institute, Inc. Medical College of Georgia Research Institute, Inc. (Institute) is a legally separate, tax-exempt component unit of Medical College of Georgia (College). The Institute was established in 1980 to contribute to the education, research, and service functions of the College in obtaining contracts from individuals, industrial or other private organizations, government or other public agencies for the performance of sponsored research, development or other programs by the various departments or other units of the College. All research contracts awarded to the Institute are sub-contracted to the College, which is responsible for the fiscal administration of the research projects. Although the College does not control the timing or amount of activity, all grant awards are sub-contracted and managed by the College. Because of this special relationship, the Institute is considered a component unit of the College and is discretely presented in the College's financial statements.
The Institute's financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board ("GASB"), in order to be consistent with the accounting principles followed by its primary government, Medical College of Georgia. The Institute's fiscal year is July 1 through June 30.
During the year ended June 2008, the Institute sub-contracted approximately $53.2 million of research projects to the College. Complete financial statements for the Institute can be obtained from the Medical College of Georgia's Division of Sponsored Program Administration at Medical College of Georgia, Augusta, Georgia 30912.

Annual Financial Report FY 2008 124

Deposits and Investments

Deposits: As of June 30, 2008, $7,033,741 of the Institute's bank balance was exposed to custodial credit risk. Of that amount, $200,000 was insured by Federal depository insurance and $6,833,741 was uncollateralized.

The Institute had no investments as of June 30, 2008.

Capital Assets for Component Units:

The Institute's Capital Asset activity for the year ending June 30, 2008 was as follows:

Capital Assets, Being Depreciated: Equipment Total Assets Being Depreciated

Beginning Balances 7/1/2007
$28,676 28,676

Additions
$0 0

Reductions
$0 0

Ending Balance 6/30/2008
$28,676 28,676

Less: Accumulated Depreciation Equipment Total Accumulated Depreciation

11,948 11,948

5,735 5,735

17,683

0

17,683

Total Capital Assets, Being Depreciated, Net Capital Assets, net

16,728 $16,728

(5,735) ($5,735)

0

10,993

$0

$10,993

Medical College of Georgia Dental Foundation Medical College of Georgia Dental Foundation (Foundation) is a legally separate, tax-exempt component unit of the Medical College of Georgia (College). The objectives and purposes of the Dental Foundation are to acquire and administer funds and property which are derived from fees charged for services rendered in the practice of dentistry at the School of Dentistry at the Medical College of Georgia by members of the faculty, residents, and hygienists of the School of Dentistry. Dental Foundation funds are used to maintain and improve the high standard of instruction at the Medical College of Georgia Dental School for advanced study by members of the School's student body and faculty and for research in the dental health field. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income is used in direct support of Medical College of Georgia. Because of this, the Foundation is considered to be a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is March 1, 2007 through February 29, 2008. Because the Foundation's
Annual Financial Report FY 2008 125

fiscal year differs from that of the College, amounts due to or due from the two entities are not consistent in this report.

During the year ended February 29, 2008, the Foundation distributed $1.9 million to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office of Medical College of Georgia, School of Dentistry, AD 1104, Augusta, Georgia 30912.

Investments for Component Units:

Investments are stated at fair value and are comprised of the following amounts at February 29, 2008:

Certificates of Deposit Unit Investment Trust Government Bonds Preferred Stocks Domestic Equities
Total Investments

Cost
$1,069,000 130,869 57,030 24,979
2,219,826 $3,501,704

Fair Value
$1,081,292 128,970 53,265 23,830
2,181,956 $3,469,313

University of Georgia
The University of Georgia Foundation The University of Georgia Foundation (Foundation) is a legally separate, tax-exempt component unit of the University of Georgia (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The thirty-six member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $22,252,188 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Foundation Office at 394 South Milledge Avenue, Athens, GA 30602 or from the Foundation's website at www.ugafoundation.org.

Annual Financial Report FY 2008 126

Special Item Transfer:

In 2006, the Board of Trustees of the Foundation agreed to transfer its sole membership of the UGA Real Estate Foundation (Real Estate Foundation) to the University of Georgia Research Foundation, Inc. The transfer was contingent upon a private letter ruling from the Internal Revenue Service accepting the transfer with no negative impact on the tax-exempt status of the Real Estate Foundation's outstanding bond debt. In 2007, the private letter ruling favorable to the transfer was received, and the transfer of sole membership became effective July 1, 2007. The transfer of the Real Estate Foundation's Assets and Liabilities as of July 1, 2007 resulted in a Net Asset transfer of ($6,638,835), which is reported as a Special Item Transfer on the Statement of Revenues, Expenses and Changes in Net Assets.

Investments for Component Units:
The University of Georgia Foundation holds investments in the amount of $606 million at June 30, 2008. Investments consist of the following:

Cash held by investment organization Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds Split Interest Investments Real Estate Diversifying Strategies Investment Pools
Total Investments

Cost
$39,793,183 231,943 304,827
2,668,042 1,920,332 15,232,070 16,155,937
599,994 392,105,046
$469,011,374

Fair Value
$39,793,183 234,316 301,002
2,693,996 1,828,504 16,727,272 16,155,937
613,950 527,703,970
$606,052,130

Capital Assets for Component Units:

The University of Georgia Foundation holds the following Capital Assets as of June 30, 2008:

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

June 30, 2008
$4,810,092 44,187
4,854,279
9,414,449 1,071,428 10,485,877 1,340,863 9,145,014 $13,999,293

Annual Financial Report FY 2008 127

Long-Term Liabilities for Component Units:

Changes in long-term liabilities for the University of Georgia Foundation for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Transfer of Real Estate Foundation

Adjusted Beginning Balance
July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Compensated Absences Liabilities under split interest agreement Notes and Loans Payable Revenue/Mortgage Bonds Payable Other Long Term Liabilities
Total Long Term Liabilities

$29,495 11,686,162 20,691,533 175,667,798
0
$208,074,988

($29,495) (10,499,210) (175,667,798)
($186,196,503)

$0 11,686,162 10,192,323
0 0
$21,878,485

$0 655,613 5,014,961

$0 8,083,918

686,085

$6,356,659 $8,083,918

$0 12,341,775 7,123,366
0 686,085
$20,151,226

$0 126,617 686,085 $812,702

Notes and Loans Payable: During 2002, the Foundation signed an $880,000 promissory loan agreement with a bank, which was amended during 2005 to increase the borrowed amount to $1,117,865. This agreement expires on May 1, 2012. As of June 30, 2008, $974,091 was outstanding under this agreement. Interest is charged at the bank's 30-day LIBOR rate plus 45 basis points (or 0.45%), or 2.91% at June 30, 2008. Principal and interest are payable monthly.

During 2007, the Foundation signed a $6,200,000 promissory loan agreement with a bank, which expires on November 1, 2017. As of June 30, 2008, $6,149,275 was outstanding under this agreement. Interest is charged at the bank's 30-day LIBOR rate plus 32.5 basis points (or 0.325%), or 2.78% at June 30, 2008. Principal and interest are payable monthly.

Interest Rate Caps: The Foundation has two outstanding interest rate cap agreements effectively limiting the interest rate exposure on the $1,117,865 note payable to a 5.75% fixed rate over the term of the note payable and limiting the interest rate exposure on the $6,200,000 note payable from variable to a 5.95% fixed rate over the term of the note payable. As of June 30, 2008, the fair value of these interest rate caps was a liability of $686,085 and is reported in the Other Liabilities (current) line on the Statement of Net Assets. The Foundation recorded a charge of $691,109 in fiscal 2008 as a result of these caps as an adjustment to interest expense.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018

Notes and Loans Payable

Principal

Interest

Total

1

$126,617

$418,741

$545,358

2

134,261

411,110

545,371

3

142,367

403,018

545,385

4

921,202

390,742

1,311,944

5

101,376

342,301

443,677

6-10

5,697,543

1,406,626

7,104,169

$7,123,366

$3,372,538

$10,495,904

Annual Financial Report FY 2008 128

The University of Georgia Athletic Association, Inc. The University of Georgia Athletic Association, Inc. (the Association) is a legally separate, taxexempt component unit of the University of Georgia (the "University"). The Association was organized in 1938 as a not-for-profit corporation to promote intercollegiate athletic sports representing the University. The twenty-member board of directors consists of faculty, staff, students, and alumni of the University. Although the University does not control the timing or amount of receipts from the Association, the majority of resources or income thereon that the Association holds and invests are restricted to the athletic activities of the University. Because these restricted resources held by the Association can only be used by or for the benefit of the University and their management role is significant to the accomplishment of the University's mission, the Association is considered a component unit of the University and is discretely presented in the University's financial statements.
For financial reporting purposes, the Association is considered a special purpose government agency engaged only in business type activities, as defined by GASB Statement 34. The Association's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Association made payments to the University for services such as food services, parking services, health services, tuition, gas, electricity, security, and golf course maintenance. These payments totaled $29,766,110 and were recognized as expenses of the Association.
Capital assets net of accumulated depreciation of $185 million are included in the financial statements of the Association. These capital assets, excluding moveable equipment and construction work in progress, are also included in the University's report. Complete financial statements for the Association can be obtained from the Treasurer's office at 456 East Broad Street, Athens, GA 30602.
Deposits for Component Units:
Funds belonging to the State of Georgia 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 notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 Authority of the United States government, which are fully guaranteed by the United States government, both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank,
Annual Financial Report FY 2008 129

the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. 6. Insurance of accounts provided by the Federal Deposit Insurance Corporation and the Federal Savings and Loan Insurance Corporation.

As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia the option of exempting demand deposits from the collateral requirements.

At June 30, 2008, the book-carrying amount of the Athletic Association's deposits, including noncurrent cash and cash equivalents, was $89,246,997 and the bank balance was $92,433,058. The Athletic Association's bank balance is classified as follows at June 30, 2008:

Amount insured by the FDIC and FSLIC Collateralized with securities held in
the Athletic Association's name Uncollateralized

$ 333,000
80,613,869 11,486,189 $92,433,058

Capital Assets for Component Units:

The University of Georgia Athletic Association, Inc. had the following Capital Assets activity

for the year ended June 30, 2008:

Beginning

Ending

Balances

Balance

7/1/2007

Additions

Reductions

6/30/2008

Capital Assets, Not Being Depreciated:

Construction Work-in-Progress

$29,493,360

$466,936

$29,354,321

$605,975

Total Capital Assets Not Being Depreciated

29,493,360

466,936

29,354,321

605,975

Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Total Assets Being Depreciated

176,834,763 19,476,061 6,879,287
203,190,111

31,971,945 145,581 622,646
32,740,172

173,528 173,528

208,806,708 19,621,642 7,328,405
235,756,755

Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Total Accumulated Depreciation
Total Capital Assets, Being Depreciated, Net
Capital Assets, net

35,018,890 6,374,570 4,264,753
45,658,213
157,531,898
$187,025,258

3,549,328 842,110
1,178,988 5,570,426
27,169,746
$27,636,682

146,115 146,115
27,413
$29,381,734

38,568,218 7,216,680 5,297,626
51,082,524
184,674,231
$185,280,206

Long-term Liabilities for Component Units:
Changes in long-term liabilities for the Athletic Association for the fiscal year ended June 30, 2008 are shown below:

Annual Financial Report FY 2008 130

Notes and Loans Payable-Primary Government Notes and Loans Payable Revenue/Mortgage Bonds Payable Other Long Term Liabilities
Total Long Term Liabilities

Beginning Balance July 1, 2007
$2,336,428 87,113
97,560,000 2,754,277
$102,737,818

Additions $0
$0

Reductions
$333,395 87,113
2,090,000 518,474
$3,028,982

Ending Balance June 30, 2008

Amounts due within
One Year

$2,003,033 0
95,470,000 2,235,803
$99,708,836

$354,016
2,140,000 500,000
$2,994,016

Notes Payable-Due to Primary Government: Under an agreement with the University of Georgia, the Athletic Association assumed the responsibility for a portion of the funding for the construction of the Ramsey Student Center for Physical Activities. In fiscal 1996, the Athletic Association recorded as property approximately $7,800,000, representing the Athletic Association's share of the Ramsey Center based on estimated usage as defined in the agreement. The Athletic Association paid cash of $2,858,928, and subsequently recorded a liability of $4,941,072 at June 30, 1996, representing the remaining principal balance of the obligation. The note has an outstanding principal balance at June 30, 2008 of $2,003,033. The principal balance due within one year, $354,016, is reflected within the Due to Primary Government - Current Liabilities balance on the Statement of Net Assets. The Association made payments of principal and interest of $477,917 during the year ended June 30, 2008, and will make an equal payment in each succeeding year through 2013. The interest rate associated with this liability is 6.19%.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30:

2009

1

2010

2

2011

3

2012

4

2013

5

Total

Principal

Notes and Loans Payable Interest

$354,016 375,915 399,167 423,858 450,077
$2,003,033

$123,901 102,002 78,750 54,059 27,840 $386,552

Total
$477,917 477,917 477,917 477,917 477,917
$2,389,585

Revenue Bonds Payable: On September 27, 2001, the Development Authority of Athens-Clarke County, Georgia (the Authority) issued $34 million in Revenue Bonds (UGA Athletic Association, Inc. Project), Series 2001 (the Bonds) and entered into an agreement (the Loan Agreement) to loan $34 million to the Association. The Bonds are secured by a letter of credit issued by SunTrust Bank in favor of the Authority that must be renewed annually. Under the Loan Agreement, the Association is required to use the proceeds of such loan to fund improvements of certain properties as specified in the Loan Agreement. Borrowings under the Loan Agreement bear interest payable monthly at a formula rate adjusted daily (2.50% on June 30, 2008). The loan matures in 2031, subject to certain early repayment provisions. At June 30, 2008, the balance of this obligation was $33,100,000.

Annual Financial Report FY 2008 131

On August 28, 2003, the Development Authority of Athens-Clarke County, Georgia (the Authority) issued $36 million in Revenue Bonds (UGA Athletic Association, Inc. Project), Series 2003 (the Bonds) and entered into an agreement (the Loan Agreement) to loan $36 million to the Association. The Bonds are secured by a letter of credit issued by Bank of America, NA in favor of the Authority that must be renewed annually. Under the Loan Agreement, the Association is required to use the proceeds of such loan to fund improvements of certain properties as specified in the Loan Agreement. Borrowings under the Loan Agreement bear interest payable monthly at a formula rate adjusted daily (2.50% on June 30, 2008). The loan matures in 2033, subject to certain early repayment provisions. On March 7, 2005, the Association redeemed $16 million of these bonds. The remaining obligation at June 30, 2008 was $18,195,000.
On January 27, 2005, the Development Authority of Athens-Clarke County, Georgia (the Authority) issued $17.47 million in Revenue Bonds (UGA Athletic Association, Inc. Project), Series 2005 (the Bonds) and entered into an agreement (the Loan Agreement) to loan $17.47 million to the Association. The Bonds are secured by a letter of credit issued by Bank of America, NA in favor of the Authority that must be renewed annually. Under the Loan Agreement, the Association is required to use the proceeds of such loan to fund improvements of certain properties as specified in the Loan Agreement. Borrowings under the Loan Agreement bear interest payable monthly at a formula rate adjusted daily (2.10% on June 30, 2008). The loan matures in 2021 and requires yearly principal reductions. At June 30, 2008, the balance of this obligation was $15,280,000.
On August 25, 2005, the Development Authority of Athens-Clarke County, Georgia (the Authority) issued $30 million in Revenue Bonds (UGA Athletic Association, Inc. Project), Series 2005B (the Bonds) and entered into an agreement (the Loan Agreement) to loan $30 million to the Association. The Bonds are secured by a letter of credit issued by Bank of America, NA in favor of the Authority that must be renewed annually. Under the Loan Agreement, the Association is required to use the proceeds of such loan to fund improvements of certain properties as specified in the Loan Agreement. Borrowings under the Loan Agreement bear interest payable monthly at a formula rate adjusted daily (2.50% on June 30, 2008). The loan matures in 2035, subject to certain early repayment provisions. The June 30, 2008 remaining obligation for these revenue bonds was $28,895,000.
Interest Rate Swap Agreements: The Association is a party to interest rate swap agreements that are not recorded in the financial statements. Following are disclosure of key aspects of the agreements.
Objective and Terms - As a means of interest rate management, the Association entered into three separate interest rate swap transactions with Bank of America, N.A. (the "Counterparty") relating to its variable rate tax-exempt Series 2001 Bonds, tax-exempt Series 2003 Bonds, taxable Series 2005 Bonds and tax-exempt Series 2005B Bonds. Pursuant to an ISDA Master Agreement and Schedule to ISDA Master Agreement each dated as of January 27, 2005 between the Association and the Counterparty and three Confirmations, the Association has agreed to pay to the Counterparty a fixed rate of interest in an amount equal to: (1) 3.49% per annum multiplied by a notional amount which is equal to the principal amount of the Series 2001 Bonds until September 2021; (2) 3.38% per annum multiplied by a notional amount which is equal to the principal amount of the Series 2003 Bonds until August 2033; (3) 5.05% per annum
Annual Financial Report FY 2008 132

multiplied by a notional amount which is equal to the principal amount of the Series 2005 Bonds until July 2021; and (4) 3.483% per annum multiplied by the notional amount which is equal to the principal amount of the Series 2005B Bonds until August 2033.
In return, the Counterparty has agreed to pay to the Association a floating rate of interest in an amount equal to: (1) 67% of LIBOR multiplied by a notional amount which is equal to the principal amount of the Series 2001 Bonds until September 2021; (2) 67% of LIBOR multiplied by a notional amount which is equal to the principal amount of the Series 2003 Bonds until August 2033; (3) LIBOR multiplied by a notional amount which is equal to the principal amount of the Series 2005 Bonds until July 2021; and (4) 67% of LIBOR multiplied by the notional amount which is equal to the principal amount of the Series 2005B Bonds until July 2035.
Fair Value The Association will be exposed to variable rates if the counterparty to a swap defaults or if a swap is terminated. A termination of the swap agreement may also result in the Association's making or receiving a termination payment
As of June 30, 2008, the fair value of the interest rate swap agreement on the 2001 Series Bonds was ($1,224,921), indicating the amount that the Association would be required to pay the counterparty to terminate the swap agreement.
As of June 30, 2008, the fair value of the interest rate swap agreement on the 2003 Series Bonds was ($439,283), indicating the amount that the Association counterparty would be required to pay the counterparty to terminate the swap agreement.
As of June 30, 2008, the fair value of the interest rate swap agreement on the 2005A Series Bonds was ($585,624), indicating the amount that the Association would be required to pay the counterparty to terminate the swap agreement.
As of June 30, 2008, the fair value of the interest rate swap agreement on the 2005B series Bonds was ($998,313), indicating the amount that the Association would be required to pay the counterparty to terminate the swap agreement.
Swap Payments and Associated Debt As of June 30, 2008, debt service requirements of the variable-rate debt and net swap payments, assuming current interest rates remain the same, for their term were as follows. As rates vary, variable-rate bond interest payments and net swap payments will vary.
Annual Financial Report FY 2008 133

Year Ending 2009 2010 2011 2012 2013 2014-2018 2019-2023 2024-2028 2029-2033 2034-2036 Total

Variable Rate Bonds

Principal

Interest

$2,140,000 $2,275,870

2,195,000 2,224,835

2,245,000 2,172,630

2,295,000 2,119,275

2,355,000 2,064,500

12,685,000 9,451,250

13,050,000 7,888,970

9,330,000 6,626,000

43,760,000 3,844,917

5,415,000

118,865

$ 95,470,000 $ 38,787,112

Interest Rate Swaps, Net
$1,182,926 1,143,088 1,102,376 1,060,686 1,018,030 4,412,533 3,217,542 2,582,177 1,505,379 46,525
$ 17,271,262

Total $5,598,796
5,562,923 5,520,006 5,474,961 5,437,530 26,548,783 24,156,512 18,538,177 49,110,296 5,580,390 $ 151,528,374

Credit Risk As of June 30, 2008, the fair value of the swaps represents the Association's credit exposure to the Counterparty. Should the Counterparty fail to perform in accordance with the terms of the swap agreements, the Association could see a possible gain equivalent of $17.3 million less the cumulative fair value of $3.2 million. As of June 30, 2008, the Counterparty was rated Aaa by Moody's and AA+ by S&P.
Basis Risk The swaps expose the Association to basis risk. The interest rate on the Series 2001 Bonds, the Series 2003 Bond and the Series 2005B Bonds is a tax-exempt interest rate while the LIBOR basis on the variable rate receipt on the interest rate swap agreements is taxable. Taxexempt interest rates can change without a corresponding change in the 30 day LIBOR rate due to factors affecting the tax-exempt market which do not have a similar effect on the taxable market. The Association will be exposed to basis risk under the swaps to the extent that the interest rates on the tax-exempt bonds trades at greater than 67% of LIBOR for extended periods of time. The Association would also be exposed to tax risk stemming from changes in the marginal income tax rates or those caused by a reduction or elimination in the benefits of tax exemption for municipal bonds.
Termination Risk The interest rate swap agreement uses the International Swap Dealers Association Master Agreement, which includes standard termination events, such as failure to pay and bankruptcy. The Association or the Counterparty may terminate the swap if the other party fails to perform under the terms of the contract. If the swap is terminated, the variable rate bonds would no longer carry a synthetically fixed interest rate. Also, if at the time of termination, the swap has a negative fair value, then the Association would be liable to the Counterparty for a payment equal to the swap's fair value.
The Arch Foundation for the University of Georgia, Inc. The Arch Foundation for the University of Georgia, Inc. (the "Foundation") is a not-for-profit foundation that was chartered in 2005 to receive and administer contributions for the support of the University of Georgia (the "University"). The University is governed by the Board of Regents of the University System of Georgia (the "Board of Regents"). The mission and purpose of the Foundation is to provide support to the teaching, research, public service and outreach programs of the University by means of volunteer leadership and assistance in development and fundraising activities, fiduciary care for the assets of the Foundation for the long-term benefit and enhancement of the University, and the provision of broad advice, consultation and support
Annual Financial Report FY 2008 134

to the President of the University. The Foundation operates as a Cooperative Organization in accordance with policies of the Board of Regents.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $7,353,573 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the External Affairs Office of Financial Services at 394 S. Milledge Avenue, Athens, GA 30602 or from the Foundation's website at www.uga.edu/archfoundation.

Investments for Component Units:

The Arch Foundation for the University of Georgia, Inc. holds investments in the amount of $30.3 million. Investments consist of marketable securities, bonds, real property, and an investment in a limited partnership as follows:

Cost

Fair Value

Equity Securities Split Interest Investments Joint Ventures/Partnerships Real Estate Investment Pools

$39,025 28,077 630,000 2,624,000 27,190,416

$39,025 28,077 630,000 2,624,000 26,974,899

Total Investments

$30,511,518

$30,296,001

University of Georgia Research Foundation, Inc. The University of Georgia Research Foundation, Inc. (the Research Foundation) is a legally separate, tax-exempt component unit of the University of Georgia (University). The Research Foundation serves to enhance the research mission of the University by securing sponsored research funding and by providing funding of special research initiatives. All University intellectual property developed through these research programs are managed by the Research Foundation. The twenty member board of the Foundation consists of designated University personnel, appointees of several University constituent groups, and individuals selected by the Research Foundation itself. Although the University does not control the timing or amount of receipts from the Research Foundation, all sponsored research awards are subcontracted to the University and other resources and related income are restricted to benefit the research mission of the University. Consequently, the Research Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

Annual Financial Report FY 2008 135

The Research Foundation is considered a special-purpose government entity engaged only in business-type activities and is required to follow all applicable GASB pronouncements. The Research Foundation's fiscal year is July 1 through June 30.
The Research Foundation financial statements include two blended component units: the UGA Real Estate Foundation, Inc. and UGARF Media Holdings, LLC.
During fiscal year 2008, the Research Foundation transferred approximately $118 million in sponsored research and other support funds to the University and shows a net payable to the University at June 30 related to this activity. Complete financial statements for the Research Foundation can be obtained from the Treasurer's office at 456 East Broad Street, Athens, GA 30602.
Special Item Transfer:
Effective July 1, 2007, the Research Foundation became the sole member of the UGA Real Estate Foundation, Inc. (Real Estate Foundation). The Real Estate Foundation had previously been the sole member of the University of Georgia Foundation. The transfer at July 1, 2007 of the assets and liabilities of the Real Estate Foundation to the Research Foundation resulted in a Net Asset addition of $6,638,835. This transfer is reported as a Special Item Transfer in the Statement of Revenues, Expenses and Changes in Net Assets.
Prior Period Adjustment:
The UGA Real Estate Foundation, as the lessor of several leases wherein the ownership of the leased property is converted to the Board of Regents at the end of the lease term, changed its method of accounting for these leases from operating leases to capital lease treatment. The amount recognized as a prior period increase to net assets as of June 30, 2007 is $11,774,904. This increase in net assets is due to the difference between the previously recorded net of rental income less depreciation and the amount that would be recorded as net income using capital lease interest amortization.
Capital Assets as of June 30, 2007 were restated as a result of the change in lease treatment, from $165,199,306 to $18,271,896 and were replaced by Net Investment in Capital Leases of $158,702,315 on the Statement of Net Assets.
Deposits and Investments for Component Units:
Deposits: The custodial credit risk for deposits is the risk that in the event of a bank failure, the Research Foundation's deposits may not be recovered. The Research Foundation does not have a deposit policy for custodial credit risk.
At June 30, 2008, the book value of the Research Foundation's deposits was $68,499,622. The bank and investment account balances at June 30, 2008 were $68,810,956 of which $67,769,750 was uninsured. Of these uninsured deposits, $11,281,000 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the Research Foundation's name and $56,488,750 were uncollateralized.
Annual Financial Report FY 2008 136

Investments: The University of Georgia Research Foundation, Inc. maintains both short-term and long-term investment policies. Both establish primary and secondary objectives, specify allowable investments, set target investment mix, and provide investment guidelines.

The Research Foundation's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment type Debt Securities
U.S. Treasuries U.S. Agencies
Explicitly Guaranteed Implicitly Guaranteed Corporate Debt Municipal Obligation
Other Investments Equity Mutual Funds Equity Securities - Domestic Equity Securities - International Managed Futures/Hedge Funds

Fair Value

Less Than 1 Year

Investment Maturity

1-5 Years

6-10 Years

More Than 10 Years

$3,480,885
1,557,910 10,060,298 21,147,955
50,967 $36,298,015
5,443,301 3,827,681 2,228,145 4,504,381
$52,301,523

$2,156,323
660,058 18,305,443 $21,121,824

$396,311
6,209,089 2,206,599 $8,811,999

$564,416
2,891,818 635,913
$4,092,147

$363,835
1,557,910 299,333
50,967 $2,272,045

Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The Research Foundation's policy for managing interest rate risk is divided between short-term and long-term investments. Short-term investments will have a maximum maturity of eighteen months to five years depending on type of investment. Longterm investments are managed using a planning timeline of five years or more and overall risk measurements rather than specific maturity limits.
The Real Estate Foundation's policy for managing interest rate risk is to invest only in short-term United State treasury obligations with a maximum maturity of one year.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the Research Foundation will not be able to recover the value of the investment or collateral securities that are in possession of an outside party. The Research Foundation does not have a formal policy for managing custodial credit risk for investments.
At June 30, 2008, $40,197,518 of the Research Foundation's applicable investments were uninsured and held by the investment counterparty's trust department or agent in the Research Foundation's name and $2,156,323 of the Real Estate Foundation's applicable investments were uninsured and held by the investment counterparty's trust department or agent, but not in the Research Foundation's name.

Annual Financial Report FY 2008 137

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Research Foundation's investment policies specify that fixed income securities be of investment grade. The short-term investment policy specifies that corporate bonds be rated BBB (Standard & Poor's) or Baa (Moody's) or higher; the long-term policy requires a BBB (Standard & Poor's) or Baa3 (Moody's) rating or higher. The investment policy also requires that securities that drop below investment grade should be sold at the manager's discretion; in the event that a rating falls below investment grade, the manager will contact the financial advisor and advise them of the proposed strategy for disposition of the security.

The Research Foundation's investments as of June 30, 2008 are presented below. All investments are presented by investment type, and fixed income securities are presented by credit quality ratings.

Related Debt Investments U. S. Agencies - Implicitly Guaranteed Corporate Debt Municipal Obligation

Fair Value
$10,060,298 21,147,955
50,967 $31,259,220

Aaa
$1,033,795 81,815
$1,115,610

Aa

A

Baa

Ba

Unrated

$0 2,953,906
50,967
$3,004,873

$0 4,563,349

$0 13,138,163

$4,563,349 $13,138,163

$0 410,722
$410,722

$9,026,503 $9,026,503

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an entity's investment in a single issuer. The Research Foundation's policy for managing concentration of credit risk is divided between short-term and long-term investments. For short-term investments, maximum percentages are set for cash and cash equivalents at 15%, asset backed securities at 50% and corporate bonds at 90%, while U.S. Treasuries, U.S. Agencies debt, and certificates of deposit may comprise 100% for the short-term investments. For long-term investment, equities comprise 40-80%, bonds 20-60% and alternative investments can range 0-20%.

As of June 30, 2008, investments in a single issuer where those investments exceed 5% of total investments were as follows:

Federal National Mortgage Association

10%

Federal Home Loan Mortgage Corporation

9%

Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or a deposit. The Research Foundation's investments are not exposed to foreign currency risk as securities denominated in currencies other than the U.S. dollar are not permissible by the Research Foundation's investment policy.

The Real Estate Foundation's investments increased by $64,010 due to foreign currency fluctuations between the Euro and the dollar on cash balances held in banks. Amounts held in foreign currency denominations are valued at $267,788 as of June 30, 2008.

Annual Financial Report FY 2008 138

Capital Assets for Component Units:

The University of Georgia Research Foundation, Inc. had Capital Assets activity as follows for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land (and other assets) Construction Work-in-Progress
Total Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Equipment Total Assets Being Depreciated
Less: Accumulated Depreciation Buildings Equipment Total Accumulated Depreciation
Total Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning Balance 7/1/2007
$110,000 0
110,000

Restated Real Estate Fdn Transfer
$15,722,163 224,900
15,947,063

Adjusted Beg. Balance 7/1/2007
$15,832,163 224,900
16,057,063

Additions

Reductions

$4,702,061 34,149,651 38,851,712

$0 5,110,857 5,110,857

Ending Balance 6/30/2008
$20,534,224 29,263,694 49,797,918

1,142,307 0
1,142,307

2,535,466 184,134
2,719,600

3,677,773 184,134
3,861,907

5,385,599 3,167
5,388,766

5,110,857 5,110,857

3,952,515 187,301
4,139,816

737,313 737,313 404,994 $514,994

260,539 134,228 394,767
2,324,833
$18,271,896

997,852 134,228 1,132,080
2,729,827
$18,786,890

143,008

26,473

169,481

0

5,219,285

5,110,857

$44,070,997 $10,221,714

1,140,860 160,701
1,301,561
2,838,255
$52,636,173

Long-term Liabilities for Component Units:

Changes in long-term liabilities for the Research Foundation for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Transfer of Real Estate Foundation

Adjusted Beginning Balance
July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Compensated Absences Notes and Loans Payable Revenue/Mortgage Bonds Payable
Total Long Term Liabilities

$0

$29,495

0

10,499,210

0

175,667,798

$0 $186,196,503

$29,495 10,499,210 175,667,798
$186,196,503

$0 20,688,117 56,359,497
$77,047,614

$1,231 12,960,440
3,849,754
$16,811,425

$28,264 18,226,887 228,177,541
$246,432,692

$28,264 3,595,000 $3,623,264

Notes and Loans Payable: During 2008, the Real Estate Foundation renewed a $50 million revolving credit agreement with a bank. The agreement expires on November 30, 2010. The revolving credit agreement provides for borrowings or letters of credit at the Real Estate Foundation's option. Credit available under the revolving credit agreement is reduced by outstanding borrowings and outstanding letters of credit. At June 30, 2008, amounts outstanding or issued under this agreement included borrowings of $18,226,887 and unused letters of credit and bank reserves of $8,159,715, resulting in $23,613,398 available as borrowing capacity under this line. Borrowings under the revolving credit agreement bear interest at the bank's 30-day London InterBank Offered Rate ("LIBOR") plus 32.5 basis points (or 0.325%). At June 30, 2008, the rate applicable to the borrowings was 2.79563%.

Annual Financial Report FY 2008 139

All borrowings under this revolving credit agreement are subject to a guarantee requirement except for those borrowings for projects supported by a rental or license agreement with the Board of Regents or the University. As of June 30, 2008, the borrowings subject to this guarantee requirement were $7,797,561. Effective July 1, 2007, the Real Estate Foundation's $50 million revolving credit agreement was amended and a new guarantee was executed to reflect the Research Foundation as guarantor.

During 2006, the Real Estate Foundation entered into an interest rate cap agreement effectively limiting the interest rate on the revolving credit agreement to a 6% fixed rate until December 1, 2010. The Real Estate Foundation paid a premium of $122,000 in connection with this agreement. The fair value of the interest rate cap as of June 30, 2008 is $25,665 and has been recorded as an asset in accordance with SFAS No. 133. The Real Estate Foundation recorded a loss of $17,316 on the fair value of the derivative for the year ended June 30, 2008 as an adjustment to interest expense.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30:

2009

1

2010

2

2011

3

Notes and Loans Payable

Principal

Interest

Total

$0 0
18,226,887 $18,226,887

$509,556 509,556 212,315
$1,231,427

$509,556 509,556
18,439,202 $19,458,314

Revenue Bonds Payable: $25,620,000 Bond Issue: In 2001, the Development Authority of the Unified Government of Athens -- Clarke County, Georgia (the "Development Authority") issued Revenue Bonds (UGA Real Estate Foundation, Inc. Project), Series 2001 (the "2001 Bonds") and entered into an agreement (the "2001 Loan Agreement") to loan $25,620,000 to the Real Estate Foundation. The 2001 Bonds are secured by a letter of credit issued on behalf of the Real Estate Foundation in favor of the Development Authority under the Real Estate Foundation's $50 million credit agreement discussed above. During 2002, the Real Estate Foundation used the proceeds of this loan to fund purchases and improvements of certain properties.

Borrowings under the 2001 Loan Agreement bear interest payable monthly at a formula rate adjusted each week (1.53% at June 30, 2008). The loan matures in 2031, subject to certain early repayment provisions. During the year ended June 30, 2008, principal payments of $410,000 were made. At June 30, 2008, the balance of this obligation was $8,015,000.

During 2005, the Real Estate Foundation entered into an interest rate cap agreement effectively limiting the interest rate on the 2001 Loan Agreement to a 3.5% fixed rate until November 30, 2007. The Real Estate Foundation paid a premium of $91,000 in connection with this agreement. The Real Estate Foundation recorded a loss of $15,495 on the fair value of the derivative for the year ended June 30, 2008.

During 2008, the Real Estate Foundation entered into an interest rate cap agreement effectively limiting the interest rate on a portion of the 2001 Loan Agreement to a 4.0% fixed rate until

Annual Financial Report FY 2008 140

December 3, 2012. The Real Estate Foundation paid a premium of $75,000 in connection with this agreement. The fair value of the interest rate cap as of June 30, 2008 was $74,033 and has been recorded as an asset in accordance with SFAS No. 133. The Real Estate Foundation recorded a loss of $967 on the fair value of this derivative for the year ended June 30, 2008.
$39,155,000 Bond Issue: In 2002, the Development Authority issued Educational Facilities Revenue Bonds (UGAREF CCRC Building, LLC Project), Series 2002 (the "CCRC Bonds") and entered into an agreement (the "CCRC Loan Agreement") to loan $39,155,000 to UGAREF CCRC Building, LLC (a single-member limited liability company owned by the Real Estate Foundation) (the "CCRC Entity"). Payment of principal and interest under the CCRC Bonds is insured by a financial guaranty insurance policy and secured by certain real property constituting the facility and by the CCRC Entity's interest in certain rents and leases derived from the facility. The CCRC Entity used the proceeds of this loan to fund construction of the facility which was completed in October 2003.
Borrowings under the CCRC Loan Agreement bear interest payable semiannually on December 15 and June 15 at fixed rates ranging from 2.5% to 5% depending on the schedule of bond maturities. Principal payments are due on December 15 starting in 2004 and continuing through 2032. During the year ended June 30, 2008, principal payments of $800,000 were made. At June 30, 2008, the balance of this obligation was $36,075,000.
$99,860,000 Bond Issue: In 2002, the Housing Authority of the City of Athens, Georgia, issued Student Housing Lease Revenue Bonds (UGAREF East Campus Housing, LLC Project), Series 2002 (the "Bonds") and entered into an agreement (the "Loan Agreement") to loan $99,860,000 to the Real Estate Foundation. Payment of principal and interest under the Bonds is insured by a financial guaranty insurance policy and secured by certain real property constituting the facilities and by the Real Estate Foundation's interest in certain rents and leases derived from the facilities. The Real Estate Foundation used the proceeds of this loan to fund construction of certain real estate projects which were completed in July 2004.
Borrowings under the Loan Agreement bear interest payable semiannually at fixed rates ranging from 3% to 5.25% depending on the schedule of bond maturities. Principal payments are due on December 1 starting in 2005 and continuing through 2033. During the year ended June 30, 2008, principal payments of $1,935,000 were made. At June 30, 2008, the balance of this obligation was $94,100,000.
$8,215,000 Bond Issue: In 2003, the Oconee County Industrial Development Authority issued Revenue Bonds (UGAREF Gainesville Campus, LLC Project), Series 2003 (the "Gainesville Campus Bonds") and entered into an agreement (the "Gainesville Campus Loan Agreement") to loan $8,215,000 to UGAREF Gainesville Campus, LLC (a single-member limited liability company owned by the Real Estate Foundation) (the "Gainesville Campus Entity"). Payment of principal and interest under the Gainesville Campus Bonds is insured by a financial guaranty insurance policy and secured by certain real property constituting the land and educational facility and by the Gainesville Campus Entity's interest in certain rents and leases derived from the land and educational facility. During 2003, the Gainesville Campus Entity used the proceeds of this loan to fund the acquisition of the land and educational facility.
Annual Financial Report FY 2008 141

Borrowings under the Gainesville Campus Loan Agreement bear interest payable semiannually at fixed rates ranging from 2.2% to 4.375% depending on the schedule of bond maturities. Principal payments are due on December 15 starting in 2003 and continuing through 2027. During the year ended June 30, 2008, principal payments of $250,000 were made. At June 30, 2008, the balance of this obligation was $7,155,000.
$25,970,000 Bond Issue: In 2004, the Development Authority issued $25,545,000 of Educational Facilities Revenue Bonds (UGAREF Coverdell Building, LLC Project), Series 2004A, and $425,000 of Educational Facilities Taxable Revenue Bonds (UGAREF Coverdell Building, LLC Project), Series 2004B (collectively, the "Coverdell Bonds"). The Development Authority entered into an agreement (the "Coverdell Loan Agreement") to loan $25,970,000 to UGAREF Coverdell Building, LLC (a single member limited liability company owned by the Real Estate Foundation) (the "Coverdell Entity"). Payment of principal and interest under the Coverdell Bonds is insured by a financial guaranty insurance policy and secured by certain real property constituting a portion of the facility and by the Coverdell Entity's interest in certain rents and leases derived from a portion of the facility. The Coverdell Entity used the proceeds of this loan to fund construction of a portion of the facility, which was completed in 2007.
Borrowings under the Coverdell Loan Agreement bear interest payable semiannually at fixed rates ranging from 2.5% to 5% depending on the schedule of bond maturities. Principal payments are due on December 15 starting in 2006 and continuing through 2034. During the year ended June 30, 2008, a principal payment of $500,000 was made on the outstanding Series 2004A bonds. At June 30, 2008, the balance of this obligation was $25,010,000.
$62,475,000 Bond Issue: In 2008, the Development Authority issued $35,055,000 of Educational Facilities Current Interest Revenue Bonds (UGAREF Central Precinct, LLC Project), and $27,420,000 of Educational Facilities Convertible Revenue Bonds (UGAREF Central Precinct, LLC Project) (collectively, the "Central Precinct Bonds"). The Development Authority entered into an agreement (the "Central Precinct Loan Agreement") to loan $62,475,000 to UGAREF Central Precinct, LLC (a single-member limited liability company owned by the Real Estate Foundation) (the "Central Precinct Entity"). Payment of principal and interest under the Central Precinct Bonds is insured by a financial guaranty insurance policy and secured by certain real property constituting a parking deck and building addition, and by the Central Precinct Entity's interest in certain rents and leases derived from these facilities. The Central Precinct Entity is using the proceeds of this loan to fund construction of the facilities. The building addition is reported as construction in progress at June 30, 2008. Subsequent to the issuance of these financial statements, the parking deck was placed in service on August 6, 2008.
Borrowings under the Central Precinct Loan Agreement bear interest payable semiannually at fixed rates ranging from 2% to 5% depending on the schedule of bond maturities. Principal payments are due on June 15 starting in 2010 and continuing through 2038. The total balance of the obligation at June 30, 2008 is $62,475,000.
During 2007, the Real Estate Foundation entered into an interest rate hedge agreement at no cost to lock in the then current interest rate on this future borrowing. This forward swap agreement expired during the year ended June 30, 2008 and the Real Estate Foundation paid a termination fee in the amount of $1,277,320. The Real Estate Foundation recorded a loss of $3,324,113 on the fair value of the derivative for the year ended June 30, 2008.
Annual Financial Report FY 2008 142

Annual debt service requirements to maturity for Bonds Payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal

Bonds Payable Interest

$3,595,000 4,080,000 4,225,000 4,385,000 4,540,000
31,280,000 39,435,000 49,690,000 66,780,000 24,820,000 232,830,000 (4,652,459) $228,177,541

$9,368,150 9,248,435 9,097,922 8,937,625 8,767,050
47,025,033 38,466,504 27,572,570 13,862,117
2,467,476 174,812,882
$174,812,882

Total
$12,963,150 13,328,435 13,322,922 13,322,625 13,307,050 78,305,033 77,901,504 77,262,570 80,642,117 27,287,476
407,642,882 (4,652,459)
$402,990,423

Georgia Southern University

Georgia Southern University Foundation, Inc. Georgia Southern University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Georgia Southern University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $2,544,332 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at P.O. Box 8040, Statesboro, GA 30460.

Investments for Component Units:

Georgia Southern University Foundation, Inc. holds endowment and other investments of approximately $41 million. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by donors. Georgia Southern

Annual Financial Report FY 2008 143

University Foundation, Inc., in conjunction with the donors, has established a spending plan whereby 5% of the three year moving average of the endowment fair market value may be used for academic scholarships. The remaining earnings are set aside as a reserve.

Investments are comprised of the following amounts at June 30, 2008:

Cost

Fair Value

Money Market Accounts Mutual Funds Real Estate
Total Investments

$235,552 39,219,701 1,314,719
$40,769,972

$235,552 39,560,615 1,314,719
$41,110,886

Capital Assets for Component Units:

Georgia Southern University Foundation, Inc. had the following Capital Assets at June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$395,860 395,860
50,000 50,000 27,778 22,222 $418,082

Long-Term Liabilities for Component Units
Georgia Southern Foundation, Inc. had $140,764 in Liabilities Under Split-interest Agreements as of June 30, 2008.
Georgia Southern University Housing Foundation, Inc. Georgia Southern University Housing Foundation, Inc. and Subsidiaries (GSUHF) is a legally separate, tax-exempt component unit of Georgia Southern University (University). GSUHF acts primarily as an organization to issue bonds where the funds are utilized to construct student housing and other university facilities that are available to the University in support of its programs. The board of the GSUHF is self-perpetuating and consists of employees and friends of the University. Because this organization's purpose is for the benefit of the University, GSUHF is considered a component unit of the University and is discretely presented in the University's financial statements.

Annual Financial Report FY 2008 144

GSUHF is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. GSUHF's fiscal year is July 1 through June 30.

Complete financial statements for GSUHF can be obtained from Dabbs, Hickman, Hill and Cannon, LLP, P.O. Box 727, Statesboro, GA 30459.

Capital Assets for Component Units

Georgia Southern University Housing Foundation, Inc. had $ 17,917,378 in Construction Work in Progress at June 30, 2008.

Long-Term Liabilities for Component Units

Changes in long-term liabilities for the Housing Foundation for the fiscal year ended June 30,

2008 are shown below:

Beginning

Ending

Amounts due

Balance

Balance

within

July 1, 2007

Additions

Reductions

June 30, 2008

One Year

Revenue/Mortgage Bonds Payable Total Long Term Liabilities

$112,450,827 $112,450,827

$69,000,000 $69,000,000

$1,754,173 $1,754,173

$179,696,654 $2,800,000 $179,696,654 $2,800,000

Georgia Southern University Housing Foundation One, LLC has a bond obligation to Wachovia Bank for the construction of the student housing facilities, funded by the proceeds of the bond issuance. The Development Authority of Bulloch County issued $38,180,000 of Student Housing Lease Revenue Bonds, Series 2002. The bonds were issued in $5,000 denominations, and consist of $22,930,000 Serial Bonds, maturing annually through 2022; $5,000,000 Term I Bonds, due August 1, 2028; and $10,250,000 Term II Bonds, due August 1, 2028. Pursuant to the loan agreement, the Foundation grants a pledge and assignment of and grants a lien upon and security interest in the loan agreement, the deed, and the development agreement in favor of Wachovia Bank, as security for the payment of the bonds. Principal payments are due every July 25th, commencing in 2004. Interest payments are due every January and July 25th, commencing in 2003. Interest rates vary from 3% to 5% over the obligation term. The balance of the bond obligation was $35,035,000 as of June 30, 2008.
Georgia Southern University Housing Foundation Two, LLC has a bond obligation to BB&T for the construction of the student housing facilities, funded by the proceeds of the bond issuance. The Development Authority of Bulloch County issued $35,900,000 of Student Housing Lease Revenue Bonds, Series 2004. The bonds were issued in $5,000 denominations, and consist of $19,375,000 Serial Bonds, maturing annually through 2024; $4,035,000 Term I Bonds, due August 1, 2019; $5,885,000 Term II Bonds, due August 1, 2027; and $6,605,000 Term III Bonds, due August 1, 2030. Pursuant to the loan agreement, the Foundation grants a pledge and

Annual Financial Report FY 2008 145

assignment of and grants a lien upon and security interest in the loan agreement, the deed, and the development agreement in favor of BB&T, as security for the payment of the bonds. Principal payments are due every August 1st, commencing in 2005. Interest payments are due every February and August 1st commencing on August 1, 2004. Interest rates vary from 2.75% to 5.25% over the obligation term. The balance of the bond obligation was $34,170,000 as of June 30, 2008.
Georgia Southern University Housing Foundation Three, LLC has a bond obligation to BB&T for the construction of the recreation facilities, funded by the proceeds of the bond issuance. The Development Authority of Bulloch County issued $40,540,000 of Student Housing Lease Revenue Bonds, Series 2005A (tax-exempt) and 2005B (non-exempt). The bonds were issued in $5,000 denominations, and consist of $13,235,000 Serial 2005A Bonds, maturing annually through 2021; $9,800,000 Term I 2005A Bonds, due August 1, 2026; $7,135,000 Term II 2005A Bonds, due August 1, 2029; $5,360,000 Term III 2005A Bonds, due August 1, 2031; and $5,010,000 Serial 2005B Bonds, maturing annually through 2012. Pursuant to the loan agreement, the Foundation grants a pledge and assignment of and grants a lien upon and security interest in the loan agreement, the deed, and the development agreement in favor of BB&T, as security for the payment of the bonds Principal payments are due every August 1st, commencing in 2008. Interest payments are due every February and August 1st, commencing on August 1, 2005. Interest rates vary from 3.5% to 5.25% over the obligation term. The balance of the bond obligation was $40,540,000 as of June 30, 2008.
Georgia Southern University Housing Foundation Four, LLC has a bond obligation to BB&T for the acquisition and renovation of 472 beds of student housing, and the construction of four new buildings which will house 1,000 new beds of student housing. This project also includes the design, development and construction of approximately 8,700 square feet of retail space. The student housing and the retail space will be funded by the proceeds of the bond issuance. The Development Authority of Bulloch County issued $69,000,000 of Student Housing Revenue Bonds, Series 2008. The bonds were issued in $5,000 denominations, and consist of $69,000,000 Serial Bonds, maturing annually through 2039. Pursuant to the loan agreement, the Foundation grants a pledge and assignment of and grants a lien upon and security interest in the loan agreement, the deed, and the development agreement in favor of BB&T, as security for the payment of the bonds. Principal payments are due every July 1st, commencing in 2009. Interest payments are due every January and July 1st, commencing on July 1, 2008. Interest rates vary from 3% to 5% over the obligation term. The balance of the bond obligation was $69,000,000 as of June 30, 2008.
Annual debt service requirements to maturity for revenue bonds payable are as follows:
Annual Financial Report FY 2008 146

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038 2039 through 2043

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31-35

Bond Premium/(Discount)

Principal

Bonds Payable Interest

$2,800,000 3,850,000 3,915,000 4,255,000 4,395,000
25,650,000 32,710,000 41,480,000 36,615,000 19,125,000
3,950,000 178,745,000
951,654 $179,696,654

$6,249,103 8,559,264 8,444,236 8,289,020 8,125,201
37,770,723 31,080,775 22,007,349
9,742,000 6,143,919 1,308,275 147,719,865
$147,719,865

Total
$9,049,103 12,409,264 12,359,236 12,544,020 12,520,201 63,420,723 63,790,775 63,487,349 46,357,000 25,268,919
5,258,275 326,464,865
951,654 $327,416,519

Southern Boosters, Inc. Southern Boosters, Inc. is a legally separate, tax-exempt component unit of Georgia Southern University (University). The fifty-two member board of Southern Boosters is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Southern Boosters, the majority of resources or income thereon that Southern Boosters holds and invests is restricted to the athletic activities of the University by the donors. Because these restricted resources held by Southern Boosters can only be used by, or for the benefit of, the University and their management role is significant to the accomplishment of the University's mission, Southern Boosters is considered a component unit of the University and is discretely presented in the University's financial statements.
Southern Boosters, Inc. is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. Southern Booster's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, Southern Boosters, Inc. distributed $550,000 to the University for athletic scholarship support and approximately $359,111 for the support of other University programs.
Complete financial statements for Southern Boosters, Inc. can be obtained from the Administrative Office at P.O. Box 811501, Statesboro, GA 30460.
Investments for Component Units:
Southern Boosters, Inc. holds the following investments as of June 30, 2008:

Annual Financial Report FY 2008 147

Certificates of Deposit Total Investments

Cost
$509,836 $509,836

Fair Value
$509,836 $509,836

Capital Assets for Component Units:

Southern Boosters, Inc. has the following Capital Assets as of June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$80,301 80,301
1,614,828 95,585
1,710,413 141,432
1,568,981 $1,649,282

Long-Term Liabilities for Component Units:

Southern Boosters, Inc. has a Note Payable to Sea Island Bank, payable in annual installments of $35,220 including interest at a variable rate (5.0% at June 30, 2008), through September 14, 2013, unsecured. The original note amount was $279,000 and the principal balance outstanding on the note at June 30, 2008 was $194,516.

Southern Boosters, Inc. obtained new financing in 2006 with a Note Payable to Park Avenue Bank. Interest is payable in quarterly installments at a variable rate (5.0% at June 30, 2008) and the note matures on January 15, 2009. This debt is secured by the Golf Practice facility. The outstanding principal balance was $359,457 at June 30, 2008.

Changes in long-term liabilities for Southern Boosters, Inc. for the fiscal year ended June 30,

2008 are shown below:

Beginning

Ending

Amounts due

Balance

Balance

within

July 1, 2007

Additions

Reductions

June 30, 2008

One Year

Notes and Loans Payable Total Long Term Liabilities

$578,802 $578,802

$0

$24,829

$0

$24,829

$553,973 $553,973

$383,102 $383,102

Annual requirements to maturity for notes payable are as follows:
Annual Financial Report FY 2008 148

Year ending June 30:

2009

1

2010

2

2011

3

2012

4

2013

5

2014 through 2018

6-10

Notes and Loans Payable

Principal

Interest

Total

383,102 24,968 26,466 28,054 29,737 61,646
$553,973

$29,548 10,252 8,754 7,166 5,483 3,082
$64,285

$412,650 35,220 35,220 35,220 35,220 64,728
$618,258

Georgia Southern University Research and Service Foundation, Inc. Georgia Southern University Research and Service Foundation, Inc. (the Research Foundation) is a legally separate, tax-exempt component unit of Georgia Southern University (University). The Research Foundation serves to enhance the research mission of the University by securing sponsored research funding and by providing funding of special research initiatives. All University intellectual property developed through these research programs are managed by the Research Foundation. The six member board of the Foundation consists of designated University personnel, appointees of several University constituent groups, and individuals selected by the Research Foundation itself. Although the University does not control the timing or amount of receipts from the Research Foundation, all sponsored research awards are subcontracted to the University and other resources and related income are restricted to benefit the research mission of the University. Consequently, the Research Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Research Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Research Foundation's fiscal year is July 1 through June 30.
During fiscal year 2008, the Research Foundation transferred $4,854,603 in sponsored research to the University. Complete financial statements for the Research Foundation can be obtained from the Administrative Office at P.O. Box 8005, Statesboro, GA 30460.
Restatement of Prior Year Net Assets:
During the year ended June 30, 2008, a correction was made to prior year grants receivable. The effect of the error increased Beginning Net Assets by $49,200.

Annual Financial Report FY 2008 149

Valdosta State University

Valdosta State University Foundation, Inc. Valdosta State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Valdosta State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The thirty-one member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 through December 31. Because the University's fiscal year end is June 30, the amounts reported as due to or due from the related entities do not agree.

During the year ended December 31, 2007, the Foundation distributed $1,575,933 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 102 Georgia Avenue, Valdosta, GA 31698.

Investments for Component Units:

Valdosta State University Foundation, Inc. holds endowment and other investments in the amount of $21.1 million. The $19.2 million corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Valdosta State University Foundation, Inc., in conjunction with the donors, has established a spending plan whereby 3% of the earnings may be used per the donor's stipulation. The remainder of the earnings are set aside as a reserve. Investments are comprised of the following amounts at December 31, 2007:

M oney M arket Accounts Equity Securities M utual Funds Split Interest Investments

Cost
$188,254 3,184,589 12,996,017
765,801

Fair Value
$188,254 3,271,607 16,892,840
792,046

Total Investments

$17,134,661

$21,144,747

Annual Financial Report FY 2008 150

Capital Assets for Component Units:

Valdosta State University Foundation, Inc. had the following capital assets as of December 31, 2007:

December 31, 2007

Cap ital Assets not being Dep reciated: Land and other Assets Construction in Progress
Total Cap ital Assets not being Dep reciated
Cap ital Assets being Dep reciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Cap ital Assets being Dep reciated, Net
Capital Assets, Net

$2,928,106 516,913
3,445,019
34,342,521 52,966
34,395,487 3,755,741
30,639,746 $34,084,765

Long-term Liabilities for Component Units:

Changes in long-term debt for Valdosta State Foundation, Inc. for the fiscal year ended December 31, 2007 are shown below:

Beginning Balance January 1, 2007

Additions

Reductions

Ending Balance December 31, 2007

Amounts due within One Year

Liabilities under split interest agreement Capital Lease Obligations Notes and Loans Payable Revenue/Mortgage Bonds Payable Other Long Term Liabilities

$394,948 21,175
1,343,920 38,120,736
596

$0
5,800,000 227,667

$5,937 7,695 473,619 385,295
596

$389,011 13,480 870,301
43,535,441 227,667

$0 5,472 787,816 1,049,705 220,776

Total Long Term Liabilities

$39,881,375

$6,027,667

$873,142

$45,035,900

$2,063,769

Capital Lease Obligations: The Foundation leased a vehicle from Ford Credit under a capital lease through April 11, 2010. The balance of this obligation as of December 31, 2007 is $13,480.
Annual debt service requirements to maturity for capital lease obligations are as follows:

Annual Financial Report FY 2008 151

Year ending December 31:

2008

1

2009

2

2010

3

Total minimum lease payments

Less: Interest

Principal Outstanding

Capital Leases
$5,472 6,597 2,753
14,822 1,342
$13,480

Notes and Loans Payable: The Foundation incurred a note payable to a local financial institution to assist with updating University Athletic facilities. The Foundation has reported this transaction as a receivable from the University and as a liability. Since the University retains ownership of the facility, the University has recorded a capital asset and liability. The balance of this obligation was $124,922 as of December 31, 2007.

The Foundation has two lines of credit and a short-term note payable with a total outstanding principal balance of $745,379 as of December 31, 2007.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending December 31:

2008

1

2009

2

2010

3

Princip al

Notes and Loans Payable Interest

$787,816 44,276 38,209
$870,301

$39,300 2,650 746
$42,696

Total
$827,116 46,926 38,955
$912,997

Revenue Bonds Payable: Valdosta State University Foundation, Inc. issued Bonds to finance the acquisition of facilities for Valdosta State University. The bonds mature serially and are collateralized by real estate. The interest rates for the bonds are a floating tax-exempt rate, currently 4.89%, and an associated collar with a floor of 3.25% and a ceiling of 5.75%. These Bonds are represented as Property and Equipment and a Bond Payable on the Foundation's financial statement. Since the University leases the property from the Foundation, the University has accounted for this transaction as a capital lease and related Lease Obligation. The balance of this obligation was $1,879,550 as of December 31, 2007.

In June 2004, The Valdosta Housing Authority issued Series 2004 Student Housing Revenue Bonds and loaned the proceeds to VSU Foundation Real Estate I, LLC (a subsidiary). The bonds, serial and term, are secured by pledges of gross receipts from student housing at Valdosta State University. The bonds bear interest at rates ranging from 3.25% to 5.25%. Interest is due semiannually and principal is due annually. The balance of the obligation at December 31, 2007 is $35,855,891.

In November 2007, The Development Authority of Lowndes County issued $5,800,000 of Series 2007 First Mortgage Revenue Bond. The Authority then loaned the proceeds to VSU Foundation, Inc. The bonds are secured by a lien upon certain leasehold deeds to secure debt

Annual Financial Report FY 2008 152

and certain pledged revenues and assignment of rents and leases. The bonds bear interest at a variable rate equal to the sum of (i) 61.1% of LIBOR plus (ii) 115 basis points. Interest is due monthly on December 31, 2007, and principal is due monthly beginning November 1, 2008. The balance of the obligation at December 31, 2007 is $5,800,000.

Annual debt service requirements to maturity for bonds payable are as follows:

Year ending December 31: 2008 2009 2010 2011 2012 2013 through 2017 2018 through 2022 2023 through 2027 2028 through 2030

1 2 3 4 5 6-11 12-15 16-20 21-25

Bond Premium

Princip al
$1,049,705 1,278,009 1,351,556 1,315,093 1,448,733 7,740,827 9,446,230
11,986,281 7,653,116
43,269,550 265,891
$43,535,441

Bonds Payable Interest
$2,055,495 2,011,264 1,958,675 1,909,321 1,852,630 8,299,349 6,395,659 3,746,063 765,563
28,994,019
$28,994,019

Total
$3,105,200 3,289,273 3,310,231 3,224,414 3,301,363
16,040,176 15,841,889 15,732,344
8,418,679 72,263,569
265,891 $72,529,460

VSU Auxiliary Services Real Estate Foundation, Inc. VSU Auxiliary Services Real Estate Foundation (Real Estate Foundation) is a legally separate, tax-exempt component unit of Valdosta State University (University). The Real Estate Foundation constructs auxiliary buildings and facilities for use by the University and then leases the completed buildings to the institution. The seven-member board of the Foundation is selfperpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Real Estate Foundation, the majority of resources or income thereon that the Real Estate Foundation holds and invests is restricted to the real estate activities of the University. Because these restricted resources held by the Real Estate Foundation can only be used by, or for the benefit of, the University, the Real Estate Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 through December 31. Because the University's fiscal year end is June 30, the amounts reported as due to or due from the related entities do not agree.
Complete financial statements for the Foundation can be obtained from the Administrative Office at 102 Georgia Avenue, Valdosta, GA 31698.

Annual Financial Report FY 2008 153

Capital Assets for Component Units:
VSU Auxiliary Services Real Estate Foundation, Inc. had $9,607,301 in Construction Work in Progress as of December 31, 2007.
Long-term Liabilities for Component Units:
Changes in long-term debt for VSU Auxiliary Services Real Estate Foundation, Inc. for the fiscal year ended December 31, 2007 are shown below:

Beginning Balance January 1, 2007

Additions

Reductions

Ending Balance December 31, 2007

Amounts due within
One Year

Revenue/M ortgage Bonds Payable

$0 $84,429,716

$0

$84,429,716

$0

Revenue Bonds were issued on October 18, 2007 by the Valdosta Housing Authority. The Authority loaned the proceeds to the VSU Auxiliary Services Real Estate Foundation to finance the construction of student housing on university property. The bonds are secured by 1) the trust estate, 2) the Debt Service Reserve Fund, 3) the loan agreement, 4) project real estate and personal property set forth in the deeds and documents relating to construction and management of the project, and 5) any and all rents and leases for use of the project property. The interest rate ranges from 4% to 5%.

Annual debt service requirements to maturity for Student Housing revenue bonds payable are as follows:

Year ending December 31:

2008

1

2009

2

2010

3

2011

4

2012

5

2013 through 2017

6-10

2018 through 2022

11-15

2023 through 2027

16-20

2028 through 2032

21-25

2033 through 2037

26-30

2038 through 2042

31-35

Bond Discount

Princip al

Bonds Payable Interest

$0 0 0
645,000 750,000 5,275,000 8,790,000 13,325,000 18,480,000 25,615,000 12,680,000 85,560,000 (1,130,284) $84,429,716

$660,659 3,906,839 3,906,840 3,893,940 3,866,041 18,793,990 17,308,240 14,748,716 11,189,950 6,145,165
600,628 85,021,008
$85,021,008

Total
$660,659 3,906,839 3,906,840 4,538,940 4,616,041 24,068,990 26,098,240 28,073,716 29,669,950 31,760,165 13,280,628 170,581,008 (1,130,284) $169,450,724

Annual Financial Report FY 2008 154

Albany State University
Albany State University Foundation, Inc. Albany State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Albany State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The seven-member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation follows GASB Statement 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments, GASB Statement 35, Basic Financial Statements-Management's Discussion and Analysis-for Public Colleges and Universities, GASB Statement No. 37, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments: Omnibus-an amendment of GASB Statements No.21 and No.34, and GASB No.38, Certain Financial Statement Note Disclosures. The foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $0 to the University. Complete financial statements for the Foundation can be obtained from the Administrative Office at 300 College Drive, Albany, GA 30000.
Prior Period Adjustment:
A prior period adjustment in the amount of ($568,749) was made to restate the prior year's Agency Funds payable. The adjustment had the effect of reducing Beginning Net Assets for the fiscal year that ended June 30, 2008.
Deposits and Investments for Component Units:
Deposits: As of June 30, 2008, the carrying amount of the Foundation's bank deposits was $1,938,159 and the respective bank balances totaled $2,075,933. Of the total bank balance, $211,346 was insured through the Federal Depository Insurance Corporation (FDIC). The remaining $1,864,587 was collateralized with pooled securities held by the financial institutions' trust departments, but not in the Foundation's name.
Investments: Investments as of June 30, 2008 are summarized as follows:
Annual Financial Report FY 2008 155

Investment type Certificates of Deposit General Obligation Bonds M oney M arket M utual Fund Repurchase Agreements

Fair Value

Investment Maturity

Less Than

1 Year

1-5 Years

$1,030,577 781,177 518,937
5,158,082 $7,488,773

781,177 518,937 5,158,082 $6,458,196

$1,030,577 $1,030,577

Capital Assets for Component Units:

Albany State University Foundation Inc. had the following Capital Asset activity for the year ended June 30, 2008:

Capital Assets, Being Depreciated: Facilities and Other Improvements Equipment Total Assets Being Depreciated

Beginning Balances 7/1/2007
$37,078,604 24,340
37,102,944

Additions
$41,344 63,474 104,818

Reductions $0 0

Ending Balance 6/30/2008
$37,119,948 87,814
37,207,762

Less: Accumulated Depreciation Facilities and Other improvements Equipment Total Accumulated Depreciation

812,196 8,743
820,939

968,535 9,845
978,380

1,780,731

18,588

0

1,799,319

Total Capital Assets, Being Depreciated, Net Capital Assets, net

36,282,005 $36,282,005

(873,562) ($873,562)

0

35,408,443

$0

$35,408,443

Long-term Liabilities for Component Units:

The Foundation had the following activity in long-term liabilities for the year ended June 30, 2008:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within One Year

Notes and Loans Payable Revenue/Mortgage Bonds Payable
Total Long Term Liabilities

$2,310,077 34,955,276
$37,265,353

$0

$87,242

$2,222,835

$2,222,835

0

23,529

34,931,747

225,000

$0

$110,771

$37,154,582

$2,447,835

Annual Financial Report FY 2008 156

Notes and Loans Payable: On May 2004, Albany State University Foundation, Inc. entered into a loan agreement with SunTrust Bank for the purpose of completing the Albany Municipal Coliseum construction project. The multi-advance loan is in the amount of $2,181,889. The accrued interest is payable on the 1st day of each August beginning August 1, 2005, at a rate equal to the LIBOR Index plus 2.5% per annum. The outstanding loan balance as of June 30, 2008 is $2,181,889.

On October 29, 2003, Albany State University Foundation, Inc. entered into a loan agreement with SunTrust Bank for the purpose of purchasing a scoreboard for the Albany Municipal Coliseum. The original term loan was for $332,092, with interest payments at a rate of 4.130% per annum with the final payment due on November 1, 2008. The outstanding loan balance as of June 30, 2008 is $40,946.

Annual debt service requirements to maturity for Albany Municipal Coliseum installment loans with SunTrust Bank are as follows:

Year ending June 30:

2009

1

Principal

Notes and Loans Payable Interest

$2,222,835

$162,097

Total $2,384,932

Revenue Bonds Payable: On July 1, 2005, the Foundation issued $33,110,000 Albany-Dougherty Inner City Authority Revenue Bonds, Series 2005A and $1,210,000 Albany-Dougherty City Authority Taxable Revenue Bonds, Series 2005B. The Bonds were issued for the purpose of financing and refinancing in whole or in part, the cost of the acquisition, construction and equipping of certain land, buildings and personal property, known as Albany State University Student Housing Project. These bonds are carried as liabilities of Albany State Real Estate Foundation, LLC, a single member limited liability company.

Annual debt service requirements to maturity for Student Housing revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 through 2017 2018 through 2022 2023 through 2027 2028 through 2032 2033 through 2034
Bond Premium

1 2 3 4 5-9 10-14 15-19 20-24 27-29

Princip al
$225,000 230,000 240,000 250,000
3,025,000 5,335,000 7,815,000 9,975,000 7,225,000 34,320,000
611,747 $34,931,747

Bonds Payable Interest
$1,576,737 1,567,175 1,557,400 1,516,898 7,456,523 6,692,925 5,277,905 3,190,144 820,931
29,656,638
$29,656,638

Total
$1,801,737 1,797,175 1,797,400 1,766,898
10,481,523 12,027,925 13,092,905 13,165,144
8,045,931 63,976,638
611,747 $64,588,385

Annual Financial Report FY 2008 157

Armstrong Atlantic State University

Armstrong Atlantic State University Foundation, Inc. Armstrong Atlantic State University Foundation, Inc. (Foundation) is a legally separate, taxexempt component unit of Armstrong Atlantic State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The seven-member board of the Foundation is selfperpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 through December 31.

During the year ended December 31, 2007, the Foundation distributed $501,087 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at Armstrong Atlantic State University, 11935 Abercorn Street, Savannah, GA 31419.

Investments for Component Units:

Armstrong Atlantic State University Foundation, Inc. holds endowment investments in the amount of $6.6 million. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Armstrong Atlantic State University Foundation holds no investments in real property.

Investments are comprised of the following amounts at December 31, 2007:

Money Market Accounts Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds
Total Investments

Cost
$922,724 $1,525,733
383,971 2,344,517
14,922
$5,191,867

Fair Value
$922,724 $1,561,235
385,261 3,698,581
13,847
$6,581,648

Annual Financial Report FY 2008 158

Armstrong Atlantic State University Educational Properties Foundation, Inc. Armstrong Atlantic State University Educational Properties Foundation, Inc. (Educational Properties) is a legally separate, tax-exempt component unit of Armstrong Atlantic State University (University). Educational Properties purchases buildings and leases them to the University for housing, recreation, etc. The five-member board of Educational Properties is selfperpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from Educational Properties, the majority of resources or income thereon that Educational Properties holds and invests is restricted to the real estate activities of the University by the donors. Because these restricted resources held by Educational Properties can only be used by, or for the benefit of the University, Educational Properties is considered a component unit of the University and is discretely presented in the University's financial statements.

Educational Properties is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. Educational Properties' fiscal year is January 1 through December 31.

Educational Properties holds real estate assets, the purchase and improvement of which have been financed through bond issuance. The corresponding capital leases and associated long-term debt are included in the University's report. Complete financial statements for Educational Properties may be obtained from the Administrative Office at Armstrong Atlantic State University, 11935 Abercorn Street, Savannah, GA 31419.

Capital Assets for Component Units:

Educational Properties held the following Capital Assets as of December 31, 2007:

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$475,561 87,372
562,933
36,534,387 2,730,336
39,264,723
6,058,887 33,205,836 $33,768,769

Annual Financial Report FY 2008 159

Long-term Liabilities for Component Units:

Changes in long-term liabilities for Educational Properties for the fiscal year ended December 31, 2007 are shown below:

Beginning Balance January 1, 2007

Additions

Reductions

Ending Balance

Amounts due within

December 31, 2007 One Year

Notes and Loans Payable Revenue/Mortgage Bonds Payable

$618,000 42,821,797

$0

$26,858

957,620

$591,142 41,864,177

$26,778 970,000

Total Long Term Liabilities

$43,439,797

$0

$984,478

$42,455,319

$996,778

Notes and Loans Payable: On November 15, 2006, the AASU Women's Field House, LLC obtained a promissory note payable with Wachovia Bank, N.A. to provide financing for the construction of the field house in the amount of $618,000. Interest is payable monthly from the date of the note until and including February 1, 2007, at the rate of 7.20%. As of March 1, 2007, the note is payable in equal monthly installments of principal and interest in an amount necessary to amortize the principal amount outstanding over a 173 month term, with all unpaid principal and accrued interest due on June 1, 2021. The note is collateralized by a deed to secure debt and an assignment of rents. In addition, the note is guaranteed by Armstrong Atlantic State University Foundation, Inc. The balance outstanding at December 31, 2007 was $591,142.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending December 31:

2008

1

2009

2

2010

3

2011

4

2012

5

Thereafter

6-14

Notes and Loans Payable

Principal

Interest

Total

$26,778 28,924 31,107 33,456 35,882
434,995 $591,142

$42,663 40,517 38,333 35,985 33,559
151,467 $342,524

$69,441 69,441 69,440 69,441 69,441
586,462 $933,666

Revenue Bonds Payable: Student Housing Bonds are issued by the AASU Educational Properties Foundation to finance student housing on University property. The bonds, serial and term, are secured by pledges of gross receipts from student housing at Armstrong Atlantic State University. The interest rates are between 3.00% and 5.00%.

Resident Instruction Bonds are issued by the AASU Educational Properties Foundation to finance professional, continuing education and recreational facilities at Armstrong Atlantic State University. The bonds, serial and term, are secured by pledges of gross receipts from rents and leases. The interest rates are between 3.25% and 5.00%.

Annual Financial Report FY 2008 160

Debt Service Obligations: Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending December 31:

2008

1

2009

2

2010

3

2011

4

2012

5

2013 through 2017

6-10

2018 through 2022

11-15

2023 through 2027

16-20

2028 through 2032

21-25

2034 through 2038

26-30

Bond Premium/(Discount)

Principal

Bonds Payable Interest

$970,000 980,000
1,015,000 1,050,000 1,090,000 6,065,000 7,365,000 9,125,000 10,770,000 2,775,000 41,205,000
659,177 $41,864,177

$1,824,214 1,788,914 1,757,065 1,720,802 1,682,089 7,761,445 6,438,939 4,616,790 2,079,689 235,750
29,905,697
$29,905,697

Total
$2,794,214 2,768,914 2,772,065 2,770,802 2,772,089
13,826,445 13,803,939 13,741,790 12,849,689
3,010,750 71,110,697
659,177 $71,769,874

Augusta State University

Augusta State University Foundation, Inc. Augusta State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Augusta State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The consolidated financial statements of the Foundation have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. The Foundation is the single member of the following three limited liability companies: 1) ASU Jaguar Student Housing I, LLC which is a limited liability company organized for the purpose of constructing and holding an apartment complex for the benefit of students attending Augusta State University; 2) ASU Jaguar Student Center, LLC which is a limited liability company organized for the purpose of constructing and holding the student center property located on the campus of the University for the benefit of its students; and 3) ASU Jaguar Ventures, LLC which is a limited liability company organized for the purpose of constructing a golf course clubhouse.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $767,507 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 2500 Walton Way, Augusta, GA 30904.

Annual Financial Report FY 2008 161

Investments for Component Units:

Augusta State University Foundation holds endowment and other investments in the amount of $17 million. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.

Investments are comprised of the following amounts at June 30, 2008:

Certificates of Deposit Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds Investment Pools
Total Investments

Cost
$889,012 1,269,530 1,597,984 10,901,585 2,346,606 1,084,050
$18,088,767

Fair Value
$889,012 1,299,465 1,579,577 10,485,676 1,805,394
987,332
$17,046,456

Long-term Liabilities for Component Units:

Changes in long-term liabilities for Augusta State University Foundation, Inc. for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Notes and Loans Payable Revenue/Mortgage Bonds Payable
Total Long Term Liabilities

$1,401,883 30,767,518
$32,169,401

$0

$142,000

$1,259,883

$142,000

269,841

30,497,677

260,000

$0

$411,841

$31,757,560

$402,000

Notes and Loans Payable: On April 23, 2003, the Foundation entered into a construction loan in the amount of $1,250,000 and increased the loan to $1,600,000 on November 10, 2003. The loan had principal outstanding in the amount of $1,259,883 at June 30, 2008. The loan was for real estate improvements at the Forest Hills Golf Club for the benefit of the Augusta State University Athletic Association. This note carries a variable interest rate of LIBOR plus 1.20% but not less than 4.41% (4.41% at June 30, 2008). Interest payments are due monthly. In August 2006, the loan converted to a term loan with quarterly payments of principal and interest. This loan will mature May 24, 2011. The loan is secured by the Foundation's investment account with Georgia Bank & Trust which had a fair market value of $4,335,779 at June 30, 2008.
Annual debt service requirements to maturity for the construction loan are as follows:

Annual Financial Report FY 2008 162

Year ending June 30:

2009

1

2010

2

2011

3

Principal

Notes and Loans Payable Interest

$142,000 142,000 975,883
$1,259,883

$53,248 46,986 40,724
$140,958

Total
$195,248 188,986
1,016,607 $1,400,841

Revenue Bonds Payable: ASU Jaguar Student Housing I, LLC had the following revenue bonds payable at June 30, 2008:

$19,515,000 ASU Jaguar Student Housing I, LLC, Revenue Bonds, Series 2004, dated August 1, 2004, due in annual installments of $90,000 to $1,445,000, due through February 1, 2035, interest at 4.375% to 5.375%. Interest expense on the bonds totaled $988,260 during the year ending June 30, 2008. The bonds are secured by a deed on the University Village Apartments and repayment responsibility of the bonds lies solely with the ASU Jaguar Student Housing I, LLC. The outstanding principal amount of the bonds as of June 30, 2008 is $19,345,000.

ASU Jaguar Student Center, LLC had the following revenue bonds payable at June 30, 2008:

$11,145,000 ASU Jaguar Student Center, LLC, Educational Facilities Revenue Bonds, Series 2005, dated February 1, 2005, due in annual installments of $170,000 to $705,000, due through July 1, 2034, interest at 3.25% to 5%. Interest incurred during the year ending June 30, 2008 totaled $497,148. Amortization of the bond premium began July 1, 2007 using the effective interest method which reduced interest expense for the year ended July 30, 2008 by $14,841. The bonds are secured by a deed on the Student Center and repayment responsibility of the bonds lies solely with the ASU Jaguar Student Center, LLC. The outstanding principal amount of the bonds as of June 30, 2008, including unamortized bond premium is $11,152,677.

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal
$260,000 330,000 395,000 465,000 515,000 3,375,000 5,050,000 6,905,000 8,825,000 4,200,000 30,320,000 177,677 $30,497,677

Bonds Payable Interest
$1,500,987 1,489,487 1,476,049 1,459,549 1,441,174 6,820,088 5,840,599 4,460,548 2,498,575 328,163
27,315,219
$27,315,219

Total
$1,760,987 1,819,487 1,871,049 1,924,549 1,956,174
10,195,088 10,890,599 11,365,548 11,323,575 4,528,163 57,635,219
177,677 $57,812,896

Annual Financial Report FY 2008 163

Augusta State University Athletic Association Augusta State University Athletic Association (the Athletic Association) is a legally separate, tax-exempt component unit of Augusta State University (University). The Athletic Association is a nonprofit organization that promotes the educational, athletic, and physical education programs of the University. The Athletic Association leases Forest Hills Golf Club (the Club), an 18-hole golf course, from the Board of Regents of the University System of Georgia for a nominal fee. The Association in turn has entered into a management agreement with the Augusta Golf Association, Inc. (the AGA) to manage, operate and maintain Forest Hills Golf Club. The income of the Association is solely derived from the revenues of the Golf Club and interest income. Because these restricted resources held by the Athletic Association can only be used by, or for the benefit of, the University and their management role is significant to the accomplishment of the University's mission, the Athletic Association is considered a component unit of the University and is discretely presented in the University's financial statements.
The Athletic Association is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Athletic Association's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Athletic Association distributed $20,041 for the support of other University programs.
Complete financial statements for the Athletic Association can be obtained from the Administrative Office at 2500 Walton Way, Augusta, GA 30904-2200.
Capital Assets for Component Units:
Augusta State University Athletic Association held the following Capital Assets as of June 30, 2008:
June 30, 2008

Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$3,432,988 943,926
4,376,914
2,585,267
1,791,647 $1,791,647

Long-term Liabilities for Component Units:
Changes in long-term liabilities for the Athletic Association for the fiscal year ended June 30, 2008 are shown below:
Annual Financial Report FY 2008 164

Capital Lease Obligations Notes and Loans Payable
Total Long Term Liabilities

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

$47,753 1,566,267
$1,614,020

$13,122 $13,122

$20,764 9,162
$29,926

$40,111 1,557,105
$1,597,216

$18,249 435,918
$454,167

Capital Lease Obligations: The Athletic Association leases course equipment under capital leases that expire in February 2010, April 2010, and June 2010. The terms of the leases require monthly payments totaling $2,011.

Future minimum lease payments are:

Year ending June 30:

2009

1

2010

2

Total minimum lease payments

Less: Interest

Principal Outstanding

Capital Leases
$24,128 19,921 44,049 3,938
$40,111

Notes and Loans Payable: The Athletic Association holds a note payable to First Bank dated September 22, 2005 in the original amount of $35,961, with an interest rate of 8%. The note is payable in monthly installments of $879 through September 20, 2009 and is secured by equipment. The outstanding principal balance of the note is $12,410 as of June 30, 2008.

The Athletic Association holds a note payable to Augusta State University Foundation, Inc., a related party, dated May 24, 2005 in the original amount of $1,544,695, secured by first priority security interest. The note is payable in quarterly installments of interest only through May 2006, then in consecutive quarterly payments equal to $35,500, plus accrued interest at the LIBOR rate plus 1.2%, commencing on August 24, 2006, and continuing on the same day each third month thereafter, with the total remaining balance due May 24, 2011. The outstanding principal balance of the note is $1,544,695 as of June 30, 2008.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30:

2009

1

2010

2

2011

3

Notes and Loans Payable

Principal

Interest

Total

$435,918 144,492 976,695
$1,557,105

$54,883 47,019 41,000
$142,902

$490,801 191,511
1,017,695 $1,700,007

Annual Financial Report FY 2008 165

Clayton State University

The Walter & Emilie Spivey Foundation The Walter & Emily Spivey Foundation (Foundation) is a legally separate, tax-exempt component unit of Clayton State University (University). The Foundation provides music scholarships and sponsors programming in Spivey Hall, the University's world class music performance hall. The six-member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 through December 31.

During the year ended December 31, 2007, the Foundation distributed $425,941 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at Clayton State University, 2000 Clayton State Blvd, Morrow, Georgia, 30260.

Investments for Component Units:

The Walter and Emilie Spivey Foundation holds investments in the amount of $7.6 million. Investments consist of marketable securities and real property.

Investments are comprised of the following amounts at December 31, 2007:

Cost

Fair Value

Real Estate Investment Pools
Suntrust Investment Pool

$137,518 7,459,453

$137,518 7,459,453

Total Investments

$7,596,971

$7,596,971

Capital Assets for Component Units:
The Walter & Emilie Spivey Foundation held the following Capital Assets as of December 31, 2007:

Annual Financial Report FY 2008 166

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

December 31, 2007
$139,882 139,882
15,384 15,384 10,769
4,615 $144,497

Clayton State University Foundation, Inc. Clayton State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Clayton State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The seven-member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $458,366 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at Clayton State University Foundation, Inc., Alumni Affairs Office, Student Center Building, 2000 Clayton State Blvd, Morrow, Georgia, 30260.
Investments for Component Units:
Clayton State University Foundation holds endowment and other investments in the amount of $4.7 million. The corpus of the endowment is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.
Investments are comprised of the following amounts at June 30, 2008:

Annual Financial Report FY 2008 167

Certificates of Deposit Real Estate Investment Pools
BOR Short Term Fund Total Return Fund
Total Investments

Cost
$202,252 1,836,464
177,290 2,723,315
$4,939,321

Fair Value
$202,252 1,836,464
178,574 2,509,856
$4,727,146

Capital Assets for Component Units:

Clayton State University Foundation, Inc. holds the following Capital Assets as of June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Construction in Progress
Capital Assets, Net

$27,638,585 $27,638,585

Long-term Debt for Component Units:

Changes in long-term liabilities for the Foundation for the fiscal year ended June 30, 2008 are

shown below:

Beginning

Ending

Amounts due

Balance

Balance

within

July 1, 2007

Additions

Reductions

June 30, 2008

One Year

Revenue/Mortgage Bonds Payable

$0

$42,650,230

$0

$42,650,230

$0

Total Long Term Liabilities

$0

$42,650,230

$0

$42,650,230

$0

Revenue Bonds Payable: On August 15, 2007, the Foundation through its subsidiary CSU Foundation Real Estate I LLC the "Company" issued Series 2007 revenue bonds in the face value amount of $42,450,000. The proceeds of the Series 2007 Bonds will be applied to (a) finance or refinance the costs of the acquisition, construction and equipping of student housing comprised of approximately 451 beds and related amenities and a student activity center (collectively, the "Project") located on the campus of Clayton State University ("CSU"); (ii) fund capitalized interest on the Series 2007 Bonds, (iii) pay the premium for a debt service reserve surety bond to be issued by XL Capital Assurance Inc. (the "Bond Insurer"); and (iv) pay costs of issuance of the Series 2007 Bonds, including a municipal bond insurance policy to be issued by the Bond Insurer. Annual debt service requirements to maturity for revenue bonds payable are as follows:

Annual Financial Report FY 2008 168

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038 2039 through 2043
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31-35

Principal
$0 600,000
85,000 135,000 175,000 1,745,000 3,730,000 6,440,000 10,200,000 15,465,000 3,875,000 42,450,000 200,230 $42,650,230

Bonds Payable Interest
$1,852,874 2,021,318 1,997,318 1,993,918 1,988,518 9,776,952 9,232,108 8,193,815 6,371,715 3,372,439 193,750
46,994,725
$46,994,725

Total
$1,852,874 2,621,318 2,082,318 2,128,918 2,163,518
11,521,952 12,962,108 14,633,815 16,571,715 18,837,439
4,068,750 89,444,725
200,230 $89,644,955

Columbus State University

Columbus State University Foundation, Inc. Columbus State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Columbus State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The fifty-seven member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements.

The fiscal year of the Foundation is August 1 through July 31. This financial statement represents activity for the year ended July 31, 2007. The amount due to Columbus State University, $279,175 is not reflected as a receivable on the University's Statement of Net Assets. This amount was received by the University before its year end of June 30, 2008.

During the year ended July 31, 2007, the Foundation distributed $983,187 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from Columbus State University Foundation, Inc. at 4225 University Avenue, Columbus, Georgia 31907.

Annual Financial Report FY 2008 169

Subsequent Event:

Columbia State University Foundation, Inc. holds equity securities in the amount of $3,000,000 in Bill Heard Enterprises stock. During 2008, Bill Heard Enterprises ceased business operations and filed for chapter 11 bankruptcy.

Investments for Component Units:

Columbus State University Foundation, Inc. holds endowment and other investments in the amount of $35,385,669. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Columbus State University Foundation, Inc., in conjunction with the donors, has established a spending plan of 5% of a trailing three-year average of the endowment's total asset value, with the understanding that this spending rate plus inflation will not normally exceed total return from investments. This trailing three-year average shall be set back six months from the time of current year calculations for the purpose of spending, with the three year average being that of either calendar or fiscal year periods according to the requirements of the budgetary process.

Investments are comprised of the following amounts at July 31, 2007:

Certificates of Deposit Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds Split Interest Investments
Total Investments

Cost
$27,006 2,844,006 1,654,062 25,968,257
776,945 1,848,188
$33,118,464

Fair Value
$27,631 2,818,479 1,641,802 28,271,024
778,545 1,848,188
$35,385,669

Long-term Liabilities for Component Units:

Changes in long-term liabilities for component units for the fiscal year ended July 31, 2007 are shown below:

Beginning Balance August 1, 2006

Additions

Reductions

Ending Balance July 31, 2007

Amounts due within One Year

Liabilities under split interest agreement Other Long Term Liabilities
Total Long Term Liabilities

$1,292,153 $1,292,153

$185,115 636,099
$821,214

$121,928 $121,928

$1,355,340 636,099
$1,991,439

$116,317 333,000
$449,317

Annual Financial Report FY 2008 170

Foundation Properties, Inc. Foundation Properties, Inc. is a legally separate, tax-exempt component unit of Columbus State University (University). Foundation Properties, Inc. constructs auxiliary buildings and facilities for use by the University and then leases the completed buildings to the Board of Regents of the University System of Georgia. The eleven member board of Foundation Properties, Inc. is selfperpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from Foundation Properties, Inc., the majority of resources or income thereon that Foundation Properties, Inc. holds and invests is restricted to the real estate activities of the University by the donors. Because these restricted resources held by Foundation Properties, Inc. can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

Foundation Properties, Inc. is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements.

The fiscal year of Foundation Properties, Inc. is August 1 through July 31. This financial statement represents activity for the year ended July 31, 2007. The amount due to Columbus State University, $29,835,936, results primarily from funds that have been transferred from the Foundation which are designated for payments on the construction of the RiverPark Campus. It is the intent of Foundation Properties that the facility be transferred to the University upon completion. There is no corresponding due from amount on the University's Statement of Net Assets.

During the year ended July 31, 2007, Foundation Properties, Inc. distributed $482,076 to the University. Complete financial statements for Foundation Properties, Inc. can be obtained from Foundation Properties, Inc. at 4225 University Avenue, Columbus, Georgia 31907.

Investments for Component Units:

Foundation Properties, Inc. holds investments in the amount of $2,194,353 as of July 31, 2007. Investments consist of marketable securities and bonds as follows:

Cost

Fair Value

Government and Agency Securities Corporate Bonds Equity Securities

$202,338 138,870 1,654,637

$200,196 135,870 1,858,287

Total Investments

$1,995,845

$2,194,353

Capital Assets for Component Units:

Foundation Properties, Inc. held the following Capital Assets as of July 31, 2007:

Annual Financial Report FY 2008 171

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$12,052,473 41,938,633 53,991,106
73,895,156 1,656,816
75,551,972
8,647,588 66,904,384 $120,895,490

Long-term Liabilities for Component Units:

Notes and Loans Payable include an unsecured line of credit with a local bank with a maximum availability of $4,200,000. The line of credit bears interest at the prime rate, payable monthly, and expires on October 13, 2007, at which time it is expected to be renewed on substantially similar terms. The amount outstanding under the line of credit totaled $3,960,000 at July 31, 2007. There is also a note payable in the amount of $257,170 that is payable to a bank in monthly installments of $2,915, including interest at the prime rate, through November 2009. This loan is collateralized by property with a cost of $478,792.

Student Housing Bonds are issued by the Foundation Properties, Inc. to finance student housing on university property. The bonds, serial and term, are secured by pledges of gross receipts from student housing at Columbus State University.

Educational Programming Bonds are issued by Foundation Properties, Inc. to finance the purchase of the One Arsenal Property to be incorporated with the future development of the RiverPark Campus, as well as the construction of the Cunningham Conference Center.

Parking Facility Revenue Bonds are issued by Foundation Properties, Inc. to finance parking facilities on university property. The bonds, serial and term, are secured by pledges of gross receipts from parking deck fees at Columbus State University.

Changes in long-term liabilities for Foundation Properties, Inc. for the fiscal year ended July 31, 2007 are shown below:

Beginning Balance Augsut 1, 2006

Additions

Reductions

Ending Balance July 31, 2007

Amounts due within
One Year

Notes and Loans Payable Revenue/M ortgage Bonds Payable

$0 70,771,806

$3,960,000 6,700,000

($257,170) 1,016,806

$4,217,170 76,455,000

$3,974,296 1,469,916

Total Long Term Liabilities

$70,771,806 $10,660,000

$759,636

$80,672,170

$5,444,212

Annual Financial Report FY 2008 172

Debt Service Obligations:

Annual requirements to maturity for Notes Payable are as follows:

Year ending July 31:

2008

1

2009

2

2010

3

Notes and Loans Payable

Princip al

Interest

Total

$3,974,296 15,521
227,353 $4,217,170

$88,684 19,459 6,196
$114,339

$4,062,980 34,980
233,549 $4,331,509

Annual debt service requirements to maturity for Student Housing, Educational Programming and Parking Facility revenue bonds payable are as follows:

Year ending July 31: 2008 2009 2010 2011 2012 2013 through 2017

1 2 3 4 5 6-10

Princip al

Bonds Payable Interest

$1,469,916 12,849,909
1,420,175 36,171,000 16,549,000
7,995,000 76,455,000

$2,522,342 2,472,772 2,422,197 2,368,584 896,249 331,709
11,013,853

Total
$3,992,258 15,322,681
3,842,372 38,539,584 17,445,249
8,326,709 87,468,853

Columbus State University Athletic Fund, Inc. Columbus State University Athletic Fund, Inc. (Athletic Fund) is a legally separate, tax-exempt component unit of Columbus State University (University). The Athletic Fund supports athletic endeavors of the institution. These endeavors include but are not limited to student services and student financial aid. The thirty-three member board of the Athletic Fund is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Athletic Fund, the majority of resources or income thereon that the Athletic Fund holds and invests are restricted to the athletic activities of the University by the donors. Because these restricted resources held by the Athletic Fund can only be used by, or for the benefit of, the University and their management role is significant to the accomplishment of the University's mission, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Athletic Fund is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The fiscal year of the Athletic Fund is August 1 through July 31. This financial statement represents activity for the month ended July 31, 2007.

Annual Financial Report FY 2008 173

Due to the difference in fiscal year ending dates between Columbus State University and the Athletic Fund, the amount due to Columbus State University of $243,021 and due from Columbus State University of $2,500 are not reflected on the University's Statement of Net Assets.

During the year ended July 31, 2007 the Athletic Fund distributed $343,944 to the University for both restricted and unrestricted purposes. Complete financial statements for the Athletic Fund can be obtained from Columbus State University Athletic Fund, Inc. at 4225 University Avenue, Columbus, Georgia 31907.

Investments for Component Units:

Columbus State University Athletic Fund, Inc. holds endowment and other investments in the amount of $1,380,902. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.

Investments are comprised of the following amounts at July 31, 2007:

Cost

Fair Value

Equity Securities Total Investments

$1,182,841 $1,182,841

$1,380,902 $1,380,902

Columbus State University Alumni Association, Inc. Columbus State University Alumni Association, Inc. (Association) is a legally separate, taxexempt component unit of Columbus State University (University). The Association seeks to promote the mission of the University through mutually beneficial relations between the University and its alumni. The twenty-member board of the Association is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Association, the majority of resources or income thereon that the Association holds and invests are restricted to the activities of the University by the donors. Because these restricted resources held by the Association can only be used by or for the benefit of the University and their management role is significant to the accomplishment of the University's mission, the Association is considered a component unit of the University and is discretely presented in the University's financial statements.
The Association is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Association's fiscal year is August 1 through July 31. This financial statement represents activity for the month ended July 31, 2007.
Due to the difference in fiscal year ending dates between Columbus State University and the Association, the amount due to Columbus State University of $654 is not reflected on the University's Statement of Net Assets.

Annual Financial Report FY 2008 174

During the year ended July 31, 2007, the Association distributed $11,659 to the University for both restricted and unrestricted purposes. Complete financial statements for the Association can be obtained from Columbus State University Alumni Association, Inc. at 4225 University Avenue, Columbus, Georgia 31907.

Investments for Component Units:

Columbus State University Alumni Association, Inc. holds endowment and other investments in the amount of $140,703. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.

Investments are comprised of the following amounts at July 31, 2007:

Certificates of Deposit Equity M utual Funds
Total Investments

Cost
$85,993 70,813
$156,806

Fair Value
$85,993 54,710
$140,703

Capital Assets for Component Units:

Columbus State University Alumni Association, Inc. held Capital Assets as of July 31, 2007 as follows:

Capital Assets being Depreciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

July 31, 2007
$9,900 400
10,300 7,816 2,484
$2,484

Fort Valley State University
Fort Valley State University Foundation, Inc. Fort Valley State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Fort Valley State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit

Annual Financial Report FY 2008 175

of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $896,245 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 1005 State University Drive, Fort Valley, GA 31030 or from the Foundation's website at www.fvsu.edu.

Investments for Component Units:

Fort Valley State University Foundation, Inc. holds endowment and other investments in the amount of $5.6 million, excluding investments limited to use (bond proceeds). The $3.1 million corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.

Investments are comprised of the following amounts at June 30, 2008:

Money Market Accounts Certificates of Deposit Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds Real Estate
Total Investments

Cost
$923,540 892,193 203,473 160,602 683,340
2,767,193 92,000
$5,722,341

Fair Value
$923,540 892,193 202,529 157,107 644,207
2,650,760 92,000
$5,562,336

Capital Assets for Component Units:
Fort Valley State University Foundation, Inc. holds the following capital asset amounts at June 30, 2008:

Annual Financial Report FY 2008 176

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

June 30, 2008
$298,607 1,931,926 2,230,533
1,280,326 52,600
1,332,926 264,396
1,068,530 $3,299,063

Long-term Liabilities for Component Units:

Changes in long-term liabilities for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Notes and Loans Payable Revenue/M ortgage Bonds Payable
Total Long Term Liabilities

$1,477,315 43,254,894
$44,732,209

$131,653 18,236,036
$18,367,689

$66,718 $66,718

$1,542,250 61,490,930
$63,033,180

$181,876 70,000
$251,876

Notes and Loans Payable: The Foundation has two notes payable to the Department of Agriculture, Rural Business Cooperative Services through 2031 which bear interest at 1%. The notes are collateralized by real and personal property including mortgage loans. The notes payable balances at June 30, 2008 were $1,160,702.
The Foundation has two banks loans due in 2009 at 5% which were for the purchase of a building and for Foundation operations. The loan balances at June 30, 2008 were $381,548.
Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Annual Financial Report FY 2008 177

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033

1 2 3 4 5 6-10 11-15 16-20 21-25

Principal

Notes and Loans Payable Interest

$181,876 300,622 51,237 51,752 52,272 269,344 283,149 297,958 54,040
$1,542,250

$27,660 23,156 10,647 10,131 9,612 40,074 26,272 11,336 1,025
$159,913

Total
$209,536 323,778 61,884 61,883 61,884 309,418 309,421 309,294 55,065
$1,702,163

Revenue Bonds Payable: In June 2006, the Development Authority of Peach County (the Authority) issued $44 million in Revenue Bonds Series 2006 (the Bonds) and entered into an agreement to loan $44 million to the Foundation for Student Housing construction. The bonds are payable solely from the Trust Estate, as defined in the Indenture. Interest rates vary from 4.0% - 5.0%. The bond liability at June 30, 2008 was $43,289,857, net of bond discount of $770,143.

In June 2008, the Authority issued $18 million in Revenue Bonds Series 2008 (the Bonds) and entered into an agreement to loan $18 million to the Foundation for additional Student Housing construction. The bonds are secured by a letter of credit issued by Wachovia Bank in favor of the Authority. The letter of credit must be renewed annually. Effective July 1, 2008, the Foundation entered into an interest rate Swap Agreement to mitigate the risk of future rate fluctuations of the variable rates on the Series 2008 Bonds. Pursuant to the Swap Agreement, the Foundation will pay a fixed rate of 4.75% to the Swap Provider in exchange for the Swap Provider's payment of a floating rate. The Swap Agreement is in the notional amount of $18,265,000. The bond liability at June 30, 2008 was $18,201,073, net of bond discount of $63,927.

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal
$70,000 130,000 195,000 290,000 345,000 3,175,000 6,590,000 9,485,000 15,935,000 26,110,000 62,325,000 (834,070) $61,490,930

Bonds Payable Interest
$2,811,113 2,870,447 2,865,247 2,859,071 2,843,970
13,938,661 12,971,466 11,112,236
8,094,179 3,328,711 63,695,101
$63,695,101

Total
$2,881,113 3,000,447 3,060,247 3,149,071 3,188,970
17,113,661 19,561,466 20,597,236 24,029,179 29,438,711 126,020,101
(834,070) $125,186,031

Annual Financial Report FY 2008 178

Georgia College & State University

Georgia College & State University Alumni Association, Inc. Georgia College & State University Alumni Association, Inc. (Alumni Association) is a legally separate, tax-exempt component unit of Georgia College & State University (University). The Alumni Association acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The thirty-eight member board of the Alumni Association is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Alumni Association, the majority of resources or income thereon that the Alumni Association holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Alumni Association can only be used by, or for the benefit of the University, the Alumni Association is considered a component unit of the University and is discretely presented in the University's financial statements.

The Alumni Association is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Alumni Association's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Alumni Association distributed $199,379 to the University for both restricted and unrestricted purposes. Complete financial statements for the Alumni Association can be obtained from the Administrative Office at Campus Box 96, 100 E. Greene Street, Suite 200, Milledgeville, GA 31061.

Investments for Component Units:

Georgia College & State University Alumni Association, Inc. investments are comprised of the following amounts at June 30, 2008:

Cost

Fair Value

M oney M arket Accounts Corporate Bonds Equity Securities M utual Funds Real Estate

$255,758 1,342,565 3,007,282
554,998 3,500

$255,758 1,363,987 3,333,208
598,369 3,500

Total Investments

$5,164,103

$5,554,822

Capital Assets for Component Units:
Georgia College & State University Alumni Association, Inc. holds the following Capital Assets as of June 30, 2008:

Annual Financial Report FY 2008 179

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

June 30, 2008
$24,000 24,000
227,692 110,600 338,292 280,279
58,013 $82,013

Georgia College & State University Foundation, Inc. Georgia College & State University Foundation, Inc. (Foundation) is a legally separate, taxexempt component unit of Georgia College & State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The thirty-five member board of the Foundation is selfperpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $217,464 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at Campus Box 96, 100 E. Greene Street, Suite 200, Milledgeville, GA 31061.
Prior Period Adjustment:
Effective January 1, 2007, the University transferred ownership of certain endowment assets to the Foundation. During the year ended June 30, 2008, it was determined by the Board of Regents that ownership of these assets should not have transferred; rather the Foundation should hold the assets and invest them with the other endowment assets of the Foundation. The effect on Net Assets from transferring the endowment investments back to the University is a decrease in Beginning Net Assets of ($1,826,301).

Annual Financial Report FY 2008 180

Investments for Component Units:

Georgia College & State University Foundation, Inc. holds endowment and other investments in the amount of $14.8 million. The $10.2 million corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Georgia College & State University Foundation, Inc., in conjunction with the donors, has established a spending plan whereby 5% of the calendar year-end market value of the investment based on a rolling 3 year average may be spent. 95% is to be spent based on donor intent and 5% is to be spent as an administrative fee.

Investments are comprised of the following amounts at June 30, 2008:

Money Market Accounts Corporate Bonds Equity Securities Mutual Funds Real Estate
Total Investments

Cost
$3,663,279 2,598,662 6,748,149 1,025,000
380,000
$14,415,090

Fair Value
$3,663,279 2,647,560 7,003,133 1,105,096 380,000
$14,799,068

Capital Assets for Component Units:

Georgia College & State University Foundation, Inc. holds the following Capital Assets as of June 30, 2008:

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

June 30, 2008
$372,188 $1,889,906
2,262,094
3,892,722 49,139
3,941,861 108,695
3,833,166 $6,095,260

Long-term Liabilities for Component Units:

Changes in long-term liabilities for Georgia College & State University Foundation, Inc. for the fiscal year ended June 30, 2008 are shown below:

Annual Financial Report FY 2008 181

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Liabilities under split interest agreement Notes and Loans Payable Revenue/Mortgage Bonds Payable
Total Long Term Liabilities

$46,652 2,670,957 109,448,601
$112,166,210

$0 161,992
$161,992

$5,742 166,667 262,424
$434,833

$40,910 2,666,282 109,186,177
$111,893,369

$0 455,000 $455,000

Notes and Loans Payable: During the year ending June 30, 2007, the Foundation purchased space in an office building in Macon, Georgia to house the Macon Campus of the University. A line of credit to a financial institution was taken out for the purchase and related renovation. The line requires monthly interest payments at LIBOR + 1.88% (4.3375% at June 30, 2008). The line is due October 2009 and is collateralized by certain real property and an assignment of certain rents. The balance on the line of credit at June 30, 2008 was $2,666,282.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30:

2009

1

2010

2

Princip al

Notes and Loans Payable Interest

$0 2,666,282 $2,666,282

$115,650 33,731
$149,381

Total
$115,650 2,700,013 $2,815,663

Bonds Payable: On December 1, 2003, Property II, LLC entered into a loan agreement with the Development Authority of the City of Milledgeville and Baldwin County whereby the Authority would issue certain bonds totaling $7,840,000 and loan the entire proceeds to Property II, LLC. As part of the loan agreement, Property II, LLC agreed to use the proceeds to construct and equip a student center and a parking lot located on the campus of the University, to establish a debt service reserve, to establish certain amounts for capitalized interest and to pay the cost of issuance of the bonds. The principal and interest are payable solely from and secured by a lien upon certain interest in real property and certain assignments of rental income originating from rental agreements between Property II, LLC and the Board of Regents. The rental agreements are annual arrangements and commence following the issuance of a certificate of occupancy. The bonds are subject to certain optional and extraordinary mandatory redemption provisions. The serial bonds have various maturities with the final payment scheduled for September 1, 2022. The balance of the bonds at June 30, 2008 was $7,034,916, net of unamortized premium of $9,916.

On June 15, 2007, Property V, LLC entered into a loan agreement with the Development Authority of the City of Milledgeville and Baldwin County whereby the Authority would issue certain bonds totaling $102,470,000 and loan the entire proceeds to Property V, LLC. As part of the loan agreement, Property V, LLC agreed to use the proceeds to refund and redeem $89,000,000 in outstanding principal of Property III, LLC, to perform capital renovations, improvements and acquisitions, to establish a debt service reserve, to establish certain amounts

Annual Financial Report FY 2008 182

for capitalized interest and to pay the cost of issuance of the bonds. The principal and interest are payable solely from and secured by a lien upon certain leasehold deeds to secure debt and certain pledged revenues and assignments of rents and leases. The bonds are subject to certain optional and extraordinary mandatory redemption provisions. The serial bonds have various maturities with the final payment scheduled for October 1, 2033. The balance of the bonds at June 30, 2008 was $102,151,261, net of unamortized discount of $318,739.

In connection with the 2007 series bonds, the Foundation entered into an interest rate swap transaction to convert its variable rate bond obligation to fixed rates. The resulting cost of funds is lower than it would have been had fixed rate borrowings been issued directly. The level of fixed rate debt resulting from the effective interest rate swap is 100% of the total bond debt of the 2007 series. Interest expense and an increase in liability from interest rate swap transactions of $5,970,968 have been recorded as of June 30, 2008. The amount was recorded based on calculated mathematical approximations of market values using certain assumptions regarding past, present, and future market conditions.

Annual debt service requirements to maturity for Bonds Payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Bond Premium/(Discount)

Princip al
$455,000 590,000 760,000 945,000
1,140,000 9,200,000 16,675,000 25,840,000 37,655,000 16,235,000 109,495,000 (308,823) $109,186,177

Bonds Payable Interest
$5,099,056 5,075,961 5,045,008 5,006,253 4,957,346
23,699,463 20,684,888 15,585,686
8,122,261 195,040
93,470,962
$93,470,962

Total
$5,554,056 5,665,961 5,805,008 5,951,253 6,097,346
32,899,463 37,359,888 41,425,686 45,777,261 16,430,040 202,965,962
(308,823) $202,657,139

Georgia Southwestern State University
Georgia Southwestern Foundation, Inc. The Georgia Southwestern Foundation, Inc (Foundation) is a legally separate, tax-exempt component unit of Georgia Southwestern State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The thirty-six member board of the Foundation is selfperpetuating and consists of graduates and friends of the University, and members of the local community. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation

Annual Financial Report FY 2008 183

is considered a component unit of the University and is discretely presented in the University's financial statements

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $1,653,246 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Georgia Southwestern State University Business Office, 800 Georgia Southwestern State University Drive, Americus, GA 31709.

Investments for Component Units:

Georgia Southwestern Foundation holds endowment and other investments in the amount of $24.6 million. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.

Cost

Fair Value

M oney M arket Accounts Certificates of Deposit Corporate Bonds & Fixed Income Funds Equity Securities & Funds

$1,066,144 2,045,953 2,023,991
18,636,412

$1,066,144 2,045,953 2,010,197
19,501,176

Total Investments

$23,772,500

$24,623,470

Capital Assets for Component Units:

Georgia Southwestern Foundation, Inc. holds the following Capital Assets as of June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$131,199 224,384 355,583
21,766,967 987,111
22,754,078
1,530,319 21,223,759 $21,579,342

Annual Financial Report FY 2008 184

Long-term Liabilities for Component Units:

The Americus-Sumter Payroll Department Authority ("PDA") issued $27,365,000 of its Revenue Bonds (GSW Foundation Housing, LLC Student Housing Project), Series 2005 ("the Bonds"). The proceeds of the sale of the Bonds have been loaned to the GSW Foundation Housing, LLC pursuant to the terms and provision of a Loan Agreement and Assignment of Gross Revenues and Certain Agreements and Accounts, dated November 1, 2005, between the PDA and the Company. The proceeds are being used to construct 2 student housing buildings and parking facilities for use by the University.

The bonds mature in the year 2037 and have interest rates ranging from 4% to 5.125%. Longterm liability activity for the year ended June 30, 2008 is as follows:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within One Year

Revenue/Mortgage Bonds Payable

$27,233,914

$0

$254,020

$26,979,894

$65,000

Debt Service Obligations:

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal
$65,000 105,000 145,000 190,000 235,000 2,010,000 3,760,000 5,220,000 6,570,000 8,815,000 27,115,000 (135,106) $26,979,894

Bonds Payable Interest
$1,274,108 1,271,508 1,267,308 1,261,507 1,253,907 6,073,617 5,492,738 4,495,212 3,151,881 1,232,050
26,773,836
$26,773,836

Total
$1,339,108 1,376,508 1,412,308 1,451,507 1,488,907 8,083,617 9,252,738 9,715,212 9,721,881
10,047,050 53,888,836
(135,106) $53,753,730

Kennesaw State University
Kennesaw State University Foundation, Inc. The Kennesaw State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Kennesaw State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The Foundation also constructs buildings and facilities for use by the
Annual Financial Report FY 2008 185

University and then leases the completed buildings to the institution. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $4,662,283 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 1000 Chastain Road, Mailbox 910, Kennesaw, GA 30144, or from the Foundation's website at www.kennesaw.edu/foundation.

Investments for Component Units:

Kennesaw State University Foundation, Inc. holds endowment and other investments in the amount of $25.5 million. The $14.1 million corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Kennesaw State University Foundation, Inc., in conjunction with the donors, has established a spending plan whereby 4% of the scholarship balance, in excess of $400, may be used for academic scholarships. The remaining 96% of the balance is set aside as a reserve.

Investments are comprised of the following amounts at June 30, 2008:

Cost

Fair Value

Money Market Accounts Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds Joint Ventures/Partnerships

$1,037,701 5,993,073 2,546,066 15,892,885 2,735,816
20,304

$1,037,701 5,373,354 2,537,368 13,682,852 2,863,007
11,982

Total Investments

$28,225,845

$25,506,264

Capital Assets for Component Units:

Kennesaw State University Foundation, Inc. holds the following Capital Assets as of June 30, 2008:

Annual Financial Report FY 2008 186

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

June 30, 2008
$6,006,139 68,492,095 74,498,234
90,546,722 3,654,007
94,200,729 14,759,875 79,440,854 $153,939,088

Long-term Debt for Component Units:

Changes in long-term liabilities for the Foundation for the fiscal year ended June 30, 2008 are shown below:

Liabilities under split interest agreement Notes and Loans Payable Revenue/Mortgage Bonds Payable Other Long Term Liabilities
Total Long Term Liabilities

Beginning Balance July 1, 2007
$223,884 2,220,615 181,790,167
0
$184,234,666

Additions
$0 561,294 93,123,701 548,548
$94,233,543

Reductions $20,012
2,220,615 4,514,655
$6,755,282

Ending Balance June 30, 2008
$203,872 561,294 270,399,213 548,548
$271,712,927

Amounts due within
One Year
$20,012 561,294 4,400,000 548,548
$5,529,854

Notes and Loans Payable: During the year ending June 30, 2008, the Foundation entered into an unsecured line of credit of $5,000,000 with a financial institution to provide interim financing for new dining hall construction. The line of credit bears interest at the 30 day LIBOR plus 1.5% (3.96% at June 30, 2008) and matures April 2009. The line of credit balance was $561,294 at June 30, 2008.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30:

2009

1

Principal

Notes and Loans Payable Interest

$561,294 $561,294

$18,000 $18,000

Total
$579,294 $579,294

Revenue Bonds Payable: During the year ending June 30, 2004, the Foundation assumed Educational Facilities Revenue Bonds, Series 1998, issued by the Development Authority of Cobb County. The Series 1998 bonds were issued to finance the acquisition of an existing facility. The Foundation assumed the

Annual Financial Report FY 2008 187

bonds in conjunction with acquiring the property that the bonds originally financed. The obligations of the Foundation under the bond documents are nonrecourse obligations. The bonds were issued in the aggregate amount of $15,990,000 and will mature in August 2031, subject to mandatory and optional redemption provisions. The bonds bear interest payable on the first business day of each month at a variable interest rate determined weekly. Interest accrues at the weekly rate until converted to another variable rate or the fixed rate in accordance with the terms of the Indenture. The outstanding principal obligation on the Series 1998 bond issue was $10,865,000 at June 30, 2008.
When the Foundation assumed the 1998 Series bonds, they also assumed an interest-rate swap transaction that was entered into originally to convert a portion of its variable-rate bond obligations to fixed rates. A liability from interest-rate swap transactions of $548,548 has been recorded as of June 30, 2008 and is reported in Other Liabilities on the Statement of Net Assets.
When the Foundation assumed the 1998 Series bonds, they also assumed a forward purchase agreement that was entered into originally to produce a guaranteed yield to the trustee. A receivable from forward purchase agreement transactions of $270,430 has been recorded as of June 30, 2008 and is reported in Other Assets on the Statement of Net Assets.
During the year ended June 30, 2005, the Development Authority of Cobb County issued revenue bonds and loaned the proceeds to the Foundation. The Series 2004 bonds were issued in the aggregate principal amount of $155,060,000. The bonds consist of six series and were issued to finance the cost of construction of 132 beds of new student housing, purchase and renovate the property known as "Chastain Pointe", refund the 2003A and 2003B bond series, including payment of swap termination fees, and finance or refinance certain parking facilities. The bonds bear interest payable semiannually at a fixed interest rate set at issuance. Interest will accrue at the fixed rate until converted to another fixed rate in accordance with the terms of the Indenture. The outstanding principal obligations on the Series 2004 bond issues were $148,065,000 at June 30, 2008.
During the year ended June 30, 2007, the Development Authority of Cobb County issued revenue bonds and loaned the proceeds to the Foundation. The Series 2006A and B bonds were issued to repay an interim loan incurred to finance the acquisition of an office building on approximately 6.3 acres, Town Point, the acquisition of approximately 7.2 acres of unimproved land for future development, to pay the cost of issuance of the 2006 bonds and to pay a portion of the premium for a surety bond. The bonds were issued in the aggregate principal amount of $15,055,000. The Series 2006A bonds will mature in July 2031, subject to mandatory and optional redemption provisions. The Series 2006B bonds will mature in July 2013, subject to mandatory and optional redemption provisions. The bonds bear interest payable semiannually at a fixed interest rate set at issuance. Interest will accrue at the fixed rate until converted to another fixed rate in accordance with the terms of the Indenture. At June 30, 2008, the applicable interest rates range from 4% to 5.34%. The outstanding principal obligations on the Series 2006 bond issues were $14,685,000 at June 30, 2008.
During the year ended June 30, 2008, the Development Authority of Cobb County issued revenue bonds and loaned the proceeds to the Foundation. The Series 2007 bonds were issued to finance the costs of acquisition, construction and equipping of a parking deck containing approximately 2,500 parking spaces on land leased by KSU Central Parking Deck Real Estate
Annual Financial Report FY 2008 188

Foundation, LLC, and to fund capitalized interest, debt service reserve, and pay a portion of the costs of issuance of the Series 2007 Parking Facilities Bonds. The bonds were issued in the aggregate amount of $38,550,000 and will mature in July 2038, subject to mandatory and optional redemption provisions. The bonds bear interest, payable semiannually, at a fixed interest rate set at issuance. Interest will accrue at the fixed rate until converted to another fixed rate in accordance with the terms of the Indenture. At June 30, 2008, the applicable interest rates ranged from 4% to 4.75%. The outstanding principal obligation on the Series 2007 bond issue was $38,550,000 at June 30, 2008.

During the year ended June 30, 2008, the Development Authority of Cobb County issued student housing revenue bonds and loaned the proceeds to the Foundation. The Series 2007A, B and C bonds were issued in the aggregate principal amount of $53,320,000 to finance the acquisition, construction, renovation, furnishing and equipping of student housing to be located on the campus of Kennesaw State University on land leased by Village II Real Estate Foundation, LLC, fund a debt service reserve, fund capitalized interest on the Series 2007 bonds, and pay all or a portion of the costs of issuing the Series 2007 bonds. The Series 2007 bonds will mature in July 2038, subject to mandatory and optional redemption provisions. The bonds bear interest, payable semiannually, at a fixed interest rate set at issuance. Interest accrues at the fixed rate until converted to another fixed rate in accordance with the terms of the Indenture. At June 30, 2008 the applicable interest rates ranged from 3.5% to 5.25%. The outstanding principal obligations on the Series 2007A, B and C bond issues were $53,320,000 at June 30, 2008.

Annual debt service requirements to maturity for the bond issues detailed above are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038 2039 through 2043
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31-35

Principal
$4,400,000 6,105,000 6,340,000 6,585,000 6,830,000
38,380,000 42,575,000 50,505,000 48,755,000 49,365,000
5,645,000 265,485,000
4,914,213 $270,399,213

Bonds Payable Interest
$12,097,845 11,918,914 11,712,508 11,506,406 11,284,434 52,474,361 43,682,816 32,177,650 18,405,094 8,496,495 141,131 213,897,654
$213,897,654

Total
$16,497,845 18,023,914 18,052,508 18,091,406 18,114,434 90,854,361 86,257,816 82,682,650 67,160,094 57,861,495 5,786,131
479,382,654 4,914,213
$484,296,867

North Georgia College & State University
North Georgia College & State University Foundation, Inc. North Georgia College & State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of North Georgia College & State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are

Annual Financial Report FY 2008 189

available to the University in support of its programs. The seven member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year ends on June 30th each year.

During the year ended June 30, 2008, the Foundation distributed $1,414,745 to or for the benefit of the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation may be obtained from their Office at 70 Alumni Drive, Dahlonega, GA 30533 or from the University's website at www.ngcsu.edu and click on "Alumni & Friends" to go to the Foundation's page.

Investments for Component Units:

North Georgia College & State University Foundation, Inc. holds endowment and other investments in the amount of $29.2 million. The $23.6 million corpus of the endowment is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. North Georgia College & State University Foundation, in conjunction with the donors, has established a spending plan whereby 50% of the earnings may be used for academic scholarships. The remaining 50% of the earnings are set aside as a reserve.

Investments are comprised of the following amounts at June 30, 2008:

Money Market Accounts Government and Agency Securities Equity Securities Mutual Funds Real Estate
Total Investments

Cost
$743,208 200,000
1,004,030 25,267,777
1,648,677
$28,863,692

Fair Value
$743,208 201,938 717,180
25,857,597 1,648,677
$29,168,600

Capital Assets for Component Units:
North Georgia College & State University Foundation, Inc. holds the following Capital Assets as of June 30, 2008:

Annual Financial Report FY 2008 190

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

June 30, 2008
$39,005 20,280,552 20,319,557
585,065 16,875 601,940 27,000
574,940 $20,894,497

Long-Term Liabilities for Component Units:

Changes in long-term liabilities for the year ended June 30, 2008 are as follows:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Liabilities under split interest agreement Notes and Loans Payable Revenue/Mortgage Bonds Payable
Total Long Term Liabilities

$22,665 300,873 46,979,761
$47,303,299

$2,547 37,896
$40,443

$0 394,758 $394,758

$25,212 338,769 46,585,003
$46,948,984

$0 338,769 590,000
$928,769

Notes and Loans Payable: The $338,769 Notes and Loans Payable balance at June 30, 2008 represents the outstanding borrowings under a $1,200,000 line of credit with a financial institution to purchase real estate. The interest rate charge is the financial institution's prime rate less .50% (4.5% at June 30, 2008). Payments of quarterly interest only are required through January 5, 2009, at which time the line of credit matures.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30: 2009

Notes and Loans Payable

Principal

Interest

Total

1

$338,769

$8,000

$346,769

Annual Financial Report FY 2008 191

Revenue Bonds Payable: In August 2001, the Downtown Development Authority of the City of Dahlonega (the Authority) issued $10.8 million in Revenue Bonds Series 2001 (the Bonds) and entered into an agreement to loan $10.8 million to the Foundation for Student Housing construction. The bonds were secured by a letter of credit issued by a financial institution in favor of the Authority. The letter of credit must be renewed annually. Borrowings under the agreement were subject to an annual fee of .25% of the letter of credit amount. The loan was paid off in February, 2007 with proceeds of the Series 2007 Bond Issue.

In February 2007, the Student Housing financed the retirement of the Series 2001A Bonds and debt associated with the purchase of real estate held for investment with the Downtown Development Authority of the City of Dahlonega 2007 Series C Revenue Bonds (the C Bonds) totaling $16,215,000. The C Bonds carried interest ranging from 3.63% to 5.00%, payable semiannually on January 1 and July 1 of each year beginning July 1, 2007.

In February 2007,the Park & Recreation Center financed the acquisition and renovation of an existing office building and the construction of a Recreation Center and Parking Deck for the North Georgia College & State University with the Downtown Development Authority of the City of Dahlonega 2007 Series A & B Revenue Bonds (the A & B Bonds) totaling $30,270,000. The Series A & B Bonds carry interest ranging from 3.63% to 5.00%, payable semi-annually on January 1 and July 1 of each year beginning July 1, 2007.

Annual debt service obligations to maturity for the revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium/(Discount)

Principal

Bonds Payable Interest

Total

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

$590,000 525,000 585,000 670,000 835,000
4,905,000 7,530,000 11,340,000 8,430,000 10,695,000 46,105,000
480,003 $46,585,003

$2,090,515 2,069,015 2,047,455 2,023,410 1,993,052 9,293,069 7,887,385 5,693,688 2,981,675 940,319
37,019,583
$37,019,583

$2,680,515 2,594,015 2,632,455 2,693,410 2,828,052
14,198,069 15,417,385 17,033,688 11,411,675 11,635,319 83,124,583
480,003 $83,604,586

Savannah State University
Savannah State University Foundation, Inc. Savannah State University Foundation, Inc., a Georgia non-profit corporation (the "Foundation") adopted resolutions authorizing the organization of SSU Foundation Real Estate Ventures, LLC (the "LLC"), a Georgia limited liability company of which the Foundation is the sole member, for the purpose of acquiring, renovating, equipping and leasing to the Board of Regents for the
Annual Financial Report FY 2008 192

benefit of the University. Although the University does not control transactions of the Foundation, all activity of the Foundation is restricted for the benefit of the University. As such, the Foundation (including the LLC) is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation (including the LLC) is a private, nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $0 to the University. Complete financial statements for the Foundation can be obtained from Savannah State University, Office of Fiscal Affairs, Colston Administration Building, P. O. Box 20419, Savannah, Georgia, 31404.

Investments for Components Units:

Savannah State University Foundation, Inc. held the following investments at June 30, 2008:

Fair Value

M oney M arket Accounts Equity Securities M utual Funds

$7,549 11,296 138,722

Total Investments

$157,567

Capital Assets for Component Units:

Savannah State University Foundation, Inc. held the following capital assets at June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$1,712,590 5,641,394 7,353,984
9,443,150 9,443,150
124,662 9,318,488 $16,672,472

Annual Financial Report FY 2008 193

Long-term Liabilities for Component Units:
Changes in long-term debt for Savannah State University Foundation, Inc. for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within One Year

Revenue/Mortgage Bonds Payable Total Long Term Liabilities

$0

$49,220,000

$0

$49,220,000

$0

$49,220,000

$0

$49,220,000

$110,000 $110,000

The Savannah Economic Development Authority offered Series 2008 bonds in February 2008 in the form of two issues for $26,245,000 (2008A) and $22,975,000 (2008B). The proceeds of the bond issues were used to construct and equip a dining/recreational facility, acquire and enhance an existing apartment complex and convert it to a student housing facility, fund capitalized interest on the bonds, and pay the costs of issuance of the bonds.

In order to mitigate interest rate risk associated with the Series 2008A and 2008B bonds, the Foundation entered into two interest rate swap agreements with Wachovia Bank, N.A. Pursuant to the agreements, the Foundation pays a fixed rate of 4.3862% on the Series 2008A bonds and a fixed rate of 4.5550% on the Series 2008B bonds based on the outstanding principal of the respective bond issues. At June 30, 2008, the Foundation recorded an unrealized loss on the fair value of the interest rate swap agreements of $3,853,970. This loss is reported as Other Liabilities (current) on the Statement of Net Assets and as a component of Interest Expense on the Statement of Revenues, Expenses and Changes in Net Assets.

Annual debt service requirements to maturity for Bonds Payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033

1 2 3 4 5 6-10 11-15 16-20 21-25

Princip al
$110,000 245,000 335,000 435,000 545,000
4,655,000 8,785,000 14,520,000 19,590,000 $49,220,000

Bonds Payable Interest
$2,197,267 2,191,938 2,180,713 2,165,436 2,145,660
10,246,997 8,850,311 6,389,782 2,474,963
$38,843,067

Total
$2,307,267 2,436,938 2,515,713 2,600,436 2,690,660
14,901,997 17,635,311 20,909,782 22,064,963 $88,063,067

Annual Financial Report FY 2008 194

Southern Polytechnic State University

Southern Polytechnic State University Foundation, Inc. Southern Polytechnic State University Foundation, Inc. (Foundation) is a legally separate, taxexempt component unit of Southern Polytechnic State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The seven member board of the Foundation is selfperpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $1,088,250 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Advancement Office at 1100 S. Marietta Parkway, Marietta GA 30060 or from the Foundation's website at www.spsu.edu.

Investments for Component Units:

Southern Polytechnic State University Foundation, Inc. holds endowment and other investments in the amount of $8.1 million. The $1.8 million corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Southern Polytechnic State University Foundation, in conjunction with the donors, has established a spending plan whereby 5% of the average of the past 3 years earnings may be used for the endowments designated purpose.

Investments are comprised of the following amounts at June 30, 2008:

Corporate Bonds Equity Securities Mutual Funds
Total Investments

Cost
$5,268,640 2,285,126 2,029,254
$9,583,020

Fair Value
$3,687,291 2,342,465 2,029,154
$8,058,910

Annual Financial Report FY 2008 195

Long-Term Liabilities for Component Units:

During the year ended June 30, 2004, SPSU Student Housing I, LLC, a subsidiary of the Foundation, arranged for the sale of $35,690,000 Development Authority of the City of Marietta Georgia (the Issuer) Tax-Exempt Adjustment Mode Revenue Bonds (Student Housing Facilities Revenue Bonds) Series 2003 (the Bonds). The proceeds were loaned to SPSU Student Housing I, LLC to finance the development, purchase and construction of dormitory and apartment facilities and to pay certain costs of issuance of the bonds. The Issuer entered into a loan agreement with the SPSU Student Housing I, LLC dated December 1, 2003. The Bonds are secured by all property of the borrower. The Bonds interest ranges from 2.5 to 5.25 percent

Changes in long-term debt for the year ended June 30, 2008 are as follows:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Revenue/Mortgage Bonds Payable Other Long Term Liabilities

$34,357,823 551,896

$0

$924,695

$33,433,128

$970,000

9,786

542,110

Total Long Term Liabilities

$34,909,719

$0

$934,481

$33,975,238

$970,000

Debt Service Obligations:

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25

Principal
$970,000 1,000,000 1,030,000 1,065,000 1,100,000 6,250,000 8,010,000 10,275,000 3,430,000 33,130,000 303,128 $33,433,128

Bonds Payable Interest
1,576,020 1,546,920 1,515,920 1,481,415 1,443,075 6,478,912 4,715,988 2,451,569 259,250 21,469,069
$21,469,069

Total
$2,546,020 2,546,920 2,545,920 2,546,415 2,543,075
12,728,912 12,725,988 12,726,569
3,689,250 54,599,069
303,128 $54,902,197

University of West Georgia

University of West Georgia Foundation, Inc. University of West Georgia Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of University of West Georgia (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The Foundation board consists of approximately forty members and is

Annual Financial Report FY 2008 196

made up of alumni and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1, 2007 through December 31, 2007. The due from amount on the Foundation's Statement of Net Assets does not agree with the University's statement due to the difference in fiscal year ends.

Investments carried as Net Investment in Capital Leases and valued at $32.2 million and the associated bond debt of $32.3 million are included in the financial statements of the Foundation. The corresponding buildings and associated capital leases are included in the University's report. Note 10 of this financial report provides information on related party leases.

During the year ended December 31, 2007, the Foundation distributed $1,727,291 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Office of Development and Alumni Services at 1901 Maple Street, Carrollton Georgia 30118.

Investments for Component Units:

University of West Georgia Foundation, Inc. holds endowment investments in the amount of $22.9 million. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. University of West Georgia Foundation, Inc. in conjunction with the donors, has established a spending plan whereby up to 5% of the adjusted corpus balance at year end may be used for academic scholarships. The remaining amount is retained in each endowment accounts.

The University of West Georgia Foundation, Inc. investments was comprised of the following amounts at December 31, 2007:

Cash held by investment organization Certificates of Deposit Government and Agency Securities Equity Securities and Options M utual Funds

Cost
$4,828,077 1,325,581 4,489,325
10,597,237 286,490

Fair Value
$4,828,077 1,325,581 4,590,574
11,818,517 288,204

Total Investments

$21,526,710

$22,850,953

Annual Financial Report FY 2008 197

Capital Assets for Component Units:

The University of West Georgia Foundation, Inc. holds the following Capital Assets as of December 31, 2007:
Dec. 31, 2007

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$2,320,036 604,639
2,924,675
3,786,134 3,786,134
299,735 3,486,399 $6,411,074

Long-term Liabilities for Component Units:

Long-term liability activity for the Foundation for the year ended December 31, 2007 was as follows:

Beginning Balance Jan. 1, 2007

Additions

Reductions

Ending Balance Dec. 31, 2007

Amounts due within
One Year

Liabilities under split interest agreement Notes and Loans Payable Revenue/M ortgage Bonds Payable
Total Long Term Liabilities

$56,377 6,095,000 33,189,181
$39,340,558

$17,976 1,488,583
$1,506,559

$9,934 1,100,000
839,743
$1,949,677

$64,419 6,483,583 32,349,438
$38,897,440

$0 5,303,552
870,000
$6,173,552

Notes and Loans Payable: During 2007, the Foundation renewed its mortgage collateralized by an apartment complex purchased by the Foundation after making a principal payment of $1,100,000. The principal amount of the loan was $4,600,000.

The mortgage note payable is payable in monthly installments of interest computed at the London Interbank Rate (LIBOR) plus 1.20% per annum adjusted monthly as of the first business day of each month. At December 31, 2007 the rate was 6.42%. Principal is due at September 29, 2008.

In October 2007, The Foundation obtained a mortgage collateralized by real estate in order to construct a parking lot. The principal balance at December 31, 2007 was $1,488,583.

The mortgage note payable is payable in six monthly installments of interest and fifty four payments of principal and interest based upon a twenty year amortization schedule. The final payment shall include all principal and interest due. Interest is computed at the rate of London

Annual Financial Report FY 2008 198

Interbank rate (LIBOR) plus 1.00% per annum adjusted monthly as of the first business day of each month. At December 31, 2007 the rate was 6.22%. Principal is due October 19, 2012. The debt payment schedule below reflects an accelerated payment schedule by the Foundation.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending December 31:

2008

1

2009

2

2010

3

2011

4

Principal

Notes and Loans Payable Interest

$5,303,552 482,975 509,833 187,223
$6,483,583

$288,816 52,115 25,258 2,245
$368,434

Total
$5,592,368 535,090 535,091 189,468
$6,852,017

Revenue Bonds Payable: Student Housing Bonds are issued by the University of West Georgia Foundation, Inc. to finance student housing on university property. The bonds, serial and term, are secured by pledges of gross receipts from student housing at University of West Georgia.

Series 2004A bonds were issued on October 1, 2004 in the amount of $19,175,000 to fund the Construction of Phase II. The bonds bear interest rates ranging from 3.0% to 5.0%. The balance of the obligation as of 12/31/2007 is $18,900,000.

Series 2004B bonds were issued on October 1, 2004 in the amount of $180,000 to fund the Construction of Phase II. The bonds bear interest rate of 3.4%. The balance of the obligation as of 12/31/2007 is $0.

Series 2005 bonds were issued on March 1, 2005 in the amount of $13,860,000 as a result of refunding the Series 2003 bonds. These bonds funded the construction of Phase I, University Suites. The bonds bear interest rates ranging from 3.375 to 5.0%. The balance of the obligation as of 12/31/2007 is $13,130,000.

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending December 31: 2008 2009 2010 2011 2012 2013 through 2017 2018 through 2022 2023 through 2027 2028 through 2032
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25

Princip al
$870,000 910,000
1,000,000 1,040,000 1,075,000 6,025,000 7,430,000 9,320,000 4,360,000 32,030,000
319,438 $32,349,438

Bonds Payable Interest
$1,391,369 1,363,344 1,328,819 1,294,569 1,253,494 5,598,937 4,232,731 2,342,683 303,107
19,109,050
$19,109,050

Total
$2,261,369 2,273,344 2,328,819 2,334,569 2,328,494
11,623,937 11,662,731 11,662,683
4,663,107 51,139,050
319,438 $51,458,488

Annual Financial Report FY 2008 199

UWG Real Estate Foundation, Inc. UWG Real Estate Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of University of West Georgia (University). The Foundation constructs research and auxiliary buildings and facilities for use by the University and then leases the completed buildings to the institution. The seven-member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the real estate activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
Investments carried as Net Investment in Capital Leases and valued at $30.1 million and the associated long-term bond debt of $30.6 million are included in the financial statements of the Foundation. The corresponding buildings and associated capital leases are included in the University's report. Note 10 of this financial report provides information on related party leases. Complete financial statements for the Foundation can be obtained from the Treasurer, Office of Business and Finance, 1601 Maple Street, Carrollton, Georgia 30118.
Capital Assets for Component Units:
The UWG Real Estate Foundation, Inc. holds $17,700 in Construction in Progress as of June 30, 2008.
Long-term Liabilities for Component Units:
Resident Instruction Bonds are issued by the UWG Real Estate Foundation, Inc. to finance Student Center facilities at University of West Georgia. The bonds mature serially and are serviced by a pledge of a portion of student fee and appropriations formerly used for square footage support.
Series 2004 bonds were issued on December 20, 2004 in the amount of $30,720,000 to fund the construction of Campus Center. The bonds bear interest rates ranging from 3.0% to 5.25%. The balance of the obligation as of 06/30/2008 is $30,360,000.
Changes in long-term liabilities for UWG Real Estate Foundation, Inc. for the fiscal year ended June 30, 2008 are shown below:
Annual Financial Report FY 2008 200

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Revenue/Mortgage Bonds Payable Total Long Term Liabilities

$30,922,900 $30,922,900

$0

$367,476

$0

$367,476

$30,555,424 $30,555,424

Debt Service Obligations:

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Bond Premium/(Discount)

Principal

Bonds Payable Interest

$390,000 425,000 465,000 505,000 545,000
3,425,000 4,955,000 7,210,000 8,765,000 3,675,000 30,360,000
195,424 $30,555,424

$1,410,383 1,395,545 1,378,326 1,360,770 1,342,395 6,360,389 5,493,388 3,954,888 1,928,620 174,207
24,798,911
$24,798,911

Total
$1,800,383 1,820,545 1,843,326 1,865,770 1,887,395 9,785,389
10,448,388 11,164,888 10,693,620
3,849,207 55,158,911
195,424 $55,354,335

$390,000 $390,000

Abraham Baldwin Agricultural College
Abraham Baldwin Agricultural College Foundation, Inc. Abraham Baldwin Agricultural College Foundation, Inc. (Foundation) is a legally separate, taxexempt component unit of Abraham Baldwin Agricultural College (College). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB

Annual Financial Report FY 2008 201

presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $384,327 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Foundation Office at 2802 Moore Highway - ABAC 13, Tifton, GA 31793.

Investments for Component Units:

Investments are comprised of the following amounts at June 30, 2008:

Cost

Fair Value

Government and Agency Securities Corporate Bonds Equity Securities M utual Funds

$2,058,184 373,354
4,613,670 2,122,807

$2,079,878 364,589
4,530,894 2,151,762

Total Investments

$9,168,015

$9,127,123

Capital Assets for Component Units:

Abraham Baldwin Agricultural College Foundation, Inc. held the following capital assets as of June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$2,816,569 2,816,569
41,176,195 2,469,278
43,645,473 5,483,974
38,161,499 $40,978,068

Long-term Liabilities for Component Units:
Changes in long-term liabilities for the Foundation for the fiscal year ended June 30, 2008 are shown below:

Annual Financial Report FY 2008 202

Notes and Loans Payable Revenue/Mortgage Bonds Payable
Total Long Term Liabilities

Beginning Balance July 1, 2007
$785,075 48,235,847
$49,020,922

Additions $474,370
$474,370

Reductions
$85,456 827,330
$912,786

Ending Balance June 30, 2008
$1,173,989 47,408,517
$48,582,506

Amounts due within
One Year
$141,908 925,000
$1,066,908

Notes and Loans Payable: On April 20, 2006 the Development Authority of Tift County issued a $1,000,250 note payable in nine equal and consecutive annual installments of $100,000 each and a final installment of unpaid principal and accrued interest on November 1, 2015. The interest rate is a variable rate at 65 percent of the Wall Street Journal Prime Rate (the "Index"). This Note is a general obligation of the Foundation and is partially secured by a Joint Resolution of the Tift County Hospital Authority, Abraham Baldwin Agricultural College Foundation, Inc. and the Tift County Development Authority, later ratified and adopted by the Development Authority of Tift County. The principal balance of the note totaled $654,119 at June 30, 2008.

The Foundation has a note payable to First Community Bank of Tifton dated October 15, 2007 for $474,370 payable in nine equal and consecutive annual installments of $70,265 each and a final installment of unpaid principal and accrued interest on October 15, 2017. The interest rate is a variable rate at 0% above the Wall Street Journal Prime Rate. Security for the note is real estate. The note balance at June 30, 2008 is $474,370.

The Foundation has a credit line of $75,000 with South Georgia Banking Company which matures on January 9, 2009 and is renewable at maturity. The interest rate is variable based on the Wall Street Journal Prime Rate. Interest is payable at maturity. This credit line has an outstanding balance of $45,500 at June 30, 2008.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018

Princip al

Notes and Loans Payable Interest

Total

1

$141,908

2

102,401

3

108,780

4

115,948

5

124,815

6-10

580,137

$1,173,989

$75,057 67,864 61,485 54,317 45,450 88,729
$392,902

$216,965 170,265 170,265 170,265 170,265 668,866
$1,566,891

Revenue Bonds Payable: First ABAC, LLC has issued, through the Tift County Development Authority, $31,615,000 in revenue bonds to finance student housing at the College. The bonds carry an interest rate ranging from 1.75% to 4.25%. The bonds are secured by pledges of gross revenues from the housing project and are covered by a financial guaranty insurance policy issued by AMBAC Assurance

Annual Financial Report FY 2008 203

Corporation. The principal balance of these bonds at June 30, 2008 totals $29,420,000. The bonds were issued at a premium of $1,049,632, which is being amortized over the life of the bonds. The accumulated amortization to date is $200,566.

Second ABAC, LLC has issued, through the Tift County Development Authority, $17,075,000 in revenue bonds to finance student housing at the College. The bonds carry an interest rate ranging from 4.0% to 5.0%. The bonds are secured by pledges of gross revenues from the housing project and are covered by a financial guaranty insurance policy issued by CIFG Assurance North America, Inc. The principal balance of these bonds at June 30, 2008 totals $17,075,000. The bonds were issued at a premium of $67,960, which is being amortized over the life of the bonds. The accumulated amortization to date is $3,509.

Annual debt service requirements to maturity for Student Housing revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Princip al
$925,000 980,000 990,000
1,040,000 1,110,000 6,530,000 8,865,000 12,035,000 8,425,000 5,595,000 46,495,000
913,517 $47,408,517

Bonds Payable Interest
$2,035,993 2,010,043 1,982,081 1,947,293 1,907,387 8,915,534 7,230,840 4,708,728 2,096,713 727,625
33,562,237
$33,562,237

Total
$2,960,993 2,990,043 2,972,081 2,987,293 3,017,387
15,445,534 16,095,840 16,743,728 10,521,713
6,322,625 80,057,237
913,517 $80,970,754

Dalton State College
Dalton State College Foundation, Inc. The Dalton State College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Dalton State College (College). The Foundation acts primarily as a fundraising organization to supplement the resources that are available to the College in support of its programs. The forty member board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain
Annual Financial Report FY 2008 204

revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is April 1 through March 31. Amounts reported due to or due from the College do not agree because of the different fiscal year ends.

During the year ended March 31, 2008, the Foundation distributed $663,627 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Fiscal Affairs Office at 650 College Drive, Dalton, GA 30720.

Investments for Component Units:

Dalton State College Foundation, Inc. holds endowment and other investments in the amount of $14.6 million. The corpus of the endowment is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.

Investments are comprised of the following amounts at March 31, 2008:

Cash held by investment organization Certificates of Deposit Corporate Bonds Equity Securities
Total Investments

Cost
$274,991 418,771
2,730,921 11,610,022
$15,034,704

Fair Value
$274,991 418,771
2,653,877 11,208,701
$14,556,340

Capital Assets for Component Units:

Capital Assets at March 31, 2008 were as follows:

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

March 31, 2008
$2,037,963 2,037,963
2,950,796 5,527
2,956,323 191,656
2,764,667 $4,802,630

Long-term Liabilities for Component Units:

Long-term liability activity for the year ended March 31, 2008 was as follows:

Annual Financial Report FY 2008 205

Liabilities under split interest agreement Notes and Loans Payable
Total Long Term Liabilities

Beginning Balance April 1, 2007

Additions

$0 2,424,945
$2,424,945

$163,601 $163,601

Reductions

Ending Balance March 31, 2008

Amounts due within
One Year

$0 47,717
$47,717

$163,601 2,377,228
$2,540,829

$17,190 50,833
$68,023

In September 2006 Dalton State College Foundation, Inc. assumed an outstanding note payable dated February 2, 2005 related to the purchase of the Wood Valley Apartment complex. The principal balance of the note at the time of assumption was $2,475,000 and accrues interest at an annual rate of 5.54%. Interest only was payable for the first twelve months and beginning in March 2006, principle and interest became payable in monthly installments of $15,258. The note matures in March 2015 with a final payment due at that time of $1,969,256.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending March 31:

2009

1

2010

2

2011

3

2012

4

2013

5

2014 through 2015

6-7

Principal

Notes and Loans Payable Interest

$50,833 53,763 56,862 59,807 63,586
2,092,377 $2,377,228

$132,263 129,333 126,234 123,289 119,510 243,070
$873,699

Total
$183,096 183,096 183,096 183,096 183,096
2,335,447 $3,250,927

The Liabilities under Split Interest Agreement represents a charitable remainder annuity trust that was established during the fiscal year by a local family naming the Foundation as trustee and ultimate beneficiary of the trust. Under the terms of the trust, the grantor is paid an annuity amount equal to nine percent (9%) of the net fair market value of the assets of the trust as of the date of the Trust in equal quarterly installments from trust income and, to the extent income is not sufficient, from principal for the lifetime of the last surviving grantor.
Gainesville State College
Gainesville State College Foundation, Inc. Gainesville State College Foundation, Inc. is a legally separate, tax-exempt component unit of Gainesville State College. The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The sevenmember board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is

Annual Financial Report FY 2008 206

considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 to December 31.

During the year ended December 31, 2007, the Foundation distributed $777,645 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 3820 Mundy Mill Road, Oakwood, GA.

Investments for Component Units:

Gainesville State College Foundation, Inc. holds endowment and other investments in the amount of $11.5 million. Gainesville State College Foundation, Inc., in conjunction with the donors, has established a spending plan whereby 50% of the earnings may be used for academic scholarships. The remaining 50% of the earnings are set aside as a reserve.

Investments are comprised of the following amounts at December 31, 2007:

Cash held by investment organization Money Market Accounts Certificates of Deposit Equity Securities Mutual Funds
Total Investments

Cost
$944,800 339,458 564,000 1,372,742 7,041,811
$10,262,811

Fair Value
$1,577,112 339,458 564,000
1,631,085 7,376,536
$11,488,191

Capital Assets for Component Units:
Gainesville State College Foundation, Inc. holds the following Capital Assets as of December 31, 2007:

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets, Net

$8,400 8,400
$8,400

Annual Financial Report FY 2008 207

Gordon College

Gordon College Foundation, Inc. Gordon College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Gordon College (College). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The fortyfour member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 through December 31.

During the year ended December 31, 2007, the Foundation distributed $37,409 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 419 College Drive, Barnesville, GA 30204.

Investments for Component Units:

Gordon College Foundation, Inc. holds non-real estate investments in the amount of $5.5 million. The Foundation also holds investments in real property valued at $2.8 million.

Investments are comprised of the following amounts at December 31, 2007:

M utual Funds Venture Capital Real Estate

Cost
$2,917,893 130
2,753,609

Fair Value
$5,505,264 130
2,753,609

Total Investments

$5,671,632

$8,259,003

Capital Assets for Component Units:
The following represents Gordon College Foundation, Inc.'s Capital Assets as of December 31, 2007:

Annual Financial Report FY 2008 208

Capital Assets not being Depreciated: Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

December 31, 2007
$8,286,475 8,286,475
12,649,270 582,676
13,231,946 898,230
12,333,716 $20,620,191

Long-term Liabilities for Component Units:

Long-term liability activity for the year ended December 31, 2007 was as follows:

Beginning Balance January 1, 2007

Additions

Reductions

Ending Balance December 31, 2007

Amounts due within
One Year

Liabilities under split interest agreement Notes and Loans Payable Revenue/Mortgage Bonds Payable
Total Long Term Liabilities

$57,249 0
15,099,554
$15,156,803

$0 2,046,942 18,890,190
$20,937,132

$7,574 (240,446) ($232,872)

$49,675 2,046,942 34,230,190
$36,326,807

$7,987 193,642 415,000
$616,629

Notes and Loans Payable: In July 2007, Gordon College Properties Foundation, LLC purchased real estate located on Georgia Avenue in Barnesville Georgia. Two properties were purchased and each was financed with a one-year note payable to First National Bank of Barnesville with interest due at maturity at 8.25%. The notes in the amount of $142,592 and $51,050 are due on June 30, 2008.

In October 2007, Gordon College Properties Foundation, LLC acquired 70 acres of vacant land on Collier Road in Barnesville, Georgia. To purchase the land, the LLC received proceeds from a note payable in the amount of $1,853,300 from United Bank. Interest of 6.88% is due annually with the total principal due in October 2009.
These real estate purchases were made with the intent that Gordon College would purchase the properties from the Foundation at such time that funds are available. The associated real estate is reported as Investments on the Statement of Net Assets.
Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Annual Financial Report FY 2008 209

Year ending December 31

2008

1

2009

2

Princip al

Notes and Loans Payable Interest

Total

$193,642 1,853,300 $2,046,942

$143,482 127,507
$270,989

$337,124 1,980,807 $2,317,931

Bonds Payable: Series 2004 Bonds On August 1, 2004, the Barnesville-Lamar County Industrial Development Authority issued certain bonds totaling $16,135,000. Proceeds of the sale of the Bonds were loaned to Gordon College Properties Foundation, LLC (Properties, LLC) whose sole member is Gordon College Foundation, Inc. Proceeds of the Series 2004 Bonds were used by Properties, LLC to finance or reimburse, in whole or in part, the cost of the construction and equipping of a new student housing complex containing approximately 459 beds, including related parking for approximately 597 vehicles and road and pedestrian walkway improvements (the Project) located on the campus of Gordon College; fund capitalized interest on the Series 2004 Bonds; fund a debt service reserve fund for the Series 2004 Bonds; and pay costs of issuance of the Series 2004 Bonds. The real property upon which the Project is located is owned by the Board of Regents of the University System of Georgia and is leased by the Board of Regents to the Properties, LLC pursuant to a Ground Lease. Pursuant to a Rental Agreement, the Properties, LLC rents the project, on an annually-renewable basis, to the Board of Regents for use by the College. The Board of Regents makes monthly fixed rental payments for the use and occupancy of the Project, in amounts that the Properties, LLC estimates will be sufficient to pay, among other things, debt service on the Series 2004 Bonds. Interest rates on the Series 2004 bonds range from 3% to 5%. The balance owed on the bonds at December 31, 2007 was $15,340,000.

Series 2006 Bonds On December 14, 2006, the Barnesville-Lamar County Industrial Development Authority issued certain bonds totaling $19,285,000. Proceeds of the sale of the Bonds were loaned to Gordon College Properties Foundation II, LLC (Properties II, LLC) whose sole member is Gordon College Foundation, Inc. Proceeds of the Series 2006 Bonds were used by Properties II, LLC to finance or reimburse, in whole or in part, the cost of the construction and equipping of a new student housing complex containing approximately 405 beds and related amenities (the Project) located on the campus of Gordon College; fund capitalized interest on the Series 2006 Bonds; pay the premium for a debt reserve surety bond and pay costs of issuance of the Series 2006 Bonds. The real property upon which the Project is located is owned by the Board of Regents of the University System of Georgia and is leased by the Board of Regents to the Properties II, LLC pursuant to a Ground Lease. Pursuant to a Rental Agreement, the Properties II, LLC will rent the project, on an annually-renewable basis, to the Board of Regents for use by the College. The Board of Regents will make monthly fixed rental payments for the use and occupancy of the Project, in amounts that the Properties II, LLC estimates will be sufficient to pay, among other things, debt service on the Series 2006 Bonds. Interest rates on the Series 2006 bonds range from 3.5% to 4.5%. The balance owed on the bonds at December 31, 2007 was $18,890,190, which is net of ($394,810) bond discount.

Annual debt service requirements to maturity for Student Housing bonds payable are as follows:

Annual Financial Report FY 2008 210

Year ending December 31 2008 2009 2010 2011 2012 2013 through 2017 2018 through 2022 2023 through 2027 2028 through 2032 2033 through 2037 2038 through 2042

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31-35

Bond Premium/(Discount)

Princip al

Bonds Payable Interest

$415,000 430,000 460,000 490,000 530,000
3,435,000 4,940,000 7,150,000 7,805,000 7,180,000 1,790,000 34,625,000 (394,810) $34,230,190

$1,522,163 1,509,713 1,495,388 1,480,125 1,462,538 6,950,240 6,069,865 4,706,734 2,790,501 1,207,267 38,615
29,233,149
$29,233,149

Total
$1,937,163 1,939,713 1,955,388 1,970,125 1,992,538
10,385,240 11,009,865 11,856,734 10,595,501
8,387,267 1,828,615 63,858,149 (394,810) $63,463,339

Macon State College
Macon State College Foundation, Inc. Macon State College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Macon State College (College). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The twenty-four member board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $567,728 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Development & Alumni Affairs Office at 100 College Station Drive, Macon, GA 31206.
Investments for Component Units:
Macon State College Foundation, Inc. holds endowment and other investments in the amount of $7,124,443. The endowment is nonexpendable, but the earnings on the investment may be
Annual Financial Report FY 2008 211

expended as restricted by the donors. Macon State College Foundation, in conjunction with the donors, has established a spending plan whereby 4-6% of the three-year rolling average may be expended. The remaining percentage stays intact.

Investments are comprised of the following amounts at June 30, 2008:

Equity Securities Real Estate SunTrust Pooled Investments
Total Investments

Cost
$6 304,554 7,156,585
$7,461,145

Fair Value
$6 304,554 6,819,883
$7,124,443

Long-term Debt for Component Units:

Changes in long-term liabilities for the Foundation for the fiscal year ended June 30, 2008 are

shown below:

Beginning

Ending

Amounts due

Balance

Balance

within

July 1, 2007

Additions

Reductions

June 30, 2008

One Year

Notes and Loans Payable Total Long Term Liabilities

$0

$226,061

$0

$226,061

$0

$226,061

$226,061

$0

$226,061

$226,061

Notes and Loans Payable: The Foundation has a note payable with BB&T in the amount of $226,061 as of June 30, 2008. This note has a variable interest rate at .375% less than prime and is payable in consecutive monthly installments of principal and interest of $25,705 with the final payment due during the year ending June 30, 2009. This note is secured by real estate.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year end ing June 30:

2009

1

Total Notes and Loans Payable

Pr inc ip al

No tes and Loans Payab le Interest

$ 226 ,0 61 $ 226 ,0 61

$ 7,363 $ 7,363

T ota l
$233 ,424 $233 ,424

Middle Georgia College
Middle Georgia College Foundation, Inc. Middle Georgia College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Middle Georgia College (College). The Foundation acts primarily as a fundraising organization to supplement the resources that are available to the University in support of its programs. The sixty-two member board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or
Annual Financial Report FY 2008 212

amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $ 45,909 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Middle Georgia College Foundation, Inc. at 1100 Second St., SE, Cochran, GA 31014.

Special Item Transfer:

Georgia Aviation and Technical College Foundation, Inc. merged with and into Middle Georgia College Foundation, Inc. with an effective date of December 19, 2007. Middle Georgia College Foundation, Inc. is the surviving Corporation of the merger. All the assets and liabilities of Georgia Aviation and Technical College Foundation became those of Middle Georgia College Foundation, Inc. and resulted in a Net Asset transfer of $1,012,369. This transfer is reported as a Special Item in the Statement of Revenues, Expenses and Changes in Net Assets.

Investments for Component Units:

Middle Georgia College Foundation, Inc. holds endowment and other investments in the amount of $1,157,518. The $799,955 corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Middle Georgia College Foundation, Inc. has established a spending plan whereby 100% of the realized earnings may be used for current and future expenditures except where restricted by donors.

Investments are comprised of the following amounts at June 30, 2008:

Money Market Accounts Certificates of Deposit Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds
Total Investments

Cost
$100,039 300,000 5,053 30,000 562,357 278,118
$1,275,567

Fair Value
$100,039 300,000 5,039 29,151 480,039 243,250
$1,157,518

Capital Assets for Component Units:

Annual Financial Report FY 2008 213

Middle Georgia College Foundation, Inc. holds Capital Assets as of June 30, 2008 as follows:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$79,482 8,699,823 8,779,305
820,500 820,500
50,976 769,524 $9,548,829

Long-term Liabilities for Component Units:

Changes in long-term liabilities for the Foundation for the fiscal year ended June 30, 2008 are

shown below:

Beginning

Ending

Amounts due

Balance

Balance

within

July 1, 2007

Additions

Reductions

June 30, 2008

One Year

Revenue/Mortgage Bonds Payable Total Long Term Liabilities

$26,850,000 $26,850,000

$36,340,000 $36,340,000

$0

$63,190,000

$0

$0

$63,190,000

$0

On November 1, 2005, the Bleckley-Cochran Development Authority issued certain bonds totaling $26,850,000. Proceeds of the sale of the bond were loaned to MGC Real Estate Foundation, LLC. The proceeds of the Series 2005 Bonds are being used to (i) finance or reimburse, in whole or in part, the cost of construction and equipping of three residence halls containing approximately 704 beds including related parking located on the campus of Middle Georgia College, a unit of the University System of Georgia; (ii) fund capitalized interest on the Series 2005 Bonds; (iii) fund a debt service reserve fund for the Series 2005 Bonds; and (iv) pay costs of issuance of the Series 2005 Bonds. The Series 2005 bonds have interest rates ranging from 3.5% to 5.25% and the final maturity is July 1, 2036.
On July 1, 2007, the Joint Development Authority of Bleckley County and Dodge County issued certain bonds totaling $36,340,000. Proceeds of the sale of the bonds were loaned to MGC Real Estate Foundation II, LLC. The proceeds of the Series 2008 Bonds are being used to (i) finance or refinance the costs of acquisition, construction, and equipping of student housing containing approximately 699 beds and related amenities located on two campuses of Middle Georgia College, a unit of the University System of Georgia; (ii) fund capitalized interest on the Series 2008 Bonds; (iii) fund a debt service reserve fund and (iv) pay costs of issuance of the Series 2008 Bonds. The project consists of one residence hall with approximately 143 beds and related amenities on the Eastman campus and two residences halls with approximately 278 beds each on
Annual Financial Report FY 2008 214

the Cochran campus. The Series 2008 bonds have interest rates ranging from 3% to 5.25% and the final maturity is July 1, 2038.

The outstanding balance of these obligations at June 30, 2008 is $63,190,000.

Debt Service Obligations:

Annual debt service requirements to maturity for Student Housing bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038 2039 through 2043

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31-35

Principal
$0 40,000 80,000 175,000 275,000 2,860,000 6,215,000 10,985,000 16,650,000 20,890,000 5,020,000 $63,190,000

Bonds Payable Interest
$1,953,234 3,108,326 3,106,226 3,103,426 3,097,396
15,127,749 14,091,255 11,912,175
8,417,538 3,131,900
263,550 $67,312,775

Total
$1,953,234 3,148,326 3,186,226 3,278,426 3,372,396
17,987,749 20,306,255 22,897,175 25,067,538 24,021,900 5,283,550 $130,502,775

Bainbridge College
Bainbridge College Foundation Bainbridge College Foundation is a legally separate, tax-exempt component unit of Bainbridge College. The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The seven member board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is November 1 through October 31. Amounts reported due to or due from the College do not necessarily agree because of the different fiscal year ends.
During the year ended October 31, 2007, the Foundation distributed $12,180 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation

Annual Financial Report FY 2008 215

can be obtained from the Administrative Office at 2500 E. Shotwell Street, Bainbridge, GA 39819.

Investments for Component Units:

Bainbridge College Foundation holds endowments and other investments in the amount of $109,733. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Bainbridge College Foundation, in conjunction with the donors, has established a spending plan whereby 50% of the earnings may be used for academic scholarships. The remaining 50% of the earnings are set aside as a reserve.

Investments are comprised of the following amounts at October 31, 2007:

Cost

Fair Value

Certificates of Deposit

$109,733

$109,733

Total Investments

$109,733

$109,733

Coastal Georgia Community College
Coastal Georgia Community College Foundation, Inc. Coastal Georgia Community College Foundation, Inc. (Foundation) is a legally separate, taxexempt component unit of Coastal Georgia Community College (College). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The seven member board of the Foundation is selfperpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 through December 31.
During the year ended December 31, 2007, the Foundation distributed $733,315 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Business Affairs Office at 3700 Altama Avenue, Brunswick, GA 31520.
Investments for Component Units:

Annual Financial Report FY 2008 216

Coastal Georgia Community College Foundation, Inc. holds endowments and other investments in the amount of $7.5 million. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.

Coastal Georgia Community College Foundation, Inc. investments are comprised of the following amounts at December 31, 2007:

Cost

Fair Value

Certificates of Deposit Government and Agency Securities Corporate Bonds Equity Securities M utual Funds

$2,144,962 1,421,167 201,005 7,840 3,542,866

$2,152,756 1,427,782 216,205 5,875 3,684,563

Total Investments

$7,317,840

$7,487,181

Darton College
Darton College Foundation, Inc. Darton College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Darton College (College). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The board of trustees of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $152,430 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Treasurer at 2400 Gillionville Road, Albany, GA 31707.
Investments for Component Units:
Investments are comprised of the following amounts at June 30, 2008:

Annual Financial Report FY 2008 217

Cash held by investment organization Certificates of Deposit Corporate Bonds Equity Securities
Total Investments

Cost
$12,111 374,902 608,063 424,023
$1,419,099

Fair Value
$12,111 374,902 590,964 399,132
$1,377,109

Capital Assets for Component Units:

Darton College Foundation, Inc. holds the following Capital Assets as of June 30, 2008:

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

June 30, 2008
$308,826 374,818 683,644
123,324 123,324
10,958 112,366 $796,010

East Georgia College
East Georgia College Foundation, Inc. East Georgia College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of East Georgia College (College). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The forty-four member board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
Annual Financial Report FY 2008 218

During the year ended June 30, 2008, the Foundation distributed $40,969 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Office of the Vice President for Fiscal Affairs at 131 College Circle, Swainsboro, GA 30401.

Investments for Component Units:

East Georgia College Foundation, Inc. holds investments in the amount of $943,936 and those investments are classified as either temporarily restricted or unrestricted. Typically, the net assets of the restricted funds are not expended and earnings on the investments may be expended as restricted by the donors. Some of the restricted net assets are defined as fully expendable by the donor for the purpose specified by the donor.

Investments are comprised of the following amounts at June 30, 2008:

Cash held by investment organization Equity Securities Investment Pools:
BOR Short Term Fund BOR Balanced Income Fund SunTrust Diversified Fund
Total Investments

Cost
$6,904 23,653
41,398 238,787 732,462
$1,043,204

Fair Value
$6,904 23,653
41,236 198,056 674,087
$943,936

Capital Assets for Component Units:

East Georgia College Foundation, Inc. has capital assets of $175,965 at June 30, 2008 in the form of Land.

Georgia Highlands College

Georgia Highlands College Foundation, Inc. Georgia Highlands College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Georgia Highlands College. The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The twenty-five member board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue

Annual Financial Report FY 2008 219

recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $0 to the University. Complete financial statements for the Foundation can be obtained from the Administrative Office at 3175 Cedartown Hwy Rome, GA 30161.

Investments for Component Units:

Georgia Highlands College Foundation, Inc. holds endowment and other investments in the amount of $606,661. Georgia Highlands College Foundation, in conjunction with the donors, has established a spending plan whereby 100% of the earnings may be used for academic scholarships.

Investments are comprised of the following amounts at June 30, 2008:

Government and Agency Securities Equity Securities Mutual Funds
Total Investments

Cost
$143,954 281,263 128,451
$553,668

Fair Value
$157,789 307,852 141,020
$606,661

Georgia Perimeter College
Georgia Perimeter College Foundation, Inc. Georgia Perimeter College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Georgia Perimeter College (College). The Foundation is a nonprofit entity comprised of a volunteer group entrusted with the oversight for private fund raising to benefit Georgia Perimeter College. The Foundation provides volunteer leadership to the college's development and fund raising programs. In addition, the board monitors the administration of the assets of the Foundation, resulting in a broadening of opportunities for learning by students and a continued investment in faculty and staff. The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that has adopted Statement of Financial Accounting Standards (SFAS) No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the

Annual Financial Report FY 2008 220

GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 through December 31.

During the year ended December 31, 2007, the Foundation distributed $247,093 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 3251 Panthersville Rd, Decatur, GA 30034.

Prior Period Adjustment:

In the year ending December 31, 2006, the Foundation received the proceeds of a bond issuance and reported the proceeds and bond liability in its financial statements. It was subsequently discovered that Newton County was obligated for the debt and therefore, a gift to the Foundation of $2,550,000 should have been recognized instead of the bond liability. This error correction in 2007 includes bond principal and accrued interest for 2006. The beginning net assets of the Foundation were increased by $2,681,325 as a result of the correction.

Investments for Component Units:

Georgia Perimeter College Foundation, Inc. holds endowment and other investments in the

amount of $1,318,647. Investments are comprised of the following amounts at December 31,

2007:

Cost

Fair Value

Money Market Accounts Certificates of Deposit Government and Agency Securities Corporate Bonds Equity Securities

$154,209 721,000 15,000 75,000 395,166

$154,209 725,184 15,000 75,000 349,254

Total Investments

$1,360,375

$1,318,647

Capital Assets for Component Units:
Georgia Perimeter College Foundation, Inc. holds the following Capital Assets as of December 31, 2007:
December 31, 2007

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$3,000,000 26,689,930 29,689,930
24,192,829 932,888
25,125,717
377,607 24,748,110 $54,438,040

Annual Financial Report FY 2008 221

Long-term Liabilities for Component Units:

Changes in long-term liabilities for component units for the fiscal year ended December 31, 2007 are shown below:

Revenue/Mortgage Bonds Payable Total Long Term Liabilities

Beginning Balance January 1, 2007
$25,245,000
$25,245,000

Prior Year Adjustment

Adjusted Beginning Bal. January 1, 2007

(2,550,000)

22,695,000

($2,550,000)

$22,695,000

Additions

Reductions

Ending Balance December 31, 2007

Amounts due within
One Year

$25,560,000

$0

$48,255,000

$430,000

$25,560,000

$0

$48,255,000

$430,000

On December 29, 2005, the Newton County Industrial Revenue Authority effected a revenue bond issue "Series 2005" in the amount of $22,695,000. These proceeds will fund a building project. Rental payments from the Board of Regents of the University System of Georgia will be used to amortize this bonded indebtedness. The repayment of this debt is due in annual installments ranging from $430,000 to $1,400,000 through 2035 at 4.6% per annum. The outstanding principal obligation on the Series 2005 bonds was $22,695,000 at December 31, 2007.
In addition, two additional bond issuances were effected during 2007 that are accounted for on the Foundation's books.
Georgia Gwinnett College Real Estate Parking I, LLC Project Incremental Draw Revenue Bonds Series 2007A - These funds will be used to construct a parking facility and a student center on the Georgia Gwinnett College campus. Rental payments from the Board of Regents of the University System of Georgia will be used to amortize this bonded indebtedness. The repayment of this debt will be due in annual principal installments ranging from $55,000 to $2,105,000 through 2032 at a variable interest rate (4.15% as of December 31, 2007). GGC Real Estate Parking I, LLC's indebtedness under the 2007A Series bonds is $15,315,000 at December 31, 2007.
Georgia Perimeter College Real Estate Student Support I, LLC Project Incremental Draw Revenue Bonds Series 2007A These funds will be used to construct several facilities on four campuses of Georgia Perimeter College. Rental payments from the Board of Regents of the University System of Georgia will be used to amortize this bond indebtedness. The repayment of this debt will be due in annual principal installments ranging from $450,000 to $4,725,000 through 2035 at a variable interest rate (4.19% as of December 31, 2007). Georgia Perimeter College Real Estate Student Support I, LLC's indebtedness under the 2007A Series bonds is $10,245,000 at December 31, 2007.
Annual debt service requirements to maturity for revenue bonds payable are as follows:

Annual Financial Report FY 2008 222

Year ending December 31: 2008 2009 2010 2011 2012 2013 through 2019 2020 through 2024 2025 through 2029

1 2 3 4 5 6-10 11-15 16-20

Principal
$430,000 970,000
1,100,000 1,645,000 1,705,000 11,010,000 16,730,000 14,665,000 $48,255,000

Bonds Payable Interest
$5,828,601 4,293,763 4,612,051 4,569,770 5,255,236 2,551,325 18,647,966 14,330,576
$60,089,288

Total
$6,258,601 5,263,763 5,712,051 6,214,770 6,960,236
13,561,325 35,377,966 28,995,576 $108,344,288

South Georgia College
South Georgia College Foundation, Inc. South Georgia College Foundation, Inc. is a chartered not for profit corporation. The Foundation was created for the express purpose of serving the interests of the College in carrying out its programs and activities including the solicitation, receipt and investment of gifts, donations, and grants. The Foundation is a legal entity separate from the College.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $189,067 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the office of the Vice President for Business Affairs, South Georgia College, 100 West College Park Drive, Douglas, GA 31533.
Investments for Component Units:
South Georgia College Foundation, Inc. holds investments in the amount of $2.6 million. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. South Georgia College Foundation, in conjunction with the donors, has established a spending plan whereby 100% of the earnings may be used for academic scholarships.
Investments are comprised of the following amounts at June 30, 2008:

Annual Financial Report FY 2008 223

Cash held by investment organization Certificates of Deposit Equity Securities M utual Funds Real Estate Investment Pools
BOR Balanced Income Fund Total Return & Holding Fund
Total Investments

Cost
$37,935 30,500 83,789 47,234 13,500
85,462 2,430,949
$2,729,369

Fair Value
$37,935 30,500 86,473 46,611 13,500
76,183 2,316,366
$2,607,568

Long-term Liabilities for Component Units:

Long-term liability activity for the year ended June 30, 2008 was as follows:

Beginning

Ending

Balance

Balance

July 1, 2007

Additions

Reductions

June 30, 2008

Amounts due within
One Year

Revenue/Mortgage Bonds Payable Total Long Term Liabilities

$15,801,289 $15,801,289

$0

$13,581

$15,787,708

$50,000

$0

$13,581

$15,787,708

$50,000

On December 14, 2006, the Atkinson County - Coffee County Joint Development Authority (the "Authority") issued certain bonds totaling $15,395,000. Proceeds of the sale of the bonds were loaned to SGC Real Estate Foundation, LLC whose sole member is South Georgia College Foundation, Inc.
Proceeds of the Series 2006 Bonds are being used by SGC Real Estate Foundation, LLC to finance or reimburse, in whole or in part, the cost of construction and equipping of a new student housing complex containing approximately 252 beds including related parking and the acquisition and renovation of the property known as the "Clower Center" all located on the campus of South Georgia College, a unit of the University System of Georgia; fund capitalized interest on the Series 2006 Bonds; fund a debt service reserve fund for the Series 2006 Bonds; and pay costs of issuance of the Series 2006 Bonds. Interest rates on the bonds range from 4% to 6%.
The real property upon which the Project is located is owned by the Board of Regents of the University System of Georgia and is leased by the Board of Regents to SGC Real Estate Foundation, LLC pursuant to a Ground Lease. Pursuant to a Rental Agreement, SGC Real Estate Foundation, LLC leases the Project, on an annually-renewable basis, to the Board of Regents for use by the College. The Board of Regents makes monthly fixed rental payments for the use and occupancy of the Project, in amounts that SGC Real Estate Foundation, LLC estimates will be sufficient to pay, among other things, the debt service on the Series 2006 Bonds.
Annual debt service requirements to maturity for Student Housing revenue bonds payable are as follows:
Annual Financial Report FY 2008 224

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Bond Premium/(Discount)

Princip al
$50,000 75,000
100,000 125,000 150,000 1,215,000 2,020,000 3,025,000 4,240,000 4,395,000 15,395,000 392,708 $15,787,708

Bonds Payable Interest
$730,625 728,625 725,625 721,625 716,625
3,457,325 3,110,975 2,524,625 1,647,875
498,825 14,862,750
$14,862,750

Total
$780,625 803,625 825,625 846,625 866,625
4,672,325 5,130,975 5,549,625 5,887,875 4,893,825 30,257,750
392,708 $30,650,458

Waycross College
Waycross College Foundation, Inc. Waycross College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Waycross College (College). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The twenty-one member board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $18,629 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Foundation Office at 2001 South Georgia Parkway, Waycross, GA 31503.
Investments for Component Units:
Waycross College Foundation holds endowment and other investments in the amount of $1.4 million. The $1.3 million corpus of the endowment is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Waycross College Foundation, Inc., in conjunction with the donors, has established a spending plan whereby dividends and cash

Annual Financial Report FY 2008 225

earnings may be used for academic scholarships. The realized gains on investments are set aside as a reserve.

Investments are comprised of the following amounts at June 30, 2008:

Certificates of Deposit BOR Short Term Fund SunTrust Diversified Fund

Cost
$14,000 30,087
1,427,474

Fair Value
$14,000 29,789
1,359,258

Total Investments

$1,471,561

$1,403,047

Annual Financial Report FY 2008 226

Required Supplementary Information
BOARD OF REGENTS RETIREE HEALTH BENEFIT FUND SCHEDULEOF FUNDING PROGRESS

Actuarial Valuation
Date 7/1/2007

Actuarial Value of Assets
(a) $0

Actuarial Accrued Liability (AAL) Projected Unit
Credit (b)
$1,985,200,000

Unfunded AAL (UAAL) (b-a)
$1,985,200,000

Funded Ratio (a/b) 0.0%

Covered Payroll
(c) $2,201,804,465

UAAL as a Percentage of Covered Payroll
((b-a)/c) 90.2%

Note: The allocation and transfer of assets to the plan took place subsequent to the actuarial valuation date.

B OARD OF REGENTS RETIREE HEALTH B ENEFIT FUND S CHEDULE OF EMPLOYER CONTRIBUTIONS

Year Ended June 30
2008

Annual Required Contribution
$224,900,000

P e r c e ntag e Contributed
29.7%

Annual Financial Report FY 2008 227

Balance Sheet (Non-GAAP Basis)

UNIVERSITY SYSTEM OF GEORGIA CONSOLIDATED BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Margin Allocation Prepaid Expenditures Inventories Other Assets
Total Assets

$371,725,029.47 56,626,714.11
75,573,639.97 204,888,180.62
7,247,639.00 41,170,614.76
4,733,542.00 5,543,577.60
$767,508,937.53

LIABILITIES AND FUND EQUITY
Liabilities Cash Overdraft Contracts Payable Accrued Payroll Encumbrance Payable Accounts Payable Benefits Payable Deferred Revenue Funds Held for Others Other Liabilities
Total Liabilities
Fund Balances Reserved Capital Outlay Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry-Forward Carry-Over "Per State Accounting Office" Early Retirement Program Unreserved Surplus Tobacco Settlement Funds
Total Fund Balances
Total Liabilities and Fund Balances

$22,748,782.74 2,906,076.67
14,689,046.68 147,608,441.54 105,694,003.82
96,015.58 209,459,209.56
15,295,037.90 12,234,773.67 $530,731,388.16
$6,694,149.08 21,979,729.29 51,154,871.97 12,539,684.95 105,792,974.28 11,287,655.86
3,173,177.35 10,664,996.97
3,549,074.23 7,365,016.53
2,575,910.43 308.43
$236,777,549.37 $767,508,937.53

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.

Annual Financial Report FY 2008 228

Budget Comparison and Surplus Analysis Report (Non-GAAP Basis)

UNIVERS ITY S YS TEM OF GEORGIA CONS OLIDATED BUDGET COMPARIS ON AND S URPLUS ANALYS IS REPORT (NON-GAAP BAS IS )
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds Tobacco Funds
Non-State Funds Research Funds Agency Funds
Total Revenue Prior Year Reserves Available for Expenditure Total Funds Available

ORIGINAL BUDGET

FINAL BUDGET

$2,115,477,060.00 20,337,799.00
1,417,322,782.00 1,514,587,141.00
$5,067,724,782.00
$5,067,724,782.00

$2,121,723,333.00 20,337,799.00
1,525,579,153.00 1,776,169,789.00
$5,443,810,074.00
$5,443,810,074.00

ACTUAL

VARIANCE

$2,121,723,333.00 20,337,799.00
1,368,958,572.97 1,677,654,977.10
$5,188,674,682.07 209,946,250.18
$5,398,620,932.25

$0.00 0.00
(156,620,580.03) (98,514,811.90)
($255,135,391.93) 209,946,250.18
($45,189,141.75)

EXPENDITURES
Advanced Technology Development Center/EDI Agricultural Experiment Station Athens Tifton Vet Labs Cooperative Extension Service Forestry Cooperative Extension Forestry Research Georgia Eminent Scholar Endowment Trust Fund Georgia M ilitary College Georgia Public Telecommunications Georgia Radiation Therapy Center Georgia Tech Research Institute M CG Hospitals and Clinics M arine Institute M arine Resources Extension Center Office of M inority Business Payments to Georgia Cancer Coalition Public Libraries Regents Central Office Research Consortium Skidaway Institute of Oceanography Special Funding Initiative Student Education Enrichment Program Teaching Veterinary M edicine Experiment Station Veterinary M edicine Teaching Hospital
Total Expenditures
Excess of Funds Available over Expenditures

$27,974,712.00 75,377,483.00 4,882,330.00 58,486,061.00 987,793.00 5,826,331.00 500,000.00 3,062,152.00 18,069,614.00 3,625,810.00
130,786,385.00 33,181,112.00 1,731,994.00 2,761,521.00 884,273.00 14,587,799.00 45,537,501.00 7,683,800.00 36,745,015.00 7,370,710.00 46,081,344.00 314,737.00
4,530,679,466.00 3,384,254.00 7,202,585.00
$5,067,724,782.00
$0.00

$29,574,712.00 86,015,877.00 6,268,386.00 68,438,718.00 1,170,484.00 7,706,916.00 500,000.00 3,062,152.00 18,069,614.00 3,625,810.00
154,736,385.00 33,181,112.00 1,786,536.00 4,316,521.00 884,273.00 14,587,799.00 44,851,896.00 7,762,975.00 36,745,015.00 6,470,710.00 45,856,344.00 314,737.00
4,852,246,263.00 3,384,254.00
12,252,585.00 $5,443,810,074.00
$0.00

FUND BALANCE JULY 1
Reserved Unreserved
ADJUS TMENTS
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Increase (Decrease) in Inventories Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services M andatory Transfers M andatory Transfers - Restricted Non-M andatory Transfers Other Additions (Deletions) Prior Year Reserved Fund Balance Included in Funds Available

$27,175,514.08 80,354,212.99 5,908,662.02 65,093,392.11 1,008,149.45 7,645,793.68 500,000.00 3,062,152.00 18,069,614.00 3,625,810.00
149,869,704.44 33,181,112.00 1,420,923.86 3,684,272.67 883,081.61 14,587,490.57 44,657,879.92 8,442,787.75 36,735,472.49 6,443,433.25 45,762,009.90 314,737.00
4,629,055,370.60 3,384,254.00
10,068,145.59 $5,200,933,975.98
$197,686,956.27
230,386,955.87 1,968,440.84
4,680,279.06 (3,344,349.25)
13,617.57 (1,968,440.84)
1,066,226.00 (3,838.16)
16,037,024.72 200,927.47
(209,946,250.18)

$2,399,197.92 5,661,664.01 359,723.98 3,345,325.89 162,334.55 61,122.32 0.00 0.00 0.00 0.00 4,866,680.56 0.00 365,612.14 632,248.33 1,191.39 308.43 194,016.08 (679,812.75) 9,542.51 27,276.75 94,334.10 0.00
223,190,892.40 0.00
2,184,439.41 $242,876,098.02
$197,686,956.27

FUND BALANCE JUNE 30

$236,777,549.37

Annual Financial Report FY 2008 229

Budget Comparison and Surplus Analysis Report (Non-GAAP Basis), Continued

UNIVERS ITY S YS TEM OF GEORGIA CONS OLIDATED BUDGET COMPARIS ON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS )
BUDGET FUND Year Ended June 30, 2008

S UMMARY OF FUND BALANCE
Reserved Capital Outlay Department Sales & Services Early Retirement Program Indirect Cost Recovery Inventories Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Forward Property Reserves
Total Reserved
Unreserved Surp lus
Total Fund Balance

$6,694,149.08 21,979,729.29 7,365,016.53 51,154,871.97 3,173,177.35 12,539,684.95 105,792,974.28 11,287,655.86 10,664,996.97 3,549,074.23
$234,201,330.51
2,576,218.86 $236,777,549.37

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 p rincip les.

Annual Financial Report FY 2008 230

UNIVERSITYSYSTEMOF GEORGIA STATEMENT OF PROGRAMREVENUES AND EXPENDITURES BYFUNDINGSOURCECOMPARED TO BUDGET
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE30, 2008

AdvancedTechnology Development Center State Appropriation State General Funds Other Funds
Total Advanced Technology Development Center

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Comparedto Budget

Prior Year

Total

Variance

Carry-Over Funds Available Positive (Negative)

$ 15,099,712.00 $ 15,099,712.00 $ 15,099,712.00 $ 12,875,000.00 14,475,000.00 12,042,668.25
$ 27,974,712.00 $ 29,574,712.00 $ 27,142,380.25 $

0.00 $ 15,099,712.00 $

0.00

0.00 12,042,668.25

(2,432,331.75)

0.00 $ 27,142,380.25 $ (2,432,331.75)

Agricultural Experiment Station State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Agricultural Experiment Station

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Comparedto Budget

Prior Year

Total

Variance

Carry-Over Funds Available Positive (Negative)

$ 42,936,221.00 $ 42,936,221.00 $ 42,936,221.00 $

0.00 $ 42,936,221.00 $

0.00

22,000,000.00 10,441,262.00

25,000,000.00 18,079,656.00

23,791,106.14 14,305,679.24

7,974,091.98 709,197.47

31,765,198.12 15,014,876.71

6,765,198.12 (3,064,779.29)

$ 75,377,483.00 $ 86,015,877.00 $ 81,033,006.38 $ 8,683,289.45 $ 89,716,295.83 $ 3,700,418.83

Athens andTifton Veterinary Laboratories State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Athens and Tifton Veterinary Lab

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Comparedto Budget

Prior Year

Total

Variance

Carry-Over Funds Available Positive (Negative)

$ 62,192.00 $ 62,192.00 $ 62,192.00 $

0.00 $ 62,192.00 $

0.00

4,820,138.00 0.00

6,120,138.00 86,056.00

5,771,956.96 73,161.01

2,293,261.29 35,099.40

8,065,218.25 108,260.41

1,945,080.25 22,204.41

$ 4,882,330.00 $ 6,268,386.00 $ 5,907,309.97 $ 2,328,360.69 $ 8,235,670.66 $ 1,967,284.66

Cooperative Extension Service State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Cooperative Extension Service

Funds Available Comparedto Budget

Original

Final

Current Year Prior Year

Total

Variance

Appropriation

Budget

Revenues

Carry-Over Funds Available Positive (Negative)

$ 35,391,924.00 $ 35,391,924.00 $ 35,391,924.00 $

0.00 $ 35,391,924.00 $

0.00

13,000,000.00 10,094,137.00

19,000,000.00 14,046,794.00

18,567,741.73 11,571,359.19

1,914,732.87 240,190.33

20,482,474.60 11,811,549.52

1,482,474.60 (2,235,244.48)

$ 58,486,061.00 $ 68,438,718.00 $ 65,531,024.92 $ 2,154,923.20 $ 67,685,948.12 $ (752,769.88)

Annual Financial Report FY 2008 231

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program FundBalances Transfers

Program FundBalances

Reserve

Surplus

Total

15,099,712.26 $

(0.26) $

12,075,801.82 2,399,198.18

(0.26) $ (33,133.57)

16,806.44 $ 8,410.50

0.26 $ 46,268.01

16,806.44 $ 21,544.94

0.00 $

0.00 $ 16,806.44 $ 16,806.44

0.00

13,134.44

8,410.50

21,544.94

27,175,514.08 $ 2,399,197.92 $ (33,133.83) $ 25,216.94 $ 46,268.27 $ 38,351.38 $

0.00 $ 13,134.44 $ 25,216.94 $ 38,351.38

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program FundBalances Transfers

Program FundBalances

Reserve

Surplus

Total

42,936,221.00 $

0.00 $

0.00 $ 72,724.38 $

0.00 $ 72,724.38 $

0.00 $

0.00 $ 72,724.38 $ 72,724.38

23,249,351.41 14,168,640.58

1,750,648.59 3,911,015.42

8,515,846.71 846,236.13

80,354,212.99 $ 5,661,664.01 $ 9,362,082.84 $

0.00 6,830.63
79,555.01 $

0.00 8,515,846.71 363.40 853,430.16
363.40 $ 9,442,001.25 $

0.00 8,515,846.71 0.00 853,430.16

0.00 8,515,846.71 0.00 853,430.16

0.00 $ 9,369,276.87 $ 72,724.38 $ 9,442,001.25

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program FundBalances Transfers

Program FundBalances

Reserve

Surplus

Total

61,862.00 $

330.00 $

330.00 $

(330.00) $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

5,776,490.08 70,309.94

343,647.92 15,746.06

2,288,728.17 37,950.47

0.00

0.00 2,288,728.17

330.00

(330.00)

37,950.47

0.00 2,288,728.17

0.00

37,950.47

0.00 2,288,728.17

0.00

37,950.47

5,908,662.02 $ 359,723.98 $ 2,327,008.64 $

0.00 $ (330.00) $ 2,326,678.64 $

0.00 $ 2,326,678.64 $

0.00 $ 2,326,678.64

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program FundBalances Transfers

Program FundBalances

Reserve

Surplus

Total

35,391,924.00 $

0.00 $

0.00 $

18,014,357.14 11,687,110.97

985,642.86 2,359,683.03

2,468,117.46 124,438.55

65,093,392.11 $ 3,345,325.89 $ 2,592,556.01 $

26,629.73 $
0.00 8,349.92
34,979.65 $

0.00 $ 26,629.73 $
0.00 2,468,117.46 (828.00) 131,960.47
(828.00) $ 2,626,707.66 $

0.00 $

0.00 $ 26,629.73 $ 26,629.73

0.00 2,468,117.46 0.00 131,960.47

0.00 2,468,117.46 0.00 131,960.47

0.00 $ 2,600,077.93 $ 26,629.73 $ 2,626,707.66

Annual Financial Report FY 2008 232

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OFPROGRAMREVENUES AND EXPENDITURES BYFUNDINGSOURCECOMPARED TO BUDGET, CONTINUED
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE30, 2008

Forestry Cooperative Extension State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Forestry Cooperative Extension

Funds Available Comparedto Budget

Original

Final

Current Year Prior Year

Total

Variance

Appropriation

Budget

Revenues Carry-Over Funds Available Positive (Negative)

$ 687,388.00 $ 687,388.00 $ 687,388.00 $

0.00 $ 687,388.00 $

200,000.00 100,405.00

350,000.00 133,096.00

317,731.81 16,477.69

29,896.06 38,801.37

347,627.87 55,279.06

$ 987,793.00 $ 1,170,484.00 $ 1,021,597.50 $ 68,697.43 $ 1,090,294.93 $

0.00
(2,372.13) (77,816.94)
(80,189.07)

Forestry Research State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Forestry Research

Funds Available Comparedto Budget

Original

Final

Current Year Prior Year

Total

Variance

Appropriation

Budget

Revenues Carry-Over Funds Available Positive (Negative)

$ 3,276,331.00 $ 3,276,331.00 $ 3,276,331.00 $

0.00 $ 3,276,331.00 $

0.00

2,000,000.00 550,000.00

3,500,000.00 930,585.00

3,553,178.63 1,070,782.29

673,544.71 358,490.09

4,226,723.34 1,429,272.38

726,723.34 498,687.38

$ 5,826,331.00 $ 7,706,916.00 $ 7,900,291.92 $ 1,032,034.80 $ 8,932,326.72 $ 1,225,410.72

Georgia Eminent Scholars Endowment Trust Fund State Appropriation State General Funds Other Funds
Total Georgia Eminent Scholars Endowment Trust Fund

Funds Available Comparedto Budget

Original

Final

Current Year Prior Year

Total

Variance

Appropriation

Budget

Revenues Carry-Over Funds Available Positive (Negative)

$ 500,000.00 $ 500,000.00 $ 500,000.00 $

0.00 $ 500,000.00 $

0.00

0.00

0.00

0.00

0.00

0.00

0.00

$ 500,000.00 $ 500,000.00 $ 500,000.00 $

0.00 $ 500,000.00 $

0.00

Georgia Radiation Therapy Center State Appropriation State General Funds Other Funds
Total Georgia Radiation Therapy Center

Funds Available Comparedto Budget

Original

Final

Current Year Prior Year

Total

Variance

Appropriation

Budget

Revenues Carry-Over Funds Available Positive (Negative)

$

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

3,625,810.00 3,625,810.00 3,625,810.00

0.00 3,625,810.00

0.00

$ 3,625,810.00 $ 3,625,810.00 $ 3,625,810.00 $

0.00 $ 3,625,810.00 $

0.00

Annual Financial Report FY 2008 233

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program FundBalances

Reserve

Surplus

Total

687,388.00 $

0.00 $

0.00 $

145.68 $

0.00 $ 145.68 $

0.00 $

0.00 $ 145.68 $ 145.68

287,675.19

62,324.81

59,952.68

0.00

33,086.26

100,009.74

22,192.80

300.00

0.00 59,952.68 0.00 22,492.80

0.00 59,952.68 0.00 22,492.80

0.00 59,952.68 0.00 22,492.80

1,008,149.45 $ 162,334.55 $ 82,145.48 $

445.68 $

0.00 $ 82,591.16 $

0.00 $ 82,445.48 $ 145.68 $ 82,591.16

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program FundBalances

Reserve

Surplus

Total

3,276,331.00 $
3,438,216.89 931,245.79

0.00 $

0.00 $

61,783.11 (660.79)

788,506.45 498,026.59

8,848.57 $
0.00 2,163.69

0.00 $ 8,848.57 $
0.00 788,506.45 0.00 500,190.28

0.00 $

0.00 $ 8,848.57 $ 8,848.57

0.00 788,506.45 0.00 500,190.28

0.00 788,506.45 0.00 500,190.28

7,645,793.68 $ 61,122.32 $ 1,286,533.04 $ 11,012.26 $

0.00 $ 1,297,545.30 $

0.00 $ 1,288,696.73 $ 8,848.57 $ 1,297,545.30

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program FundBalances

Reserve

Surplus

Total

500,000.00 $

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

500,000.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program FundBalances

Reserve

Surplus

Total

0.00 $ 3,625,810.00
3,625,810.00 $

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 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

Annual Financial Report FY 2008 234

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OFPROGRAMREVENUES AND EXPENDITURES BYFUNDINGSOURCECOMPARED TO BUDGET, CONTINUED
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE30, 2008

Georgia Tech Research Institute State Appropriation State General Funds Other Funds
Total Georgia Tech Research Institute
Marine Institute State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Marine Institute

Funds Available Comparedto Budget

Original

Final

Current Year Prior Year

Total

Variance

Appropriation

Budget

Revenues Carry-Over Funds Available Positive (Negative)

$ 7,868,427.00 $ 7,868,427.00 $ 7,868,427.00 $ 122,917,958.00 146,867,958.00 142,001,279.33
$ 130,786,385.00 $ 154,736,385.00 $ 149,869,706.33 $

0.00 $ 7,868,427.00 $

0.00

0.00 142,001,279.33 (4,866,678.67)

0.00 $ 149,869,706.33 $ (4,866,678.67)

Funds Available Comparedto Budget

Original

Final

Current Year Prior Year

Total

Variance

Appropriation

Budget

Revenues Carry-Over Funds Available Positive (Negative)

$ 964,361.00 $ 964,361.00 $ 964,361.00 $

0.00 $ 964,361.00 $

700,000.00 67,633.00

700,000.00 122,175.00

372,941.32 48,194.24

11,273.94 54,542.13

384,215.26 102,736.37

$ 1,731,994.00 $ 1,786,536.00 $ 1,385,496.56 $ 65,816.07 $ 1,451,312.63 $

0.00
(315,784.74) (19,438.63)
(335,223.37)

Marine Resources Extension Service State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Marine Resources Extension Service

Funds Available Comparedto Budget

Original

Final

Current Year Prior Year

Total

Variance

Appropriation

Budget

Revenues Carry-Over Funds Available Positive (Negative)

$ 1,576,721.00 $ 1,576,721.00 $ 1,576,721.00 $

0.00 $ 1,576,721.00 $

0.00

600,000.00 584,800.00

2,000,000.00 739,800.00

1,400,996.35 702,918.25

185,949.68 0.00

1,586,946.03 702,918.25

(413,053.97) (36,881.75)

$ 2,761,521.00 $ 4,316,521.00 $ 3,680,635.60 $ 185,949.68 $ 3,866,585.28 $ (449,935.72)

Medical College of Georgia Hospital andClinics State Appropriation State General Funds Other Funds
Total Medical College of Georgia Hospital and Clinics

Funds Available Comparedto Budget

Original

Final

Current Year Prior Year

Total

Variance

Appropriation

Budget

Revenues Carry-Over Funds Available Positive (Negative)

$ 33,181,112.00 $ 33,181,112.00 $ 33,181,112.00 $

0.00 $ 33,181,112.00 $

0.00

0.00

0.00

0.00

0.00

0.00

0.00

$ 33,181,112.00 $ 33,181,112.00 $ 33,181,112.00 $

0.00 $ 33,181,112.00 $

0.00

Annual Financial Report FY 2008 235

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund Balances

Transfers

Program FundBalances

Reserve

Surplus

Total

7,868,427.00 $

0.00 $

142,001,277.44 4,866,680.56

0.00 $ 1,294.50 $

0.00 $ 1,294.50 $

1.89

73,237.59 115,397.67 188,637.15

0.00 $

0.00 $ 1,294.50 $ 1,294.50

0.00 115,399.56 73,237.59 188,637.15

149,869,704.44 $ 4,866,680.56 $

1.89 $ 74,532.09 $ 115,397.67 $ 189,931.65 $

0.00 $ 115,399.56 $ 74,532.09 $ 189,931.65

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund Balances

Transfers

Program FundBalances

Reserve

Surplus

Total

964,361.00 $

0.00 $

369,274.87 87,287.99

330,725.13 34,887.01

0.00 $
14,940.39 15,448.38

800.00 $
0.00 0.00

0.00 $ 800.00 $
0.00 14,940.39 0.00 15,448.38

0.00 $

0.00 $

0.00 14,940.39 0.00 15,448.38

800.00 $ 800.00
0.00 14,940.39 0.00 15,448.38

1,420,923.86 $ 365,612.14 $ 30,388.77 $

800.00 $

0.00 $ 31,188.77 $

0.00 $ 30,388.77 $ 800.00 $ 31,188.77

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund Balances

Transfers

Program FundBalances

Reserve

Surplus

Total

1,576,721.00 $

0.00 $

0.00 $

814.45 $

0.00 $ 814.45 $

0.00 $

0.00 $ 814.45 $ 814.45

1,404,633.42

595,366.58

182,312.61

0.00

0.00 182,312.61

0.00 182,312.61

0.00 182,312.61

702,918.25

36,881.75

0.00

65.82

0.00

65.82

0.00

65.82

0.00

65.82

3,684,272.67 $ 632,248.33 $ 182,312.61 $

880.27 $

0.00 $ 183,192.88 $

0.00 $ 182,378.43 $ 814.45 $ 183,192.88

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund Balances

Transfers

Program FundBalances

Reserve

Surplus

Total

33,181,112.00 $ 0.00
33,181,112.00 $

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

0.00

0.00

0.00

0.00 $

0.00 $

0.00

Annual Financial Report FY 2008 236

UNIVERSITYSYSTEMOF GEORGIA STATEMENT OF PROGRAMREVENUES AND EXPENDITURES BYFUNDINGSOURCECOMPARED TO BUDGET, CONTINUED
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE30, 2008

Office of Minority Business Enterprise State Appropriation State General Funds Other Funds
Total Office of Minority Business Enterprise

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Comparedto Budget

Prior Year

Total

Variance

Carry-Over Funds Available Positive (Negative)

$ 884,273.00 $ 884,273.00 $ 884,273.00 $

0.00 $ 884,273.00 $

0.00

0.00

0.00

0.00

0.00

0.00

0.00

$ 884,273.00 $ 884,273.00 $ 884,273.00 $

0.00 $ 884,273.00 $

0.00

Georgia Cancer Coalition State Appropriation Tobacco Funds Other Funds
Total Georgia Cancer Coalition
Public Libraries State Appropriation State General Funds Other Funds
Total Public Libraries
Regents Central Office State Appropriation State General Funds Other Funds
Total Regents Central Office
Research Consortium State Appropriation State General Funds Tobacco Funds Other Funds
Total Research Consortium

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Comparedto Budget

Prior Year

Total

Variance

Carry-Over Funds Available Positive (Negative)

$ 14,587,799.00 $ 14,587,799.00 $ 14,587,799.00 $

0.00 $ 14,587,799.00 $

0.00

0.00

0.00

0.00

0.00

0.00

0.00

$ 14,587,799.00 $ 14,587,799.00 $ 14,587,799.00 $

0.00 $ 14,587,799.00 $

0.00

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Comparedto Budget

Prior Year

Total

Variance

Carry-Over Funds Available Positive (Negative)

$ 41,015,101.00 $ 40,329,496.00 $ 40,329,496.00 $

4,522,400.00

4,522,400.00

4,395,430.71

0.00 $ 40,329,496.00 $

22,773.34

4,418,204.05

$ 45,537,501.00 $ 44,851,896.00 $ 44,724,926.71 $ 22,773.34 $ 44,747,700.05 $

0.00 (104,195.95)
(104,195.95)

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Comparedto Budget

Prior Year

Total

Variance

Carry-Over Funds Available Positive (Negative)

$ 7,683,800.00 $ 0.00
$ 7,683,800.00 $

7,683,800.00 $ 7,683,800.00 $

0.00 $ 7,683,800.00 $

79,175.00

73,319.24 5,696,782.64

5,770,101.88

7,762,975.00 $ 7,757,119.24 $ 5,696,782.64 $ 13,453,901.88 $

0.00 5,690,926.88
5,690,926.88

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Comparedto Budget

Prior Year

Total

Variance

Carry-Over Funds Available Positive (Negative)

$ 35,995,015.00 $ 35,995,015.00 $ 35,995,015.00 $

0.00 $ 35,995,015.00 $

0.00

750,000.00

750,000.00

750,000.00

750,000.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

$ 36,745,015.00 $ 36,745,015.00 $ 36,745,015.00 $

0.00 $ 36,745,015.00 $

0.00

Annual Financial Report FY 2008 237

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program Fund Balances

Reserve

Surplus

Total

883,081.61 $ 0.00
883,081.61 $

1,191.39 $ 0.00
1,191.39 $

1,191.39 $ 0.00
1,191.39 $

0.00 $ 0.00
0.00

0.00 $ 0.00
0.00 $

1,191.39 $ 0.00
1,191.39 $

0.00 $ 0.00
0.00 $

0.00 $ 0.00

1,191.39 $ 0.00

0.00 $ 1,191.39 $

1,191.39 0.00
1,191.39

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program Fund Balances

Reserve

Surplus

Total

14,587,490.57 $

308.43 $

308.43 $

0.00

0.00

0.00

0.00

0.00

0.00 $ 0.00

308.43 $ 0.00

0.00 $ 0.00

0.00 $ 308.43 $

308.43

0.00

0.00

0.00

14,587,490.57 $

308.43 $

308.43 $

0.00

0.00 $

308.43 $

0.00 $

0.00 $ 308.43 $

308.43

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program Fund Balances

Reserve

Surplus

Total

40,298,425.87 $ 4,359,454.05

31,070.13 $ 162,945.95

31,070.13 $ 133,382.40 $

58,750.00

0.00

0.00 $ 164,452.53 $

0.00

58,750.00

0.00 $

0.00 $ 164,452.53 $ 164,452.53

0.00

58,750.00

0.00

58,750.00

44,657,879.92 $ 194,016.08 $ 89,820.13 $ 133,382.40 $

0.00 $ 223,202.53 $

0.00 $ 58,750.00 $ 164,452.53 $ 223,202.53

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program Fund Balances

Reserve

Surplus

Total

7,641,783.99 $ 801,003.76

42,016.01 $ 42,016.01 $ (721,828.76) 4,969,098.12

0.00 $ 0.00

0.00 $ 42,016.01 $ 0.00 4,969,098.12

0.00 $

0.00 $ 42,016.01 $ 42,016.01

0.00 4,969,098.12

0.00 4,969,098.12

8,442,787.75 $ (679,812.75) $ 5,011,114.13 $

0.00 $

0.00 $ 5,011,114.13 $

0.00 $ 4,969,098.12 $ 42,016.01 $ 5,011,114.13

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program Fund Balances

Reserve

Surplus

Total

35,985,472.49 $ 750,000.00 0.00
36,735,472.49 $

9,542.51 $ 0.00 0.00
9,542.51 $

9,542.51 $ 0.00 0.00

(959,064.72) $ 0.00 0.00

9,542.51 $ (959,064.72) $

0.00 $ 0.00 0.00

(949,522.21) $ 0.00 0.00

820,085.30 $ 0.00 0.00

0.00 $ (949,522.21) $ 820,085.30 $

Annual Financial Report FY 2008 238

0.00 $ (129,436.91) $

0.00

0.00

0.00

0.00

(129,436.91) 0.00 0.00

0.00 $ (129,436.91) $ (129,436.91)

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OFPROGRAMREVENUES AND EXPENDITURES BYFUNDINGSOURCECOMPARED TO BUDGET, CONTINUED
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE30, 2008

Skidaway Institute of Oceanography State Appropriation State General Funds Other Funds
Total Skidaway Institute of Oceanography

Funds Available Comparedto Budget

Original

Final

Current Year Prior Year

Total

Variance

Appropriation

Budget

Revenues Carry-Over Funds Available Positive (Negative)

$ 1,712,710.00 $ 1,712,710.00 $ 1,712,710.00 $ 5,658,000.00 4,758,000.00 4,847,044.74
$ 7,370,710.00 $ 6,470,710.00 $ 6,559,754.74 $

0.00 $ 1,712,710.00 $ 0.00 4,847,044.74
0.00 $ 6,559,754.74 $

0.00 89,044.74
89,044.74

Special Funding Initiative State Appropriation State General Funds Tobacco Funds
Total Special Funding Initiative

Funds Available Comparedto Budget

Original

Final

Current Year Prior Year

Total

Variance

Appropriation

Budget

Revenues Carry-Over Funds Available Positive (Negative)

$ 41,081,344.00 $ 40,856,344.00 $ 40,856,344.00 $

0.00 $ 40,856,344.00 $

0.00

5,000,000.00 5,000,000.00 5,000,000.00

0.00 5,000,000.00

0.00

$ 46,081,344.00 $ 45,856,344.00 $ 45,856,344.00 $

0.00 $ 45,856,344.00 $

0.00

Student Education Enrichment Program State Appropriation State General Funds Other Funds
Total Student Education Enrichment Program

Funds Available Comparedto Budget

Original

Final

Current Year Prior Year

Total

Variance

Appropriation

Budget

Revenues Carry-Over Funds Available Positive (Negative)

$ 314,737.00 $ 314,737.00 $ 314,737.00 $

0.00 $ 314,737.00 $

0.00

0.00

0.00

0.00

0.00

0.00

0.00

$ 314,737.00 $ 314,737.00 $ 314,737.00 $

0.00 $ 314,737.00 $

0.00

Teaching State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Teaching

Funds Available Comparedto Budget

Original

Final

Current Year Prior Year

Total

Variance

Appropriation

Budget

Revenues Carry-Over Funds Available Positive (Negative)

$ 1,820,227,086.00 $ 1,827,383,964.00 $ 1,827,383,964.00 $

0.00 $ 1,827,383,964.00 $

0.00

275,402,955.00 278,829,892.00 205,197,233.86 30,853,721.75 236,050,955.61 2,435,049,425.00 2,746,032,407.00 2,582,823,549.19 157,750,624.92 2,740,574,174.11

(42,778,936.39) (5,458,232.89)

$ 4,530,679,466.00 $ 4,852,246,263.00 $ 4,615,404,747.05 $ 188,604,346.67 $ 4,804,009,093.72 $ (48,237,169.28)

Annual Financial Report FY 2008 239

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program FundBalances

Reserve

Surplus

Total

1,712,710.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

4,730,723.25

27,276.75

116,321.49

0.00

0.00 116,321.49

0.00 116,321.49

0.00 116,321.49

6,443,433.25 $ 27,276.75 $ 116,321.49 $

0.00 $

0.00 $ 116,321.49 $

0.00 $ 116,321.49 $

0.00 $ 116,321.49

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program FundBalances

Reserve

Surplus

Total

40,762,009.90 $ 5,000,000.00

94,334.10 $ 0.00

94,334.10 $ 0.00

88,274.86 $ 0.00

0.00 $ 182,608.96 $ (53,380.24) $

0.00

0.00

0.00

0.00 $ 129,228.72 $ 129,228.72

0.00

0.00

0.00

45,762,009.90 $ 94,334.10 $ 94,334.10 $ 88,274.86 $

0.00 $ 182,608.96 $ (53,380.24) $

0.00 $ 129,228.72 $ 129,228.72

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program FundBalances

Reserve

Surplus

Total

314,737.00 $

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

314,737.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program FundBalances

Reserve

Surplus

Total

1,827,835,849.00 $ (451,885.00) $ (451,885.00) $ 997,748.12 $ 357,161.70 $ 903,024.82 $ 748,718.58 $

0.00 $ 1,651,743.41 $ 1,651,743.41

202,958,089.41 75,871,802.59 33,092,866.20 2,598,261,432.19 147,770,974.81 142,312,741.92

0.00

0.00 33,092,866.20

0.00 33,092,866.20

833,126.80 15,428,773.87 158,574,642.59 (1,515,423.64) 156,553,790.75

0.00 33,092,866.20 505,428.19 157,059,218.94

4,629,055,370.60 $ 223,190,892.40 $ 174,953,723.12 $ 1,830,874.92 $ 15,785,935.57 $ 192,570,533.61 $ (766,705.06) $ 189,646,656.95 $ 2,157,171.60 $ 191,803,828.55

Annual Financial Report FY 2008 240

UNIVERSITYSYSTEMOF GEORGIA STATEMENT OF PROGRAMREVENUES AND EXPENDITURES BYFUNDINGSOURCECOMPARED TO BUDGET, CONTINUED
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE30, 2008

Veterinary Medicine Experiment Station State Appropriation State General Funds Other Funds
Total Veterinary Medicine Experiment Station

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Comparedto Budget

Prior Year

Total

Variance

Carry-Over Funds Available Positive (Negative)

$ 3,384,254.00 $ 3,384,254.00 $ 3,384,254.00 $

0.00 $ 3,384,254.00 $

0.00

0.00

0.00

0.00

0.00

0.00

0.00

$ 3,384,254.00 $ 3,384,254.00 $ 3,384,254.00 $

0.00 $ 3,384,254.00 $

0.00

Veterinary Medicine Teaching Hospital State Appropriation State General Funds Other Funds
Total Veterinary Medicine Teaching Hospital

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Comparedto Budget

Prior Year

Total

Variance

Carry-Over Funds Available Positive (Negative)

$ 502,585.00 $ 502,585.00 $ 502,585.00 $

0.00 $ 502,585.00 $

6,700,000.00 11,750,000.00 10,042,989.90 1,103,276.21 11,146,266.11

$ 7,202,585.00 $ 12,252,585.00 $ 10,545,574.90 $ 1,103,276.21 $ 11,648,851.11 $

0.00 (603,733.89)
(603,733.89)

Payments to Georgia Military College State Appropriation State General Funds Other Funds
Total Payments to Georgia Military College

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Comparedto Budget

Prior Year

Total

Variance

Carry-Over Funds Available Positive (Negative)

$ 3,062,152.00 $ 3,062,152.00 $ 3,062,152.00 $

0.00 $ 3,062,152.00 $

0.00

0.00

0.00

0.00

0.00

0.00

0.00

$ 3,062,152.00 $ 3,062,152.00 $ 3,062,152.00 $

0.00 $ 3,062,152.00 $

0.00

Payments to Georgia Public Telecommunications Commission State Appropriation State General Funds Other Funds

Original Appropriation
$ 18,069,614.00 $ 0.00

Final Budget

Current Year Revenues

Funds Available Comparedto Budget

Prior Year

Total

Variance

Carry-Over Funds Available Positive (Negative)

18,069,614.00 $ 18,069,614.00 $

0.00 $ 18,069,614.00 $

0.00

0.00

0.00

0.00

0.00

0.00

Total Payments to Georgia Public Telecommunications Commission $ 18,069,614.00 $ 18,069,614.00 $ 18,069,614.00 $

0.00 $ 18,069,614.00 $

0.00

Total University System of Georgia

$ 5,067,724,782.00 $ 5,443,810,074.00 $ 5,188,674,682.07 $ 209,946,250.18 $ 5,398,620,932.25 $ (45,189,141.75)

Annual Financial Report FY 2008 241

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program Fund Balances

Reserve

Surplus

Total

3,384,254.00 $ 0.00
3,384,254.00 $

0.00 $ 0.00
0.00 $

0.00 $ 0.00
0.00 $

1,575.25 $ 0.00
1,575.25 $

0.00 $ 0.00
0.00 $

1,575.25 $ 0.00
1,575.25 $

0.00 $ 0.00
0.00 $

0.00 $ 0.00

1,575.25 $ 0.00

0.00 $ 1,575.25 $

1,575.25 0.00
1,575.25

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program Fund Balances

Reserve

Surplus

Total

502,585.00 $

0.00 $

0.00 $

9,565,560.59

2,184,439.41

1,580,705.52

0.00 13,465.19

0.00 $

0.00 $

(17,993.35) 1,576,177.36

0.00 $

0.00 $

0.00 1,576,177.36

0.00 $

0.00

0.00 1,576,177.36

10,068,145.59 $ 2,184,439.41 $ 1,580,705.52 $ 13,465.19

(17,993.35) $ 1,576,177.36 $

0.00 $ 1,576,177.36 $

0.00 $ 1,576,177.36

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program Fund Balances

Reserve

Surplus

Total

3,062,152.00 $ 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

3,062,152.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

Expenditures Comparedto Budget Variance
Actual Positive (Negative)

Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Total Program Adjustments FundBalances Transfers

Program Fund Balances

Reserve

Surplus

Total

18,069,614.00 $ 0.00
18,069,614.00 $

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

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

5,200,933,975.98 $ 242,876,098.02 $ 197,686,956.27 $ 1,335,929.80 $ 15,928,813.56 $ 214,951,699.63 $

0.00 $ 212,375,480.77 $ 2,576,218.86 $ 214,951,699.63

Unexpendable Reserves Uncollectible Accounts Receivable Inventories Early Retirement Program

11,287,655.86 3,173,177.35 7,365,016.53

Total Fund Balance

236,777,549.37

Annual Financial Report FY 2008 242

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA 270 Washington Street, SW., Atlanta, Georgia 30334
(404) 656-2237

ABRAHAM BALDWIN AGRICULTURAL COLLEGE
Financial Report
For the Year Ended June 30, 2008

Abraham Baldwin Agricultural College Tifton, Georgia

Dr. David C. Bridges
President

John T. Clemens
Vice President for Fiscal Affairs

ABRAHAM BALDWIN AGRICULTURAL COLLEGE ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ............................................................................ 1 Statement of Net Assets ...................................................................................................... 8 Statement of Revenues, Expenses and Changes in Net Assets........................................... 9 Statement of Cash Flows .................................................................................................. 11 Note 1. Summary of Significant Accounting Policies .................................................... 13 Note 2. Deposits and Investments................................................................................... 18 Note 3. Accounts Receivable.......................................................................................... 19 Note 4. Inventories.......................................................................................................... 19 Note 5. Notes/Loans Receivable..................................................................................... 19 Note 6. Capital Assets..................................................................................................... 20 Note 7. Deferred Revenue............................................................................................... 21 Note 8. Long-Term Liabilities ........................................................................................ 21 Note 9. Significant Commitments................................................................................... 21 Note 10. Lease Obligations............................................................................................. 21 Note 11. Retirement Plans .............................................................................................. 23 Note 12. Risk Management............................................................................................. 26 Note 13. Contingencies................................................................................................... 27 Note 14. Post-Employment Benefits Other Than Pension Benefits ............................... 28 Note 15. Natural Classifications with Functional Classifications .................................. 29 Note 16. Component Units ............................................................................................. 30

ABRAHAM BALDWIN AGRICULTURAL COLLEGE
Management's Discussion and Analysis

Introduction
Abraham Baldwin Agricultural College is one of the 35 institutions of higher education of the University System of Georgia. The College, located in Tifton, Georgia, was founded in 1908 and has become known for its state-of-the-art technology and technology-related programs. The College offers associate and baccalaureate degrees in a wide variety of subjects. This wide range of educational opportunities attracts a highly qualified faculty and a student body of more than 3,600 students. The institution continues to grow as shown by the comparison numbers that follow.

Students Students Faculty (Headcount) (FTE)

FY2008

121

FY2007

125

FY2006

114

3,665 3,574 3,423

3,214 3,114 2,929

Overview of the Financial Statements and Financial Analysis
Abraham Baldwin Agricultural College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.
Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Abraham Baldwin Agricultural College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and noncurrent), and Net Assets (Assets minus Liabilities). The difference between current and noncurrent assets will be discussed in the footnotes to the financial statements.
From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.
Abraham Baldwin Agricultural College Annual Financial Report FY 2008 1

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$5,777,020 78,476,535
362,608 84,616,163

June 30, 2007
$5,158,429 30,108,793
398,884 35,666,106

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

4,006,415 50,814,931 54,821,346

2,302,493 330,228
2,632,721

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

26,919,250 666,011
2,209,556 $29,794,817

30,108,793 646,704
2,277,888 $33,033,385

The total assets of the institution increased by $48,950,057. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $48,367,742 in the category of Capital Assets, net. The balance of the increase is mainly in the cash and cash equivalents category.
The total liabilities for the year increased by $52,188,625. The combination of the increase in total assets of $48,950,057 and the increase in total liabilities of $52,188,625 yields a decrease in total net assets of ($3,238,568). The decrease in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of ($3,189,543). This is the result of the College's effort to expand its mission by increasing capital facilities through capital leases.
Statement of Revenues, Expenses and Changes in Net Assets
Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and non-

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 2

operating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$22,094,624 38,333,167 (16,238,543) 12,999,975
(3,238,568) 0
(3,238,568) 33,033,385
0 33,033,385 $29,794,817

$15,175,188 29,609,948 (14,434,760) 14,070,492
(364,268) 1,663,677 1,299,409 31,733,976
0 31,733,976 $33,033,385

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a year of investment with a decrease in the net assets at the end of the year through the use of capital lease options. Future revenue flow from the investment in expanded dormitories will eventually result in a net gain for the College. Some highlights of the information presented on the Statement of Revenues, Expenses, and Changes in Net Assets are as follows:

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$4,033,492 6,667,417 231,975
10,927,522 234,218
22,094,624
15,801,603 478,460 57,786
(1,025,255) 15,312,594
0 0 0 $37,407,218

June 30, 2007
$3,890,719 6,092,751 274,689 4,702,461 214,568
15,175,188
13,574,045 479,515 33,712 (16,780)
14,070,492
572,555 1,091,122 1,663,677 $30,909,357

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$11,061,120 958,543
2,612,472 2,449,368 5,042,890 5,102,802 1,734,698 9,371,274 38,333,167
2,312,619 $40,645,786

June 30, 2007
$10,225,439 849,194
2,558,246 2,126,973 4,094,917 3,700,418 1,682,551 4,372,210 29,609,948
0 $29,609,948

Operating revenues increased by $6,919,436 in fiscal 2008. Tuition & Fees included a 4% increase, but Auxiliary revenues accounted for most of the increase due to the addition of new dormitories.

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 4

The Auxiliary revenue increase of $6,225,061 is a result of the changing environment of residential life on the College's campus. During the year, residential life increased some food service options and at the same time, Second ABAC, LLC, a related party, constructed over 489 beds of new housing on the campus. The net effect to the campus is that the students actually have more on-campus residential life availability. The College has entered into capital lease agreements on two dorms which results in an increased liability.

Non-operating revenues increased by $1,242,102 for the year primarily due to an increase of $2,227,558 in State Appropriations.

The compensation and employee benefits category increased by $1,959,136 and primarily affected the Instruction, Student Services, Institutional Support and Auxiliary categories. The increase reflects merit increases and an increased cost of health insurance for the employees of the institution.

Utilities increased by $546,730 during the past year. The increase was primarily associated with the addition of two dormitories.

Statement of Cash Flows

The final statement presented by Abraham Baldwin Agricultural College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($12,289,030) 16,357,569 (3,182,850) 57,786 943,475 1,710,789
$2,654,264

June 30, 2007
($12,966,755) 14,052,951 (1,196,982) 33,712 (77,074) 1,787,863
$1,710,789

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 5

Capital Assets The College had three significant capital asset additions for facilities in fiscal year 2008, which consisted of: the assumption of the ABAC Place Dormitories, the completion of the new Lakeside Dormitories and completion of the ABAC Athletic Fields. For additional information concerning Capital Assets, see Notes 1, 6, 8, and 10 in the Notes to the Financial Statements. Long Term Debt and Liabilities Abraham Baldwin Agricultural College had Long-Term Debt and Liabilities of $52,369,680 of which $1,554,749 was reflected as current liability at June 30, 2008. For additional information concerning Long-Term Debt and Liabilities, see notes 1, 8 and 10 in the Notes to the Financial Statements. Component Units In compliance with GASB Statement No. 39, Abraham Baldwin Agricultural College has included the financial statements and notes for all required component units for FY2008. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Abraham Baldwin Agricultural College Annual Financial Report FY 2008 6

Economic Outlook The College is acutely aware of the state's economic downturn that became more apparent in early 2008 and seems to be continuing into calendar year 2009. State appropriations for FY 2009 are expected to be reduced and stringent restrictions are being imposed on spending. On the other hand, enrollment seems to be remaining steady and slightly increasing. As long as enrollment continues to remain vibrant, the College's overall financial position will remain strong. However, there are a number of factors that could adversely affect the College's financial stability. For one, the rising cost of energy will result in major challenges in the coming year. If these costs can not be held in check, the College's budget will need to be redirected to offset these increases. Secondly, budget reductions imposed by the state could curtail campus maintenance needs to the point deferred maintenance continues to mount and buildings continue to deteriorate. Other than the concerns listed above, the College is not aware of any other currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The College's overall financial position is strong. The College anticipates the current fiscal year will be tough and will maintain a close watch over resources to maintain the College's ability to react to unknown internal and external issues.
Dr. David C. Bridges, President Abraham Baldwin Agricultural College
Abraham Baldwin Agricultural College Annual Financial Report FY 2008 7

Statement of Net Assets
A B R A H A M B A L D W IN A G R IC UL T UR A L C O L L EG E S T A TEM EN T O F N ET A S S ETS June 30, 2008

A S S ETS C u rre n t Asse ts Cash an d Cash E quiv alen t s Sh o r t - t e r m I n v e st m e n t s A cco un t s Receiv able, n et (n o t e 3 ) Receiv ables - Federal Fin an cial A ssist an ce Receiv ables - O t h er D ue Fro m Co m p o n en t U n it s P ledges Receiv able D ue Fro m P rim ary Go v ern m en t In v en t o ries (n o t e 4 ) P rep aid it em s T o t al Curren t A sset s
Non cu rre n t Asse ts N o n curren t Cash In v est m en t s (in cludin g Real E st at e) N o t es Receiv able, n et P ledges Receiv able Cap it al A sset s, n et (n o t e 6 ) O t h er A sset s T o t al N o n curren t A sset s TO TA L A S S ETS
L IA B IL ITIES C u rre n t Liabilitie s A cco un t s P ay able Sa la r ie s P a y a ble D eferred Rev en ue (n o te 7 ) D ep o sit s H eld fo r O t h er O rgan izat io n s D ue t o P rim ary Go v ern m en t L ease P urch ase O bligat io n s (curren t p o rt io n ) Co m p en sat ed A bsen ces (curren t p o rt io n ) Rev en ue/M o rt gage Bo n ds P ay able (curren t ) D ue t o Co m p o n en t U n it s N o t es an d L o an s P ay able (curren t p o rt io n ) T o t al Curren t L iabilit ies Non cu rre n t Liabilitie s L ease P urch ase O bligat io n s (n o n curren t ) Co m p en sat ed A bsen ces (n o n curren t ) Rev en ue/M o rt gage Bo n ds P ay able (n o n curren t ) N o t es an d L o an s P ay able (n o n curren t ) T o t al N o n curren t L iabilit ies TO TA L L IA B IL ITIES
N ET A S S ETS In v est ed in Cap it al A sset s, n et o f relat ed debt Rest rict ed fo r N o n ex p en dable E x p en dable U n rest rict ed TO TA L N ET A S S ETS

Abrah am B aldwin Agricu ltu ral C ollege
$2 ,6 5 4,2 6 4 1 14 ,0 5 5 9 63 ,9 6 7
1 ,2 0 0,7 9 2 1 52 ,1 0 9
6 74 ,6 4 0 17 ,1 9 3
5 ,7 7 7,0 2 0
3 62 ,6 0 8 78 ,4 7 6,5 3 5 78 ,8 3 9,1 4 3 84 ,6 1 6,1 6 3
1 ,2 1 0,9 8 6 3 61 ,1 7 4 4 67 ,4 4 0 4 11 ,2 0 9
1 ,0 7 4,6 5 8 4 80 ,0 9 1 857
4 ,0 0 6,4 1 5 50 ,4 8 2,6 2 7
3 32 ,3 0 4
50 ,8 1 4,9 3 1 54 ,8 2 1,3 4 6
26 ,9 1 9,2 5 0
6 66 ,0 1 1 2 ,2 0 9,5 5 6 $2 9 ,7 94 ,8 1 7

C om pon e n t Un it Abrah am B aldwin
Agricu ltu ral C ollege
Fo u n da ti o n , In c.
$ 2 ,5 4 8 ,9 9 4
1 4 7 ,7 1 3 4 1 4 ,4 9 9
857 3 ,2 7 1 3 ,1 1 5 ,3 3 4
7 ,2 7 7 ,2 4 8 9 ,1 2 7 ,1 2 3
4 2 6 ,8 0 3 4 0 ,9 7 8 ,0 6 8
2 ,0 8 8 ,0 6 6 5 9 ,8 9 7 ,3 0 8 6 3 ,0 1 2 ,6 4 2
8 1 7 ,8 3 4 6 ,1 3 5
1 5 2 ,1 0 9
9 2 5 ,0 0 0 1 4 1 ,9 0 8 2 ,0 4 2 ,9 8 6
4 6 ,4 8 3 ,5 1 7 1 ,0 3 2 ,0 8 1
4 7 ,5 1 5 ,5 9 8 4 9 ,5 5 8 ,5 8 4
1 ,8 0 6 ,3 7 6 7 ,5 1 1 ,5 7 2 2 ,2 8 5 ,1 0 2 1 ,8 5 1 ,0 0 8 $ 1 3 ,4 5 4 ,0 5 8

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets
ABRAHAM BALDWIN AGRICULTURAL COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Grant s and Cont ract s Federal St at e Other Sales and Services Rents and Royalt ies Auxiliary Ent erprises Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion P ayment s t o or on behalf of Abraham Baldwin Agricult ural College
T ot al Operat ing Expenses Operat ing Income (loss)

Abraham Baldwin Agri cu l tu ral C olle ge

C om pone nt Unit
Abraham Baldwin Agri cu l tu ral College
Fou n dati on , In c.

$7,135,952 (3,102,460)
6,450,818 57,918
158,681 231,975 101,536
5,220,137 2,421,729 1,913,072
1,413 501,955 508,963 360,253 132,682 22,094,624
6,239,238 6,945,912 4,526,929
149,193 278,619 2,218,164 1,330,354 13,231,383 3,413,375
38,333,167 (16,238,543)

$0 1,795,479
5,570,187
7,365,666
78,778 20,875
2,586,214 1,999,461
384,327 5,069,655 2,296,011

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 9

Statement of Revenues, Expenses and Changes in Net Assets, Continued
ABRAHAM BALDWIN AGRICULTURAL COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

Abraham Baldwin Agri cu l tu ral C olle ge

C om pone nt Unit
Abraham Baldwin Agri cu l tu ral College
Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENS ES ) St at e Appropriat ions Gift s Invest m ent Incom e (endowment s, auxiliary and ot her) Int erest Expense (capit al asset s) Ot her Nonoperat ing Revenues Net Nonoperat ing Revenues Income before ot her revenues, expenses, gains, or loss Addit ions t o perm anent endowment s T ot al Ot her Revenues Increase in Net Asset s
NET AS S ETS Net Asset s-beginning of year, as originally report ed P rior Year Adjust ment s Net Asset s-beginning of year, rest at ed Net Asset s-End of Year

15,801,603 478,460 57,786
(2,312,619) (1,025,255) 12,999,975 (3,238,568)
0 (3,238,568)
33,033,385 0
33,033,385 $29,794,817

434,123 (1,945,156)
(1,511,033) 784,978 311,805 311,805
1,096,783
12,357,275 0
12,357,275 $13,454,058

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 10

Statement of Cash Flows
ABRAHAM BALDWIN AGRICULTURAL COLLEGE S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$4,118,353 6,945,990 231,976
(19,616,817) (13,077,523)
(2,218,164) (7,865) 44,141
4,914,652 2,207,435 1,941,114
936 505,209 513,593 359,706 848,234 (12,289,030)
15,801,603 77,506
478,460 16,357,569
(645,166) (948,265) (1,589,419) (3,182,850)
57,786 57,786 943,475 1,710,789 $2,654,264

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 11

Statement of Cash Flows, Continued
ABRAHAM BALDWIN AGRICULTURAL COLLEGE S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed asset s acquired by incurring capit al lease obligat ions Change in accrued int erest payable affect ing int erest paid

June 30, 2008
($16,238,543)
3,413,375 564,564 (232,258) (3,496) 16,899 28,630 140,274 (29,618) 51,143
($12,289,030)
$52,191,772 ($313,778)

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 12

ABRAHAM BALDWIN AGRICULTURAL COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Abraham Baldwin Agricultural College serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Abraham Baldwin Agricultural College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Abraham Baldwin Agricultural College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Abraham Baldwin Agricultural College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Abraham Baldwin Agricultural College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Abraham Baldwin Agricultural College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the College's report. For FY2008, Abraham Baldwin Agricultural College is reporting the activity for the Abraham Baldwin Agricultural College Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and
Abraham Baldwin Agricultural College Annual Financial Report FY 2008 13

Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of 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 consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Resale Inventories are valued at cost using the average-cost basis.
Abraham Baldwin Agricultural College Annual Financial Report FY 2008 14

Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 the year ended June 30, 2008, GSFIC did not transfer any capital additions to Abraham Baldwin Agricultural College.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a College's residence halls.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Abraham Baldwin Agricultural College had accrued liability for compensated absences in the amount of $761,251 as of 7-1-2007. For FY2008, $576,785 was earned in compensated absences and employees were paid $525,641, for a net increase of $51,144. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $812,395.
Abraham Baldwin Agricultural College Annual Financial Report FY 2008 15

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Assets The College's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.

Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans T ot al Rest rict ed Expendable

June 30, 2008
$3,586 633,949
28,476 $666,011

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.
Abraham Baldwin Agricultural College Annual Financial Report FY 2008 16

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$816,005 640,826 752,725
$2,209,556

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Abraham Baldwin Agricultural 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.

Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 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 College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 17

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $2,761,002 and the bank balance was $3,140,557. Of the College's deposits, $2,886,442 were uninsured. Of these uninsured deposits, $2,886,442 were collateralized with securities held by the financial institution's trust department or agent in the College's name.
B. Investments Abraham Baldwin Agricultural College had no investments as of June 30, 2008.
Abraham Baldwin Agricultural College Annual Financial Report FY 2008 18

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$104,948 322,054 963,967 152,109 809,327
2,352,405 35,537
$2,316,868

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore T otal

$674,640 $674,640

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the College for amounts cancelled under these provisions. As the College determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The College has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was $0.

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 19

Note 6. Capital Assets

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

Capital Asset s, Not Being Depreciat ed: Land Const ruct ion Work-in-P rogress
T ot al Capital Asset s Not Being Depreciated

Beginning Balance s 7/1/2007
$67,441 1,018,881 1,086,322

Addi ti o n s
$0 236,250 236,250

Re ductions
$0 1,018,881 1,018,881

Capital Asset s, Being Depreciat ed: Building and Building Improvement s Facilities and Ot her Improvements Equipment Capit al Leases Library Collections Capit alized Collections T ot al Assets Being Depreciated

39,645,844 607,439
3,562,699 0
2,709,398 156,200
46,681,580

1,061,542 276,397
52,191,772 43,833
53,573,544

1,024,000 66,858
119,341 1,210,199

Less: Accumulated Depreciation Buildings Facilities and Ot her improvements Equipment Capit al Leases Library Collections Capit alized Collections T ot al Accumulat ed Depreciat ion

12,334,890 546,695
2,392,653 0
2,362,225 22,646
17,659,109

915,634 44,231
310,198 2,064,365
77,570 1,377
3,413,375

81,062 119,341 200,403

T ot al Capital Asset s, Being Depreciated, Net

29,022,471

50,160,169

1,009,796

Capital Asset s, net

$30,108,793

$50,396,419

$2,028,677

En di n g B al an ce 6/30/2008
$67,441 236,250 303,691
38,621,844 1,668,981 3,772,238
52,191,772 2,633,890 156,200
99,044,925
13,250,524 590,926
2,621,789 2,064,365 2,320,454
24,023 20,872,081
78,172,844
$78,476,535

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 20

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $127,420 340,020
$467,440

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations
Other Liabilities Compensated Absences Total
Total Long Term Obligations

Beginning Balance
July 1, 2007
$0

Additions $52,505,550

Reductions

Ending Balance June 30, 2008

$948,265

$51,557,285

761,251 761,251
$761,251

576,785 576,785
$53,082,335

525,641 525,641
$1,473,906

812,395 812,395
$52,369,680

Current Portion $1,074,658
480,091 480,091 $1,554,749

Note 9. Significant Commitments
The College had no significant unearned, outstanding, construction or renovation contracts executed as of June 30, 2008.
Note 10. Lease Obligations
Abraham Baldwin Agricultural College is obligated under various operating leases for the use of equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property and equipment.
CAPITAL LEASES
Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between fiscal 2009 and 2038. Interest rates range from 4.459 percent to 8.399 percent. Expenditures for fiscal year 2008 were $3,260,884 of which $2,312,619 represented interest and $948,265 represented principal. Unpaid interest of $313,778 was added to the capital lease principal balance during fiscal 2008, which was consistent with the payment amortization schedule. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 21

Buildings Equipment Total Assets Held Under Capital Lease

$50,119,694 7,713
$50,127,407

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.
Abraham Baldwin Agricultural College had two capital leases with related entities in the current fiscal year. On July 1, 2007, Abraham Baldwin Agricultural College entered into a capital lease of $33,247,420 at 4.459 percent with First ABAC, LLC), a discretely presented component unit, whereby the College leases a building for a twenty-three year period that expires August 2029. On August 1, 2007 the College entered into a capital lease of $18,935,452 at 4.641 percent with the Second ABAC, LLC, a discretely presented component unit, whereby the College leases a building for a thirty year period that expires July 2037. The outstanding liability at June 30, 2008 on these capital leases were $32,300,945 and $19,249,229, respectively. The College at its option may terminate the lease and purchase First and Second ABAC, LLC's interest for the unamortized principal balance and the payment of $1.
Abraham Baldwin Agricultural College also has a capital lease for equipment with a third party with an outstanding balance at June 30, 2008 in the amount of $7,111.
OPERATING LEASES
Abraham Baldwin Agricultural College has a non-cancellable operating lease having a remaining term of more than one year that will expire in fiscal 2011. This agreement has no renewal option and is cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. This lease is payable on a monthly basis and is for maintenance equipment.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for non-cancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 22

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 2034 t hrough 2038 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$3,387,821 3,406,456 3,382,536 3,399,418 3,421,222
17,416,679 18,022,794 18,571,308
9,385,441 6,882,041 87,275,716 35,718,431 $51,557,285

$4,296 4,296 1,432
$10,024

Abraham Baldwin Agricultural College's FY2008 expense for rental of equipment under operating leases was $3,014.

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Abraham Baldwin Agricultural College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Abraham Baldwin Agricultural College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Abraham Baldwin Agricultural College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$825,382 $748,785 $731,016

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 23

Employees' Retirement System of Georgia
Plan Description Abraham Baldwin Agricultural College participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age. Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The College's payroll for the year ended June 30, 2008, for employees covered by ERS was $118,513. The College's total payroll for all employees was $13,185,150.
For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the College pays the remainder on behalf of the employee.
Abraham Baldwin Agricultural College Annual Financial Report FY 2008 24

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the College amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$12,337 $4,721 $8,027

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Abraham Baldwin Agricultural College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 25

Abraham Baldwin Agricultural College and the covered employees made the required contributions of $241,163 (8.13% or 8.15%) and $144,134 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Abraham Baldwin Agricultural 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $30,356 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Abraham Baldwin Agricultural College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System
Abraham Baldwin Agricultural College Annual Financial Report FY 2008 26

Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Abraham Baldwin Agricultural College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Abraham Baldwin Agricultural College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Abraham Baldwin Agricultural College (an organizational unit of the Board of Regents of the University 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, 2008.
Abraham Baldwin Agricultural College Annual Financial Report FY 2008 27

Note 14. Post-Employment Benefits Other Than Pension Benefits Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 151 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Abraham Baldwin Agricultural College recognized as incurred $695,144 of expenditures, which was net of $272,124 of participant contributions.
Abraham Baldwin Agricultural College Annual Financial Report FY 2008 28

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Dep reciat ion
Total Expenses

Inst ruct ion
$6,227,407 1,317,906 2,046,403
118,322 163,194
11,029 773,615 403,244
$11,061,120

Functional Classification FY2008

Public Service

Academic Support

St udent Services

$4,660 352,575 100,212

$0 1,187,842
357,199

$954 1,407,071
388,137

9,623 34,140
(8) 456,237
1,104

26,039
6,152 808,127 227,113

62,987 30,742
5,303 545,467
8,707

$958,543

$2,612,472

$2,449,368

Inst it ut ional Support
$6,217 1,942,097 1,400,105
149,193 44,013 180 43,043
884,046 573,996
$5,042,890

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operat ions & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Ent erprises

$0

$0

$0

738,421

234,873

750,720 4,333,092
18,990

1,734,698

17,635 255,210 514,115 5,430,799 2,180,221

$5,102,802

$1,734,698

$9,371,274

T ot al Expenses
$6,239,238 6,945,912 4,526,929 149,193 278,619 2,218,164 1,330,354
13,231,383 3,413,375
$38,333,167

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 29

Note 16. Component Units

Abraham Baldwin Agricultural College Foundation, Inc. (Foundation) is a legally separate, taxexempt component unit of Abraham Baldwin Agricultural College (College). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $384,327 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Foundation Office at 2802 Moore Highway - ABAC 13, Tifton, GA 31793.

Investments for Component Units:

Investments are comprised of the following amounts at June 30, 2008:

Cost

Fair Value

Government and Agency Securities Corporate Bonds Equity Securities M utual Funds

$2,058,184 373,354
4,613,670 2,122,807

$2,079,878 364,589
4,530,894 2,151,762

Total Investments

$9,168,015

$9,127,123

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 30

Capital Assets for Component Units:

Abraham Baldwin Agricultural College Foundation, Inc. held the following capital assets as of June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$2,816,569 2,816,569
41,176,195 2,469,278
43,645,473 5,483,974
38,161,499 $40,978,068

Long-term Liabilities for Component Units:

Changes in long-term liabilities for the Foundation for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Notes and Loans Payable Revenue/Mortgage Bonds Payable

$785,075 48,235,847

$474,370

$85,456 827,330

$1,173,989 47,408,517

$141,908 925,000

Total Long Term Liabilities

$49,020,922

$474,370

$912,786

$48,582,506

$1,066,908

Notes and Loans Payable:
On April 20, 2006 the Development Authority of Tift County issued a $1,000,250 note payable in nine equal and consecutive annual installments of $100,000 each and a final installment of unpaid principal and accrued interest on November 1, 2015. The interest rate is a variable rate at 65 percent of the Wall Street Journal Prime Rate (the "Index"). This Note is a general obligation of the Foundation and is partially secured by a Joint Resolution of the Tift County Hospital Authority, Abraham Baldwin Agricultural College Foundation, Inc. and the Tift County Development Authority, later ratified and adopted by the Development Authority of Tift County. The principal balance of the note totaled $654,119 at June 30, 2008.

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 31

The Foundation has a note payable to First Community Bank of Tifton dated October 15, 2007 for $474,370 payable in nine equal and consecutive annual installments of $70,265 each and a final installment of unpaid principal and accrued interest on October 15, 2017. The interest rate is a variable rate at 0% above the Wall Street Journal Prime Rate. Security for the note is real estate. The note balance at June 30, 2008 is $474,370.

The Foundation has a credit line of $75,000 with South Georgia Banking Company which matures on January 9, 2009 and is renewable at maturity. The interest rate is variable based on the Wall Street Journal Prime Rate. Interest is payable at maturity. This credit line has an outstanding balance of $45,500 at June 30, 2008.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018

1 2 3 4 5 6-10

Princip al

Notes and Loans Payable Interest

$141,908 102,401 108,780 115,948 124,815 580,137
$1,173,989

$75,057 67,864 61,485 54,317 45,450 88,729
$392,902

Total
$216,965 170,265 170,265 170,265 170,265 668,866
$1,566,891

Revenue Bonds Payable:
First ABAC, LLC has issued, through the Tift County Development Authority, $31,615,000 in revenue bonds to finance student housing at the College. The bonds carry an interest rate ranging from 1.75% to 4.25%. The bonds are secured by pledges of gross revenues from the housing project and are covered by a financial guaranty insurance policy issued by AMBAC Assurance Corporation. The principal balance of these bonds at June 30, 2008 totals $29,420,000. The bonds were issued at a premium of $1,049,632, which is being amortized over the life of the bonds. The accumulated amortization to date is $200,566.
Second ABAC, LLC has issued, through the Tift County Development Authority, $17,075,000 in revenue bonds to finance student housing at the College. The bonds carry an interest rate ranging from 4.0% to 5.0%. The bonds are secured by pledges of gross revenues from the housing project and are covered by a financial guaranty insurance policy issued by CIFG Assurance North America, Inc. The principal balance of these bonds at June 30, 2008 totals $17,075,000. The bonds were issued at a premium of $67,960, which is being amortized over the life of the bonds. The accumulated amortization to date is $3,509.

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 32

Annual debt service requirements to maturity for Student Housing revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Princip al
$925,000 980,000 990,000
1,040,000 1,110,000 6,530,000 8,865,000 12,035,000 8,425,000 5,595,000 46,495,000
913,517 $47,408,517

Bonds Payable Interest
$2,035,993 2,010,043 1,982,081 1,947,293 1,907,387 8,915,534 7,230,840 4,708,728 2,096,713 727,625
33,562,237
$33,562,237

Total
$2,960,993 2,990,043 2,972,081 2,987,293 3,017,387
15,445,534 16,095,840 16,743,728 10,521,713
6,322,625 80,057,237
913,517 $80,970,754

Abraham Baldwin Agricultural College Annual Financial Report FY 2008 33

ALBANY STATE UNIVERSITY
Financial Report
For the Year Ended June 30, 2008

Albany State University Albany, Georgia

Dr. Everette Freeman
President

Larry Wakefield
Vice President for Fiscal Affairs

ALBANY STATE UNIVERSITY ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ............................................................................ 1 Statement of Net Assets ...................................................................................................... 7 Statement of Revenues, Expenses and Changes in Net Assets........................................... 8 Statement of Cash Flows .................................................................................................. 10 Note 1. Summary of Significant Accounting Policies .................................................... 11 Note 2. Deposits and Investments................................................................................... 16 Note 3. Accounts Receivable.......................................................................................... 17 Note 4. Inventories.......................................................................................................... 17 Note 5. Notes/Loans Receivable..................................................................................... 17 Note 6. Capital Assets..................................................................................................... 18 Note 7. Deferred Revenue............................................................................................... 19 Note 8. Long-Term Liabilities ........................................................................................ 19 Note 9. Significant Commitments................................................................................... 19 Note 10. Lease Obligations............................................................................................. 19 Note 11. Retirement Plans .............................................................................................. 21 Note 12. Risk Management............................................................................................. 24 Note 13. Contingencies................................................................................................... 25 Note 14. Post-Employment Benefits Other Than Pension Benefits ............................... 25 Note 15. Natural Classifications with Functional Classifications .................................. 27 Note 16. Component Units ............................................................................................. 28

ALBANY STATE UNIVERSITY
Management's Discussion and Analysis

Introduction

Albany State University is one of the 35 institutions of higher education of the University System of Georgia. The University, located in Albany, Georgia, was founded in 1903 and has become known as a leader in teacher education, nursing, criminal justice, business, public administration and the sciences. The University offers baccalaureate and masters degrees in a wide variety of subjects. This wide range of educational opportunities attracts highly qualified faculty and a student body of more than 4,000 students. The institution continues to grow as shown by the comparison numbers that follow.

Students

Students

Faculty (Headcount) (FTE)

FY2008

180

FY2007

167

FY2006

137

4,033 3,927 3,649

3,716 3,594 3,302

Overview of the Financial Statements and Financial Analysis
Albany State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.
Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Albany State University. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.
From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.
Albany State University Annual Financial Report FY 2008 1

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$8,563,239 128,256,555
290,638 137,110,432

June 30, 2007
$8,692,602 131,686,366
276,026 140,654,994

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

2,954,884 34,007,758 36,962,642

4,594,914 33,981,785 38,576,699

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

94,137,393 374,520
5,635,877 $100,147,790

97,366,366 364,493
4,347,436 $102,078,295

The total assets of the institution decreased by ($3,544,562). A review of the Statement of Net Assets will reveal that the decrease was primarily due to a decrease of ($3,429,811) in the category of Capital Assets, net. The decrease is primarily due to a significant increase in depreciation resulting from the new housing recorded last year.
The total liabilities for the year decreased by ($1,614,057). The combination of the decrease in total assets of ($3,544,562) and the decrease in total liabilities of ($1,614,057) yields a decrease in total net assets of ($1,930,505). The decrease in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of ($3,228,973).

Albany State University Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$39,590,834 63,716,142 (24,125,308) 22,144,103
(1,981,205) 50,700
(1,930,505) 102,078,295
0 102,078,295 $100,147,790

$38,532,944 57,633,061 (19,100,117) 21,324,644
2,224,527 0
2,224,527 99,853,768
0 99,853,768 $102,078,295

The Statement of Revenues, Expenses, and Changes in Net Assets reflect a negative year with 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:

Albany State University Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$8,301,559 19,455,599
529,176 11,245,463
59,037 39,590,834
23,105,463 344,675 250,867 (4,326)
23,696,679
50,700 50,700 $63,338,213

June 30, 2007
$7,881,331 19,789,503
189,389 10,614,991
57,730 38,532,944
21,202,714 77,258
295,948 (50,684) 21,525,236
0 0 $60,058,180

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$23,570,589 2,146,136 348,149 4,059,452 3,216,018
10,149,475 4,139,604 4,678,596
11,408,123 63,716,142
1,552,576 $65,268,718

June 30, 2007
$20,545,762 1,059,524 261,837 3,168,161 3,137,226 9,676,405 6,654,679 3,957,546 9,171,921
57,633,061
200,592 $57,833,653

Operating revenues increased by $1,057,890 in fiscal 2008. While revenues decreased in Grants and Contracts, it increased in Sales and Services, Auxiliary and Other categories.

Albany State University Annual Financial Report FY 2008 4

The Auxiliary revenue increase of $630,472 is primarily the result of a successful Food Services operation and one time gain due to sale of inventory as part of contracting the management of the Bookstore.

Nonoperating revenues increased by $2,171,443 for the year primarily due to an increase of $1,902,749 in State Appropriations.

The compensation and employee benefits category increased by $2,369,923 and primarily affected the Instruction, Public Service, Student Services and Institutional Support categories.

Utilities increased by $282,436 during the past year. The increase was primarily associated with the increased natural gas costs that was experienced in the winter of fiscal year 2008 and affected the Plant Operations and Maintenance category.

Statement of Cash Flows

The final statement presented by Albany State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($18,568,368) 23,024,001 (3,189,685) 250,868 1,516,816 3,910,971
$5,427,787

June 30, 2007
($16,514,184) 21,319,938 (2,737,944) 295,948 2,363,758 1,547,213
$3,910,971

Albany State University Annual Financial Report FY 2008 5

Capital Assets For additional information concerning Capital Assets, see Notes 1, 6, 8, and 10 in the Notes to the Financial Statements. Long Term Debt and Liabilities Albany State University had Long-Term Debt and Liabilities of $35,787,794 of which $1,780,036 was reflected as current liability at June 30, 2008. For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements. Component Units In compliance with GASB Statement No. 39, Albany State University has included the financial statements and notes for all required component units for FY2008. For additional information, see Notes 1 and 16 in the Notes to the Financial Statements. Economic Outlook The University is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The University's overall financial position is strong. The University anticipates the current fiscal year to be challenging with state appropriation reductions, however, the University will maintain a close watch and continue to be good stewards over our resources to maintain the University's ability to react to unknown internal and external issues.
Dr. Everette Freeman, President Albany State University
Albany State University Annual Financial Report FY 2008 6

Statement of Net Assets

A LB A NY S TA TE UNIVERS ITY S TATEMEN T O F N ET A S S ETS
June 30, 2008

A S S ETS C u rre n t Asse ts Cash an d Cash E quiv alen t s A cco un t s Receiv able, n et (n o t e 3 ) Receiv ables - Federal Fin an cial Assist an ce Receiv ables - Ot h er P rep aid it em s T o t al Curren t Asset s
Noncurre nt Assets N o n curren t Cash Sh o r t -t erm I n v est m en t s In v est m en t s (in cludin g Real E st at e) No t es Receiv able, n et Cap it al A sset s, n et (n o t e 6 ) O t h er A sset s T o t al No n curren t Asset s TO TA L A S S ETS
LIA B ILITIES C u rre n t Liabilitie s A cco un t s P ay able Salaries P ay able Dep o sit s Deferred Rev en ue (n o t e 7 ) Ot h er L iabilit ies D ep o sit s H eld fo r O t h er O rgan izat io n s L ease P urchase Obligat ion s (curren t po rt io n ) Co m p en sat ed Absen ces (curren t p o rt io n ) Rev en ue/M o rt gage Bo n ds P ay able (curren t ) N o t es an d L o an s P ay able (curren t p o rt io n ) T o t al Curren t L iabilit ies Non cu rre n t Liabilitie s L ease P urch ase O bligat io n s (n o n curren t ) Co m p en sat ed Absen ces (n o n curren t ) Rev en ue/M o rt gage Bon ds P ay able (n o n curren t ) Ot h er L on g-T erm L iabilit ies T o t al No n curren t L iabilit ies TO TA L LIA B ILITIES
N ET A S S ETS In v est ed in Cap it al Asset s, n et o f relat ed debt Rest rict ed fo r E x p en dable Un rest rict ed TO TA L N ET A S S ETS

Alban y S tate Un i ve rs i ty
$ 5 ,4 2 7 ,7 8 7 1 ,8 9 0 ,0 5 6 1 ,2 3 5 ,5 7 8 9 ,8 1 8 8 ,5 6 3 ,2 3 9
2 9 0 ,6 3 8 1 2 8 ,2 5 6 ,5 5 5 1 2 8 ,5 4 7 ,1 9 3 1 3 7 ,1 1 0 ,4 3 2
1 7 1 ,9 2 3 1 7 4 ,1 1 2 2 2 5 ,0 0 0 6 8 3 ,8 2 3
1 1 ,4 1 5 (9 1 ,4 2 5 ) 1 ,1 8 3 ,4 4 8 5 9 6 ,5 8 8
2 ,9 5 4 ,8 8 4 3 2 ,9 3 5 ,7 1 4
1 ,0 7 2 ,0 4 4
3 4 ,0 0 7 ,7 5 8 3 6 ,9 6 2 ,6 4 2
9 4 ,1 3 7 ,3 9 3 3 7 4 ,5 2 0
5 ,6 3 5 ,8 7 7 $ 1 0 0 ,1 4 7 ,7 9 0

C om pon e n t Un it Alban y S tate U n i ve rs i ty
Fo u n da ti o n , In c.
$7,373
21,676 29,049
639,398 5 ,1 5 8 ,0 8 2 2 ,3 3 0 ,6 9 1 3 5 ,4 0 8 ,4 4 3 1 ,1 1 4 ,0 7 5 4 4 ,6 5 0 ,6 8 9 4 4 ,6 7 9 ,7 3 8
856,044
225,000 2 ,2 2 2 ,8 3 5 3 ,3 0 3 ,8 7 9
3 4 ,7 0 6 ,7 4 7 435,025
3 5 ,1 4 1 ,7 7 2 3 8 ,4 4 5 ,6 5 1
(417,409) 2 ,4 5 1 ,1 5 2 4 ,2 0 0 ,3 4 4 $ 6 ,2 3 4 ,0 8 7

Albany State University Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
ALBANY S TATE UNIVERS ITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Grant s and Cont ract s Federal St at e Other Sales and Services Rents and Royalt ies Auxiliary Ent erprises Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion
T ot al Operat ing Expenses Operat ing Income (loss)

Albany State Un i ve rsi ty

C om pone nt Unit
Albany State Un i ve rsi ty
Fou n dati on , In c.

$12,841,354 (4,539,795)
17,265,209 1,774,967 415,423 529,176 23,996
4,556,424 1,362,634 2,751,503
141,482 427,419 1,800,557 205,444
35,041 39,590,834
11,379,366 16,121,895
8,184,651 378,174 422,591
5,554,310 2,633,223 14,129,476 4,912,456 63,716,142 (24,125,308)

$0 381,400
2,171,848
2,553,248
302,470 359,240 978,380 1,640,090 913,158

Albany State University Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
ALBANY S TATE UNIVERS ITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

Albany State Un i ve rsi ty

C om pone nt Unit
Albany State Un i ve rsi ty
Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENS ES ) St at e Appropriat ions Gift s Invest m ent Incom e (endowment s, auxiliary and ot her) Int erest Expense (capit al asset s) Ot her Nonoperat ing Revenues Net Nonoperat ing Revenues Income before ot her revenues, expenses, gains, or loss Capit al Grant s and Gift s Ot h er T ot al Ot her Revenues Increase in Net Asset s
NET AS S ETS Net Asset s-beginning of year, as originally report ed P rior Year Adjust ment s Net Asset s-beginning of year, rest at ed Net Asset s-End of Year

23,105,463 344,675 250,867
(1,552,576) (4,326)
22,144,103 (1,981,205)
50,700 50,700 (1,930,505)
102,078,295 0
102,078,295 $100,147,790

441,132 (1,822,786)
32,292 (1,349,362)
(436,204)
0 (436,204)
7,239,040 (568,749) 6,670,291 $6,234,087

Albany State University Annual Financial Report FY 2008 9

Statement of Cash Flows

A LB A N Y S TA TE UN IV ER S IT Y S TA TEM EN T O F C A S H FLO W S For th e Ye ar En de d J u n e 3 0 , 2 0 0 8

C A S H FL O W S FR O M O P ER A TIN G A C TIV ITIES T uit io n an d Fees Gran t s an d Co n t ract s (E x ch an ge) Sa le s a n d Se r v ic e s P a y m e n t s t o Sup p lie r s P ay m en t s t o E m p lo y ees P a y m e n t s f o r Sc h o la r sh ip s a n d F e llo wsh ip s L o a n s I ssue d t o St ude n t s a n d E m p lo y e e s A ux iliary E n t erp rise Ch arges: Residen ce H alls Bo o k st o re F o o d Se r v ic e s P ark in g/T ran sp o rt at io n H e a lt h Se r v ic e s In t erco llegiat e A t h let ics O t h er O rgan izat io n s O t h er Receip t s (p ay m en t s) N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
C A S H FL O W S FR O M N O N - C A P ITA L FIN A N C IN G A C TIV ITIES St a t e A p p r o p r ia t io n s A gen cy Fun ds T ran sact io n s Gift s an d Gran t s Receiv ed fo r O t h er T h an Cap it al P urp o ses N et Cash Flo ws P ro v ided by N o n -cap it al Fin an cin g A ct iv it ies
C A S H FL O W S FR O M C A P ITA L A N D R EL A TED FIN A N C IN G A C TIV ITIES Cap it al Gran t s an d Gift s Receiv ed P urch ases o f Cap it al A sset s P rin cip al P aid o n Cap it al D ebt an d L eases In t erest P aid o n Cap it al D ebt an d L eases N et Cash used by Cap it al an d Relat ed Fin an cin g A ct iv it ies
C A S H FL O W S FR O M IN V ES TIN G A C TIV ITIES In t erest o n In v est m en t s N et Cash P ro v ided (used) by In v est in g A ct iv it ies N et In crease/D ecrease in Cash Cash an d Cash E quiv alen t s - Begin n in g o f y ear Cash an d Cash E quiv alen t s - E n d o f Y ear

R EC O N C IL IA TIO N O F O P ER A TIN G L O S S TO N ET C A S H P R O V ID ED ( U S ED ) B Y O P ER A TIN G A C TIV ITIES :
O p erat in g In co m e (lo ss) A djust m en t s t o Reco n cile N et In co m e (lo ss) t o N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
D ep reciat io n Ch an ge in A sset s an d L iabilit ies:
Receiv ables, n et In v en t o ries P rep aid It em s N o t es Receiv able, N et A cco un t s P ay able D eferred Rev en ue O t h er L iabilit ies Co m p en sat ed A bsen ces
N et Cash P ro v ided (used) by O p erat in g A ct iv it ies

Albany State University Annual Financial Report FY 2008 10

June 30, 2008
$ 8 ,4 8 0 ,6 0 6 1 8 ,4 5 0 ,9 4 1
5 2 9 ,1 7 4 (2 5 ,7 3 1 ,3 1 6 ) (2 7 ,3 0 2 ,7 6 3 )
(5 ,5 5 4 ,3 1 0 ) (1 4 ,6 1 2 )
4 ,6 3 3 ,3 8 4 1 ,8 8 0 ,2 6 3 2 ,5 3 5 ,3 8 7
1 4 1 ,4 8 2 4 4 4 ,9 3 4 1 ,7 9 8 ,8 5 5 2 0 6 ,9 5 7 9 3 2 ,6 5 0 (1 8 ,5 6 8 ,3 6 8 )
2 3 ,1 0 5 ,4 6 3 (4 2 6 ,1 3 7 ) 3 4 4 ,6 7 5
2 3 ,0 2 4 ,0 0 1
5 0 ,7 0 0 (1 ,4 8 6 ,9 7 1 )
(2 0 0 ,8 3 8 ) (1 ,5 5 2 ,5 7 6 ) (3 ,1 8 9 ,6 8 5 )
2 5 0 ,8 6 8 2 5 0 ,8 6 8 1 ,5 1 6 ,8 1 6 3 ,9 1 0 ,9 7 1 $ 5 ,4 2 7 ,7 8 7
($ 2 4 ,1 2 5 ,3 0 8 )
4 ,9 1 2 ,4 5 6
(1 8 8 ,5 6 4 ) 4 5 7 ,1 5 3
(9 ,8 1 8 ) (1 4 ,6 1 2 ) (1 2 4 ,3 3 7 ) 2 8 5 ,7 4 0 1 3 ,4 6 0 2 2 5 ,4 6 2
($ 1 8 ,5 6 8 ,3 6 8 )

ALBANY STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Albany State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Albany State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Albany State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Albany State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Albany State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Albany State University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, Albany State University is reporting the activity for the Albany State University Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB
Albany State University Annual Financial Report FY 2008 11

Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
Albany State University Annual Financial Report FY 2008 12

To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Albany State University.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Albany State University had accrued liability for compensated absences in the amount of $1,443,169 as of 7-1-2007. For FY2008, $1,053,941 was earned in compensated absences and employees were paid $828,478, for a net increase of $225,463. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $1,668,632.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University'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
Albany State University Annual Financial Report FY 2008 13

in this definition does not include debt of the GSFIC as discussed previously in Note 1 Capital Assets section.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Federal Loans Inst it ut ional Loans T ot al Rest rict ed Expendable

$372,581 1,939
$374,520

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$240,480 4,010,487 1,384,910 $5,635,877

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Albany State University, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Albany State University Annual Financial Report FY 2008 14

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans. Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 University, 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 non-operating revenues in the University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Albany State University Annual Financial Report FY 2008 15

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $5,415,647 and the bank balance was $6,359,578. Of the University's deposits, $6,159,578 were uninsured. Of these uninsured deposits, $6,159,578 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name.
B. Investments Albany State University had no investments as of June 30, 2008.
Albany State University Annual Financial Report FY 2008 16

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$1,030,968 709,483
1,890,056 490,900
4,121,407 995,773
$3,125,634

Note 4. Inventories
Albany State had no inventory balance at June 30, 2008.
Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was $0.

Albany State University Annual Financial Report FY 2008 17

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections Capitalized Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$2,922,366 1,743,593 4,665,959
12,621,336 115,643,413
3,976,745 4,836,134 34,320,000 5,807,389
177,205,017
2,529,364 36,669,686
2,941,170 2,831,246
0 5,211,477
1,667 50,184,610
127,020,407
$131,686,366

Addi ti o n s
$0 277,408 277,408

Re du cti on s
$0 2,021,001 2,021,001

En di n g B al an ce 6/30/2008
$2,922,366 0
2,922,366

2,021,000 340,896 780,589
38,079 50,000 3,230,564

219,365 34,230
253,595

12,621,336 117,664,413
4,317,641 5,397,358 34,320,000 5,811,238
50,000 180,181,986

238,225 2,671,575
66,510 356,561 1,415,700 165,793
(1,908) 4,912,456
(1,681,892)
($1,404,484)

298,029 45,156
(129,178) 1,032
34,230
249,269
4,326
$2,025,327

2,469,560 39,296,105
3,136,858 3,186,775 1,415,700 5,343,040
(241) 54,847,797
125,334,189
$128,256,555

Albany State University Annual Financial Report FY 2008 18

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $93,004 590,819
$683,823

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations

Beginning Balance
July 1, 2007
$34,320,000

Additions $0

Reductions

Ending Balance June 30, 2008

$200,838

$34,119,162

Other Liabilities Compensated Absences Total

1,443,169 1,443,169

1,053,941 1,053,941

828,478 828,478

1,668,632 1,668,632

Total Long Term Obligations

$35,763,169

$1,053,941

$1,029,316

$35,787,794

Current Portion $1,183,448
596,588 596,588 $1,780,036

Note 9. Significant Commitments
The University had no significant unearned, outstanding, construction or renovation contracts executed as of June 30, 2008.
Note 10. Lease Obligations
Albany State University is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under a capital lease for the acquisition of real property.
CAPITAL LEASES
Albany State University has one capital lease that is payable in monthly installments and expires in 2035. Expenditures for fiscal year 2008 were $1,753,414, made up of $1,552,576 interest expense and $200,838 in principal payments. Interest rates range from 3.25 percent to 5.50 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Albany State University Annual Financial Report FY 2008 19

Buildings Total Assets Held Under Capital Lease

$32,904,300 $32,904,300

Albany State University had one capital lease with related entities in the current fiscal year. In August 2006, Albany State University entered into a capital lease of $34,320,000 at 3.25 percent to 5.50 percent with the Albany State University Foundation, whereby the University leases a building for a twenty-nine year period that began August 2006 and expires July 2035. The outstanding principal balance as of June 30, 2008 is $34,119,162.

OPERATING LEASES

Albany State University's non-cancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2012. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis.

Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 2034 t hrough 2038 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$1,875,108 1,881,373 1,887,393 2,088,175 2,147,297
11,738,648 13,528,065 14,181,713 14,440,484
3,184,817 66,953,073 32,833,911 $34,119,162

$7,954 5,632 3,310 2,207
$19,103

Albany State University's FY2008 expense for rental of real property and equipment under operating leases was $7,954.

Albany State University Annual Financial Report FY 2008 20

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Albany State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Albany State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Albany State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$1,564,492 $1,505,814 $1,397,830

Employees' Retirement System of Georgia

Plan Description Albany State University participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Albany State University Annual Financial Report FY 2008 21

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30, 2008, for employees covered by ERS was $0. The University's total payroll for all employees was $27,501,261.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$0 $1,001 $3,002

Albany State University Annual Financial Report FY 2008 22

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Albany State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Albany State University and the covered employees made the required contributions of $557,530 (8.13% or 8.15%) and $345,566 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Albany State University 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.
Albany State University Annual Financial Report FY 2008 23

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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $40,518 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Albany State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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'
Albany State University Annual Financial Report FY 2008 24

indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Albany State University, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Albany State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Albany State University (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
Albany State University Annual Financial Report FY 2008 25

The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial Statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 174 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Albany State University recognized as incurred $745,517 of expenditures, which was net of $256,324 of participant contributions.
Albany State University Annual Financial Report FY 2008 26

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Instruction
$11,130,007 3,794,705 3,664,927
134,588 409,226 118,402 908,630 3,410,104
$23,570,589

Research
$112,235 349,134 87,617
23,067
3,074 1,537,953
33,056
$2,146,136

Functional Classification FY2008

Public Service

Academic Support

$3,500 157,226 14,476

$21,850 1,763,135
489,197

3,031

47,491

3,215 166,701

48,852 1,509,976
178,951

$348,149

$4,059,452

Student Services
$65,000 1,736,966
527,624
53,157 60,277 54,520 715,657 2,817
$3,216,018

Institutional Support
$46,774 5,218,571 2,506,413
95,373 104,433
2,200 148,338 1,942,120 85,253
$10,149,475

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

$0 1,883,811
590,266 (708,922)
4,010
1,761,599 536,020 72,820

$0
282,801 4,395,795

$0 1,218,347
304,131 708,922 52,814 686,812 495,223 6,812,419 1,129,455

$4,139,604

$4,678,596

$11,408,123

Total Expenses
$11,379,366 16,121,895 8,184,651
378,174 422,591 5,554,310 2,633,223 14,129,476 4,912,456
$63,716,142

Albany State University Annual Financial Report FY 2008 27

Note 16. Component Units
Albany State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Albany State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The seven-member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation follows GASB Statement 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments, GASB Statement 35, Basic Financial Statements-Management's Discussion and Analysis-for Public Colleges and Universities, GASB Statement No. 37, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments: Omnibus-an amendment of GASB Statements No.21 and No.34, and GASB No.38, Certain Financial Statement Note Disclosures. The foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $0 to the University. Complete financial statements for the Foundation can be obtained from the Administrative Office at 300 College Drive, Albany, GA 30000.
Prior Period Adjustment:
A prior period adjustment in the amount of ($568,749) was made to restate the prior year's Agency Funds payable. The adjustment had the effect of reducing Beginning Net Assets for the fiscal year that ended June 30, 2008.
Deposits and Investments for Component Units:
Deposits:
As of June 30, 2008, the carrying amount of the Foundation's bank deposits was $1,938,159 and the respective bank balances totaled $2,075,933. Of the total bank balance, $211,346 was insured through the Federal Depository Insurance Corporation (FDIC). The remaining $1,864,587 was collateralized with pooled securities held by the financial institutions' trust departments, but not in the Foundation's name.
Investments:
Investments as of June 30, 2008 are summarized as follows:
Albany State University Annual Financial Report FY 2008 28

Investment type Certificates of Deposit General Obligation Bonds M oney M arket M utual Fund Repurchase Agreements

Fair Value

Investment Maturity

Less Than

1 Year

1-5 Years

$1,030,577 781,177 518,937
5,158,082 $7,488,773

781,177 518,937 5,158,082 $6,458,196

$1,030,577 $1,030,577

Capital Assets for Component Units:

Albany State University Foundation Inc. had the following Capital Asset activity for the year ended June 30, 2008:

Capital Assets, Being Depreciated: Facilities and Other Improvements Equipment Total Assets Being Depreciated

Beginning Balances 7/1/2007
$37,078,604 24,340
37,102,944

Additions
$41,344 63,474
104,818

Reductions $0 0

Ending Balance 6/30/2008
$37,119,948 87,814
37,207,762

Less: Accumulated Depreciation Facilities and Other improvements Equipment Total Accumulated Depreciation

812,196 8,743
820,939

968,535 9,845
978,380

1,780,731

18,588

0

1,799,319

Total Capital Assets, Being Depreciated, Net Capital Assets, net

36,282,005 $36,282,005

(873,562) ($873,562)

0

35,408,443

$0

$35,408,443

Long-term Liabilities for Component Units:

The Foundation had the following activity in long-term liabilities for the year ended June 30, 2008:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within One Year

Notes and Loans Payable Revenue/Mortgage Bonds Payable
Total Long Term Liabilities

$2,310,077 34,955,276
$37,265,353

$0

$87,242

$2,222,835

$2,222,835

0

23,529

34,931,747

225,000

$0

$110,771

$37,154,582

$2,447,835

Albany State University Annual Financial Report FY 2008 29

Notes and Loans Payable On May 2004, Albany State University Foundation, Inc. entered into a loan agreement with SunTrust Bank for the purpose of completing the Albany Municipal Coliseum construction project. The multi-advance loan is in the amount of $2,181,889. The accrued interest is payable on the 1st day of each August beginning August 1, 2005, at a rate equal to the LIBOR Index plus 2.5% per annum. The outstanding loan balance as of June 30, 2008 is $2,181,889.

On October 29, 2003, Albany State University Foundation, Inc. entered into a loan agreement with SunTrust Bank for the purpose of purchasing a scoreboard for the Albany Municipal Coliseum. The original term loan was for $332,092, with interest payments at a rate of 4.130% per annum with the final payment due on November 1, 2008. The outstanding loan balance as of June 30, 2008 is $40,946.

Annual debt service requirements to maturity for Albany Municipal Coliseum installment loans with SunTrust Bank are as follows:

Year ending June 30:

2009

1

Principal

Notes and Loans Payable Interest

$2,222,835

$162,097

Total $2,384,932

Revenue Bonds Payable On July 1, 2005, the Foundation issued $33,110,000 Albany-Dougherty Inner City Authority Revenue Bonds, Series 2005A and $1,210,000 Albany-Dougherty City Authority Taxable Revenue Bonds, Series 2005B. The Bonds were issued for the purpose of financing and refinancing in whole or in part, the cost of the acquisition, construction and equipping of certain land, buildings and personal property, known as Albany State University Student Housing Project. These bonds are carried as liabilities of Albany State Real Estate Foundation, LLC, a single member limited liability company.

Annual debt service requirements to maturity for Student Housing revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 through 2017 2018 through 2022 2023 through 2027 2028 through 2032 2033 through 2034
Bond Premium

1 2 3 4 5-9 10-14 15-19 20-24 27-29

Princip al
$225,000 230,000 240,000 250,000
3,025,000 5,335,000 7,815,000 9,975,000 7,225,000 34,320,000
611,747 $34,931,747

Bonds Payable Interest
$1,576,737 1,567,175 1,557,400 1,516,898 7,456,523 6,692,925 5,277,905 3,190,144 820,931
29,656,638
$29,656,638

Total
$1,801,737 1,797,175 1,797,400 1,766,898
10,481,523 12,027,925 13,092,905 13,165,144
8,045,931 63,976,638
611,747 $64,588,385

Albany State University Annual Financial Report FY 2008 30

ARMSTRONG ATLANTIC STATE UNIVERSITY
Financial Report
For the Year Ended June 30, 2008

Armstrong Atlantic State University Atlanta, Georgia

Thomas Z. Jones
President

William N. Gauthier
Interim Vice President for Business and Finance

ARMSTRONG ATLANTIC STATE UNIVERSITY ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 12 Note 2. Deposits and Investments............................................................................................... 18 Note 3. Accounts Receivable...................................................................................................... 20 Note 4. Inventories...................................................................................................................... 20 Note 5. Notes/Loans Receivable................................................................................................. 20 Note 6. Capital Assets................................................................................................................. 21 Note 7. Deferred Revenue........................................................................................................... 22 Note 8. Long-Term Liabilities .................................................................................................... 22 Note 9. Significant Commitments............................................................................................... 22 Note 10. Lease Obligations......................................................................................................... 22 Note 11. Retirement Plans .......................................................................................................... 25 Note 12. Risk Management......................................................................................................... 28 Note 13. Contingencies............................................................................................................... 29 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 29 Note 15. Natural Classifications with Functional Classifications .............................................. 31 Note 16. Component Units ......................................................................................................... 32

ARMSTRONG ATLANTIC STATE UNIVERSITY
Management's Discussion and Analysis

Introduction
Armstrong Atlantic State University is located in Savannah, within twenty-five miles of some of Georgia's most beautiful coastlines. Since its founding over 70 years ago by the city of Savannah, Armstrong Atlantic has become a vibrant 250-acre, urban campus of 6,800 students serving a wider community of nearly 340,000 residents. The university offers programs at two other centers in the coastal Georgia area. It is the lead institution at the Liberty Center in Hinesville, an education consortium with Waycross College, and is a cooperative partner at the Brunswick Center, located at Coastal Georgia Community College. Founded in 1935 as Armstrong Junior College, the institution became a two-year unit of the University System of Georgia in 1959 and a four-year college in 1966. It became Armstrong Atlantic State University in 1996. The University has become known for its state-of-the-art technology-related, health professions, and education programs. The institution continues to grow as shown by the comparison numbers that follow. The student body is 30-70% male-female and a mix of 20-80% non-traditional/traditional students. The average student age is 26.

Students Students Faculty (Headcount) (FTE)

FY2008

296

FY2007

290

FY2006

276

6,848 6,728 6,710

5,767 5,565 5,502

Overview of the Financial Statements and Financial Analysis
Armstrong Atlantic State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2007 and FY 2008.
Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Armstrong Atlantic State University. The Statement of Net Assets presents

Armstrong Atlantic State University Annual Financial Report FY 2008 1

end-of-year data concerning Assets (current and non-current), Liabilities (current and noncurrent), and Net Assets (Assets minus Liabilities). The difference between current and noncurrent assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$11,972,314 103,572,168
2,599,729 118,144,211

June 30, 2007
$13,867,474 56,489,121 2,814,887 73,171,482

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

11,272,935 47,567,364 58,840,299

12,085,868 1,821,488
13,907,356

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

55,730,602 2,425,533 191,876 955,901
$59,303,912

55,672,639 2,518,930 217,417 855,140
$59,264,126

The total assets of the institution increased by $44,972,729. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $47,083,047 in the category of Capital Assets, net. This was due mainly to the capitalization of capital leases.
The total liabilities for the year increased by $44,932,943. The combination of the increase in total assets of $44,972,729 and the increase in total liabilities of $44,932,943 yields an increase in total net assets of $39,786. The increase in total net assets of $39,786 affected all net asset categories by minor amounts.
Armstrong Atlantic State University Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$41,622,255 75,241,825 (33,619,570) 32,787,515
(832,055) 3,027,575 2,195,520 59,264,126 (2,155,734) 57,108,392 $59,303,912

$39,808,243 74,764,827 (34,956,584) 32,115,346
(2,841,238) 1,347,810 (1,493,428) 60,757,554
0 60,757,554 $59,264,126

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Armstrong Atlantic State University Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$18,627,850 10,860,387 1,827,416 9,981,271 325,331 41,622,255
34,533,440 137,512 (86,999) 370,729
34,954,682
2,813,812 213,763
3,027,575 $79,604,512

June 30, 2007
$17,445,772 10,034,993 1,993,208 9,725,332 608,938 39,808,243
31,424,581 0
713,967 (3,817)
32,134,731
1,341,734 6,076
1,347,810 $73,290,784

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$31,241,179 709,539
7,748,575 4,505,564 8,646,964 7,724,776 5,141,804 9,523,424
0 75,241,825
2,167,167 $77,408,992

June 30, 2007
$30,885,962 868,338
7,184,189 4,337,574 7,808,363 6,713,746 5,136,087 10,147,273 1,683,295 74,764,827
19,385 $74,784,212

Operating revenues increased by $1,814,012 in fiscal 2008. Tuition & fees included a 7% increase, while grants and contracts increased 8%.

Armstrong Atlantic State University Annual Financial Report FY 2008 4

Nonoperating revenues increased by $2,819,951 for the year primarily due to an increase of $3,108,859 in State Appropriations.

Statement of Cash Flows

The final statement presented by Armstrong Atlantic State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($31,454,920) 35,542,483 (5,843,024) 428,159 (1,327,302) 3,569,951
$2,242,649

June 30, 2007
($33,441,204) 31,344,954 (1,089,138) 431,646 (2,753,742) 6,323,693
$3,569,951

Capital Assets
Capital assets increased $47,083,047 due primarily to the capitalization of capital leases. For additional information concerning Capital Assets, see notes 1, 6, 8, and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
Armstrong Atlantic State University had Long-Term Debt and Liabilities of $49,934,756 of which $2,448,524 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.

Armstrong Atlantic State University Annual Financial Report FY 2008 5

Component Units In compliance with GASB Statement No. 39, Armstrong Atlantic State University has included the financial statements and notes for all required component units for FY2008. The Armstrong Atlantic State University Foundation, Inc. had investments of $6.6 million as of December 31, 2007. The Armstrong Atlantic State University Educational Properties Foundation, Inc. had long-term debt of $42.5 million in the form of two bond issues and a note payable. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units. Economic Outlook The University is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The University's overall financial position is strong. The University anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the University's ability to react to unknown internal and external issues. Thomas Z. Jones, President Armstrong Atlantic State University
Armstrong Atlantic State University Annual Financial Report FY 2008 6

Statement of Net Assets

ARMS TRONG ATLANTIC S TATE UNIVERS ITY S TATEMENT OF NET AS S ETS June 30, 2008

A S S ETS C urrent Assets Cash an d Cash Equivalent s Sh o rt -t erm In v est m en t s Acco unt s Receiv able, net (no t e 3) Receiv ables - Federal Fin ancial Assist an ce Receiv ables - Ot her Con t ribut io ns Receivable Invent ories (note 4) P repaid it em s T o t al Curren t Asset s

Arm strong Atlantic State
Un i ve rs i ty

C om pone nt Unit
Arm strong Atlantic State
Un i ve rs i ty Fo u n da ti o n , In c.

$2,107,883 250,000
1,681,454 6,984,489
942,657 5,831
11,972,314

$1,130,892
17,288 57,399 1,205,579

Noncurrent Assets No ncurrent Cash Inv est m ent s (including Real Est at e) No t es Receivable, n et Capit al Asset s, n et (no t e 6 ) Ot her Asset s T o t al No ncurrent Asset s TO TAL AS S ETS
LIAB ILITIES C u rre n t Liabilitie s Acco unt s P ayable Salaries P ay able Deposit s Deferred Reven ue (no t e 7) Dep osit s Held fo r Ot her Organ izat ion s Lease P urchase Obligat ion s (current p ort ion ) Com p ensat ed Absences (curren t po rt io n) Revenue/M o rt gage Bon ds P ay able (current ) No t es an d Lo ans P ayable (curren t port ion ) T o t al Curren t Liabilit ies Non cu rre n t Liabilitie s Lease P urchase Obligat ion s (n on curren t ) Deferred Reven ue (no ncurrent ) Com p ensat ed Absences (no ncurrent ) Revenue/M o rt gage Bon ds P ay able (n on curren t ) No t es an d Lo ans P ayable (no ncurrent ) T o t al No ncurrent Liabilit ies TO TAL LIAB ILITIES
NET AS S ETS Inv est ed in Cap it al Asset s, net of relat ed debt Rest rict ed for Non exp endable Exp endable Un rest rict ed TO TAL NET AS S ETS

134,766 2,453,309
11,654 103,572,168
106,171,897 118,144,211
671,314 264,795
4,825,410 3,062,892 1,438,960 1,009,564
11,272,935
46,771,475 81,132
714,757
47,567,364 58,840,299
55,730,602
2,425,533 191,876 955,901
$59,303,912

6,581,648 6,581,648 7,787,227
15,000
15,000
0 15,000
4,449,936 3,086,659
235,632 $7,772,227

C om pon e n t Un it Arm strong Atlantic S ta te U n i ve rs i ty EP
Fo u n da ti o n , In c.
$617,310
37,077
3,032 657,419
5,210,909
33,768,769 1,433,588
40,413,266 41,070,685
944,935 15,278
328,906
970,000 26,778
2,285,897
40,894,177 564,364
41,458,541 43,744,438
(2,118,040)
(555,713) ($2,673,753)

Armstrong Atlantic State University Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
ARMSTRONGATLANTIC STATEUNIVERSITY STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

REVENUES
Operating Revenues Student Tuition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues Total Operating Revenues
EXPENSES Operating Expenses
Salaries: Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Other Operating Expense Payments to or on behalf of Armstrong Atlantic State University
Total Operating Expenses Operating Income (loss)

Armstrong Atlantic State
University

Component Unit
Armstrong Atlantic State
University Foundation, Inc.

Component Unit
Armstrong Atlantic State University EP
Foundation, Inc.

$26,263,875 (7,636,025)
9,145,293 273,114
1,441,980 1,827,416
905
4,127,746 2,980,128
344,295 174,537 182,284 2,107,943 64,338 324,426 41,622,255
17,680,456 17,395,861 9,442,181
138,961 640,962 6,374,349 4,137,330 14,923,493 4,508,232
75,241,825 (33,619,570)

1,401,062 437,270
1,838,332 351,049
688,261 501,087 1,540,397 297,935

$0
4,519,532
23 4,519,555
123,047 138
920,733 1,732,892
153,271 2,930,081 1,589,474

Armstrong Atlantic State University Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
ARMSTRONGATLANTIC STATEUNIVERSITY STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Ot her Additions to permanent endowments Total Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

Armstrong Atlantic State
University

Component Unit
Armstrong Atlantic State
University Foundation, Inc.

Component Unit
Armstrong Atlantic State University EP
Foundation, Inc.

34,533,440
137,512 (86,999) (2,167,167) 370,729 32,787,515 (832,055)
2,813,812 213,763
3,027,575 2,195,520
59,264,126 (2,155,734) 57,108,392 $59,303,912

107,337
107,337 405,272
410,189 410,189 815,461
6,956,766 0
6,956,766 $7,772,227

231,533 (1,872,158)
(1,640,625) (51,151)
0 (51,151)
(2,622,602) 0
(2,622,602) ($2,673,753)

Armstrong Atlantic State University Annual Financial Report FY 2008 9

Statement of Cash Flows
ARMS TRONG ATLANTIC S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes P rincipal P aid on Inst allment Debt Int erest P aid on Inst allment Debt Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES P roceeds from Sales and Mat urit ies of Invest m ent s Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$18,902,919 12,924,213 1,827,416 (29,499,594) (34,835,529) (6,374,349)
4,254,963 2,995,300
628,969 177,373 216,919 2,062,544 145,470 (4,881,534) (31,454,920)
34,533,440 629,385 507,512 (109,637) (18,217)
35,542,483
3,027,575 (5,411,829) (1,309,820) (2,148,950) (5,843,024)
275,000 153,159 428,159 (1,327,302) 3,569,951 $2,242,649

Armstrong Atlantic State University Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
ARMS TRONG ATLANTIC S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed asset s acquired by incurring capit al lease obligat ions Change in fair value of invest ment s recognized as a component of int erest income

June 30, 2008
($33,619,570)
4,508,232 426,237 (152,548) (5,831) 21,326
(2,615,903) 10,048 (26,911)
($31,454,920)
$602,782 ($240,158)

Armstrong Atlantic State University Annual Financial Report FY 2008 11

ARMSTRONG ATLANTIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Armstrong Atlantic State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Armstrong Atlantic State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Armstrong Atlantic State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Armstrong Atlantic State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Armstrong Atlantic State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Armstrong Atlantic State University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, Armstrong Atlantic State University is reporting the activity for the Armstrong Atlantic State University Foundation, Inc. and the Armstrong Atlantic State University Educational Properties Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and
Armstrong Atlantic State University Annual Financial Report FY 2008 12

Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the Board of Regents Short-Term Investment Pool.
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.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund and the Board of Regents Diversified Fund are included under Investments.
Armstrong Atlantic State University Annual Financial Report FY 2008 13

Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
Armstrong Atlantic State University Annual Financial Report FY 2008 14

Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Armstrong Atlantic State University had accrued liability for compensated absences in the amount of $1,751,231 as of 7-1-2007. For FY2008, $1,324,964 was earned in compensated absences and employees were paid $1,351,874, for a net decrease of ($26,910). The ending balance as of 6-30-2008 in accrued liability for compensated absences was $1,724,321.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Armstrong Atlantic State University Annual Financial Report FY 2008 15

Expendable Restricted Net Assets include the following:

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans T ot al Rest rict ed Expendable

June 30, 2008
$146,659 10,702 34,515
$191,876

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$1,743,573 383,288 76,054
(1,247,014) $955,901

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Armstrong Atlantic State University, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.

Armstrong Atlantic State University Annual Financial Report FY 2008 16

Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 University, 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 University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Restatement of Prior Year Balances Armstrong Atlantic State University has a restatement of prior year net assets decreasing beginning net assets by ($2,155,734).
During fiscal 2008, the University's leases were reviewed for capital lease treatment. Five leases that had been classified as operating leases in prior years were determined to be capital leases. The correction of the accounting for these five leases resulted in a decrease to Beginning Net Assets of ($1,861,397) and represents the excess of Depreciation and Interest Expense over prior years' reported Rent Expense for the respective leases.
During fiscal 2008, Accumulated Depreciation for Library Collections was adjusted resulting in an additional $291,440 in Depreciation Expense related to prior years and a decrease to Beginning Net Assets of ($291,440).
During fiscal 2008, the accounting for a fiscal 2001 Food Services contract was corrected to reflect capital improvements that were funded by the food services vendor and the amortization of those improvements over the life of the related contract. The effect on Beginning Net Assets due to this correction was a decrease of ($8,197).
During fiscal 2008, $5,300 in outstanding checks related to prior years were canceled, resulting in an increase to Beginning Net Assets.
The July 1, 2007 Beginning Balance for Capital Leases in Note 6 - Capital Assets was restated to include an increase of $45,706,668 for the capital asset effect of the prior year adjustments detailed above. The July 1, 2007 Beginning Balance for Lease Obligations in Note 8 - LongTerm Liabilities was restated to reflect an addition of $47,622,486 in capital lease debt resulting from the change in lease treatment described above.
Armstrong Atlantic State University Annual Financial Report FY 2008 17

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $2,492,109 and the bank balance was $4,443,107. Of the University's deposits, $4,193,107 were uninsured. Of these uninsured deposits, $4,193,107 were collateralized with securities held by the financial institution's trust department or agent in the University's name.
Armstrong Atlantic State University Annual Financial Report FY 2008 18

B. Investments At June 30, 2008, the carrying value of the University's investments were $2,453,309, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows:

Investment Pools Board of Regents Short-T erm Fund Legal Fund Diversified Fund

$25,159 256,356 2,171,794

T otal Investment Pools

$2,453,309

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.

Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk.

The Weighted Average Maturity of the Short Term Fund is 1.99 years. Of the University's total investment of $25,159 in the Short Term Fund, $25,058 is invested in debt securities.

The Weighted Average Maturity of the Legal Fund is 3.84 years. Of the University's total investment of $256,356 in the Legal Fund, $254,049 is invested in debt securities.

The Weighted Average Maturity of the Diversified Fund is 7.84 years. Of the University's total investment of $2,171,794 in the Diversified Fund, $675,428 is invested in debt securities.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk.

Armstrong Atlantic State University Annual Financial Report FY 2008 19

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$338,481 700,239
1,681,454 6,458,662 9,178,836
512,893
$8,665,943

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

Bookst ore Other
T otal

June 30, 2008
$874,512 68,145
$942,657

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was approximately $0.

Armstrong Atlantic State University Annual Financial Report FY 2008 20

Note 6. Capital Assets

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

Capit al Asset s, Not Being Depreciat ed: Land Const ruct ion W ork-in-P rogress
T ot al Capit al Asset s Not Being Depreciat ed

(Re state d) Beginning B al an ce s
7/1/2007
$4,678,254 522,800
5,201,054

Addition s
$0 3,864,183 3,864,183

Re ductions
$0 1,661,931 1,661,931

Capit al Asset s, Being Depreciat ed: Infrast ruct ure Building and Building Improvement s Facilities and Other Improvements E quip m en t Capit al Leases Library Collect ions Capit alized Collect ions T ot al Asset s Being Depreciat ed

2,597,715 61,495,493
3,246,634 4,509,939 50,032,473 9,552,366
16,575 131,451,195

1,938,013
609,846 602,782 661,718
3,812,359

400,000 66,899 66,480
533,379

Less: Accumulat ed Depreciat ion Infrast ruct ure Buildin gs Facilities and Other improvements E quip m en t Capit al Leases Library Collect ions Capit alized Collect ions T ot al Accumulat ed Depreciat ion

663,077 18,471,576
1,306,044 3,655,018 3,213,833 7,143,622
3,290 34,456,460

86,418 1,781,151
90,572 263,442 1,775,384 510,851
414 4,508,232

270,000 66,899 66,480
403,379

T ot al Capit al Asset s, Being Depreciat ed, Net

96,994,735

(695,873)

130,000

Capit al Asset s, net

$102,195,789

$3,168,310

$1,791,931

En di n g B al an ce 6/30/2008
$4,678,254 2,725,052 7,403,306
2,597,715 63,033,506
3,246,634 5,052,886 50,635,255 10,147,604
16,575 134,730,175
749,495 19,982,727
1,396,616 3,851,561 4,989,217 7,587,993
3,704 38,561,313
96,168,862
$103,572,168

Armstrong Atlantic State University Annual Financial Report FY 2008 21

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $2,719,302 2,106,108
$4,825,410

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations
Other Liabilities Compensated Absences Total
Total Long Term Obligations

(Restated) Beginning
Balance July 1, 2007
$48,917,473

Additions $602,782

Reductions

Ending Balance June 30, 2008

$1,309,820

$48,210,435

1,751,231 1,751,231
$50,668,704

1,324,964 1,324,964
$1,927,746

1,351,874 1,351,874
$2,661,694

1,724,321 1,724,321
$49,934,756

Note 9. Significant Commitments

Current Portion $1,438,960
1,009,564 1,009,564 $2,448,524

The University had no significant unearned, outstanding, construction or renovation contracts executed as of June 30, 2008 that are not reflected in the accompanying basic financial statements.
Note 10. Lease Obligations
Armstrong Atlantic State University is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property and equipment.
CAPITAL LEASES
Capital leases are generally payable in installments, ranging from monthly to annually and have terms expiring in various years between 2009 and 2034. Expenditures for fiscal year 2008 were $3,476,987 of which $2,167,167 represented interest. Total principal paid on capital leases was

Armstrong Atlantic State University Annual Financial Report FY 2008 22

$1,309,820 for fiscal year 2008. Interest rates range from 3.75% to 7.2%. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Equipment Infrastructure Buildings
Total Assets Held Under Capital Lease

$784,252 579,340
44,282,446 $45,646,038

In fiscal 2005, Armstrong Atlantic State University entered into a capital lease with AASU Educational Properties Foundation, Inc., a related party, in the amount of $17,066,427 for Armstrong Center. The lease term expires in fiscal 2034. The outstanding principal balance at June 30, 2008 was $16,807,782.

In fiscal 2006, Armstrong Atlantic State University entered into a capital lease with AASU Educational Properties Foundation, Inc., a related party, in the amount of $20,842,373 for Compass Pointe Apartments. The lease term expires in fiscal 2030. The outstanding principal balance at June 30, 2008 was $19,409,572.

Also in fiscal 2006, Armstrong Atlantic State University entered into a capital lease with AASU Educational Properties Foundation, Inc., a related party, in the amount of $5,511,581 for the University Crossing Apartments. The lease term expires in fiscal 2030. The outstanding principal balance at June 30, 2008 was $5,132,692.

In fiscal 2007, Armstrong Atlantic State University entered into a capital lease with AASU Educational Properties Foundation, Inc., a related party, in the amount of $4,955,220 for a Student Recreation Center. The lease term expires in fiscal 2032. The outstanding principal balance at June 30, 2008 was $4,743,995.

Also in fiscal 2007, Armstrong Atlantic State University entered into a capital lease with AASU Educational Properties Foundation, Inc., a related party, in the amount of $746,125 for a Women's Fieldhouse. The lease term expires in fiscal 2021. The outstanding principal balance at June 30, 2008 was $714,693.

Armstrong Atlantic State University has various capital leases with third party vendors for equipment with an outstanding balance at June 30, 2008 in the amount of $1,401,701.

OPERATING LEASES

For fiscal year 2008, Armstrong Atlantic State University had four operating leases. One lease is with Michael Porton, Inc. to rent offices and classroom space in Hinesville, Georgia for the Liberty Center. The monthly rental amount is $8,750 and the rental term may be extended on an annual basis until June 30, 2016.

A second lease is with SSF Savannah Properties, LLC to rent space for a dental clinic operated by our Department of Dental Hygiene. The monthly rent is $25,580.

Armstrong Atlantic State University Annual Financial Report FY 2008 23

A third lease is with Savannah Teachers Properties, Inc. to rent classroom space in the Savannah Mall. Monthly base rent in fiscal 2008 was $24,307. The rental term may be extended on an annual basis until May 30, 2026.
The fourth lease is with University Terrace, LLC to rent the University Terrace Apartments at a monthly fixed base rental of $24,000. The rental term may be extended on an annual basis until June 30, 2022.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 2034 t hrough 2038 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$3,571,880 3,585,700 3,606,070 3,390,461 3,252,110
16,152,613 16,401,965 16,451,779 10,576,783
572,069 77,561,430 29,350,995 $48,210,435

$1,011,700 1,029,101 1,050,198 1,094,650 1,114,123 5,159,372 3,291,930 528,331
$14,279,405

Armstrong Atlantic State University's FY2008 expense for rental of real property and equipment under operating leases was $1,122,253.

Armstrong Atlantic State University Annual Financial Report FY 2008 24

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Armstrong Atlantic State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Armstrong Atlantic State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Armstrong Atlantic State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$1,523,872 $1,472,188 $1,376,453

Employees' Retirement System of Georgia

Plan Description Armstrong Atlantic State University participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Armstrong Atlantic State University Annual Financial Report FY 2008 25

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30, 2008, for employees covered by ERS was $89,267. The University's total payroll for all employees was $35,076,317.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$9,348 $8,997 $8,787

Armstrong Atlantic State University Annual Financial Report FY 2008 26

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Armstrong Atlantic State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Armstrong Atlantic State University and the covered employees made the required contributions of $1,126,589 (8.13% or 8.15%) and $692,059 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Armstrong Atlantic State University 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.
Armstrong Atlantic State University Annual Financial Report FY 2008 27

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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $124,765 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Armstrong Atlantic State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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'
Armstrong Atlantic State University Annual Financial Report FY 2008 28

indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Armstrong Atlantic State University, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Armstrong Atlantic State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Armstrong Atlantic State University (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the
Armstrong Atlantic State University Annual Financial Report FY 2008 29

publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 177 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Armstrong Atlantic State University recognized as incurred $727,396 of expenditures, which was net of $311,431 of participant contributions.
Armstrong Atlantic State University Annual Financial Report FY 2008 30

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses
Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Inst ruct ion
$17,504,920 3,746,976 4,934,858
312,791 261,037
86,588 3,732,702
661,307
$31,241,179

Functional Classification FY2008

Public Service

Academic Support

St udent Services

$12,500 417,502
88,272
13,722
1,911 172,083
3,549

$150,212 4,089,215 1,071,459
(53,643) 118,301
77,865 1,721,405
573,761

$4,125 2,475,951
643,035 (11,221) 56,088 29,558 30,208 1,071,947 205,873

$709,539

$7,748,575

$4,505,564

Inst it ut ional Support
$0 4,588,530 2,139,072
203,825 136,878
70,467 1,375,846
132,346
$8,646,964

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

$0 800,447 272,465

$0

$8,699

1,277,240

293,020

2,011
3,063,656 1,808,837 1,777,360

5,141,804

1,171 941,950 806,635 5,040,673 1,154,036

$7,724,776

$5,141,804

$9,523,424

T ot al Expenses
$17,680,456 17,395,861 9,442,181 138,961 640,962 6,374,349 4,137,330 14,923,493 4,508,232
$75,241,825

Armstrong Atlantic State University Annual Financial Report FY 2008 31

Note 16. Component Units

Armstrong Atlantic State University Foundation, Inc. Armstrong Atlantic State University Foundation, Inc. (Foundation) is a legally separate, taxexempt component unit of Armstrong Atlantic State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The seven-member board of the Foundation is selfperpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 through December 31.

During the year ended December 31, 2007, the Foundation distributed $501,087 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at Armstrong Atlantic State University, 11935 Abercorn Street, Savannah, GA 31419.

Investments for Component Units:

Armstrong Atlantic State University Foundation, Inc. holds endowment investments in the amount of $6.6 million. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Armstrong Atlantic State University Foundation holds no investments in real property.

Investments are comprised of the following amounts at December 31, 2007:

Money Market Accounts Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds
Total Investments

Cost
$922,724 $1,525,733
383,971 2,344,517
14,922
$5,191,867

Fair Value
$922,724 $1,561,235
385,261 3,698,581
13,847
$6,581,648

Armstrong Atlantic State University Annual Financial Report FY 2008 32

Armstrong Atlantic State University Educational Properties Foundation, Inc. Armstrong Atlantic State University Educational Properties Foundation, Inc. (Educational Properties) is a legally separate, tax-exempt component unit of Armstrong Atlantic State University (University). Educational Properties purchases buildings and leases them to the University for housing, recreation, etc. The five-member board of Educational Properties is selfperpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from Educational Properties, the majority of resources or income thereon that Educational Properties holds and invests is restricted to the real estate activities of the University by the donors. Because these restricted resources held by Educational Properties can only be used by, or for the benefit of the University, Educational Properties is considered a component unit of the University and is discretely presented in the University's financial statements.

Educational Properties is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. Educational Properties' fiscal year is January 1 through December 31.

Educational Properties holds real estate assets, the purchase and improvement of which have been financed through bond issuance. The corresponding capital leases and associated long-term debt are included in the University's report. Complete financial statements for Educational Properties may be obtained from the Administrative Office at Armstrong Atlantic State University, 11935 Abercorn Street, Savannah, GA 31419.

Capital Assets for Component Units:

Educational Properties held the following Capital Assets as of December 31, 2007:

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$475,561 87,372
562,933
36,534,387 2,730,336
39,264,723
6,058,887 33,205,836 $33,768,769

Armstrong Atlantic State University Annual Financial Report FY 2008 33

Long-term Liabilities for Component Units:

Changes in long-term liabilities for Educational Properties for the fiscal year ended December 31, 2007 are shown below:

Beginning Balance January 1, 2007

Additions

Reductions

Ending Balance

Amounts due within

December 31, 2007 One Year

Notes and Loans Payable Revenue/Mortgage Bonds Payable
Total Long Term Liabilities

$618,000 42,821,797
$43,439,797

$0

$26,858

957,620

$0

$984,478

$591,142 41,864,177
$42,455,319

$26,778 970,000
$996,778

Notes and Loans Payable: On November 15, 2006, the AASU Women's Field House, LLC obtained a promissory note payable with Wachovia Bank, N.A. to provide financing for the construction of the field house in the amount of $618,000. Interest is payable monthly from the date of the note until and including February 1, 2007, at the rate of 7.20%. As of March 1, 2007, the note is payable in equal monthly installments of principal and interest in an amount necessary to amortize the principal amount outstanding over a 173 month term, with all unpaid principal and accrued interest due on June 1, 2021. The note is collateralized by a deed to secure debt and an assignment of rents. In addition, the note is guaranteed by Armstrong Atlantic State University Foundation, Inc. The balance outstanding at December 31, 2007 was $591,142.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending December 31:

2008

1

2009

2

2010

3

2011

4

2012

5

Thereafter

6-14

Notes and Loans Payable

Principal

Interest

Total

$26,778 28,924 31,107 33,456 35,882
434,995 $591,142

$42,663 40,517 38,333 35,985 33,559
151,467 $342,524

$69,441 69,441 69,440 69,441 69,441
586,462 $933,666

Revenue Bonds Payable: Student Housing Bonds are issued by the AASU Educational Properties Foundation to finance student housing on University property. The bonds, serial and term, are secured by pledges of gross receipts from student housing at Armstrong Atlantic State University. The interest rates are between 3.00% and 5.00%.

Armstrong Atlantic State University Annual Financial Report FY 2008 34

Resident Instruction Bonds are issued by the AASU Educational Properties Foundation to finance professional, continuing education and recreational facilities at Armstrong Atlantic State University. The bonds, serial and term, are secured by pledges of gross receipts from rents and leases. The interest rates are between 3.25% and 5.00%.
Debt Service Obligations
Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending December 31:

2008

1

2009

2

2010

3

2011

4

2012

5

2013 through 2017

6-10

2018 through 2022

11-15

2023 through 2027

16-20

2028 through 2032

21-25

2034 through 2038

26-30

Bond Premium/(Discount)

Principal

Bonds Payable Interest

$970,000 980,000
1,015,000 1,050,000 1,090,000 6,065,000 7,365,000 9,125,000 10,770,000 2,775,000 41,205,000
659,177 $41,864,177

$1,824,214 1,788,914 1,757,065 1,720,802 1,682,089 7,761,445 6,438,939 4,616,790 2,079,689 235,750
29,905,697
$29,905,697

Total
$2,794,214 2,768,914 2,772,065 2,770,802 2,772,089
13,826,445 13,803,939 13,741,790 12,849,689
3,010,750 71,110,697
659,177 $71,769,874

Armstrong Atlantic State University Annual Financial Report FY 2008 35

ATLANTA METROPOLITAN COLLEGE
Financial Report
For the Year Ended June 30, 2008

Atlanta Metropolitan College Atlanta, Georgia

Dr. Gary A. McGaha
President

Tracey Cook-Robinson
Vice President for Fiscal Affairs

ATLANTA METROPOLITAN COLLEGE ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 8 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 9 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 11 Note 2. Deposits and Investments................................................................................................ 15 Note 3. Accounts Receivable...................................................................................................... 16 Note 4. Inventories...................................................................................................................... 16 Note 5. Notes/Loans Receivable................................................................................................. 16 Note 6. Capital Assets................................................................................................................. 17 Note 7. Deferred Revenue........................................................................................................... 18 Note 8. Long-Term Liabilities .................................................................................................... 18 Note 9. Significant Commitments............................................................................................... 18 Note 10. Lease Obligations......................................................................................................... 18 Note 11. Retirement Plans .......................................................................................................... 19 Note 12. Risk Management......................................................................................................... 21 Note 13. Contingencies................................................................................................................ 21 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 22 Note 15. Natural Classifications with Functional Classifications .............................................. 23

ATLANTA METROPOLITAN COLLEGE
Management's Discussion and Analysis

Introduction
Atlanta Metropolitan College is one of the 35 institutions of higher education in the University System of Georgia. The College was founded in 1974 and is located in the southwest quadrant of Atlanta, Georgia. The College, among its many attributes, has become known for its commitment to a high-quality general education program which supports a variety of well chosen associate degree and certificate and learning support programs designed to ensure access and opportunity for a diverse student group at an affordable cost. This variety of educational programs attracts a highly qualified faculty and a student body of approximately 1,800 students per semester. The faculty and student enrollment count for each of the last three successive fall semesters shows the following pattern:
Students Students Faculty (Headcount) (FTE)

FY2008

62

1,882

1,510

FY2007

56

1,683

1,299

FY2006

51

1,748

1,351

Overview of the Financial Statements and Financial Analysis
Atlanta Metropolitan College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Atlanta Metropolitan College. The Statement of Net Assets presents end-ofyear data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

Atlanta Metropolitan College Annual Financial Report FY 2008 1

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Total As se ts

June 30, 2008
$4,648,586 12,566,668 17,215,254

June 30, 2007
$3,039,451 12,951,015 15,990,466

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

1,615,279 315,292
1,930,571

1,435,158 242,928
1,678,086

Net Assets: Invest ed in Capit al Asset s, net of debt Unrest rict ed Total Ne t As s e ts

12,566,668 2,718,015
$15,284,683

12,951,015 1,361,365
$14,312,380

The total assets of the institution increased by $1,224,788. A review of the Statement of Net Assets will reveal that the increase was primarily due to increases in cash and cash equivalents, accounts receivables and inventories. The increase in cash and cash equivalents was primarily due to MRR funding received in the current year for projects not yet paid. The funds were received as cash rather than on a reimbursement basis as in prior years. The increase in accounts receivable was primarily due to an increase in the receivable from Georgia State Financing and Investment Commission (GSFIC) of approximately $260,000 for 2007 projects completed during the year. Finally, the increase in inventory was due to an increase in the inventory for the campus bookstore operation. The College secured new shelving and storage space for the bookstore, which allowed for more items to be stocked. The bookstore was able to take advantage of quantity discounts and reduce shipping costs.
The total liabilities for the year increased by $252,485. The increase in accounts payable of $161,173 was mainly due to summer activities sponsored by federal programs and capital project

Atlanta Metropolitan College Annual Financial Report FY 2008 2

expenses. The combination of the increase in total assets of $1,224,788 and the increase in total liabilities of $252,485 yields an increase in total net assets of $972,303.

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$8,301,747 18,046,403 (9,744,656) 10,446,195
701,539 270,764 972,303 14,312,380
0 14,312,380 $15,284,683

$6,490,155 15,787,482 (9,297,327)
9,077,036
(220,291) 644,490 424,199 13,888,181
0 13,888,181 $14,312,380

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Atlanta Metropolitan College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$2,848,575 3,862,148 19,794 1,481,423 89,807 8,301,747
8,829,347 1,347,518
246,431 101,546 (78,647) 10,446,195
269,738 1,026
270,764 $19,018,706

June 30, 2007
$2,319,767 3,004,120 17,699 1,094,450 54,119 6,490,155
7,757,794 1,131,775
73,754 113,713
0 9,077,036
641,315 3,175
644,490 $16,211,681

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$4,901,352 1,430,405 1,348,747 1,749,649 3,025,767 2,296,177 1,965,280 1,329,026
18,046,403
0 $18,046,403

June 30, 2007
$3,950,170 1,194,768 864,982 1,750,144 2,999,468 2,447,482 1,581,567 998,901
15,787,482
0 $15,787,482

Operating revenues increased by $1,811,592 in fiscal 2008. Tuition and fees increased by approximately 23%. The increase was primarily a result of a 12% increase in enrollment, which directly resulted from the College's ongoing initiative to expand mini-mester, evening, weekend
Atlanta Metropolitan College Annual Financial Report FY 2008 4

and online course offerings. The tuition and fee rates were also increased for the year as approved by the Board of Regents.
The College realized an increase of $858,028 in grants and contracts. This was mainly due to an increase of $813,000 in the amount of Pell awards granted during the fiscal year.
The Auxiliary revenue increase of $386,973 is due to an increase in bookstore and cafeteria sales which is a direct result of the increase in enrollment. The athletic program was also reinstated during the year.
Nonoperating revenues increased by $1,369,159 for the year primarily due to an increase of $1,071,553 in State Appropriations.
The compensation and employee benefits category increased by $1,072,862 and primarily affected the Instruction and Academic Support categories. The increase in instruction was the result of the decision to increase the number of full-time faculty members thereby enhancing the quality of instruction. Academic support was also enhanced by increasing the number of tutors and extending the hours of operation for both the Library and the Academic Support Center. The increase also reflects overall merit increases and an increased cost of health insurance for the employees of the College.
The increase in supplies and other services mainly occurred in the areas of Academic Support and Auxiliary Enterprises. The College focused on making needed upgrades and improvements to the Library to improve the learning environment. As a result, Library utilization increased during the year. The increase in Auxiliary Enterprises was directly related to the increase in sales.
The increase in scholarships and fellowships is a direct result of the increase in enrollment and more specifically the amount of Pell grants awarded during the year.
Statement of Cash Flows
The final statement presented by Atlanta Metropolitan College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.
Atlanta Metropolitan College Annual Financial Report FY 2008 5

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($9,577,287) 10,371,798
(27,848) 101,546 868,209 2,125,185
$2,993,394

June 30, 2007
($8,524,488) 8,990,860 (193,740) 113,713 386,345 1,738,840
$2,125,185

Capital Assets
Atlanta Metropolitan College continued work on the Campus Entry and Roadway Improvement Project. GSFIC has provided funding of approximately $1.37 million for the project to date, which includes approximately $18,000 in the current fiscal year. It is anticipated that the project will be completed in FY2009.
The Harmon House renovation project was completed during the year. The total cost of the project was approximately $182,000.
The College made major improvements to the main quad entranceway to include paving and landscaping. The total cost of the project was approximately $101,000.
As the College continued to provide updated technology for students in the computer labs throughout the campus, the Office of Management Information Systems completed phases I and II of equipment surplus. The obsolete equipment was transferred to the Georgia Department of Administrative Services.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the notes to the financial statements.
Long Term Debt and Liabilities
Atlanta Metropolitan College had Long-Term Debt and Liabilities of $601,538 of which $286,246 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.

Atlanta Metropolitan College Annual Financial Report FY 2008 6

Component Units Atlanta Metropolitan College does not have a component unit that meets the criteria set forth in GASB Statement No. 39. Economic Outlook The College, like all state agencies, has been instructed to cut budgets by 6% for fiscal year 2009. With the uncertainty of state revenues and the rising cost of health care and utility cost, the College will approach the coming year cautiously. The College will maintain a close watch over resources to maintain the College's ability to react to unknown internal and external issues. The College's overall financial position is stable. The College was able to generate a modest increase in Net Assets. The College will continue in its efforts to improve enrollment growth through a combination of intensive recruiting and the implementation of a strategic retention plan. Any enrollment growth will translate into additional tuition revenue dollars. Dr. Gary A. McGaha, President Atlanta Metropolitan College
Atlanta Metropolitan College Annual Financial Report FY 2008 7

Statement of Net Assets
ATLANTA METROPOLITAN COLLEGE S TATEMENT OF NET AS S ETS June 30, 2008
AS S ETS C urrent Assets Cash and Cash Equivalent s Account s Receivable, net (not e 3) Receivables - Federal Financial Assist ance Receivables - Ot her Inventories (not e 4) P repaid Items T ot al Current Asset s
Noncurre nt Asse ts Capit al Asset s, net (not e 6) T ot al Noncurrent Asset s TO TAL AS S ETS
LIAB ILITIES C u rre n t Liabilitie s Account s P ayable Salaries P ayable Deferred Revenue (not e 7) Ot her Liabilit ies Deposit s Held for Ot her Organizat ions Lease P urchase Obligat ions (current port ion) Com pensat ed Absences (current port ion) T ot al Current Liabilit ies Non cu rre n t Liabilitie s Com pensat ed Absences (noncurrent ) T ot al Noncurrent Liabilit ies TO TAL LIAB ILITIES
NET AS S ETS Invest ed in Capit al Asset s, net of relat ed debt Unrest rict ed
TO TAL NET AS S ETS

June 30, 2008
$2,993,394
315,655 566,930 680,171
92,436 4,648,586
12,566,668 12,566,668 17,215,254
614,597 341,537 103,552
1,609 267,738
0 286,246 1,615,279
315,292 315,292 1,930,571
12,566,668 2,718,015
$15,284,683

Atlanta Metropolitan College Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets

ATLANTA METRO P O LITAN CO LLEGE S TATEMENT of REVENUES , EXP ENS ES , and CHANGES in NET AS S ETS
for the Year Ended J une 3 0 , 2 0 0 8

R EV EN U ES

June 30, 2008

O p erat in g Rev en ues St uden t T uit io n an d Fees (n et o f allo wan ce fo r do ubt ful acco un t s) L ess: Sch o larsh ip A llo wan ces Gran t s an d Co n t ract s Federal St at e Other Sales an d Serv ices Ren t s an d Ro y alt ies Aux iliary E n t erp rises Bo o k st o re Fo o d Serv ices In t erco llegiat e At h let ics O t h er O rgan izat io n s Ot h er O p erat in g Rev en ues T o t al O p erat in g Rev en ues
EXP EN S ES Operat in g Expenses
Sa la r i e s: Facult y St aff
Em ployee Benefits O t h er P erso n al Serv ices T ravel Sch o larsh ip s an d Fello wsh ip s Ut ilit ies Sup p lies an d O t h er Serv ices Dep reciat io n
T ot al Operat ing Expenses O p erat in g In co m e (lo ss)

$ 4 ,6 3 9 ,5 8 7 (1 ,7 9 1 ,0 1 2 )
3 ,8 2 9 ,9 3 4 1 2 ,2 2 5 1 9 ,9 8 9 1 9 ,7 9 4 1 8 ,2 0 7
8 9 5 ,5 9 3 3 1 1 ,9 6 8 2 6 1 ,5 3 2
1 2 ,3 3 0 7 1 ,6 0 0 8 ,3 0 1 ,7 4 7
3 ,4 2 9 ,6 3 2 5 ,1 7 1 ,9 9 0 2 ,2 6 7 ,1 7 7
9 2 ,2 1 5 1 0 4 ,6 9 3 2 ,1 4 3 ,6 7 7 5 0 6 ,2 2 4 3 ,7 2 6 ,4 8 3 6 0 4 ,3 1 2 1 8 ,0 4 6 ,4 0 3 (9 ,7 4 4 ,6 5 6 )

N O N O P ER A TIN G R EV EN U ES (EXP EN S ES ) St at e A p p ro p riat io n s Gran t s an d Co n t ract s Federal Gift s In v est m en t In co m e (en do wm en t s, aux iliary an d o t h er) O t h er N o n o p erat in g Rev en ues Net No n o perat ing Rev en ues In co m e befo re o t her reven ues, ex p en ses, gain s, o r loss Cap it al Gran t s an d Gift s St at e Other T o t al O t h er Rev en ues In crease in Net Asset s
N ET A S S ETS N et A sset s-begin n in g o f y ear, as o rigin ally rep o rt ed P rio r Y ear A djust m en t s N et A sset s-begin n in g o f y ear, rest at ed
N et A sset s-E n d o f Year

8 ,8 2 9 ,3 4 7
1 ,3 4 7 ,5 1 8 2 4 6 ,4 3 1 1 0 1 ,5 4 6 (7 8 ,6 4 7 )
1 0 ,4 4 6 ,1 9 5 7 0 1 ,5 3 9
2 6 9 ,7 3 8 1 ,0 2 6
2 7 0 ,7 6 4 9 7 2 ,3 0 3
1 4 ,3 1 2 ,3 8 0 0
1 4 ,3 1 2 ,3 8 0 $ 1 5 ,2 8 4 ,6 8 3

Atlanta Metropolitan College Annual Financial Report FY 2008 9

Statement of Cash Flows
A T L A N T A M ET R O P O L IT A N C O L L EGE S TA TEM EN T O F C A S H FLO W S For th e Ye ar En de d J u n e 3 0 , 2 0 0 8
C A S H FL O W S FR O M O P ER A TIN G A C TIV ITIES T uit io n an d Fees Gran t s an d Co n t ract s (E x ch an ge) Sa le s a n d Se r v ic e s P a y m e n t s t o Sup p lie r s P ay m en t s t o E m p lo y ees P a y m e n t s f o r Sc h o la r sh ip s a n d F e llo wsh ip s A ux iliary E n t erp rise Ch arges: Bo o k st o re F o o d Se r v ic e s In t erco llegiat e A t h let ics O t h er O rgan izat io n s O t h er Receip t s (p ay m en t s) N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
C A S H FL O W S FR O M N O N - C A P ITA L FIN A N C IN G A C TIV ITIES St a t e A p p r o p r ia t io n s A gen cy Fun ds T ran sact io n s Gift s an d Gran t s Receiv ed fo r O t h er T h an Cap it al P urp o ses N et Cash Flo ws P ro v ided by N o n -cap it al Fin an cin g A ct iv it ies
C A S H FL O W S FR O M C A P ITA L A N D R EL A TED FIN A N C IN G A C TIV ITIES Cap it al Gran t s an d Gift s Receiv ed P urch ases o f Cap it al A sset s N et Cash used by Cap it al an d Relat ed Fin an cin g A ct iv it ies
C A S H FL O W S FR O M IN V ES TIN G A C TIV ITIES In t erest o n In v est m en t s N et Cash P ro v ided (used) by In v est in g A ct iv it ies N et In crease/D ecrease in Cash Cash an d Cash E quiv alen t s - Begin n in g o f y ear Cash an d Cash E quiv alen t s - E n d o f Y ear
R EC O N C IL IA TIO N O F O P ER A TIN G L O S S TO N ET C A S H P R O V ID ED ( U S ED ) B Y O P ER A TIN G A C TIV ITIES :
O p erat in g In co m e (lo ss) A djust m en t s t o Reco n cile N et In co m e (lo ss) t o N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
D ep reciat io n Ch an ge in A sset s an d L iabilit ies:
Receiv ables, n et In v en t o ries P rep aid It em s A cco un t s P ay able D eferred Rev en ue O t h er L iabilit ies Co m p en sat ed A bsen ces
N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
* * N O N - C A SH I N VE ST I N G, N O N - C A P I T A L F I N A N C I N G, A N D C A P I T A L A N D R E L A T E D F I N A N C I N G T R A N SA C T I O N S
Gift o f cap it al asset s reducin g p ro ceeds o f cap it al gran t s an d gift s

June 30, 2008
$ 2 ,8 1 8 ,5 3 4 3 ,5 0 9 ,6 3 6 1 9 ,7 9 4 (6 ,6 4 7 ,7 9 0 ) (8 ,4 3 3 ,3 8 8 ) (2 ,1 4 3 ,6 7 7 )
6 6 3 ,0 4 3 3 3 0 ,0 6 5 2 4 2 ,1 1 7
1 3 ,3 6 4 5 1 ,0 1 5 (9 ,5 7 7 ,2 8 7 )
8 ,8 2 9 ,3 4 7 (5 1 ,4 9 8 )
1 ,5 9 3 ,9 4 9 1 0 ,3 7 1 ,7 9 8
2 6 9 ,7 3 8 (2 9 7 ,5 8 6 )
(2 7 ,8 4 8 )
1 0 1 ,5 4 6 1 0 1 ,5 4 6 8 6 8 ,2 0 9 2 ,1 2 5 ,1 8 5 $ 2 ,9 9 3 ,3 9 4
($ 9 ,7 4 4 ,6 5 6 )
6 0 4 ,3 1 2
(3 4 3 ,8 8 8 ) (3 3 4 ,4 2 8 )
(6 2 ,6 1 0 ) 2 4 7 ,2 3 3 (2 5 ,5 1 0 )
(1 ,3 2 0 ) 8 3 ,5 8 0
($ 9 ,5 7 7 ,2 8 7 )
($ 1 ,0 2 6 )

Atlanta Metropolitan College Annual Financial Report FY 2008 10

ATLANTA METROPOLITAN COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Atlanta Metropolitan College serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Atlanta Metropolitan College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Atlanta Metropolitan College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Atlanta Metropolitan College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Atlanta Metropolitan College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Atlanta Metropolitan College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Unit - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. For FY2008, Atlanta Metropolitan College does not have any foundations or affiliated organizations that qualify as component units.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. The financial statements have been prepared
Atlanta Metropolitan College Annual Financial Report FY 2008 11

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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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-University transactions have been eliminated.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash and demand.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies and resale inventories are carried using the weighted average method.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will
Atlanta Metropolitan College Annual Financial Report FY 2008 12

generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Atlanta Metropolitan College.
Deferred Revenues Deferred revenues include amounts received from grant and contract sponsors that have not yet been earned.
Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Atlanta Metropolitan College had accrued liability for compensated absences in the amount of $517,958 as of 7-1-2007. For FY2008, $377,421 was earned in compensated absences and employees were paid $293,841, for a net increase of $83,580. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $601,538.
Noncurrent Liabilities Noncurrent liabilities include liabilities that will not be paid within the next fiscal year.
Net Assets The College's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.
Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general
Atlanta Metropolitan College Annual Financial Report FY 2008 13

operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$2,552,845 53,474
111,696 $2,718,015

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Atlanta Metropolitan 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 College, and the amount that is paid by students and/or third parties making payments on the students' behalf. Certain governmental

Atlanta Metropolitan College Annual Financial Report FY 2008 14

grants, such as Pell grants, and other Federal, state or nongovernmental programs are recorded as either operating or nonoperating revenues in the College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $2,990,185 and the bank balance was $3,313,580. Of the College's deposits, $3,313,580 were uninsured. Of these uninsured deposits, $3,313,580 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the College's name.
Atlanta Metropolitan College Annual Financial Report FY 2008 15

B. Investments

The College did not have any investments at June 30, 2008.

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Georgia St at e Financing and Invest m ent Com m ission Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$98,659 13,787
315,655 298,915 180,578 907,594
25,009
$882,585

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore Food Services Other
T otal

$619,013 7,892
53,266
$680,171

Note 5. Notes/Loans Receivable The College did not have any notes/loans receivable at June 30, 2008.

Atlanta Metropolitan College Annual Financial Report FY 2008 16

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$3,007,739 130,368
3,138,107
15,777,291 863,547
2,883,796 1,927,498 21,452,132
7,060,264 622,177
2,140,844 1,815,939 11,639,224
9,812,908
$12,951,015

Addi ti o n s $17,694 17,694

Re du cti on s
$0 130,368 130,368

182,412 101,561 116,037
11,276 411,286

486,445 1,416
487,861

399,655 17,493
148,076 39,088
604,312
(193,026)
($175,332)

407,798 1,416
409,214
78,647
$209,015

En di n g B al an ce 6/30/2008
$3,025,433 0
3,025,433
15,959,703 965,108
2,513,388 1,937,358 21,375,557
7,459,919 639,670
1,881,122 1,853,611 11,834,322
9,541,235
$12,566,668

Atlanta Metropolitan College Annual Financial Report FY 2008 17

Note 7. Deferred Revenue

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

Ot her Deferred Revenue T ot als

June 30, 2008 $103,552 $103,552

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Other Liabilities Compensated Absences

Beginning Balance
July 1, 2007
$517,958

Additions $377,421

Reductions

Ending Balance June 30, 2008

$293,841

$601,538

Total Long Term Obligations

$517,958

$377,421

$293,841

$601,538

Current Portion
$286,246
$286,246

Note 9. Significant Commitments
The College had significant unearned, outstanding, construction or renovation contracts executed in the amount of $355,399 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.

Note 10. Lease Obligations CAPITAL LEASES The College did not have any capital leases at June 30, 2008. OPERATING LEASES The College did not have any operating leases at June 30, 2008. The College had no operating lease expense in fiscal 2008.

Atlanta Metropolitan College Annual Financial Report FY 2008 18

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Atlanta Metropolitan College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Atlanta Metropolitan College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Atlanta Metropolitan College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$579,459 $540,884 $546,315

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Atlanta Metropolitan College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in

Atlanta Metropolitan College Annual Financial Report FY 2008 19

accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
Atlanta Metropolitan College and the covered employees made the required contributions of $74,131 (8.13% or 8.15%) and $45,532 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Atlanta Metropolitan 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $50,744 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.
Atlanta Metropolitan College Annual Financial Report FY 2008 20

Note 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Atlanta Metropolitan College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Atlanta Metropolitan College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Atlanta Metropolitan College expects such amounts, if any, to be immaterial to its overall financial position.
Atlanta Metropolitan College Annual Financial Report FY 2008 21

Litigation, claims and assessments filed against Atlanta Metropolitan College (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 54 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Atlanta Metropolitan College recognized as incurred $255,003 of expenditures, which was net of $89,962 of participant contributions.
Atlanta Metropolitan College Annual Financial Report FY 2008 22

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Instruction
$3,382,632 436,557 807,917
19,279 2,200
22,616 207,936
22,215
$4,901,352

Functional Classification FY2008

Public Service

Academic Support

Student Services

$0 757,068 165,934

$47,000 601,660 160,049

$0 1,177,125
296,206

24,598 62,172
6,538 414,095

13,240 20,430
4,150 452,513
49,705

24,310 4,570
13,989 228,360
5,089

$1,430,405

$1,348,747

$1,749,649

Institutional Support
$0 1,311,200
615,894 92,215 21,565
30,742 887,135
67,016
$3,025,767

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Op erat ions & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Ent erprises

$0 645,690 180,318

$0

$0

242,690

40,859

642
423,324 587,171 459,032

1,965,280

1,059 89,025
4,865 949,273
1,255

$2,296,177

$1,965,280

$1,329,026

T ot al Expenses
$3,429,632 5,171,990 2,267,177 92,215 104,693 2,143,677 506,224 3,726,483 604,312
$18,046,403

Atlanta Metropolitan College Annual Financial Report FY 2008 23

AUGUSTA STATE UNIVERSITY
Financial Report
For the Year Ended June 30, 2008

Augusta State University Augusta, Georgia

William A. Bloodworth, Jr.
President

N. Dan Whitfield
Vice President of Business Operations

AUGUSTA STATE UNIVERSITY ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ............................................................................ 1 Statement of Net Assets ...................................................................................................... 8 Statement of Revenues, Expenses and Changes in Net Assets........................................... 9 Statement of Cash Flows .................................................................................................. 11 Note 1. Summary of Significant Accounting Policies .................................................... 13 Note 2. Deposits and Investments................................................................................... 19 Note 3. Accounts Receivable.......................................................................................... 21 Note 4. Inventories.......................................................................................................... 21 Note 5. Notes/Loans Receivable..................................................................................... 21 Note 6. Capital Assets..................................................................................................... 22 Note 7. Deferred Revenue............................................................................................... 23 Note 8. Long-Term Liabilities ........................................................................................ 23 Note 9. Significant Commitments................................................................................... 23 Note 10. Lease Obligations............................................................................................. 23 Note 11. Retirement Plans .............................................................................................. 25 Note 12. Risk Management............................................................................................. 27 Note 13. Contingencies................................................................................................... 28 Note 14. Post-Employment Benefits Other Than Pension Benefits ............................... 28 Note 15. Natural Classifications with Functional Classifications .................................. 30 Note 16. Component Units ............................................................................................. 31

AUGUSTA STATE UNIVERSITY
Management's Discussion and Analysis

Introduction
Augusta State University is one of the 35 institutions of higher education of the University System of Georgia. Augusta State is the primary public institution of higher learning in the state's second largest city. While it shares the technological and innovative resources of the University System, Augusta State University maintains its historical roots that make the learning experience as unique as the campus itself. The University is well known for its dedication to expanding educational opportunities for people of all ages and backgrounds, with a specific emphasis on service to Georgians in the Central Savannah River Area.
Students Students Faculty (Headcount) (FTE)

FY2008

270

FY2007

254

FY2006

202

6,588 6,573 6,333

5,668 5,571 5,361

Overview of the Financial Statements and Financial Analysis
Augusta State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Augusta State University. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.
From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Augusta State University Annual Financial Report FY 2008 1

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$11,033,382 105,889,171
918,861 117,841,414

June 30, 2007
$11,470,039 104,331,602
975,303 116,776,944

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

6,603,128 32,672,823 39,275,951

6,261,062 32,825,349 39,086,411

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

73,717,823 14,000
1,825,831 3,007,809 $78,565,463

71,753,459 333,470
1,375,785 4,227,819 $77,690,533

The total assets of the institution increased by $1,064,470. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $1,557,569 in the category of Capital Assets, net. The major assets added included the D. Douglas Barnard Amphitheatre, as well as renovations to the Washington Hall, the Fine Arts Center and the Maxwell Performing Arts Theatre.
The total liabilities for the year increased by $189,540. The combination of the increase in total assets of $1,064,470 and the increase in total liabilities of $189,540 yields an increase in total net assets of $874,930. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $1,964,364.

Augusta State University Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$33,709,095 65,305,669 (31,596,574) 29,017,949
(2,578,625) 3,453,555
874,930 77,690,533
0 77,690,533 $78,565,463

$31,687,990 60,993,947 (29,305,957) 26,573,304
(2,732,653) 3,863,100 1,130,447 76,560,086
0 76,560,086 $77,690,533

The Statement of Revenues, Expenses, and Changes in Net Assets reflect a positive year with an increase 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:

Augusta State University Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$18,143,906 6,949,703 531,265 7,644,583 439,638
33,709,095
28,846,604 1,145,648 246,500 414,154 (6,634)
30,646,272
3,420,529 33,026
3,453,555 $67,808,922

June 30, 2007
$16,729,413 6,754,192 566,549 7,130,969 506,867
31,687,990
26,466,011 701,368 592,756 510,773 (60,295)
28,210,613
2,706,381 1,156,719 3,863,100 $63,761,703

Operating Revenues increased $2,021,105 in fiscal year 2008. Tuition and Fee revenue was up $1,414,493 or 8.5 percent and resulted mainly from tuition increases ranging from 6 to 12 percent, since enrollment was flat. Auxiliary revenue grew by $513,614 or 7.2 percent and is mainly attributed to increased bookstore sales.
Nonoperating revenue increased by $2,435,659, or 8.6 percent, due to increased State Appropriations. State Appropriations revenue rose by $2,380,593 or 9.0 percent due to enrollment growth in previous years.
Overall, Capital Gifts and Grants decreased by 10.6 percent as FY 2007 included one-time outside contributions for the J. Fleming Norvell Golf House. However, State Capital Gifts increased by 26.4 percent or $714,148 and covered a range of projects.

Augusta State University Annual Financial Report FY 2008 4

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$23,984,074 87,115
386,579 7,390,548 3,666,959 7,216,159 9,419,487 6,010,493 7,144,255 65,305,669
1,628,323 $66,933,992

June 30, 2007
$22,100,834 90,070
366,400 6,018,871 3,655,415 6,920,182 9,733,668 5,531,792 6,576,715 60,993,947
1,637,309 $62,631,256

The University's Total Expenses, as shown above, increased 6.9 percent versus last year. Excluding Scholarships and Auxiliary Enterprises, core University operating expenses rose by 6.7 percent versus FY 2007. The year-to-year increase came in part from higher compensation expenses, up $3.2 million or 8.8 percent. Merit increases, additional faculty positions, as well as increases in benefits, summer faculty and part time faculty expenditures were the factors in the growth in compensation expense. Expenses relating to employee benefits increased 11.6 percent from the previous year. Operating and equipment expenditures however decreased by $448,345 or 6 percent versus last fiscal year.
By function, Instruction expenses rose by 8.5 percent versus FY 2007 due to merit increases, additional faculty positions and increased summer and part time faculty expenditures. Academic Support expenses were up 22.8 percent mainly due to a reclassification of Instructional Technology Support (ITS) costs as well as increases in Student Technology Fee spending. In the past ITS costs were spread across the Academic Support function and the Institutional Support function; however, this year the costs for both personal services and non personal services were split proportionally across the two functions. Institutional Support costs rose modestly by 4.3 percent over FY 2007 and were primarily due to merit increases and higher health care costs.
Plant Operations expenses overall, as reported above, were down 3.2 percent due to decreased project spending. Utilities included in the Plant Operations figures above, increased $264,828 or 14.4 percent due to higher electricity and natural gas rates. Excluding utilities, ongoing Plant Operations were up 4.8 percent compared to FY 2007.
The large increase shown in Scholarships and Fellowships, 8.7 percent, is due almost entirely to an increase in Pell Grants.
Auxiliary Enterprises expenses grew primarily due to Bookstore cost of goods sold as Bookstore sales increased by 12.5 percent in FY 2008.

Augusta State University Annual Financial Report FY 2008 5

Statement of Cash Flows

The final statement presented by Augusta State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($27,181,283) 29,932,622 (3,585,544) 449,525 (384,680) 8,371,411
$7,986,731

June 30, 2007
($24,974,071) 27,892,609 (2,828,883) 470,916 560,571 7,810,840
$8,371,411

Capital Assets
The University's Capital Assets increased by $1,557,569, or 1.5 percent during FY 2008. The largest addition was the D. Douglas Barnard Amphitheatre which was 23 percent privately funded. Other asset additions included renovations to Washington Hall, the Fine Arts Center and the Maxwell Performing Arts Theatre.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the notes to the financial statements.
Long Term Debt and Liabilities
Augusta State University had Long-Term Debt and Liabilities of $33,746,584 of which $1,073,761 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.

Augusta State University Annual Financial Report FY 2008 6

Component Units In compliance with GASB Statement No. 39, Augusta State University has included the financial statements and notes for all required component units for FY2008. The component units shown are the Augusta State University Foundation, Inc. and the Augusta State University Athletic Association. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units. Economic Outlook Due to the State's uncertain economic conditions, the University has been asked to prepare for possible budget reductions in the upcoming year. If implemented, these budget reductions will adversely impact our ability to hire the quality and caliber of faculty planned in our original budget and that are needed to move the University forward. Augusta State University's operating expenses are already lean and the budget reductions would impact our ability to maintain and update our facilities and equipment. William A. Bloodworth, Jr., President Augusta State University
Augusta State University Annual Financial Report FY 2008 7

Statement of Net Assets

A UG US T A S T A T E UN IV ER S IT Y S TA TEM EN T O F N ET A S S ETS
June 30, 2008

C om pon e n t Un it

Au gu sta S tate U n i ve rs i ty

Au gu sta S tate U n i ve rs i ty
Fo u n da ti o n , In c.

A S S ETS C u rre n t Asse ts Cash an d Cash E quiv alen t s Sh o r t - t e r m In v e st m e n t s A cco un t s Receiv able, n et (n o t e 3 ) Receiv ables - Federal Fin an cial A ssist an ce Receiv ables - O t h er D ue Fro m Co m p o n en t U n it s N et In v est m en t in Cap it al L eases P ledges Receiv able In v en t o ries (n o t e 4 ) P rep aid it em s N o t es an d M o rt gages Receiv able T o t al Curren t A sset s

$ 7 ,9 7 2 ,7 3 1
1 5 ,9 4 2 1 ,0 3 2 ,3 3 7
1 ,6 4 9
5 0 1 ,2 8 4 1 ,5 0 9 ,4 3 9 1 1 ,0 3 3 ,3 8 2

$ 2 ,0 3 6 ,6 1 8 9 8 7 ,3 3 2
1 5 4 ,6 4 7 2 7 7 ,6 4 3 2 ,0 7 7 ,2 7 6
4 2 6 ,0 0 0 5 ,9 5 9 ,5 1 6

Non cu rre n t Asse ts N o n curren t Cash In v est m en t s (in cludin g Real E st at e) N o t es Receiv able, n et N et In v est m en t in Cap it al L eases P ledges Receiv able Cap it al A sset s, n et (n o t e 6 ) O t h er A sset s T o t al N o n curren t A sset s TO TA L A S S ETS
L IA B IL ITIES C u rre n t Liabilitie s A cco un t s P ay able Sa la r ie s P a y a ble Co n t ract s P ay able D ep o sit s D eferred Rev en ue (n o t e 7 ) D ep o sit s H eld fo r O t h er O rgan izat io n s D ue t o P rim ary Go v ern m en t L ease P urch ase O bligat io n s (curren t p o rt io n ) Co m p en sat ed A bsen ces (curren t p o rt io n ) Rev en ue/M o rt gage Bo n ds P ay able (curren t ) N o t es an d L o an s P ay able (curren t p o rt io n ) T o t al Curren t L iabilit ies Non cu rre n t Liabilitie s L ease P urch ase O bligat io n s (n o n curren t ) Co m p en sat ed A bsen ces (n o n curren t ) Rev en ue/M o rt gage Bo n ds P ay able (n o n curren t ) N o t es an d L o an s P ay able (n o n curren t ) T o t al N o n curren t L iabilit ies TO TA L L IA B IL ITIES
N ET A S S ETS In v est ed in Cap it al A sset s, n et o f relat ed debt Rest rict ed fo r N o n ex p en dable E x p en dable U n rest rict ed TO TA L N ET A S S ETS

1 4 ,0 0 0 3 9 6 ,1 2 1 5 0 8 ,7 4 0
1 0 5 ,8 8 9 ,1 7 1
1 0 6 ,8 0 8 ,0 3 2 1 1 7 ,8 4 1 ,4 1 4
1 ,0 0 4 ,0 2 3 2 1 ,0 1 2
3 6 0 ,4 2 8 2 ,3 7 3
3 ,6 9 9 ,1 4 0 4 4 2 ,3 9 1
2 7 4 ,6 4 4 7 9 9 ,1 1 7
6 ,6 0 3 ,1 2 8
3 1 ,8 9 6 ,7 0 4 7 7 6 ,1 1 9
3 2 ,6 7 2 ,8 2 3 3 9 ,2 7 5 ,9 5 1
7 3 ,7 1 7 ,8 2 3
1 4 ,0 0 0 1 ,8 2 5 ,8 3 1 3 ,0 0 7 ,8 0 9 $ 7 8 ,5 6 5 ,4 6 3

4 ,8 4 9 ,2 5 2 1 6 ,0 5 9 ,1 2 4
1 ,1 1 8 ,6 9 5 3 1 ,8 9 6 ,7 0 4
1 ,2 2 8 ,6 2 2 8 4 0 ,7 2 2
5 5 ,9 9 3 ,1 1 9 6 1 ,9 5 2 ,6 3 5
6 7 0 ,5 7 2
3 ,4 8 5 1 ,6 4 9
2 6 0 ,0 0 0 1 4 2 ,0 0 0 1 ,0 7 7 ,7 0 6
3 0 ,2 3 7 ,6 7 7 1 ,1 1 7 ,8 8 3
3 1 ,3 5 5 ,5 6 0 3 2 ,4 3 3 ,2 6 6
1 9 ,4 1 8 ,7 4 9 6 ,7 2 3 ,4 5 3 3 ,3 7 7 ,1 6 7
$ 2 9 ,5 1 9 ,3 6 9

C om pon e n t Un it Au gu sta S tate U n i ve rs i ty Ath le tic A s s o ci a ti o n
$ 3 5 3 ,1 9 2
7 ,6 9 3
4 ,2 4 5 3 6 5 ,1 3 0
1 ,7 9 1 ,6 4 7 1 ,7 9 1 ,6 4 7 2 ,1 5 6 ,7 7 7
2 1 1 ,5 4 7 8 ,7 7 2
1 8 ,2 5 7
1 8 ,2 4 9
4 3 5 ,9 1 8 6 9 2 ,7 4 3
2 1 ,8 6 2
1 ,1 2 1 ,1 8 7 1 ,1 4 3 ,0 4 9 1 ,8 3 5 ,7 9 2
1 9 4 ,4 3 1
5 0 ,7 9 9 7 5 ,7 5 5 $ 3 2 0 ,9 8 5

Augusta State University Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets
AUGUSTA STATEUNIVERSITY STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

REVENUES
Operating Revenues Student Tuition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Parking/Transportation Intercollegiate Athletics Other Organizations Realized/Unrealized Gains (Losses) Interest and Dividend income Other Operating Revenues Total Operating Revenues
EXPENSES Operating Expenses
Salaries: Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to or on behalf of Augusta State University
Total Operating Expenses Operating Income (loss)

Augusta State University

Component Unit
Augusta State University
Foundation, Inc.

Component Unit
Augusta State University Athletic
Association

$23,926,669 (5,782,763)
6,900,085 294
49,324 531,265 174,375
2,009,752 3,290,334
232,584 2,036,594
75,319
265,263 33,709,095

$0 869,942 661,071
1,709,197
(2,440,645) 413,298 6,399
1,219,262

16,571,203 15,333,004 8,787,718
278,759 438,215 6,680,840 2,363,818 11,047,349 3,804,763
65,305,669 (31,596,574)

902,538
767,507 1,670,045 (450,783)

$0 25,000
928,460 13,691
50,000 1,017,151
400,417
64,503 359,873 147,735 20,041 992,569 24,582

Augusta State University Annual Financial Report FY 2008 9

Statement of Revenues, Expenses and Changes in Net Assets, Continued
AUGUSTA STATEUNIVERSITY STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

Augusta State University

Component Unit
Augusta State University
Foundation, Inc.

Component Unit
Augusta State University Athletic
Association

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal St at e Ot her Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Ot her Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

28,846,604
44,146 102,620 998,882 246,500 414,154 (1,628,323)
(6,634) 29,017,949 (2,578,625)
3,420,529 33,026
3,453,555 874,930
77,690,533 0
77,690,533 $78,565,463

246,410 (1,572,790)
(1,326,380) (1,777,163)
3,425,215 3,425,215 1,648,052
27,871,317 0
27,871,317 $29,519,369

8,704 (80,507)
(71,803) (47,221)
0 (47,221)
368,206 0
368,206 $320,985

Augusta State University Annual Financial Report FY 2008 10

Statement of Cash Flows

AUGUS TA S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008

C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$18,367,652 6,960,821 531,265
(22,857,433) (31,723,755)
(6,680,840) (313,706) 334,776
2,016,110 3,249,463
235 233,989 2,069,705
75,634 554,801 (27,181,283)
28,846,604 (306,130) 1,392,148
29,932,622
3,420,529 (5,141,896)
(235,854) (1,628,323) (3,585,544)
449,525 449,525 (384,680) 8,371,411 $7,986,731

Augusta State University Annual Financial Report FY 2008 11

Statement of Cash Flows, Continued
AUGUS TA S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Depreciat ion Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Change in fair value of invest m ent s recognized as a component of int erest incom e Gift of capit al asset s reducing proceeds of capit al grant s and gift s

June 30, 2008
($31,596,574)
3,804,763 213,557 (57,877) (108,259) 21,070 187,064 250,727 (62,111) 166,357
($27,181,283)
($35,371) ($33,026)

Augusta State University Annual Financial Report FY 2008 12

AUGUSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Augusta State University serves the state of Georgia and the Central Savannah River Area by providing its students with academic instruction that is focused on excellence in teaching, advancement of knowledge and enrichment of the community in a climate that fosters humane values and a lifelong love of learning.
Reporting Entity Augusta State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Augusta State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Augusta State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Augusta State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Augusta State University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, Augusta State University is reporting the activity for the Augusta State University Foundation, Inc. and the Augusta State University Athletic Association.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999
Augusta State University Annual Financial Report FY 2008 13

by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced
Augusta State University Annual Financial Report FY 2008 14

Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Augusta State University.
Augusta State University Annual Financial Report FY 2008 15

Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Augusta State University had accrued liability for compensated absences in the amount of $1,408,878 as of 7-1-2007. For FY2008, $1,096,648 was earned in compensated absences and employees were paid $930,290, for a net increase of $166,358. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $1,575,236.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Augusta State University Annual Financial Report FY 2008 16

Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans Quasi-Endowm ent s T ot al Rest rict ed Expendable

$470,459 811,184 250,316 293,872
$1,825,831

Restricted net assets expendable Capital Projects: This represents resources for which the University is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$101,987 4,306,825
40,532 (1,441,535) $3,007,809

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Augusta State University, 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.

Augusta State University Annual Financial Report FY 2008 17

Classification of Revenues The University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria: Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans. Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 University, 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 University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Augusta State University Annual Financial Report FY 2008 18

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $2,121,356 and the bank balance was $2,696,337. Of the University's deposits, $2,696,337 were uninsured. Of these uninsured deposits, $2,696,337 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name.
B. Investments
At June 30, 2008, the carrying value of the University's investments was $6,242,696, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents and/or Office of Treasury and Fiscal Services investment pools as follows:
Augusta State University Annual Financial Report FY 2008 19

Investment Pools Board of Regents Short-T erm Fund T otal Return Fund Sub T otal
Office of T reasury and Fiscal Services Georgia Fund 1
Sub T otal
T otal Investment Pools

$5,749,591 396,121
6,145,712
96,984 96,984
$6,242,696

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.
The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1 Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 days.
Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk.
The Weighted Average Maturity of the Short Term Fund is 1.99 years. Of the University total investment of $5,749,591 in the Short Term Fund, $5,726,593 is invested in debt securities.
The Weighted Average Maturity of the Total Return Fund is 7.84 years. Of the University total investment of $396,121 in the Total Return Fund, $125,175 is invested in debt securities.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk.

Augusta State University Annual Financial Report FY 2008 20

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$522,084 176,825 15,942 1,649 646,507
1,363,007 313,079
$1,049,928

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

Bookst ore P hysical P lant Other
T otal

June 30, 2008
$456,480 25,670 19,134
$501,284

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was approximately $134,907.

Augusta State University Annual Financial Report FY 2008 21

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Capitalized Collections Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$5,558,065 75,006
3,233,584 8,866,655
1,792,483 71,543,175
6,831,724 6,516,926 32,280,744 7,503,266 126,468,318
429,072 16,234,668
1,826,765 4,217,880 1,692,707 6,602,279 31,003,371
95,464,947
$104,331,602

Addi ti o n s
$0
2,959,484 2,959,484

Re ductions
$0
1,153,330 1,153,330

En di n g B a l a n ce 6/30/2008
$5,558,065 75,006
5,039,738 10,672,809

1,984,129 1,096,785
362,941
114,400 3,558,255

483,098
57,433 540,531

1,792,483 73,527,304
7,928,509 6,396,769 32,280,744 7,560,233 129,486,042

71,240 1,784,150
269,260 496,723 961,094 222,296 3,804,763
(246,508)
$2,712,976

481,021 57,433
538,454 2,077
$1,155,407

500,312 18,018,818
2,096,025 4,233,582 2,653,801 6,767,142 34,269,680
95,216,362
$105,889,171

Augusta State University Annual Financial Report FY 2008 22

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $3,659,444 39,696
$3,699,140

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Le as e s Lease Obligations

Beginning Balance
July 1, 2007
$32,407,202

Addi ti on s $0

Re du cti on s

Ending Balance June 30, 2008

$235,854

$32,171,348

Other Liabilities Compensated Absences T ot al

1,408,878 1,408,878

1,096,648 1,096,648

930,290 930,290

1,575,236 1,575,236

Total Long Term Obligations

$33,816,080

$1,096,648

$1,166,144

$33,746,584

C u rre n t Portion
$274,644
799,117 799,117 $1,073,761

Note 9. Significant Commitments
The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $462,640 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.
Note 10. Lease Obligations
Augusta State University is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.
CAPITAL LEASES
Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2009 and 2035. Expenditures for fiscal year 2008 were $2,032,754 of which $1,628,323 represented interest and $168,577 represented executory costs. Total principal paid on capital leases was $235,854 for the fiscal year ended June 30, 2008. Interest rates range from 4.72 percent to 5.23 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:
Augusta State University Annual Financial Report FY 2008 23

Buildings Equipment Total Assets Held Under Capital Lease

$29,507,430 119,514
$29,626,944

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.
Augusta State University had two capital leases with related entities in the current fiscal year. In August 2004, Augusta State University entered into a capital lease of $20,246,137 at 5.23 percent with the Augusta State University Foundation, Inc., whereby the University leases a student housing complex for a thirty year period that began September 2005 and will expire in January 2035.
In February 2005, the University entered into an additional capital lease of $11,782,962 at 4.72 percent with the Augusta State University Foundation, Inc. whereby the University leases a student activities center for a 29 year term that began March 2006 and will expire in June 2034.
The University is responsible for operating costs, such as utilities and insurance for both leases listed above. The outstanding liability as of June 30, 2008 on these capital leases is $20,467,034 an $11,704,314 respectively.
The University may cancel the lease agreements at the end of any fiscal year when sufficient appropriations, revenues, income, grants or other funding sources are not available. The Augusta State University Foundation, Inc. is a component unit of Augusta State University.
OPERATING LEASES
Augusta State University's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2013. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small business equipment.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Augusta State University Annual Financial Report FY 2008 24

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 2034 t hrough 2038 T ot al m inim um lease paym ent s
Less: Int erest Less: Execut ory cost s (if paid) P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$2,064,169 2,140,170 2,199,881 2,251,741 2,293,743
11,939,811 12,990,919 13,553,125 13,839,682
3,229,134 66,502,375 27,427,397
6,903,630 $32,171,348

$102,549 96,638 88,287 84,280 80,254
$452,008

Augusta State University's FY2008 expense for rental of real property and equipment under operating leases was $119,574.
Note 11. Retirement Plans
Teachers Retirement System of Georgia
Plan Description Augusta State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.
Funding Policy Employees of Augusta State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Augusta State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Augusta State University Annual Financial Report FY 2008 25

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$1,517,685 $1,427,681 $1,359,864

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Augusta State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.

Augusta State University and the covered employees made the required contributions of $1,036,958 (8.13% or 8.15%) and $636,868 (5%), respectively.

AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.

Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

Georgia Defined Contribution Plan

Plan Description Augusta State University 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,

Augusta State University Annual Financial Report FY 2008 26

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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $77,583 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Augusta State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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
Augusta State University Annual Financial Report FY 2008 27

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. Augusta State University, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Augusta State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Augusta State University (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
Augusta State University Annual Financial Report FY 2008 28

The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 159 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Augusta State University recognized as incurred $696,769 of expenditures, which was net of $287,565 of participant contributions.
Augusta State University Annual Financial Report FY 2008 29

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Instruction
$16,556,779 1,719,106 3,999,526 51,240 182,042 63,011 99,313 1,167,276 145,781
$23,984,074

Research
$0 47,058
589 200 24,709
217 12,923 1,419
$87,115

Functional Classification FY2008

Public Service

Academic Support

$0 152,550 49,514

$6,500 3,873,954
987,948 2,912 76,914

3,047 181,468

29,944 1,909,304
503,072

$386,579

$7,390,548

Student Services
$1,000 2,163,177
576,670 19,627 53,094
545 41,754 781,178 29,914
$3,666,959

Institutional Support
$6,924 3,877,786 2,059,395
202,937 33,057
800 48,593 902,985 83,682
$7,216,159

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

$0 2,438,032
828,381 (81,660)
9,993
2,109,069 1,722,282 2,393,390

$0 1,855
6,008,638

$0 1,059,486
285,695 83,503 58,406 607,846 31,881 4,369,933 647,505

$9,419,487

$6,010,493

$7,144,255

Total Expenses
$16,571,203 15,333,004 8,787,718
278,759 438,215 6,680,840 2,363,818 11,047,349 3,804,763
$65,305,669

Augusta State University Annual Financial Report FY 2008 30

Note 16. Component Units

Augusta State University Foundation, Inc. Augusta State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Augusta State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The consolidated financial statements of the Foundation have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. The Foundation is the single member of the following three limited liability companies: 1) ASU Jaguar Student Housing I, LLC which is a limited liability company organized for the purpose of constructing and holding an apartment complex for the benefit of students attending Augusta State University; 2) ASU Jaguar Student Center, LLC which is a limited liability company organized for the purpose of constructing and holding the student center property located on the campus of the University for the benefit of its students; and 3) ASU Jaguar Ventures, LLC which is a limited liability company organized for the purpose of constructing a golf course clubhouse.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $767,507 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 2500 Walton Way, Augusta, GA 30904.

Investments for Component Units:

Augusta State University Foundation holds endowment and other investments in the amount of $17 million. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.

Investments are comprised of the following amounts at June 30, 2008:

Certificates of Deposit Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds Investment Pools
Total Investments

Cost
$889,012 1,269,530 1,597,984 10,901,585 2,346,606 1,084,050
$18,088,767

Fair Value
$889,012 1,299,465 1,579,577 10,485,676 1,805,394
987,332
$17,046,456

Augusta State University Annual Financial Report FY 2008 31

Long-term Liabilities for Component Units:

Changes in long-term liabilities for Augusta State University Foundation, Inc. for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Notes and Loans Payable Revenue/Mortgage Bonds Payable
Total Long Term Liabilities

$1,401,883 30,767,518
$32,169,401

$0

$142,000

$1,259,883

$142,000

269,841

30,497,677

260,000

$0

$411,841

$31,757,560

$402,000

Notes and Loans Payable On April 23, 2003, the Foundation entered into a construction loan in the amount of $1,250,000 and increased the loan to $1,600,000 on November 10, 2003. The loan had principal outstanding in the amount of $1,259,883 at June 30, 2008. The loan was for real estate improvements at the Forest Hills Golf Club for the benefit of the Augusta State University Athletic Association. This note carries a variable interest rate of LIBOR plus 1.20% but not less than 4.41% (4.41% at June 30, 2008). Interest payments are due monthly. In August 2006, the loan converted to a term loan with quarterly payments of principal and interest. This loan will mature May 24, 2011. The loan is secured by the Foundation's investment account with Georgia Bank & Trust which had a fair market value of $4,335,779 at June 30, 2008.

Annual debt service requirements to maturity for the construction loan are as follows:

Year ending June 30:

2009

1

2010

2

2011

3

Principal

Notes and Loans Payable Interest

$142,000 142,000 975,883
$1,259,883

$53,248 46,986 40,724
$140,958

Total
$195,248 188,986
1,016,607 $1,400,841

Revenue Bonds Payable ASU Jaguar Student Housing I, LLC had the following revenue bonds payable at June 30, 2008:

$19,515,000 ASU Jaguar Student Housing I, LLC, Revenue Bonds, Series 2004, dated August 1, 2004, due in annual installments of $90,000 to $1,445,000, due through February 1, 2035, interest at 4.375% to 5.375%. Interest expense on the bonds totaled $988,260 during the year ending June 30, 2008. The bonds are secured by a deed on the University Village Apartments and repayment responsibility of the bonds lies solely with the ASU Jaguar Student Housing I, LLC. The outstanding principal amount of the bonds as of June 30, 2008 is $19,345,000.

ASU Jaguar Student Center, LLC had the following revenue bonds payable at June 30, 2008:

Augusta State University Annual Financial Report FY 2008 32

$11,145,000 ASU Jaguar Student Center, LLC, Educational Facilities Revenue Bonds, Series 2005, dated February 1, 2005, due in annual installments of $170,000 to $705,000, due through July 1, 2034, interest at 3.25% to 5%. Interest incurred during the year ending June 30, 2008 totaled $497,148. Amortization of the bond premium began July 1, 2007 using the effective interest method which reduced interest expense for the year ended July 30, 2008 by $14,841. The bonds are secured by a deed on the Student Center and repayment responsibility of the bonds lies solely with the ASU Jaguar Student Center, LLC. The outstanding principal amount of the bonds as of June 30, 2008, including unamortized bond premium is $11,152,677.

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal
$260,000 330,000 395,000 465,000 515,000
3,375,000 5,050,000 6,905,000 8,825,000 4,200,000 30,320,000
177,677 $30,497,677

Bonds Payable Interest
$1,500,987 1,489,487 1,476,049 1,459,549 1,441,174 6,820,088 5,840,599 4,460,548 2,498,575 328,163
27,315,219
$27,315,219

Total
$1,760,987 1,819,487 1,871,049 1,924,549 1,956,174
10,195,088 10,890,599 11,365,548 11,323,575
4,528,163 57,635,219
177,677 $57,812,896

Augusta State University Athletic Association Augusta State University Athletic Association (the Athletic Association) is a legally separate, tax-exempt component unit of Augusta State University (University). The Athletic Association is a nonprofit organization that promotes the educational, athletic, and physical education programs of the University. The Athletic Association leases Forest Hills Golf Club (the Club), an 18-hole golf course, from the Board of Regents of the University System of Georgia for a nominal fee. The Association in turn has entered into a management agreement with the Augusta Golf Association, Inc. (the AGA) to manage, operate and maintain Forest Hills Golf Club. The income of the Association is solely derived from the revenues of the Golf Club and interest income. Because these restricted resources held by the Athletic Association can only be used by, or for the benefit of, the University and their management role is significant to the accomplishment of the University's mission, the Athletic Association is considered a component unit of the University and is discretely presented in the University's financial statements.
The Athletic Association is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the

Augusta State University Annual Financial Report FY 2008 33

GASB presentation for external financial reporting purposes in these financial statements. The Athletic Association's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Athletic Association distributed $20,041 for the support of other University programs.
Complete financial statements for the Athletic Association can be obtained from the Administrative Office at 2500 Walton Way, Augusta, GA 30904-2200.
Capital Assets for Component Units:
Augusta State University Athletic Association held the following Capital Assets as of June 30, 2008:
June 30, 2008

Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$3,432,988 943,926
4,376,914
2,585,267
1,791,647 $1,791,647

Long-term Liabilities for Component Units:

Changes in long-term liabilities for the Athletic Association for the fiscal year ended June 30,

2008 are shown below:

Beginning

Ending

Amounts due

Balance

Balance

within

July 1, 2007 Additions Reductions

June 30, 2008

One Year

Capital Lease Obligations Notes and Loans Payable
Total Long Term Liabilities

$47,753 1,566,267
$1,614,020

$13,122 $13,122

$20,764 9,162
$29,926

$40,111 1,557,105
$1,597,216

$18,249 435,918
$454,167

Capital Lease Obligations: The Athletic Association leases course equipment under capital leases that expire in February 2010, April 2010, and June 2010. The terms of the leases require monthly payments totaling $2,011.

Augusta State University Annual Financial Report FY 2008 34

Future minimum lease payments are:

Year ending June 30:

2009

1

2010

2

Total minimum lease payments

Less: Interest

Principal Outstanding

Capital Leases
$24,128 19,921 44,049 3,938
$40,111

Notes and Loans Payable: The Athletic Association holds a note payable to First Bank dated September 22, 2005 in the original amount of $35,961, with an interest rate of 8%. The note is payable in monthly installments of $879 through September 20, 2009 and is secured by equipment. The outstanding principal balance of the note is $12,410 as of June 30, 2008.

The Athletic Association holds a note payable to Augusta State University Foundation, Inc., a related party, dated May 24, 2005 in the original amount of $1,544,695, secured by first priority security interest. The note is payable in quarterly installments of interest only through May 2006, then in consecutive quarterly payments equal to $35,500, plus accrued interest at the LIBOR rate plus 1.2%, commencing on August 24, 2006, and continuing on the same day each third month thereafter, with the total remaining balance due May 24, 2011. The outstanding principal balance of the note is $1,544,695 as of June 30, 2008.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30:

2009

1

2010

2

2011

3

Notes and Loans Payable

Principal

Interest

Total

$435,918 144,492 976,695
$1,557,105

$54,883 47,019 41,000
$142,902

$490,801 191,511
1,017,695 $1,700,007

Augusta State University Annual Financial Report FY 2008 35

BAINBRIDGE COLLEGE
Financial Report
For the Year Ended June 30, 2008

Bainbridge College Bainbridge, Georgia

Dr. Thomas A. Wilkerson
President

Natalie Higley
Vice President for Fiscal Affairs

BAINBRIDGE COLLEGE ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 12 Note 2. Deposits and Investments............................................................................................... 17 Note 3. Accounts Receivable...................................................................................................... 19 Note 4. Inventories...................................................................................................................... 19 Note 5. Notes/Loans Receivable................................................................................................. 19 Note 6. Capital Assets................................................................................................................. 20 Note 7. Deferred Revenue........................................................................................................... 21 Note 8. Long-Term Liabilities .................................................................................................... 21 Note 9. Significant Commitments............................................................................................... 21 Note 10. Lease Obligations.......................................................................................................... 21 Note 11. Retirement Plans ........................................................................................................... 22 Note 12. Risk Management.......................................................................................................... 24 Note 13. Contingencies................................................................................................................ 24 Note 14. Post-Employment Benefits Other Than Pension Benefits ............................................ 25 Note 15. Natural Classifications with Functional Classifications ............................................... 26 Note 16. Special Item................................................................................................................... 27 Note 17. Component Units .......................................................................................................... 27

BAINBRIDGE COLLEGE
Management's Discussion and Analysis

Introduction
Bainbridge College is one of the 35 institutions of higher education of the University System of Georgia. The College, located in Bainbridge, Georgia, was founded in 1970 with construction of the original five buildings beginning in July 1972. Classes began October 1, 1973. The Division of Vocational/Technical Education and the Department of Development Education were added during the academic year 1973-74. A unique agreement, which continues to this day, between the Board of Regents and Georgia Department of Technical and Adult Education, made the addition of the vocational/technical programs possible. Bainbridge College is the only comprehensive community college in southwest Georgia and is fully accredited by the Commission on Colleges of the Southern Association of Colleges and Schools. The College has seen some decline in growth of headcount as shown by the following chart:

Students Students Faculty (Headcount) (FTE)

FY2008

67

2,661

2,042

FY2007

74

2,783

2,085

FY2006

58

2,475

1,825

Overview of the Financial Statements and Financial Analysis

Bainbridge College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Bainbridge College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

Bainbridge College Annual Financial Report FY 2008 1

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$5,191,616 11,416,975
585,079 17,193,670

June 30, 2007
$5,256,825 6,472,893 656,158
12,385,876

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

1,924,545 258,918
2,183,463

1,942,897 177,411
2,120,308

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

11,416,975 560,382 (84,315)
3,117,165 $15,010,207

6,472,893 586,433 98,975
3,107,267 $10,265,568

The total assets of the institution increased by $4,807,794. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $4,944,082 in the category of Capital Assets, net.
The total liabilities for the year increased by $63,155. The combination of the increase in total assets of $4,807,794 and the increase in total liabilities of $63,155 yields an increase in total net assets of $4,744,639. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $4,944,082.

Bainbridge College Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$11,142,461 19,420,110 (8,277,649) 9,451,971
1,174,322 3,570,317 4,744,639 10,265,568
0 10,265,568 $15,010,207

$11,323,426 18,348,411 (7,024,985) 8,691,906
1,666,921 279,226
1,946,147 8,319,421
0 8,319,421 $10,265,568

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Bainbridge College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s and Special It em St at e Special It em
T ot al Capit al Gift s and Grant s and Special It em
T ot al Revenues

June 30, 2008
$2,370,850 8,134,370 362,603 266,931 7,707
11,142,461
9,410,148 0
30,777 11,046 9,451,971
173,601 3,396,716 3,570,317 $24,164,749

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$8,146,045 1,717,622 1,354,980 2,824,038 1,534,578 3,734,083 108,764 0
19,420,110
0 $19,420,110

June 30, 2007
$2,039,717 8,074,216 326,087 846,092 37,314
11,323,426
8,588,452 29,500 73,000 954
8,691,906
230,931 48,295
279,226 $20,294,558
June 30, 2007
$7,735,491 1,082,691 1,095,474 2,604,150 1,557,316 3,367,698 887,284 18,307
18,348,411
0 $18,348,411

Operating revenues decreased by ($180,965) in fiscal 2008. Although Tuition & Fees and Grants and Contracts increased, revenues in Auxiliary and Other categories decreased significantly.

Bainbridge College Annual Financial Report FY 2008 4

The Auxiliary revenue decrease of ($579,161) is a result of the changing environment of outsourcing of the College bookstore late in FY2007. The college will no longer see a revenue stream from the bookstore in the form of sales, but instead will receive a monthly commission payment from the management of the store.

Nonoperating revenues increased by $760,065 for the year primarily due to an increase of $821,696 in State Appropriations.

The compensation and employee benefits category increased by $419,669 and primarily affected the Instruction, Plant Operations & Maintenance and Institutional Support categories. The increase reflects merit increases and an increased cost of health insurance for the employees of the institution.

Utilities increased by $7,986 during the past year. The increase was primarily associated with the increased natural gas costs that were experienced in the winter of fiscal year 2008 and affected the Plant Operations and Maintenance category.

Statement of Cash Flows

The final statement presented by Bainbridge College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($6,992,646) 9,514,749 (1,980,759) 56,622 597,966 2,380,564
$2,978,530

June 30, 2007
($7,603,895) 8,751,934 (717,045) 32,621 463,615 1,916,949
$2,380,564

Bainbridge College Annual Financial Report FY 2008 5

Capital Assets The College had two significant capital asset additions for facilities in fiscal year 2008: the completion of the Nursing Renovation, and the transfer of the building and land from Albany Technical Institute. For additional information concerning Capital Assets, see Notes 1, 6, 8, 9 and 16 in the Notes to the Financial Statements. Long Term Debt and Liabilities Bainbridge College had Long-Term Debt and Liabilities of $517,313 of which $258,395 was reflected as current liability at June 30, 2008. For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements. Component Units In compliance with GASB Statement No. 39, Bainbridge College has included the financial statements and notes for all required component units for FY2008. The Bainbridge College Foundation had endowment investments of $109,733 as of October 31, 2007. Details are available in Notes 1 and 17. Economic Outlook The College is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The College's overall financial position is strong. Even with a relatively flat funded year, the College was able to generate a modest increase in Net Assets. The College anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the College's ability to react to unknown internal and external issues.
Dr. Thomas A. Wilkerson, President Bainbridge College
Bainbridge College Annual Financial Report FY 2008 6

Statement of Net Assets

BAINB RIDGE COLLEGE S TATEMENT OF NET AS S ETS
June 30, 2008

AS S ETS C urrent Assets Cash and Cash Equivalent s Short -t erm Invest m ent s Account s Receivable, net (not e 3) Receivables - Federal Financial Assist ance Receivables - Ot her Due From Com ponent Unit s P repaid items T ot al Current Asset s
Noncurre nt Asse ts Invest m ent s (including Real Est at e) Capit al Asset s, net (not e 6) T ot al Noncurrent Asset s TO TAL AS S ETS
LIAB ILITIES C u rre n t Liabilitie s Account s P ayable Salaries P ayable Deferred Revenue (not e 7) Deposit s Held for Ot her Organizat ions Due t o P rim ary Governm ent Com pensat ed Absences (current port ion) Due t o Com ponent Unit s T ot al Current Liabilit ies Non cu rre n t Liabilitie s Com pensat ed Absences (noncurrent ) T ot al Noncurrent Liabilit ies TO TAL LIAB ILITIES
NET AS S ETS Invest ed in Capit al Asset s, net of relat ed debt Rest rict ed for N o n ex p e n dable E x p en da ble Unrest rict ed TO TAL NET AS S ETS

B a i n bri dg e C olle ge
$2,978,530
773,625 1,391,230
44,231 4,000
5,191,616
585,079 11,416,975 12,002,054 17,193,670
189,117 73,660
1,008,644 386,628
258,395 8,101
1,924,545
258,918 258,918 2,183,463
11,416,975
560,382 (84,315) 3,117,165 $15,010,207

C om pone nt Un it B a i n bri dg e College Fou n dati on
$123,671 109,733
233,404
0 233,404
44,231 44,231
0 44,231
109,733 79,440
$189,173

Bainbridge College Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
B AINBRIDGE COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

B a i n bri dg e College

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful accou Less: Scholarship Allowances Gift s and Cont ribut ions Grant s and Cont ract s Federal St at e Other Sales and Services Auxiliary Ent erprises Bookst ore Food Services P arking/T ransport at ion Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion P ayment s t o or on behalf of Bainbridge College
T ot al Operat ing Expenses Operat ing Income (loss)

$4,708,138 (2,337,288)
6,602,432 1,517,717
14,221 362,603
103,246 2,500
161,185 7,707
11,142,461
4,796,482 4,048,848 2,402,503
96,020 146,767 3,728,785 397,322 3,184,638 618,745
19,420,110 (8,277,649)

C om pone nt Unit B a i n bri dg e College Fou n dati on
$0 20,229
20,229
7,147 12,180 19,327
902

Bainbridge College Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
B AINBRIDGE COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

B a i n bri dg e College

C om pone nt Unit
B a i n bri dg e College
Fou n dati on

NO NO PERATING REVENUES (EXPENS ES ) St at e Appropriat ions Invest m ent Incom e (endowment s, auxiliary and ot her) Ot her Nonoperat ing Revenues Net Nonoperat ing Revenues Income before ot her revenues, expenses, gains, or los Capit al Grant s and Gift s St at e Special It em Addit ions t o permanent endowment s T ot al Ot her Revenues Increase in Net Asset s
NET AS S ETS Net Asset s-beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s-beginning of year, rest at ed Net Asset s-End of Year

9,410,148 30,777 11,046
9,451,971 1,174,322
173,601 3,396,716
3,570,317 4,744,639
10,265,568 0
10,265,568 $15,010,207

1,086
1,086 1,988
40,000 40,000 41,988
147,185 0
147,185 $189,173

Bainbridge College Annual Financial Report FY 2008 9

Statement of Cash Flows

BAINBRIDGE COLLEGE S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008

C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Auxiliary Ent erprise Charges: Bookst ore Food Services P arking/T ransport at ion Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$2,353,479 8,532,800 359,198 (4,624,255) (8,723,256) (3,728,785) 3,706
163,937 2,500
169,562 (1,501,532) (6,992,646)
9,410,148 91,576 13,025
9,514,749
173,601 (2,154,360) (1,980,759)
56,622 56,622 597,966 2,380,564 $2,978,530

Bainbridge College Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
BAINBRIDGE COLLEGE S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Change in fair value of invest ment s recognized as a component of int erest income Special It em - Albany T echnical College Early Count y campus asset t ransfer

June 30, 2008
($8,277,649)
618,745 658,577
8,483 4,000 3,706 89,104 (186,833) (35,273) 124,494 ($6,992,646)
($25,845) $3,396,716

Bainbridge College Annual Financial Report FY 2008 11

BAINBRIDGE COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Bainbridge College serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Bainbridge College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Bainbridge College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Bainbridge College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Bainbridge College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Bainbridge College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Unit - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. For FY2008, Bainbridge College is reporting the activity for the Bainbridge College Foundation.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB
Bainbridge College Annual Financial Report FY 2008 12

and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The College accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and
Bainbridge College Annual Financial Report FY 2008 13

local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Bainbridge College.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Bainbridge College had accrued liability for compensated absences in the amount of $392,819 as of 7-1-2007. For FY2008, $353,466 was earned in
Bainbridge College Annual Financial Report FY 2008 14

compensated absences and employees were paid $228,972, for a net increase of $124,494. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $517,313.

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Assets The College's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.

Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies Inst it ut ional Loans Quasi-Endowm ent s T ot al Rest rict ed Expendable

($140,625) (9,859) 66,169
($84,315)

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University
Bainbridge College Annual Financial Report FY 2008 15

System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$148,355 1,793,980
21,099 1,153,731 $3,117,165

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Bainbridge 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 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 College's financial statements. To the extent

Bainbridge College Annual Financial Report FY 2008 16

that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $2,973,680 and the bank balance was $3,376,462. Of the College's deposits, $3,245,319 were uninsured. Of these uninsured deposits, $3,245,319 were collateralized with securities held by the financial institution's trust department or agent in the College's name.
Bainbridge College Annual Financial Report FY 2008 17

B. Investments Bainbridge College maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable federal and state laws.

The College's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Pools Board of Regents Balanced Income Fund

$585,079

T otal Investment Pools

$585,079

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.

Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The College does not have a formal policy for managing interest rate risk.

The Weighted Average Maturity of the Balanced Income Fund is 7.84 years. Of the College's total investment of $585,079 in the Balanced Income Fund, $374,777 is invested in debt securities.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The College does not have a formal policy for managing credit quality risk.

Bainbridge College Annual Financial Report FY 2008 18

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$16,684 773,625
44,231 1,410,551 2,245,091
36,005
$2,209,086

Note 4. Inventories Bainbridge College had no Inventory as of June 30, 2008.

Note 5. Notes/Loans Receivable Bainbridge College had no Notes/Loans Receivable as of June 30, 2008.

Bainbridge College Annual Financial Report FY 2008 19

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
Total Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections Total Assets Being Depreciated
Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Library Collections Total Accumulated Depreciation
Total Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning Balances 7/1/2007
$99,269 1,697,332 1,796,601
7,387,393 332,813
2,068,819 794,989
10,584,014
3,539,466 262,507
1,443,812 661,937
5,907,722
4,676,292
$6,472,893

Special Item Transfer $351,362 351,362 3,704,000
3,704,000 658,646
658,646 3,045,354 $3,396,716

Additions
$0 1,860,573 1,860,573

Reductions
$0 376,740 376,740

Ending Balance 6/30/2008
$450,631 3,181,165 3,631,796

376,740
238,371 55,416 670,527

212,586 3,969
216,555

11,468,133 332,813
2,094,604 846,436
14,741,986

365,120 39,562 184,397 29,666 618,745
51,782
$1,912,355

224,336 3,970
228,306
(11,751)
$364,989

4,563,232 302,069
1,403,873 687,633
6,956,807
7,785,179
$11,416,975

Bainbridge College Annual Financial Report FY 2008 20

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees T ot als

June 30, 2008 $1,008,644 $1,008,644

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Other Liabilities Compensated Absences

Beginning Balance
July 1, 2007
$392,819

Additions $353,466

Reductions

Ending Balance June 30, 2008

$228,972

$517,313

Total Long Term Obligations

$392,819

$353,466

$228,972

$517,313

Current Portion
$258,395
$258,395

Note 9. Significant Commitments
There were no significant unearned, outstanding construction or renovation contracts as of June 30, 2008.
Note 10. Lease Obligations
Bainbridge College has no lease obligations as of June 30, 2008.
Bainbridge College had no expense for rental of real property and equipment under operating leases for the year ending June 30, 2008.

Bainbridge College Annual Financial Report FY 2008 21

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Bainbridge College participates in the Teachers Retirement System of Georgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Bainbridge College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Bainbridge College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$503,279 $492,798 $421,648

Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible University system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Bainbridge College Annual Financial Report FY 2008 22

Funding Policy Bainbridge College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Bainbridge College and the covered employees made the required contributions of $130,376 (8.13% or 8.15%) and $77,442 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Bainbridge 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $52,718 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.
Bainbridge College Annual Financial Report FY 2008 23

Note 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Bainbridge College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Bainbridge College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Bainbridge College expects such amounts, if any, to be immaterial to its overall financial position.
Bainbridge College Annual Financial Report FY 2008 24

Litigation, claims and assessments filed against Bainbridge College (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 42 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Bainbridge College recognized as incurred $241,582 of expenditures, which was net of $76,645 of participant contributions.
Bainbridge College Annual Financial Report FY 2008 25

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
F acult y St aff B en efit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

Inst ruct ion
$4,761,712 926,226
1,251,586
98,483
29,362 792,160 286,516
$8,146,045

Functional Clas s ification FY2008

Academ ic Sup p o r t

St udent Ser v ic e s

$34,770 632,779 161,075

$0 618,792 166,248

13,097
5,697 831,087
39,117

10,384 8,950 7,307
535,696 7,603

$1,717,622

$1,354,980

Inst it ut ional Sup p o r t
$0 1,189,642
578,126 96,020 22,812
43,095 623,113 271,230
$2,824,038

Natural Classification
F acult y St aff B en efit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

P lant Op erat io n s & Maint enance

Functional Clas s ification FY2008

Sc h o la r sh ip s & Fellowships

A ux ilia r y Ent erprises

$0 681,409 242,806
(7,397) 1,971
311,697 292,953
11,139

$0 2,662
3,719,835 11,586

$0
7,397 20
164 98,043
3,140

$1,534,578

$3,734,083

$108,764

T otal E x p en ses
$4,796,482 4,048,848 2,402,503 96,020 146,767 3,728,785 397,322 3,184,638 618,745
$19,420,110

Bainbridge College Annual Financial Report FY 2008 26

Note 16. Special Item
Bainbridge College absorbed the Early County Site of the Albany Technical College during fiscal year 2007. Per the transfer agreement, the Equipment assets for the Early County Campus were transferred in fiscal 2007 and the Land and Building assets were transferred to Bainbridge College as of July 1, 2007. The Land was transferred at its historical cost of $351,362 and the Building was transferred at its historical cost of $3,704,000 with an accumulated depreciation balance of $658,646 as of July 1, 2007. The net transfer to Bainbridge College was $3,396,716 in fiscal 2008. This amount is reported as a Special Item on the Statement of Revenues, Expenses and Changes in Net Assets and the Statement of Cash Flows. See Note 6 Capital Assets for additional information.
Note 17. Component Units
Bainbridge College Foundation is a legally separate, tax-exempt component unit of Bainbridge College. The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The seven member board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is November 1 through October 31. Amounts reported due to or due from the College do not necessarily agree because of the different fiscal year ends.
During the year ended October 31, 2007, the Foundation distributed $12,180 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 2500 E. Shotwell Street, Bainbridge, GA 39819.
Investments for Component Units:
Bainbridge College Foundation holds endowments and other investments in the amount of $109,733. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Bainbridge College Foundation, in conjunction with the donors, has established a spending plan whereby 50% of the earnings may be used for academic scholarships. The remaining 50% of the earnings are set aside as a reserve.
Bainbridge College Annual Financial Report FY 2008 27

Investments are comprised of the following amounts at October 31, 2007:

Certificates of Deposit Total Investments

Cost $109,733 $109,733

Fair Value $109,733 $109,733

Bainbridge College Annual Financial Report FY 2008 28

CLAYTON STATE UNIVERSITY
Financial Report
For the Year Ended June 30, 2008

Clayton State University Morrow, Georgia

Dr. Thomas K. Harden
President

David K. Heflin
Vice President for Business and Operations

CLAYTON STATE UNIVERSITY ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 8 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 9 Statement of Cash Flows .............................................................................................................. 11 Note 1. Summary of Significant Accounting Policies ................................................................ 13 Note 2. Deposits and Investments................................................................................................ 19 Note 3. Accounts Receivable...................................................................................................... 21 Note 4. Inventories...................................................................................................................... 21 Note 5. Notes/Loans Receivable................................................................................................. 21 Note 6. Capital Assets................................................................................................................. 22 Note 7. Deferred Revenue........................................................................................................... 23 Note 8. Long-Term Liabilities .................................................................................................... 23 Note 9. Significant Commitments............................................................................................... 23 Note 10. Lease Obligations......................................................................................................... 23 Note 11. Retirement Plans .......................................................................................................... 25 Note 12. Risk Management......................................................................................................... 28 Note 13. Contingencies................................................................................................................ 29 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 29 Note 15. Natural Classifications with Functional Classifications .............................................. 31 Note 16. Component Units .......................................................................................................... 32

CLAYTON STATE UNIVERSITY
Management's Discussion and Analysis

Introduction
Clayton State University is one of the 35 institutions of higher education of the University System of Georgia. It is located 15 miles south of Atlanta and enrolls over 6,000 students from 30 states and 25 foreign countries. Clayton State University is adjacent to the Georgia Archives and the Southeast Region Archives of the National Archives and Records Administration the only place in the United States with co-located state and national facilities. The campus environment, 175 beautiful wooded acres with five lakes, is a hallmark of the institution and a surprising contrast to the vibrant urban life of metropolitan Atlanta.
Students Students Faculty (Headcount) (FTE)

FY2008

207

FY2007

191

FY2006

141

6,043 6,081 6,212

4,895 4,919 4,967

On June 12, 2007 the Board of Regents of the University System of Georgia approved the lease for land on the Clayton State University campus to build a student housing unit and a student activity center. The property, which belongs to the University System of Georgia, will be leased to Clayton State University Foundation, Inc. for the purpose of constructing the housing facility and the student activity center. Construction will be completed in August 2008.
The 451-bed on-campus housing facility will be the first-ever for the University and the student activity center will house a recreation center and student union. It is expected that this facility will become the hub of student activities on-campus. The Student Activity Center, a 62,000 square foot building, will house a two-court gymnasium, fitness areas (cardio vascular equipment and free weights) and aerobics studios. In addition, the facility will have meeting rooms for student organizations and clubs, a ballroom, game room spaces, lounge/study areas and a caf.
The addition of these two buildings will serve to augment the total college experience for students and enhance the already exceptional reputation of excellence in education, the arts and athletics at Clayton State University.

Overview of the Financial Statements and Financial Analysis
Clayton State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and

Clayton State University Annual Financial Report FY 2008 1

analysis of the University's financial statements provide an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007. Statement of Net Assets The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Clayton State University. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements. From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors. Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.
Clayton State University Annual Financial Report FY 2008 2

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$8,678,640 57,268,985
1,011,472 66,959,097

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

3,435,649 1,761,148 5,196,797

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Capital P rojects Unrest rict ed Total Ne t As s e ts

57,171,307 988,613 22,263 741,425
2,838,692 $61,762,300

June 30, 2007
$8,097,814 53,315,488
1,084,204 62,497,506
3,986,832 863,017
4,849,849
53,315,488 1,076,036 12,333 0 3,243,800
$57,647,657

The total assets of the institution increased by $4,461,591. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $3,953,497 in the category of Capital Assets, net. The balance of the increase is mainly in the Prepaid Asset category.
The total liabilities for the year increased by $346,948. The combination of the increase in total assets of $4,461,591 and the increase in total liabilities of $346,948 yields an increase in total net assets of $4,114,643. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $3,855,819.
Statement of Revenues, Expenses and Changes in Net Assets
Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Clayton State University Annual Financial Report FY 2008 3

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$37,118,118 62,368,063 (25,249,945) 26,545,108
1,295,163 2,819,480 4,114,643 57,647,657
0 57,647,657 $61,762,300

$34,194,551 58,608,764 (24,414,213) 23,670,322
(743,891) 715,121 (28,770) 57,676,427
0 57,676,427 $57,647,657

The Statement of Revenues, Expenses, and Changes in Net Assets reflect a positive year with an increase 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:

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$16,198,028 11,765,888 2,274,921 6,685,743 193,538 37,118,118
25,908,794 525,221 193,607 (74,562)
26,553,060
2,819,480 2,819,480 $66,490,658

June 30, 2007
$14,249,066 10,427,263 2,555,327 6,785,578 177,317 34,194,551
23,038,790 253,435 436,933 (39,525)
23,689,633
715,121 715,121 $58,599,305

Clayton State University Annual Financial Report FY 2008 4

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$21,317,827 19,957
704,551 8,255,477 4,664,687 8,377,625 6,018,438 5,346,215 7,663,286
0 62,368,063
7,952 $62,376,015

June 30, 2007
$20,977,173 6,171
759,098 7,611,135 4,806,133 7,461,673 4,251,701 4,583,286 6,233,402 1,918,992 58,608,764
19,311 $58,628,075

Operating revenues increased by $2,923,567, or 9%, in fiscal 2008. Although Tuition & Fees included a 14% increase, revenues decreased in Auxiliary and Sales and Services categories by 1% and 11%, respectively.
The Auxiliary revenue decrease of ($99,835) is a result of the upcoming changing environment of residential life on the University's campus. During the year, the university has been preparing for on campus housing by adding new venues.
Nonoperating revenues increased by $2,863,427 for the year primarily due to an increase of $2,870,004 in State Appropriations.
The compensation and employee benefits category increased by $1,216,794 and primarily affected the Academic Support, Student Services and Institutional Support categories. The increase reflects merit increases along with increased cost of health insurance and other benefits such as workers compensation and unemployment insurance for the employees of the institution.
Utilities increased by $402,194 during the past year. The increase was primarily associated with the increased natural gas costs that were experienced in the winter of fiscal year 2008 and affected the Plant Operations and Maintenance category.
Statement of Cash Flows
The final statement presented by Clayton State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second
Clayton State University Annual Financial Report FY 2008 5

section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($22,682,649) 26,454,010 (3,607,622) 280,977 444,716 4,499,663
$4,944,379

June 30, 2007
($21,991,680) 23,201,194 (652,372) (631,052) (73,910) 4,573,573
$4,499,663

Capital Assets

The University had three significant capital asset additions for facilities in fiscal year 2008; the purchase of 12 acres adjacent to the university's property and two buildings that are on that property.

Clayton State University has a major building addition in progress which is the College of Business Academic Building. The $2.5 million for this project was funded by the Georgia State Financing and Investment Commission (GSFIC). Other renovations funded by the GSFIC included $300,000 for buildings and $266,000 for equipment and non-capitalized repairs. Projected funding by GSFIC for FY2009 will be approximately $1.1 million for the completion of the Business building, $3 million for a major classroom building renovation and $600,000 for repairs and renovations.

For additional information concerning Capital Assets, see Notes 1, 6, 8, 9 and 10 in the Notes to the Financial Statements.

Long Term Debt and Liabilities

Clayton State University had Long-Term Debt and Liabilities of $2,761,659 of which $1,000,511 was reflected as current liability at June 30, 2008.

For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.

Clayton State University Annual Financial Report FY 2008 6

Component Units In compliance with GASB Statement No. 39, Clayton State University has included the financial statements and notes for all required component units for fiscal year 2008. The Walter and Emilie Spivey Foundation had investments of $7.6 million as of December 31, 2007. The Clayton State University Foundation, Inc. had investments of $4.7 million as of June 30, 2008. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units. Economic Outlook The University is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The University's overall financial position is strong. The University generated a 13.5% increase in revenues and was able to generate a modest increase in Net Assets. The University anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the University's ability to react to unknown internal and external issues. Dr. Thomas K. Harden, President Clayton State University
Clayton State University Annual Financial Report FY 2008 7

Statement of Net Assets

CLAYTON S TATE UNIVERS ITY S TATEMENT OF NET AS S ETS
June 30, 2008

C om pone nt Un it

C layton State Un i ve rs i ty

Th e W al te r & Em i l i e S pi ve y
Fo u n dati on

AS S ETS C urre nt Asse ts Cash an d Cash Equiv alen t s Sh ort -t erm In v est m ent s Acco unt s Receiv able, n et (n ot e 3 ) Receiv ables - Federal Fin ancial Assist an ce Receiv ables - Ot h er P ledges Receiv able Invent ories (not e 4) P repaid it em s T ot al Curren t Asset s

$4,936,379
396,562 1,750,786
583,931 1,010,982 8,678,640

$117,729 117,729

Noncurre n t Asse ts No n current Cash In vest m ent s (in cludin g Real Est at e) No t es Receiv able, n et Capit al Asset s, net (not e 6) Ot her Asset s T ot al No n current Asset s TO TAL AS S ETS
LIAB ILITIES C u rre n t Liabilitie s Acco unt s P ay able Salaries P ay able Co n t ract s P ayable Deposit s Deferred Rev en ue (n o t e 7 ) Ot h er Liabilit ies Dep osit s Held fo r Ot h er Organ izat ion s Lease P urch ase Obligat io ns (curren t p o rt io n ) Co m p ensat ed Absen ces (curren t p o rt io n ) T ot al Curren t Liabilit ies Non cu rre n t Liabilitie s Lease P urch ase Obligat io ns (n on curren t ) Co m p ensat ed Absen ces (n on curren t ) Rev en ue/M ort gage Bo nds P ay able (n o ncurren t ) T ot al No n current Liabilit ies TO TAL LIAB ILITIES
NET AS S ETS In vest ed in Cap it al Asset s, net of relat ed debt Rest rict ed for Non ex pen dable Exp en dable Capit al P roject s Unrest rict ed TO TAL NET AS S ETS

8,000 980,613
22,859 57,268,985
58,280,457 66,959,097
520,153 172,785 167,165
24,500 1,414,182
26,701 109,652 189,617 810,894 3,435,649
782,272 978,876
1,761,148 5,196,797
57,171,307
988,613 22,263
741,425 2,838,692 $61,762,300

7,596,971 15,405
144,497 7,756,873 7,874,602
0
0 0 144,497
7,730,105 $7,874,602

C om pone nt Unit C layton State Un i ve rs i ty
Fo u n da ti o n , In c.
$507,540 178,574
57,928 1,714
745,756
14,337,790 4,548,572
27,638,585 2,221,453
48,746,400 49,492,156
129,085 1,521,940
1,651,025
42,650,230 42,650,230 44,301,255
1,527,889 1,727,627 3,404,990 (1,469,605) $5,190,901

Clayton State University Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets
CLAYTON STATEUNIVERSITY STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

REVENUES
Operating Revenues Student Tuition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Bookstore Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues Total Operating Revenues
EXPENSES Operating Expenses
Salaries: Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to or on behalf of Clayton State University
Total Operating Expenses Operating Income (loss)

Clayton State University

Component Unit
The Walter & Emilie Spivey Foundation

Component Unit
Clayton State University
Foundation, Inc.

$20,545,156 (4,347,128)
10,077,132 1,018,084
670,672 2,274,921
27,584
3,654,915 303,023 394,301
2,044,751 288,753 165,954
37,118,118
14,122,347 16,247,496 7,946,747
246,969 458,368 6,300,676 1,675,577 12,712,776 2,657,107
62,368,063 (25,249,945)

$0
0 22,215
425,941 448,156 (448,156)

$0 895,778 89,240
985,018
284,418 214,904 458,366 957,688 27,330

Clayton State University Annual Financial Report FY 2008 9

Statement of Revenues, Expenses and Changes in Net Assets, Continued
CLAYTON STATEUNIVERSITY STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

NO NO PERATING REVENUES (EXPENSES) State Appropriations Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Additions to permanent endowments Total Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

Clayton State University

Component Unit
The Walter & Emilie Spivey Foundation

Component Unit
Clayton State University
Foundation, Inc.

25,908,794 525,221 193,607 (7,952) (74,562)
26,545,108 1,295,163
2,819,480
2,819,480 4,114,643
57,647,657 0
57,647,657 $61,762,300

504,378
504,378 56,222
0 56,222 7,818,380
0 7,818,380 $7,874,602

(230,812)
(230,812) (203,482)
259,819 259,819 56,337
5,134,564 0
5,134,564 $5,190,901

Clayton State University Annual Financial Report FY 2008 10

Statement of Cash Flows

CLAYTON S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008

C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes P rincipal P aid on Inst allment Debt Int erest P aid on Inst allment Debt Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$16,407,692 11,616,487 2,274,921 (23,973,532) (30,115,220) (6,300,676) (14,639)
24,300 3,780,188
(22,182) 309,955 394,425 2,033,515 340,971 561,146 (22,682,649)
25,908,794 46,453
531,202 (25,286)
(7,153) 26,454,010
2,819,480 (6,423,478)
(2,825) (799)
(3,607,622)
280,977 280,977 444,716 4,499,663 $4,944,379

Clayton State University Annual Financial Report FY 2008 11

Statement of Cash Flows, Continued
CLAYTON S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed asset s acquired by incurring capit al lease obligat ions Non-capit al it em s acquired by incurring capit al lease obligat ions Change in fair value of invest ment s recognized as a component of int erest income

June 30, 2008
($25,249,945)
2,657,107 635,786 127,864 (267) (14,639) (801,928) 35,035 (180,528) 108,866
($22,682,649)
$100,503 $899,497 ($87,370)

Clayton State University Annual Financial Report FY 2008 12

CLAYTON STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Clayton State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Clayton State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Clayton State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Clayton State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Clayton State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Clayton State University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. For FY2008, Clayton State University is reporting the activity for the Walter and Emilie Spivey Foundation and the Clayton State University Foundation, Inc.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. The financial statements have been
Clayton State University Annual Financial Report FY 2008 13

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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
The University, as required by Generally Accepted Accounting Principles (GAAP) reports summer school revenues and expenses between fiscal years.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable
Clayton State University Annual Financial Report FY 2008 14

expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Clayton State University.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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.
Clayton State University Annual Financial Report FY 2008 15

Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Clayton State University had accrued liability for compensated absences in the amount of $1,680,905 as of July 1, 2007. For FY2008, $1,184,701 was earned in compensated absences and employees were paid $1,075,836, for a net increase of $108,865. The ending balance as of June 30, 2008 in accrued liability for compensated absences was $1,789,770.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets. The Auxiliary Division of the University has entered into a long term lease agreement in the amount of one million dollars to purchases equipment for the start up of oncampus dining services for residential students.
Net Assets The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Clayton State University Annual Financial Report FY 2008 16

Expendable Restricted Net Assets include the following:

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans T ot al Rest rict ed Expendable

June 30, 2008
$9,930 8,607 3,726
$22,263

Restricted net assets expendable Capital Projects: This represents resources for which the University is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$847,694 1,522,219
468,779 $2,838,692

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Clayton State University, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored
Clayton State University Annual Financial Report FY 2008 17

scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans. Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 University, 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 University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Clayton State University Annual Financial Report FY 2008 18

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $4,290,450 and the bank balance was $5,023,212. Of the University's deposits, $5,023,212 were uninsured. Of these uninsured deposits, $5,023,212 were uncollateralized.
B. Investments
At June 30, 2008, the carrying value of the University's investments was $1,624,408, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents and/or Office of Treasury and Fiscal Services investment pools as follows:
Clayton State University Annual Financial Report FY 2008 19

Investment Pools Board of Regents Short-T erm Fund T otal Return Fund Sub T otal
Office of T reasury and Fiscal Services Georgia Fund 1
Sub T otal
T otal Investment Pools

$298,526 980,613
1,279,139
345,269 345,269
$1,624,408

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.
The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1 Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 days.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk.
The Weighted Average Maturity of the Short Term Fund is 1.99 years. Of the University's total investment of $298,526 in the Short Term Fund, $297,332 is invested in debt securities.
The Weighted Average Maturity of the Total Return Fund is 7.84 years. Of the University's total investment of $980,613 in the Total Return Fund, $309,874 is invested in debt securities.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk.

Clayton State University Annual Financial Report FY 2008 20

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$390,306 24,708
396,562 1,474,154 2,285,730
138,382
$2,147,348

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

Bookst ore T otal

June 30, 2008 $583,931 $583,931

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program, along with a small emergency loan program run by the university, comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. The Federal Perkins Loan program has been formally closed out. The Allowance for Uncollectible Notes Receivable for the University is $0.

Clayton State University Annual Financial Report FY 2008 21

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$640,501 422,671
1,063,172
64,017,373 758,454
5,840,909 5,176,753 75,793,489
14,853,928 541,143
4,233,282 3,912,820 23,541,173
52,252,316
$53,315,488

Addi ti o n s
$593,000 2,665,206 3,258,206

Re ductions $0 0

2,298,332
871,030 263,578 3,432,940

631,565 217,559
3,571 852,695

1,943,098 74,332
391,174 248,503 2,657,107
775,833
$4,034,039

590,901 177,681
3,571 772,153
80,542
$80,542

En di n g B a l a n ce 6/30/2008
$1,233,501 3,087,877 4,321,378
66,315,705 126,889
6,494,380 5,436,760 78,373,734
16,797,026 24,574
4,446,775 4,157,752 25,426,127
52,947,607
$57,268,985

Clayton State University Annual Financial Report FY 2008 22

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $1,210,656 203,526
$1,414,182

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations

Beginning Balance
July 1, 2007
$0

Additions $1,000,000

Reductions

Ending Balance June 30, 2008

$28,111

$971,889

Other Liabilities Compensated Absences Total

1,680,905 1,680,905

1,184,701 1,184,701

1,075,836 1,075,836

1,789,770 1,789,770

Total Long Term Obligations

$1,680,905

$2,184,701

$1,103,947

$2,761,659

Current Portion
$189,617
810,894 810,894 $1,000,511

Note 9. Significant Commitments
The University has significant commitments for two lease agreements executed in August 2007 to begin payment in August of 2008. The leases are for a Student Activity Center with a net present value of the minimum lease payment obligation of $21,037,011 which will expire in June 2038 and a Student Housing Complex with a net present value of the minimum lease payment obligation of $24,911,748 to expire in June 2038. This amount is not reflected in the accompanying basic financial statements. The University also has approximately $1.4 million dollars in outstanding construction projects.
Note 10. Lease Obligations
Clayton State University is obligated under one lease agreement to be used for the acquisition of real property and equipment.
CAPITAL LEASES
The single capital lease in the amount of $1,000,000 is payable in monthly installments, carries an interest rate of 2.3%, and expires in fiscal year 2013. Expenditures for fiscal year 2008 were

Clayton State University Annual Financial Report FY 2008 23

$36,063, which included $7,952 in interest and $28,111 in principal. The outstanding lease liability at June 30, 2008 is $971,889.

The leasing arrangement is in the form of an interest-bearing escrow account that is to be used to fund Auxiliary Food Service renovations. At June 30, 3008, $100,503 had been disbursed from this escrow account for equipment and the balance of the account is reported as a Prepaid Item in the Statement of Net Assets. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Equipment Total Assets Held Under Capital Lease

$100,503 $100,503

Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5

Real P roperty and Equipm ent
Capit al Leases
$216,376 216,376 216,377 216,377 180,314
1,045,820 73,931
$971,889

Clayton State University had no expense for rental of real property and equipment under operating leases in FY2008.

Clayton State University Annual Financial Report FY 2008 24

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Clayton State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Clayton State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Clayton State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$1,373,059 $1,331,801 $1,309,323

Employees' Retirement System of Georgia

Plan Description Clayton State University participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Clayton State University Annual Financial Report FY 2008 25

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30, 2008, for employees covered by ERS was $33,750. The University's total payroll for all employees was $30,369,843.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$ 3,513 $0 $0

Clayton State University Annual Financial Report FY 2008 26

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Clayton State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Clayton State University and the covered employees made the required contributions of $921,087 (8.13% or 8.15%) and $565,822 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Clayton State University 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
Clayton State University Annual Financial Report FY 2008 27

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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $204,974 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Clayton State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Clayton State University, as an organizational unit of the Board of Regents of the University System of
Clayton State University Annual Financial Report FY 2008 28

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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. 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 expenditure that is disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Clayton State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Clayton State University (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007
Clayton State University Annual Financial Report FY 2008 29

and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 136 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Clayton State University recognized as incurred $645,778 of expenditures, which was net of $244,842 of participant contributions.
Clayton State University Annual Financial Report FY 2008 30

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Instruction
$13,978,809 1,396,148 3,277,839
196,232 86,500 125,759 1,846,436 410,104
$21,317,827

Research $5,898 1,520 1,990
40
6,275 4,234 $19,957

Functional Classification FY2008

Public Service

Academic Support

$53,036 471,193 134,088

$110,480 4,368,361 1,015,615

3,956 42,278

56,731 5,000 20,433 2,372,381 306,476

$704,551

$8,255,477

Student Services
$0 3,045,631
706,340
96,421 19,723 10,002 769,131 17,439
$4,664,687

Institutional Support
($25,876) 4,080,191 2,090,348
246,969 42,140 5,500 33,446 1,700,395 204,512
$8,377,625

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

$0 1,449,472
391,037 (46,013)
4,258
1,480,293 1,111,042 1,628,349

$0 5,346,215

$0 1,434,980
329,490 46,013 58,630
837,698 5,644
4,864,838 85,993

$6,018,438

$5,346,215

$7,663,286

T ot al Expenses
$14,122,347 16,247,496 7,946,747 246,969 458,368 6,300,676 1,675,577 12,712,776 2,657,107
$62,368,063

Clayton State University Annual Financial Report FY 2008 31

Note 16. Component Units

The Walter & Emilie Spivey Foundation The Walter & Emily Spivey Foundation (Foundation) is a legally separate, tax-exempt component unit of Clayton State University (University). The Foundation provides music scholarships and sponsors programming in Spivey Hall, the University's world class music performance hall. The six-member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 through December 31.

During the year ended December 31, 2007, the Foundation distributed $425,941 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at Clayton State University, 2000 Clayton State Blvd, Morrow, Georgia, 30260.

Investments for Component Units:

The Walter and Emilie Spivey Foundation holds investments in the amount of $7.6 million. Investments consist of marketable securities and real property.

Investments are comprised of the following amounts at December 31, 2007:

Cost

Fair Value

Real Estate Investment Pools
Suntrust Investment Pool
Total Investments

$137,518 7,459,453 $7,596,971

$137,518 7,459,453 $7,596,971

Clayton State University Annual Financial Report FY 2008 32

Capital Assets for Component Units:

The Walter & Emilie Spivey Foundation held the following Capital Assets as of December 31, 2007:

December 31, 2007

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$139,882 139,882
15,384 15,384 10,769
4,615 $144,497

Clayton State University Foundation, Inc. Clayton State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Clayton State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The seven-member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $458,366 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at Clayton State University Foundation, Inc., Alumni Affairs Office, Student Center Building, 2000 Clayton State Blvd, Morrow, Georgia, 30260.

Clayton State University Annual Financial Report FY 2008 33

Investments for Component Units:

Clayton State University Foundation holds endowment and other investments in the amount of $4.7 million. The corpus of the endowment is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.

Investments are comprised of the following amounts at June 30, 2008:

Certificates of Deposit Real Estate Investment Pools
BOR Short Term Fund Total Return Fund
Total Investments

Cost
$202,252 1,836,464
177,290 2,723,315
$4,939,321

Fair Value
$202,252 1,836,464
178,574 2,509,856
$4,727,146

Capital Assets for Component Units:

Clayton State University Foundation, Inc. holds the following Capital Assets as of June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Construction in Progress
Capital Assets, Net

$27,638,585 $27,638,585

Long-term Debt for Component Units:

Changes in long-term liabilities for the Foundation for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Revenue/Mortgage Bonds Payable Total Long Term Liabilities

$0

$42,650,230

$0

$42,650,230

$0

$42,650,230

$0

$0

$42,650,230

$0

Clayton State University Annual Financial Report FY 2008 34

Revenue Bonds Payable On August 15, 2007, the Foundation through its subsidiary CSU Foundation Real Estate I LLC the "Company" issued Series 2007 revenue bonds in the face value amount of $42,450,000. The proceeds of the Series 2007 Bonds will be applied to (a) finance or refinance the costs of the acquisition, construction and equipping of student housing comprised of approximately 451 beds and related amenities and a student activity center (collectively, the "Project") located on the campus of Clayton State University ("CSU"); (ii) fund capitalized interest on the Series 2007 Bonds, (iii) pay the premium for a debt service reserve surety bond to be issued by XL Capital Assurance Inc. (the "Bond Insurer"); and (iv) pay costs of issuance of the Series 2007 Bonds, including a municipal bond insurance policy to be issued by the Bond Insurer. Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038 2039 through 2043
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31-35

Principal
$0 600,000
85,000 135,000 175,000 1,745,000 3,730,000 6,440,000 10,200,000 15,465,000 3,875,000 42,450,000 200,230 $42,650,230

Bonds Payable Interest
$1,852,874 2,021,318 1,997,318 1,993,918 1,988,518 9,776,952 9,232,108 8,193,815 6,371,715 3,372,439 193,750
46,994,725
$46,994,725

Total
$1,852,874 2,621,318 2,082,318 2,128,918 2,163,518
11,521,952 12,962,108 14,633,815 16,571,715 18,837,439
4,068,750 89,444,725
200,230 $89,644,955

Clayton State University Annual Financial Report FY 2008 35

COASTAL GEORGIA COMMUNITY COLLEGE
Financial Report
For the Year Ended June 30, 2008

Coastal Georgia Community College Brunswick, Georgia

Dr. Dorothy L. Lord
President

C. Tom Saunders
Vice President for Business Affairs

COASTAL GEORGIA COMMUNITY COLLEGE ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 12 Note 2. Deposits and Investments............................................................................................... 17 Note 3. Accounts Receivable...................................................................................................... 19 Note 4. Inventories...................................................................................................................... 19 Note 5. Notes/Loans Receivable................................................................................................. 19 Note 6. Capital Assets................................................................................................................. 20 Note 7. Deferred Revenue........................................................................................................... 21 Note 8. Long-Term Liabilities .................................................................................................... 21 Note 9. Significant Commitments............................................................................................... 21 Note 10. Lease Obligations......................................................................................................... 21 Note 11. Retirement Plans .......................................................................................................... 22 Note 12. Risk Management......................................................................................................... 25 Note 13. Contingencies............................................................................................................... 26 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 26 Note 15. Natural Classifications with Functional Classifications .............................................. 28 Note 16. Component Units ......................................................................................................... 29

COASTAL GEORGIA COMMUNITY COLLEGE
Management's Discussion and Analysis

Introduction
Coastal Georgia Community College is one of the 35 institutions of higher education of the University System of Georgia. The College, located in Brunswick, Georgia, was founded in 1961 and has become known for its comprehensive community college mission. The College offers pre-baccalaureate degrees in a wide variety of subjects. Additionally, the College offers career programs. The institution is experiencing a slight decrease in enrollment after years of exceptional growth as shown by the comparison numbers that follow.

Students Students Faculty (Headcount) (FTE)

FY2008

76

2,942

2,109

FY2007

88

3,054

2,175

FY2006

85

3,063

2,144

Overview of the Financial Statements and Financial Analysis

Coastal Georgia Community College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Coastal Georgia Community College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and noncurrent), and Net Assets (Assets minus Liabilities). The difference between current and noncurrent assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Coastal Georgia Community College Annual Financial Report FY 2008 1

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$2,351,307 30,167,777
89,966 32,609,050

June 30, 2007
$2,142,987 28,627,183
98,739 30,868,909

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

985,756 146,886 1,132,642

1,287,652 181,293
1,468,945

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

30,167,777 68,879 39,640
1,200,112 $31,476,408

28,627,183 68,879 48,935
654,967 $29,399,964

The total assets of the institution increased by $1,740,141. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $1,540,594 in the category of Capital Assets, net. The balance of the increase is mainly in receivable categories.
The total liabilities for the year decreased by ($336,303). The combination of the increase in total assets of $1,740,141 and the decrease in total liabilities of ($336,303) yields an increase in total net assets of $2,076,444. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $1,540,594.

Coastal Georgia Community College Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$8,437,269 23,421,576 (14,984,307) 14,293,561
(690,746) 2,767,190 2,076,444 29,399,964
0 29,399,964 $31,476,408

$8,354,116 22,505,573 (14,151,457) 13,181,531
(969,926) 2,084,746 1,114,820 28,285,144
0 28,285,144 $29,399,964

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Coastal Georgia Community College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$3,193,219 3,419,785 312,062 1,447,873 64,330 8,437,269
11,655,938 2,555,358 59,068 23,197
14,293,561
2,767,190 2,767,190 $25,498,020

June 30, 2007
$3,056,829 3,402,490 366,826 1,471,063 56,908 8,354,116
10,048,197 2,614,895 444,151 74,288
13,181,531
2,084,746 2,084,746 $23,620,393

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Expenses

June 30, 2008
$9,854,303 48,745
1,352,097 1,588,229 3,276,315 3,551,335 2,348,283 1,402,269
0
$23,421,576

June 30, 2007
$9,246,490 41,384
1,017,746 1,504,387 3,170,375 3,303,375 2,167,188 1,454,093
600,535
$22,505,573

Operating revenues increased by $83,153 in fiscal 2008. Although Tuition & Fees included a 4% increase, revenues decreased in Sales and Services due to lower Continuing Education enrollment.
The Auxiliary revenue decrease of ($23,190) is a result of lowering the markup on books for the College bookstore.

Coastal Georgia Community College Annual Financial Report FY 2008 4

Nonoperating revenues increased by $1,112,030 for the year primarily due to an increase of $1,607,741 in State Appropriations.
The compensation and employee benefits category increased by $511,491 and primarily affected the Instruction and Academic Support categories. The increase reflects the addition of staff, merit increases, and increased cost of health insurance for the employees of the institution.
Utilities increased by $88,189 during the past year. The increase reflects a complete year's energy cost for the new classroom/warehouse building and continued energy price advances.
Statement of Cash Flows
The final statement presented by Coastal Georgia Community College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivit ies Non-capit al Financing Activit ies Capital and Related Financing Act ivities Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($13,414,335) 14,223,872 (1,036,251) 31,112 (195,602) 1,101,917
$906,315

June 30, 2007
($12,460,740) 13,269,357 (425,612) 65,790 448,795 653,122
$1,101,917

Capital Assets
The College had several capital projects underway during fiscal year 2008. The Library restrooms renovations and Science Building HVAC projects are reported as Construction Workin-Progress at the end of the fiscal year. Additionally there are two continuing major projects, the Physical Education Building renovation and the improvement of campus infrastructure. These two projects will continue into fiscal year 2009.

Coastal Georgia Community College Annual Financial Report FY 2008 5

For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
Coastal Georgia Community College had Long-Term Debt and Liabilities of $521,891 of which $375,005 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, Coastal Georgia Community College has included the financial statements and notes for all required component units for FY2008. The Coastal Georgia Community College Foundation, Inc. had investments of $7.5 million as of December 31, 2007. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Economic Outlook
The College received approval from the Board of Regents of the University System of Georgia for a change in mission and name, College of Coastal Georgia, for the next academic year. New baccalaureate programs will be added in teacher education, nursing, and business as early as Fall 2009. Current programs of study are under review to determine whether they remain consistent with the new College mission. This review may result in numerous changes to academic programs offered, which may affect enrollment and the finances of the institution.
The addition of baccalaureate programs will require significant additional resources. The College does expect continued strong financial support from the Board of Regents including special funding increases due to the mission change.
The College's overall financial position is strong. The College was able to generate a modest increase in Net Assets during the year. Management will maintain a close watch over resources to maintain the College's ability to react to these and other unknown internal and external issues.
Dr. Dorothy L. Lord, President Coastal Georgia Community College
Coastal Georgia Community College Annual Financial Report FY 2008 6

Statement of Net Assets
COAS TAL GEORGIA COMMUNITY COLLEGE S TATEMENT OF NET AS S ETS June 30, 2008

AS S ETS C urrent Assets Cash and Cash Equivalent s Short -t erm Invest m ent s Account s Receivable, net (not e 3) Receivables - Federal Financial Assist ance Receivables - Ot her Cont ribut ions Receivable Inventories (not e 4) P repaid items T ot al Current Asset s
Noncurrent Assets Invest m ent s (including Real Est at e) Not es Receivable, net Capit al Asset s, net (not e 6) T ot al Noncurrent Asset s TO TAL AS S ETS
LIAB ILITIES C u rre n t Liabilitie s Account s P ayable Salaries P ayable Deferred Revenue (not e 7) Deposit s Held for Ot her Organizat ions Com pensat ed Absences (current port ion) T ot al Current Liabilit ies Non cu rre n t Liabilitie s Com pensat ed Absences (noncurrent ) T ot al Noncurrent Liabilit ies TO TAL LIAB ILITIES
NET AS S ETS Invest ed in Capit al Asset s, net of relat ed debt Rest rict ed for N o n e x p e n da ble E x p en da ble Capit al P rojects Unrest rict ed TO TAL NET AS S ETS

C oastal Georgia C om m u n i ty College
$906,315
94,838 1,050,241
288,909 11,004
2,351,307
89,186 780
30,167,777 30,257,743 32,609,050
128,117 275,906
15,498 191,230 375,005 985,756
146,886 146,886 1,132,642
30,167,777
68,879 39,640
1,200,112 $31,476,408

C om pone nt Unit C oastal Georgia
C ommunity College
Fou n dati on , In c.
$1,295,625 7,487,181
177,585
8,960,391
0 8,960,391
0
0 0
4,284,665 1,396,360
894,819 2,384,547 $8,960,391

Coastal Georgia Community College Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
COAS TAL GEORGIA COMMUNITY COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Endowment Income (per spending plan) Grant s and Cont ract s Federal Sales and Services Rents and Royalties Auxiliary Ent erprises Bookst ore Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefit s Ot her P ersonal Services T ravel Scholarships and Fellowships Utilit ies Supplies and Ot her Services Depreciat ion Ot her Operat ing Expense P ayment s t o or on behalf of Coast al Georgia Comm unit y College
T ot al Operat ing Expenses Operat ing Income (loss)

C oastal Georgia C om m u n i ty College

C om pon e n t Un it
C oastal Georgia C om m u n i ty C olle ge
Fou n dati on , In c.

$5,107,974 (1,914,755)
3,419,785 312,062 24,198
1,243,426 189,502 14,945 40,132
8,437,269
4,395,248 6,359,471 3,119,611
100,959 210,839 2,443,294 819,683 4,260,105 1,712,366
23,421,576 (14,984,307)

$0 701,628 287,988
989,616
19,247
47,801 18,139 733,315 818,502 171,114

Coastal Georgia Community College Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
COAS TAL GEORGIA COMMUNITY COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

C oastal Georgia C om m u n ity College

C om pon e n t Un it
C oastal Georgia C om m u n i ty C olle ge
Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENS ES ) St at e Appropriat ions Grant s and Cont ract s Federal St at e Ot h er Gift s Invest ment Income (endowment s, auxiliary and ot her) Net Nonoperat ing Revenues Income before ot her revenues, expenses, gains, or loss Capit al Grant s and Gift s St at e T ot al Ot her Revenues Increase in Net Asset s
NET AS S ETS Net Asset s-beginning of year, as originally report ed P rior Year Adjust ment s Net Asset s-beginning of year, rest at ed Net Asset s-End of Year

11,655,938
647,341 1,162,464
745,553 59,068 23,197
14,293,561 (690,746)
2,767,190 2,767,190 2,076,444
29,399,964 0
29,399,964 $31,476,408

169,341 169,341 340,455
0 340,455
8,619,936 0
8,619,936 $8,960,391

Coastal Georgia Community College Annual Financial Report FY 2008 9

Statement of Cash Flows
COAS TAL GEORGIA COMMUNITY COLLEGE S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Bookst ore Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s P urchase of Invest ment s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$3,173,534 3,451,694 312,063 (8,677,862)
(10,854,613) (2,443,294) (3,893) 4,750
1,310,600 188,135 11,593 112,958
(13,414,335)
11,655,938 (46,493)
2,614,427 14,223,872
2,216,709 (3,252,960) (1,036,251)
35,226 (4,114) 31,112 (195,602) 1,101,917 $906,315

Coastal Georgia Community College Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
COAS TAL GEORGIA COMMUNITY COLLEGE STATEMENT OF CASH FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Change in fair value of invest ment s recognized as a component of int erest income

June 30, 2008
($14,984,307)
1,712,366 148,856 4,603 (6,900) 857 (185,380) (20,025) (3,232) (81,173)
($13,414,335)
($12,029)

Coastal Georgia Community College Annual Financial Report FY 2008 11

COASTAL GEORGIA COMMUNITY COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Coastal Georgia Community College serves the state by providing its students with academic instruction that advances fundamental knowledge of Georgia citizens.
Reporting Entity Coastal Georgia Community College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Coastal Georgia Community College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Coastal Georgia Community College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Coastal Georgia Community College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Coastal Georgia Community College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the College's report. For FY2008, Coastal Georgia Community College is reporting the activity for the Coastal Georgia Community College Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB
Coastal Georgia Community College Annual Financial Report FY 2008 12

Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the College System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The College accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Coastal Georgia Community College Annual Financial Report FY 2008 13

Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are valued at cost using the average-cost basis. Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Coastal Georgia Community College.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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.
Coastal Georgia Community College Annual Financial Report FY 2008 14

Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Coastal Georgia Community College had accrued liability for compensated absences in the amount of $603,064 as of 7-1-2007. For FY2008, $450,981 was earned in compensated absences and employees were paid $532,154, for a net decrease of ($81,173). The ending balance as of 6-30-2008 in accrued liability for compensated absences was $521,891.

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Assets The College's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.

Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies Inst it ut ional Loans T ot al Rest rict ed Expendable

$33,009 6,631
$39,640

Coastal Georgia Community College Annual Financial Report FY 2008 15

Restricted net assets expendable Capital Projects: This represents resources for which the College is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$44,143 643,457
21,000 491,512 $1,200,112

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Coastal Georgia Community 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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

Coastal Georgia Community College Annual Financial Report FY 2008 16

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 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 College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
Coastal Georgia Community College Annual Financial Report FY 2008 17

The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

At June 30, 2008, the carrying value of deposits was $902,615 and the bank balance was $1,852,754. Of the College's deposits, $1,752,754 were uninsured. Of these uninsured deposits, $1,752,754 were collateralized with securities held by the financial institution's trust department or agent in the College's name.

B. Investments

At June 30, 2008, the carrying value of the College's investments was $89,186, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows:

Investment Pools Board of Regents T otal Return Fund

$89,186

T otal Investment Pools

$89,186

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.
Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The College does not have a formal policy for managing interest rate risk.
The Weighted Average Maturity of the Total Return Fund is 7.84 years. Of the College's total investment of $89,186 in the Total Return Fund, $28,183 is invested in debt securities.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The College does not have a formal policy for managing credit quality risk.

Coastal Georgia Community College Annual Financial Report FY 2008 18

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Georgia St at e Financing and Invest m ent Com m ission Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$142,827 81,426 94,838
550,481 307,844 1,177,416
32,337
$1,145,079

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore Ot h er
T otal

$264,611 24,298
$288,909

Note 5. Notes/Loans Receivable
Institutional loans comprise all of the loans receivables at June 30, 2008. There is no allowance for uncollectible loans.

Coastal Georgia Community College Annual Financial Report FY 2008 19

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Library Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$1,578,017 523,226
2,101,243
998,920 32,718,223
1,256,195 5,021,873 2,115,391 42,110,602
702,801 9,495,192
573,109 3,323,635 1,489,925 15,584,662
26,525,940
$28,627,183

Addi ti o n s
$0 3,033,622 3,033,622

Re ductions $0 0

4,900
150,416 64,022
219,338
30,628 979,342
42,760 476,764 182,872 1,712,366
(1,493,028)
$1,540,594

75,117 223,806 298,923
75,117 223,806 298,923
0 $0

En di n g B a l a n ce 6/30/2008
$1,578,017 3,556,848 5,134,865
998,920 32,723,123
1,256,195 5,097,172 1,955,607 42,031,017
733,429 10,474,534
615,869 3,725,282 1,448,991 16,998,105
25,032,912
$30,167,777

Coastal Georgia Community College Annual Financial Report FY 2008 20

Note 7. Deferred Revenue

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

Ot her Deferred Revenue T ot als

June 30, 2008 $15,498 $15,498

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Other Liabilities Compensated Absences

Beginning Balance
July 1, 2007
$603,064

Additions $450,981

Re du cti on s

Ending Balance June 30, 2008

$532,154

$521,891

Total Long Term Obligations

$603,064

$450,981

$532,154

$521,891

C u rre n t Portion
$375,005
$375,005

Note 9. Significant Commitments
The College had significant unearned, outstanding, construction or renovation contracts executed in the amount of $4,291,285 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.

Note 10. Lease Obligations CAPITAL LEASES The College had no capital leases. OPERATING LEASES The College had no operating leases. Coastal Georgia Community College had no expense for rental of real property and equipment under operating leases in FY2008.

Coastal Georgia Community College Annual Financial Report FY 2008 21

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Coastal Georgia Community College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Coastal Georgia Community College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Coastal Georgia Community College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$564,124 $538,489 $520,382

Employees' Retirement System of Georgia

Plan Description Coastal Georgia Community College participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Coastal Georgia Community College Annual Financial Report FY 2008 22

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The College's payroll for the year ended June 30, 2008, for employees covered by ERS was $42,315. The College's total payroll for all employees was $10,754,719.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the College pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the College amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$4,405 $3,535
$0

Coastal Georgia Community College Annual Financial Report FY 2008 23

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Coastal Georgia Community College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Coastal Georgia Community College and the covered employees made the required contributions of $262,845 (8.13% or 8.15%) and $161,455 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Coastal Georgia Community 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.
Coastal Georgia Community College Annual Financial Report FY 2008 24

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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $52,685 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Coastal Georgia Community College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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
Coastal Georgia Community College Annual Financial Report FY 2008 25

property, employee and automobile liability, fidelity and certain other risks. Coastal Georgia Community College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Coastal Georgia Community College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Coastal Georgia Community College (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates
Coastal Georgia Community College Annual Financial Report FY 2008 26

that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 98 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Coastal Georgia Community College recognized as incurred $339,426 of expenditures, which was net of $118,922 of participant contributions.
Coastal Georgia Community College Annual Financial Report FY 2008 27

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Inst ruct ion
$4,395,248 2,216,460 1,543,971
115,809 14,000 96,992
1,358,585 113,238
$9,854,303

Functional Classification FY2008

Public Service

Academic Support

Student Services

$0 25,295
606

$0 741,877 189,044

$0 932,940 246,404

21,106 1,738

17,501
5,756 194,549 203,370

24,729 7,964
10,412 353,677
12,103

$48,745

$1,352,097

$1,588,229

Inst it ut ional Support
$0 1,566,034
869,288 100,959
45,574
18,402 624,538
51,520
$3,276,315

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operat ions & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

$0 759,809 241,048 (20,017)
765
683,803 555,530 1,330,397

$0 2,348,283

$0 117,056
29,250 20,017
6,461 73,047
4,318 1,152,120

$3,551,335

$2,348,283

$1,402,269

T ot al Expenses
$4,395,248 6,359,471 3,119,611 100,959 210,839 2,443,294 819,683 4,260,105 1,712,366
$23,421,576

Coastal Georgia Community College Annual Financial Report FY 2008 28

Note 16. Component Units
Coastal Georgia Community College Foundation, Inc. (Foundation) is a legally separate, taxexempt component unit of Coastal Georgia Community College (College). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The seven member board of the Foundation is selfperpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 through December 31.
During the year ended December 31, 2007, the Foundation distributed $733,315 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Business Affairs Office at 3700 Altama Avenue, Brunswick, GA 31520.
Investments for Component Units:
Coastal Georgia Community College Foundation, Inc. holds endowments and other investments in the amount of $7.5 million. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.
Coastal Georgia Community College Foundation, Inc. investments are comprised of the following amounts at December 31, 2007:

Certificates of Deposit Government and Agency Securities Corporate Bonds Equity Securities M utual Funds
Total Investments

Cost
$2,144,962 1,421,167 201,005 7,840 3,542,866
$7,317,840

Fair Value
$2,152,756 1,427,782 216,205 5,875 3,684,563
$7,487,181

Coastal Georgia Community College Annual Financial Report FY 2008 29

COLUMBUS STATE UNIVERSITY
Financial Report
For the Year Ended June 30, 2008

Columbus State University Columbus, Georgia

Dr. Frank D. Brown
President

John Thomas Helton
Vice President for Business & Finance

COLUMBUS STATE UNIVERSITY ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets..................................................... 11 Statement of Cash Flows .............................................................................................................. 15 Note 1. Summary of Significant Accounting Policies ................................................................ 17 Note 2. Deposits and Investments............................................................................................... 22 Note 3. Accounts Receivable...................................................................................................... 25 Note 4. Inventories...................................................................................................................... 25 Note 5. Notes/Loans Receivable................................................................................................. 25 Note 6. Capital Assets................................................................................................................. 26 Note 7. Deferred Revenue........................................................................................................... 27 Note 8. Long-Term Liabilities .................................................................................................... 27 Note 9. Significant Commitments............................................................................................... 27 Note 10. Lease Obligations......................................................................................................... 27 Note 11. Retirement Plans .......................................................................................................... 30 Note 12. Risk Management......................................................................................................... 33 Note 13. Contingencies............................................................................................................... 34 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 34 Note 15. Natural Classifications with Functional Classifications .............................................. 36 Note 16. Component Units ......................................................................................................... 37

COLUMBUS STATE UNIVERSITY
Management's Discussion and Analysis

Introduction
Columbus State University is one of the 35 institutions of higher education of the University System of Georgia. The University, located in Columbus, Georgia, was founded in 1958 and has become known for its nationally accredited programs in art, business, nursing, music, theatre and teacher education. The University offers baccalaureate and masters degrees in a wide variety of subjects. This wide range of educational opportunities attracts a highly qualified faculty and a student body of over 7,500 students. The institution remains consistent with prior year enrollment as shown by the comparison numbers that follow.

Students Students Faculty (Headcount) (FTE)

FY2008

301

FY2007

309

FY2006

246

7,593 7,597 7,475

6,426 6,394 6,240

Overview of the Financial Statements and Financial Analysis

Columbus State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Columbus State University. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Columbus State University Annual Financial Report FY 2008 1

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$18,769,258 128,235,685
3,367,930 150,372,873

June 30, 2007
$17,451,900 52,434,293 3,459,446 73,345,639

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

9,954,335 63,002,117 72,956,452

6,670,510 1,007,763 7,678,273

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

64,352,120 1,663,685 2,784,148 8,616,468
$77,416,421

52,434,293 1,650,195 2,811,232 8,771,646
$65,667,366

The total assets of the institution increased by $77,027,234. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $75,801,392 in the category of Capital Assets, net. The balance of the increase is mainly in the cash and cash equivalents category.
The total liabilities for the year increased by $65,278,179. The combination of the increase in total assets of $77,027,234 and the increase in total liabilities of $65,278,179 yields an increase in total net assets of $11,749,055. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $11,917,827.

Columbus State University Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$37,701,346 82,962,343 (45,260,997) 43,026,858
(2,234,139) 13,983,194 11,749,055 65,667,366
0 65,667,366 $77,416,421

$38,483,148 78,534,936 (40,051,788) 40,438,251
386,463 137,350 523,813 65,143,553
0 65,143,553 $65,667,366

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Columbus State University Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$20,848,428 8,781,693 2,347,069 5,518,527 205,629
37,701,346
38,247,603 3,633,244 816,609 712,584 (5,784)
43,404,256
1,666,756 12,316,438 13,983,194 $95,088,796

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$31,868,466 1,008
8,020,570 4,632,776 11,906,547 13,517,443 6,778,949 6,236,584
0 82,962,343
377,398 $83,339,741

June 30, 2007
$19,134,195 8,782,843 2,029,850 8,361,907 174,353
38,483,148
34,596,786 4,036,299 611,332 1,205,735 (11,901)
40,438,251
137,350
137,350 $79,058,749
June 30, 2007
$29,820,123 0
7,335,473 4,411,932 11,700,706 10,020,178 7,203,830 6,225,317 1,817,377 78,534,936
0 $78,534,936

Columbus State University Annual Financial Report FY 2008 4

Operating revenues decreased by ($781,802) in fiscal 2008. Although Tuition & Fees included a 9% increase, revenues decreased in Auxiliary.

The Auxiliary revenue decrease of ($2,843,380) is a result of the changing environment of residential life on and near the University's campus. Cougar Village, a privately owned development, opened during fiscal year 2008. A number of students made the decision to live in this particular private housing, decreasing institutionally owned housing revenues.

Nonoperating revenues increased by $2,966,005 for the year primarily due to an increase of $3,650,817 in State Appropriations, although Grants and Contracts decreased by ($403,055) and Investment Income decreased by ($493,151).

The compensation and employee benefits category increased by $3,008,556 and primarily affected the Instruction, Academic Support and Institutional Support categories. Notably, the number of faculty decreased by 8, however, the salary levels increased.

Utilities increased by $736,515 during the past year. The increase was primarily associated with the increased natural gas costs as well as a full year of operation at the RiverPark Campus located in downtown Columbus.

Statement of Cash Flows

The final statement presented by Columbus State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($39,184,837) 42,342,674 (2,984,171) 833,224 1,006,890 14,481,687
$15,488,577

June 30, 2007
($37,887,226) 39,985,680 (2,796,512) 1,047,834 349,776 14,131,911
$14,481,687

Columbus State University Annual Financial Report FY 2008 5

Capital Assets
The University had one significant capital asset addition for facilities in fiscal year 2008. The Corn Center for the Visual Arts was gifted to Columbus State University by the Columbus State University Foundation. The value of the gift was $12,233,838.
For additional information concerning Capital Assets, see Notes 1, 6, 8, 9, and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
Columbus State University had Long-Term Debt and Liabilities of $66,082,563 of which $3,080,446 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, Columbus State University has included the financial statements and notes for all required component units for FY2008. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Economic Outlook
Columbus State University continues to have very significant concerns regarding the lack of funding for support of the RiverPark campus which has now been operational for one full year. The RiverPark campus is the nerve center for what will be a critical strategic emphasis on growing CSU's fine and performing arts programs. The Schwob School of Music, the Corn Center for Visual Arts, and extensive theatre programs involving world class facilities at the RiverCenter, and the State of Georgia Theatre at the Springer Opera House position CSU for a unique place in public higher education in Georgia. Well over 100 faculty and staff and close to 600 students daily take advantage of the RiverPark campus which is a most unique private/public partnership.
While private funds built these exceptional facilities, they will require some public support to underwrite the management and maintenance of this campus. CSU plays an integral role in the economic development of uptown Columbus and has every intention of growing the fine and performing arts "franchise" at RiverPark. This wonderful arts complex reinforces the goal of the University System of Georgia to offer academic excellence, integrate with various state agencies, increase student access to the fine and performing arts and directly support faculty scholarship and research.
Dr. Frank D. Brown, President Columbus State University
Columbus State University Annual Financial Report FY 2008 6

Statement of Net Assets
COLUMBUS S TATE UNIVERS ITY S TATEMENT OF NET AS S ETS June 30, 2008

AS S ETS C urre nt Asse ts Cash and Cash Equivalent s Short -t erm Invest m ent s Account s Receivable, net (not e 3) Receivables - Federal Financial Assist ance Receivables - Ot her Due From Com ponent Unit s P ledges Receivable Due From P rim ary Governm ent Invent ories (note 4) P repaid it ems Ot her Asset s T ot al Current Asset s
Noncurrent Assets Noncurrent Cash Due from Com ponent Unit s Invest m ent s (including Real Est at e) Not es Receivable, net P ledges Receivable Capit al Asset s, net (not e 6) Ot her Asset s T ot al Noncurrent Asset s TO TAL AS S ETS

C olum bus State Un i ve rs i ty

C om pone nt Unit
C olum bus State Un i ve rs i ty
Fou n dati on , In c.

$15,087,210
373,761 2,834,305
156,078
317,904 18,769,258
401,367 2,003,987
962,576 128,235,685 131,603,615 150,372,873

$0
13,748 761,236 5,285,805
41,571 150,931 6,253,291
7,570,603 288,849
35,385,669 9,484,025
52,729,146 58,982,437

Columbus State University Annual Financial Report FY 2008 7

Statement of Net Assets, Continued
COLUMBUS S TATE UNIVERS ITY S TATEMENT OF NET AS S ETS June 30, 2008

C olum bus State Un i ve rs i ty

LIAB ILITIES C u rre n t Liabilitie s Account s P ayable Salaries P ayable Deposit s Deferred Revenue (not e 7) Ot her Liabilit ies Deposit s Held for Ot her Organizat ions Due t o P rim ary Governm ent Lease P urchase Obligat ions (current port ion) Com pensat ed Absences (current port ion) Revenue/Mort gage Bonds P ayable (current ) Liabilit ies under Split -Int erest Agreem ent s (current ) Due t o Com ponent Unit s Not es and Loans P ayable (current port ion) T ot al Current Liabilit ies Non cu rre n t Liabilitie s Lease P urchase Obligat ions (noncurrent ) Deferred Revenue (noncurrent ) Com pensat ed Absences (noncurrent ) Revenue/Mort gage Bonds P ayable (noncurrent ) Liabilit ies under Split -Int erest Agreem ent s (noncurrent ) Ot her Long-T erm Liabilit ies Due t o Com ponent Unit s Not es and Loans P ayable (noncurrent ) T ot al Noncurrent Liabilit ies TO TAL LIAB ILITIES
NET AS S ETS Invest ed in Capit al Asset s, net of relat ed debt Rest rict ed for N o n e x p en da ble E x p e n da ble Unrest rict ed TO TAL NET AS S ETS

259,001 240,806 163,925 5,174,413
4 1,035,740 1,934,114 1,146,332
9,954,335 61,949,451
1,052,666
63,002,117 72,956,452
64,352,120 1,663,685 2,784,148 8,616,468
$77,416,421

C om pone nt Unit C olum bus State
Un i ve rs i ty Fou n dati on , In c.
485,644
1,021 333,000 279,175
116,317 41,485
1,256,642
1,239,023 303,099
4,065,602 5,607,724 6,864,366
26,029,589 22,317,198
3,771,284 $52,118,071

Columbus State University Annual Financial Report FY 2008 8

Statement of Net Assets, Continued
COLUMBUS STATEUNIVERSITY STATEMENT OF NET ASSETS June 30, 2008

ASSETS Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, net (note 3) Receivables - Federal Financial Assistance Receivables - Other Due From Component Units Pledges Receivable Due From Primary Government Inventories (note 4) Prepaid items Other Assets Total Current Assets
Noncurrent Assets Noncurrent Cash Due from Component Units Investments (including Real Estate) Notes Receivable, net Pledges Receivable Capital Assets, net (note 6) Other Assets Total Noncurrent Assets TOTAL ASSETS

Component Unit

Component Unit

Component Unit

Fou n dati on Properties, Inc.

Columbus State Un i ve rsi ty
Athletic Fund, Inc.

Columbus State University Alumni
Association, Inc.

$734,833
429,798 56,682
303,250 2,119
1,526,682
1,667,691 4,065,602 2,194,353
120,895,490 1,793,421
130,616,557 132,143,239

$134,959
90,344 100
23,867 2,500 2,130 3,350
257,250
314,344 1,380,902
22,327
1,717,573 1,974,823

$45,475 8,484
564 41,385
595
96,503 47,582 132,219
2,484 182,285 278,788

Columbus State University Annual Financial Report FY 2008 9

Statement of Net Assets, Continued
COLUMBUS STATEUNIVERSITY STATEMENT OF NET ASSETS June 30, 2008

Component Unit

Component Unit

Component Unit

Foundation Properties, Inc.

Columbus State University
Athletic Fund, Inc.

Columbus State University Alumni
Association, Inc.

LIABILITIES Current Liabilities Accounts Payable Salaries Payable Deposits Deferred Revenue (note 7) Other Liabilities Deposits Held for Other Organizations Due to Primary Government Lease Purchase Obligations (current portion) Compensated Absences (current portion) Revenue/Mortgage Bonds Payable (current) Liabilities under Split-Interest Agreements (current) Due to Component Units Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Lease Purchase Obligations (noncurrent) Deferred Revenue (noncurrent) Compensated Absences (noncurrent) Revenue/Mortgage Bonds Payable (noncurrent) Liabilities under Split-Interest Agreements (noncurrent) Other Long-Term Liabilities Due to Component Units Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES
NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Unrestricted TOTAL NET ASSETS

1,883,148 116,187
2,190,878 29,835,936
1,469,916 695,922
3,974,296 40,166,283
74,985,084
242,874 75,227,958 115,394,241 46,839,128
(30,090,130) $16,748,998

60,206 27,419 243,021
121,996 452,642
288,849 288,849 741,491
1,338,572 394,094 (499,334)
$1,233,332

7,320
654
7,974 4,940
4,940 12,914
2,484 64,723 198,667 $265,874

Columbus State University Annual Financial Report FY 2008 10

Statement of Revenues, Expenses and Changes in Net Assets

COLUMBUS S TATE UNIVERS ITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Endowment Income (per spending plan) Grant s and Cont ract s Federal St at e Other Sales and Services Rents and Royalt ies Auxiliary Ent erprises Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion P ayments t o ot her Component Unit s P ayment s t o or on behalf of Columbus St at e Universit y
T ot al Operat ing Expenses Operat ing Income (loss)

C olu m bus State Un i ve rs i ty

C om pon e n t Un it
C olum bus State Un i ve rsi ty
Fou n dati on , In c.

$28,996,238 (8,147,810)
8,137,239 502,016 142,438
2,347,069 48,640
1,588,402 223,775 180,207 887,814 543,774
2,023,751 70,804
156,989 37,701,346
18,791,343 20,712,160 10,908,831
148,272 510,070 7,549,943 3,770,401 15,903,892 4,667,431
82,962,343 (45,260,997)

$0 4,321,112 2,278,073
244,193
15,154 6,858,532
974,805 116,050 376,475 5,653,497 281,590 983,187 8,385,604 (1,527,072)

Columbus State University Annual Financial Report FY 2008 11

Statement of Revenues, Expenses and Changes in Net Assets, Continued
COLUMBUS S TATE UNIVERS ITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

NO NO PERATING REVENUES (EXPENS ES ) St at e Appropriat ions Grant s and Cont ract s St at e Other Gift s Invest m ent Incom e (endowment s, auxiliary and ot her) Int erest Expense (capit al asset s) Ot her Nonoperat ing Revenues Net Nonoperat ing Revenues Income before ot her revenues, expenses, gains, or loss Capit al Grant s and Gift s St at e Other Addit ions t o permanent endowment s T ot al Ot her Revenues Increase in Net Asset s
NET AS S ETS Net Asset s-beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s-beginning of year, rest at ed Net Asset s-End of Year

C olu m bus State Un i ve rs i ty

C om pon e n t Un it
C olum bus State Un i ve rsi ty
Fou n dati on , In c.

38,247,603
103,456 3,529,788
816,609 712,584 (377,398)
(5,784) 43,026,858 (2,234,139)
1,666,756 12,316,438
13,983,194 11,749,055
65,667,366 0
65,667,366 $77,416,421

1,139,414
1,139,414 (387,658)
516,830 516,830 129,172
51,988,899 0
51,988,899 $52,118,071

Columbus State University Annual Financial Report FY 2008 12

Statement of Revenues, Expenses and Changes in Net Assets, Continued

COLUMBUS STATE UNIVERSITY STATEMENT of REVENUES, EXPENSES, and CHANGES in NET ASSETS
for the Year Ended June 30, 2008

REVENUES

C om po n e n t Un i t
Fou n dati on Prope rtie s,
In c.

C om pon e n t Un i t
C ol u m bu s State
Unive rsity Athletic Fund,
In c.

Operating Revenues Student T uition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts Federal St at e Ot h er Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bo o k st o re Food Services Parking/T ransportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues T otal Operating Revenues
EXPENS ES Operating Expenses
Salaries: Facult y St aff
Employee Benefits Other Personal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Other Services Depreciat ion Payments to other Component Units Payments to or on behalf of Columbus State University
T otal Operating Expenses Operating Income (loss)

$0 1,341,505
6,218,952
344,390 7,904,847
414,861 54,839
331,884 1,908,963 2,327,808
199,137 482,076 5,719,568 2,185,279

$0 147,983
237,283 10,800
208 396,274
217,133 910,845 343,944 1,471,922 (1,075,648)

Compone nt Un i t
Columbus State Un i ve rs i ty Al u m n i As s oci ati on , In c.
$0 88,412
47,503
1,569 137,484
33,566 3,714
41,216 660
16,875 11,659 107,690 29,794

Columbus State University Annual Financial Report FY 2008 13

Statement of Revenues, Expenses and Changes in Net Assets, Continued

COLUMBUS STATE UNIVERSITY STATEMENT of REVENUES, EXPENSES, and CHANGES in NET ASSETS
for the Year Ended June 30, 2008

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts St at e Ot her Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Ot her Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

C ompone nt Un i t
Fo u n da ti o n Prope rtie s,
In c.

C ompone nt Un i t
C olumbus State
Unive rsity Athle tic Fund,
In c.

462,105 (3,278,762)
(2,816,657) (631,378)

207,051
207,051 (868,597)

0 (631,378)
17,380,376 0
17,380,376 $16,748,998

3,200 3,200 (865,397)
2,098,729 0
2,098,729 $1,233,332

C ompone nt Un i t
C olumbus State Unive rsity Al u m n i As s oci ati on , In c.
14,311
14,311 44,105
0 44,105 221,769
0 221,769 $265,874

Columbus State University Annual Financial Report FY 2008 14

Statement of Cash Flows
COLUMBUS S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES P roceeds from Sales and Mat urit ies of Invest m ent s Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$21,207,048 6,915,111 2,347,069
(31,234,982) (39,299,032)
(7,549,943) (1,693,874) 1,664,748
2,878,153 223,483 189,910 972,765 547,853
2,044,724 70,804
1,531,326 (39,184,837)
38,247,603 (354,782) 4,449,853
42,342,674
1,666,756 (2,397,269) (1,876,260)
(377,398) (2,984,171)
113,047 720,177 833,224 1,006,890 14,481,687 $15,488,577

Columbus State University Annual Financial Report FY 2008 15

Statement of Cash Flows, Continued
COLUMBUS S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed asset s acquired by incurring capit al lease obligat ions Change in fair value of invest ment s recognized as a component of int erest income Gift of capit al asset s reducing proceeds of capit al grant s and gift s

June 30, 2008
($45,260,997)
4,667,431 (305,480)
(6,061) (29,126) 42,068 1,561,162 (23,749) 169,915 ($39,184,837)
$65,759,825 ($7,593)
($12,316,438)

Columbus State University Annual Financial Report FY 2008 16

COLUMBUS STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Columbus State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Columbus State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Columbus State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Columbus State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Columbus State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Columbus State University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, Columbus State University is reporting the activity for the Columbus State University Foundation, Inc., Foundation Properties, Inc., the Columbus State University Athletic Fund, Inc., and the Columbus State University Alumni Association, Inc. See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB
Columbus State University Annual Financial Report FY 2008 17

Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the Board of Regents Short-Term Investment Pool.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Balanced Income Fund is included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Columbus State University Annual Financial Report FY 2008 18

Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Columbus State University.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Columbus State University had accrued liability for compensated absences in the amount of $2,029,083 as of 7-1-2007. For FY2008, $1,543,030
Columbus State University Annual Financial Report FY 2008 19

was earned in compensated absences and employees were paid $1,373,115, for a net increase of $169,915. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $2,198,998.

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Assets The University's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.

Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans Quasi-Endowm ent s T ot al Rest rict ed Expendable

$956,976 607,676
1,060,686 158,810
$2,784,148

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet
Columbus State University Annual Financial Report FY 2008 20

current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$1,885,589 2,971,550 3,759,329
$8,616,468

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Columbus State University, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 University, 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

Columbus State University Annual Financial Report FY 2008 21

either operating or nonoperating revenues in the University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $14,335,011 and the bank balance was $15,845,683. Of the University's deposits, $15,745,683 were uninsured. Of these uninsured deposits, $15,745,683 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name.
Columbus State University Annual Financial Report FY 2008 22

B. Investments Columbus State University maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable Federal and state laws.

The University's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

INVES TMENTS
Investment ty p e Debt Securities
U.S. Agencies Exp licitly Guaranteed
Corp orate Debt M unicip al Obligation
Other Investments Equity Securities - Domestic
Investment Pools Board of Regents Short-T erm Fund Balanced Income Fund
Total Investments

Fair Value

Inves tment Maturity Les s Than 1 Year

387 11,383
5,000 $16,770
245,674
1,144,845 1,741,543 $3,148,832

387 11,383
5,000
$16,770

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk.

Columbus State University Annual Financial Report FY 2008 23

The Weighted Average Maturity of the Short Term Fund is 1.99 years. Of the University's total investment of $1,144,845 in the Short Term Fund, $1,140,266 is invested in debt securities.
The Weighted Average Maturity of the Balanced Income Fund is 7.84 years. Of the University's total investment of $1,741,543 in the Balanced Income Fund, $1,119,812 is invested in debt securities.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the university will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The University does not have a formal policy for managing custodial credit risk for investments.
At June 30, 2008, $234,241 of the University's applicable investments were uninsured and held by the investment's counterparty in the University's name.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk.
The investments subject to credit quality risk are reflected below:

Related Debt Inves tments Corp orate Debt M unicip al Obligation

Fair Value
$11,383 5,000
$16,383

AAA
$0 5,000 $5,000

U nrat ed $11,383 $11,383

Columbus State University Annual Financial Report FY 2008 24

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$940,503 94,752
373,761 156,078 1,926,583 3,491,677 127,533
$3,364,144

Note 4. Inventories
Columbus State University had no inventories at June 30, 2008.
Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. As of June 30, 2008, Notes Receivable contained $0 in allowance for uncollectible accounts.

Columbus State University Annual Financial Report FY 2008 25

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$2,415,543 137,350
2,552,893
2,309,513 67,210,997
2,584,312 9,793,758
0 7,389,888
22,000 89,310,468
1,272,045 22,734,714
1,884,107 6,685,270
0 6,852,932 39,429,068
49,881,400
$52,434,293

Addi ti o n s
$0 1,564,414 1,564,414

Re ductions
$0 137,350 137,350

En di n g B al an ce 6/30/2008
$2,415,543 1,564,414 3,979,957

12,445,510
688,836 65,759,825
152,297
79,046,468

436,155 436,155

2,309,513 79,656,507
2,584,312 10,046,439 65,759,825
7,542,185 22,000
167,920,781

79,959 1,621,903
94,218 817,608 1,913,034 140,709 4,667,431
74,379,037
$75,943,451

431,446
431,446 4,709
$142,059

1,352,004 24,356,617
1,978,325 7,071,432 1,913,034 6,993,641 43,665,053
124,255,728
$128,235,685

Columbus State University Annual Financial Report FY 2008 26

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $3,941,078 1,233,335
$5,174,413

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations
Other Liabilities Compensated Absences

Beginning Balance
July 1, 2007
$0
2,029,083

Additions $65,759,825
1,543,030

Reductions

Ending Balance June 30, 2008

$1,876,260

$63,883,565

1,373,115

2,198,998

Total Long Term Obligations

$2,029,083

$67,302,855

$3,249,375

$66,082,563

Current Portion $1,934,114 1,146,332 $3,080,446

Note 9. Significant Commitments
The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $6,293,882 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.
Note 10. Lease Obligations
Columbus State University is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases for the acquisition of real property.
CAPITAL LEASES
Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2031 and 2032. Expenditures for fiscal year 2008 were $2,253,658 of which $377,398 represented interest. Total principal paid on capital leases was $1,876,260 for the fiscal year ended June 30, 2008. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Columbus State University Annual Financial Report FY 2008 27

Buildings Total Assets Held Under Capital Lease

$63,846,791 $63,846,791

Columbus State University had three capital leases with Foundation Properties, Inc., a discretely presented component unit, in the current fiscal year.
In December 2006, Columbus State University entered into a capital lease of $5,873,076 whereby the University leases office space for one year with options to renew on a year-to-year basis for twenty-five consecutive one-year periods expiring on June 30, 2032. At the expiration of the lease, ownership transfers to the University. The outstanding liability at June 30, 2008 on this capital lease is $5,689,716.
In July 2006, Columbus State University entered into a capital lease of $50,706,749 whereby the University leases student housing for one year with the option to renew on a year-to-year basis for twenty-five consecutive one-year periods expiring on June 30, 2031. At the expiration of the lease, ownership transfers to the University. The outstanding liability at June 30, 2008 on this capital lease is $49,233,849.
In February 2006, Columbus State University entered into a capital lease of $9,180,000 at 4.5 percent whereby the University leases a parking deck for twenty-five year period that expires on June 30, 2032. The deck is constructed on land owned by the University and leased to Foundation Properties, Inc. for $10 annually for a period of twenty-five years commencing in February 2006. At the expiration of the ground lease, ownership of the parking deck transfers to the University. The outstanding liability at June 30, 2008 on this capital lease is $8,960,000.
OPERATING LEASES
Columbus State University's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2033. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. The property under operating leases is for classroom space, office space, dormitories, copiers and other small business equipment.
On July 1, 2007, Columbus State University entered into a real property operating lease with the Foundation Properties, Inc., a related party, for student housing from 2007 through 2008 for annual rentals of $509,232. This operating lease was renewed in June 2008 to extend the lease to June 30, 2009.
On July 1, 2007, Columbus State University entered into a real property operating lease with the Foundation Properties, Inc., a related party, for classroom and meeting room space from 2007 through 2008 for annual rentals of $172,883. This operating lease was renewed in June 2008 to extend the lease to June 30, 2009.
Columbus State University Annual Financial Report FY 2008 28

On July 1, 2007, Columbus State University entered into a real property operating lease with the Foundation Properties, Inc., a related party, for classroom and office space from 2007 through 2008 for annual rentals of $120,000. This operating lease was renewed in June 2008 to extend the lease to June 30, 2009.
On July 1, 2007, Columbus State University entered into a real property operating lease with the Foundation Properties, Inc., a related party, for classroom space from 2007 through 2008 for annual rentals of $42,372. This operating lease was renewed in June 2008 to extend the lease to June 30, 2009.
On July 1, 2007, Columbus State University entered into a real property operating lease with the Foundation Properties, Inc., a related party, for classroom and office space from 2007 through 2008 for annual rentals of $526,032. This operating lease was renewed in June 2008 to extend the lease to June 30, 2009.
On July 1, 2007, Columbus State University entered into a real property operating lease with the Foundation Properties, Inc., a related party, for office space from 2007 through 2008 for annual rentals of $152,016. This operating lease was renewed in June 2008 to extend the lease to June 30, 2009.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$2,301,811 2,347,645 2,399,620 2,452,305 2,506,647
13,392,384 15,001,839 16,837,135 12,001,762 69,241,148
5,357,583 $63,883,565

$1,635,889 1,667,606 1,558,370 1,548,422 1,419,698 7,670,396 8,721,938 9,923,254 3,627,313
$37,772,886

Columbus State University's FY2008 expense for rental of real property and equipment under operating leases was $1,556,236.

Columbus State University Annual Financial Report FY 2008 29

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Columbus State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Columbus State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Columbus State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$2,107,302 $2,016,878 $1,898,175

Employees' Retirement System of Georgia

Plan Description Columbus State University participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Columbus State University Annual Financial Report FY 2008 30

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30, 2008, for employees covered by ERS was $47,705. The University's total payroll for all employees was $39,503,503.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$4,966 $4,789 $1,171

Columbus State University Annual Financial Report FY 2008 31

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Columbus State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
Columbus State University and the covered employees made the required contributions of $955,170 (8.13% or 8.15%) and $586,751 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Columbus State University 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
Columbus State University Annual Financial Report FY 2008 32

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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $155,923 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Columbus State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Columbus State University, as an organizational unit of the Board of Regents of the University System of
Columbus State University Annual Financial Report FY 2008 33

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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Columbus State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Columbus State University (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007
Columbus State University Annual Financial Report FY 2008 34

and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 258 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Columbus State University recognized as incurred $1,176,263 of expenditures, which was net of $495,066 of participant contributions.
Columbus State University Annual Financial Report FY 2008 35

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses
Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Inst ruct ion
$18,390,845 4,483,614 4,969,768
216,233
197,025 3,269,656
341,325
$31,868,466

Functional Classification FY2008

Research

Academic Support

St udent Services

$823 123 62

$398,675 4,058,494 1,025,460

$1,000 2,748,067
696,674

135,345 4,500
52,441 2,021,096
324,559

43,875
92,959 1,045,478
4,723

$1,008

$8,020,570

$4,632,776

Inst it ut ional Support
$0 5,654,910 3,165,262
148,272 40,350
354,059 2,364,913
178,781
$11,906,547

Plant Operat ions & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Ent erprises

$0 2,666,588
765,072

$0

$0

1,100,364

286,533

11,676
3,028,347 5,006,477 2,039,283

6,778,949

62,591 766,494
45,570 2,196,272 1,778,760

$13,517,443

$6,778,949

$6,236,584

T ot al Expenses
$18,791,343 20,712,160 10,908,831 148,272 510,070 7,549,943 3,770,401 15,903,892 4,667,431
$82,962,343

Columbus State University Annual Financial Report FY 2008 36

Note 16. Component Units
Columbus State University Foundation, Inc. Columbus State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Columbus State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The fifty-seven member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements.
The fiscal year of the Foundation is August 1 through July 31. This financial statement represents activity for the year ended July 31, 2007. The amount due to Columbus State University, $279,175 is not reflected as a receivable on the University's Statement of Net Assets. This amount was received by the University before its year end of June 30, 2008.
During the year ended July 31, 2007, the Foundation distributed $983,187 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from Columbus State University Foundation, Inc. at 4225 University Avenue, Columbus, Georgia 31907.
Subsequent Event Columbia State University Foundation, Inc. holds equity securities in the amount of $3,000,000 in Bill Heard Enterprises stock. During 2008, Bill Heard Enterprises ceased business operations and filed for chapter 11 bankruptcy.
Investments for Component Units:
Columbus State University Foundation, Inc. holds endowment and other investments in the amount of $35,385,669. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Columbus State University Foundation, Inc., in conjunction with the donors, has established a spending plan of 5% of a trailing three-year average of the endowment's total asset value, with the understanding that this spending rate plus inflation will not normally exceed total return from investments. This trailing three-year average shall be set back six months from the time of current year calculations for the purpose of spending, with the three year average being that of either calendar or fiscal year periods according to the requirements of the budgetary process.
Columbus State University Annual Financial Report FY 2008 37

Investments are comprised of the following amounts at July 31, 2007:

Certificates of Deposit Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds Split Interest Investments
Total Investments

Cost
$27,006 2,844,006 1,654,062 25,968,257
776,945 1,848,188
$33,118,464

Fair Value
$27,631 2,818,479 1,641,802 28,271,024
778,545 1,848,188
$35,385,669

Long-term Liabilities for Component Units:

Changes in long-term liabilities for component units for the fiscal year ended July 31, 2007 are shown below:

Beginning Balance August 1, 2006

Additions

Reductions

Ending Balance July 31, 2007

Amounts due within One Year

Liabilities under split interest agreement Other Long Term Liabilities
Total Long Term Liabilities

$1,292,153 $1,292,153

$185,115 636,099
$821,214

$121,928 $121,928

$1,355,340 636,099
$1,991,439

$116,317 333,000
$449,317

Foundation Properties, Inc. Foundation Properties, Inc. is a legally separate, tax-exempt component unit of Columbus State University (University). Foundation Properties, Inc. constructs auxiliary buildings and facilities for use by the University and then leases the completed buildings to the Board of Regents of the University System of Georgia. The eleven member board of Foundation Properties, Inc. is selfperpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from Foundation Properties, Inc., the majority of resources or income thereon that Foundation Properties, Inc. holds and invests is restricted to the real estate activities of the University by the donors. Because these restricted resources held by Foundation Properties, Inc. can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
Foundation Properties, Inc. is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports

Columbus State University Annual Financial Report FY 2008 38

were reclassified to the GASB presentation for external financial reporting purposes in these financial statements.

The fiscal year of Foundation Properties, Inc. is August 1 through July 31. This financial statement represents activity for the year ended July 31, 2007. The amount due to Columbus State University, $29,835,936, results primarily from funds that have been transferred from the Foundation which are designated for payments on the construction of the RiverPark Campus. It is the intent of Foundation Properties that the facility be transferred to the University upon completion. There is no corresponding due from amount on the University's Statement of Net Assets.

During the year ended July 31, 2007, Foundation Properties, Inc. distributed $482,076 to the University. Complete financial statements for Foundation Properties, Inc. can be obtained from Foundation Properties, Inc. at 4225 University Avenue, Columbus, Georgia 31907.

Investments for Component Units:

Foundation Properties, Inc. holds investments in the amount of $2,194,353 as of July 31, 2007. Investments consist of marketable securities and bonds as follows:

Government and Agency Securities Corporate Bonds Equity Securities
Total Investments

Cost
$202,338 138,870 1,654,637
$1,995,845

Fair Value
$200,196 135,870
1,858,287
$2,194,353

Capital Assets for Component Units:

Foundation Properties, Inc. held the following Capital Assets as of July 31, 2007:

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$12,052,473 41,938,633 53,991,106
73,895,156 1,656,816
75,551,972
8,647,588 66,904,384 $120,895,490

Columbus State University Annual Financial Report FY 2008 39

Long-term Liabilities for Component Units:

Notes and Loans Payable include an unsecured line of credit with a local bank with a maximum availability of $4,200,000. The line of credit bears interest at the prime rate, payable monthly, and expires on October 13, 2007, at which time it is expected to be renewed on substantially similar terms. The amount outstanding under the line of credit totaled $3,960,000 at July 31, 2007. There is also a note payable in the amount of $257,170 that is payable to a bank in monthly installments of $2,915, including interest at the prime rate, through November 2009. This loan is collateralized by property with a cost of $478,792.

Student Housing Bonds are issued by the Foundation Properties, Inc. to finance student housing on university property. The bonds, serial and term, are secured by pledges of gross receipts from student housing at Columbus State University.

Educational Programming Bonds are issued by Foundation Properties, Inc. to finance the purchase of the One Arsenal Property to be incorporated with the future development of the RiverPark Campus, as well as the construction of the Cunningham Conference Center.

Parking Facility Revenue Bonds are issued by Foundation Properties, Inc. to finance parking facilities on university property. The bonds, serial and term, are secured by pledges of gross receipts from parking deck fees at Columbus State University.

Changes in long-term liabilities for Foundation Properties, Inc. for the fiscal year ended July 31, 2007 are shown below:

Beginning Balance Augsut 1, 2006

Additions

Reductions

Ending Balance July 31, 2007

Amounts due within
One Year

Notes and Loans Payable Revenue/M ortgage Bonds Payable

$0 70,771,806

$3,960,000 6,700,000

($257,170) 1,016,806

$4,217,170 76,455,000

$3,974,296 1,469,916

Total Long Term Liabilities

$70,771,806 $10,660,000

$759,636

$80,672,170

$5,444,212

Debt Service Obligations

Annual requirements to maturity for Notes Payable are as follows:

Year ending July 31:

2008

1

2009

2

2010

3

Notes and Loans Payable

Princip al

Interest

Total

$3,974,296 15,521
227,353 $4,217,170

$88,684 19,459 6,196
$114,339

$4,062,980 34,980
233,549 $4,331,509

Columbus State University Annual Financial Report FY 2008 40

Annual debt service requirements to maturity for Student Housing, Educational Programming and Parking Facility revenue bonds payable are as follows:

Year ending July 31:

2008

1

2009

2

2010

3

2011

4

2012

5

2013 through 2017

6-10

Princip al

Bonds Payable Interest

$1,469,916 12,849,909
1,420,175 36,171,000 16,549,000
7,995,000 76,455,000

$2,522,342 2,472,772 2,422,197 2,368,584 896,249 331,709
11,013,853

Total
$3,992,258 15,322,681
3,842,372 38,539,584 17,445,249
8,326,709 87,468,853

Columbus State University Athletic Fund, Inc. Columbus State University Athletic Fund, Inc. (Athletic Fund) is a legally separate, tax-exempt component unit of Columbus State University (University). The Athletic Fund supports athletic endeavors of the institution. These endeavors include but are not limited to student services and student financial aid. The thirty-three member board of the Athletic Fund is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Athletic Fund, the majority of resources or income thereon that the Athletic Fund holds and invests are restricted to the athletic activities of the University by the donors. Because these restricted resources held by the Athletic Fund can only be used by, or for the benefit of, the University and their management role is significant to the accomplishment of the University's mission, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Athletic Fund is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The fiscal year of the Athletic Fund is August 1 through July 31. This financial statement represents activity for the month ended July 31, 2007.
Due to the difference in fiscal year ending dates between Columbus State University and the Athletic Fund, the amount due to Columbus State University of $243,021 and due from Columbus State University of $2,500 are not reflected on the University's Statement of Net Assets.
During the year ended July 31, 2007 the Athletic Fund distributed $343,944 to the University for both restricted and unrestricted purposes. Complete financial statements for the Athletic Fund can be obtained from Columbus State University Athletic Fund, Inc. at 4225 University Avenue, Columbus, Georgia 31907.

Columbus State University Annual Financial Report FY 2008 41

Investments for Component Units:

Columbus State University Athletic Fund, Inc. holds endowment and other investments in the amount of $1,380,902. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.

Investments are comprised of the following amounts at July 31, 2007:

Cost

Fair Value

Equity Securities Total Investments

$1,182,841 $1,182,841

$1,380,902 $1,380,902

Columbus State University Alumni Association, Inc. Columbus State University Alumni Association, Inc. (Association) is a legally separate, taxexempt component unit of Columbus State University (University). The Association seeks to promote the mission of the University through mutually beneficial relations between the University and its alumni. The twenty-member board of the Association is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Association, the majority of resources or income thereon that the Association holds and invests are restricted to the activities of the University by the donors. Because these restricted resources held by the Association can only be used by or for the benefit of the University and their management role is significant to the accomplishment of the University's mission, the Association is considered a component unit of the University and is discretely presented in the University's financial statements.
The Association is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Association's fiscal year is August 1 through July 31. This financial statement represents activity for the month ended July 31, 2007.
Due to the difference in fiscal year ending dates between Columbus State University and the Association, the amount due to Columbus State University of $654 is not reflected on the University's Statement of Net Assets.
During the year ended July 31, 2007, the Association distributed $11,659 to the University for both restricted and unrestricted purposes. Complete financial statements for the Association can be obtained from Columbus State University Alumni Association, Inc. at 4225 University Avenue, Columbus, Georgia 31907.

Columbus State University Annual Financial Report FY 2008 42

Investments for Component Units:

Columbus State University Alumni Association, Inc. holds endowment and other investments in the amount of $140,703. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.

Investments are comprised of the following amounts at July 31, 2007:

Cost

Fair Value

Certificates of Deposit Equity M utual Funds

$85,993 70,813

$85,993 54,710

Total Investments

$156,806

$140,703

Capital Assets for Component Units:

Columbus State University Alumni Association, Inc. held Capital Assets as of July 31, 2007 as follows:

July 31, 2007

Capital Assets being Depreciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$9,900 400
10,300
7,816
2,484 $2,484

Columbus State University Annual Financial Report FY 2008 43

DALTON STATE COLLEGE
Financial Report
For the Year Ended June 30, 2008

Dalton State College Dalton, Georgia

John Schwenn, Ph.D.
President

Scott Bailey
Vice President for Fiscal Affairs

DALTON STATE COLLEGE ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 11 Note 2. Deposits and Investments............................................................................................... 16 Note 3. Accounts Receivable...................................................................................................... 18 Note 4. Inventories...................................................................................................................... 18 Note 5. Notes/Loans Receivable................................................................................................. 18 Note 6. Capital Assets................................................................................................................. 19 Note 7. Deferred Revenue........................................................................................................... 20 Note 8. Long-Term Liabilities .................................................................................................... 20 Note 9. Significant Commitments............................................................................................... 20 Note 10. Lease Obligations......................................................................................................... 20 Note 11. Retirement Plans .......................................................................................................... 21 Note 12. Risk Management......................................................................................................... 23 Note 13. Contingencies................................................................................................................ 24 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 24 Note 15. Natural Classifications with Functional Classifications .............................................. 25 Note 16. Component Units .......................................................................................................... 26

DALTON STATE COLLEGE
Management's Discussion and Analysis

Introduction
Dalton State College is one of the 35 institutions of higher education of the University System of Georgia. The College, located in Dalton, Georgia was founded in 1967 and has become known for its technical, transfer, health-related, and business programs. The College offers technical, associate, and targeted baccalaureate degrees. This wide range of educational opportunities attracts a highly qualified faculty and a growing student body. The institution continues to grow as shown by the comparison numbers that follow.
Students Students Faculty (Headcount) (FTE)

FY2008

139

FY2007

139

FY2006

119

4,532 4,349 4,267

3,521 3,208 3,122

Overview of the Financial Statements and Financial Analysis
Dalton State College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.
Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Dalton State College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors. Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's

Dalton State College Annual Financial Report FY 2008 1

equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Total As se ts

June 30, 2008
$5,141,856 24,032,483 29,174,339

June 30, 2007
$4,629,818 23,938,062 28,567,880

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

1,685,391 194,360
1,879,751

1,693,242 189,896
1,883,138

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

24,032,483 1,961
3,260,144 $27,294,588

23,938,062 1,167
2,745,513 $26,684,742

The total assets of the institution increased by $606,459. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $512,038 in the category of Current Assets. This increase is mainly in Cash and Cash Equivalents and is due to the timing of accounts receivable collections and year end purchases.
The total liabilities for the year decreased by ($3,387). The combination of the increase in total assets of $606,459 and the decrease in total liabilities of ($3,387) yields an increase in total net assets of $609,846. The increase in total net assets is primarily in the category of Unrestricted in the amount of $514,631.

Dalton State College Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$17,251,892 31,380,005 (14,128,113) 14,487,177
359,064 250,782 609,846 26,684,742
0 26,684,742 $27,294,588

$15,575,783 28,557,451 (12,981,668) 12,981,990
322 1,024,987 1,025,309 25,659,433
0 25,659,433 $26,684,742

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Dalton State College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$6,192,131 8,450,748 552,860 1,942,900 113,253
17,251,892
14,337,871 0
151,985 (2,679)
14,487,177
250,782 250,782 $31,989,851

June 30, 2007
$5,598,731 7,828,915 392,137 1,617,204 138,796
15,575,783
12,660,079 111,356 209,013 1,542
12,981,990
1,024,987 1,024,987 $29,582,760

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$14,401,943 2,473,515 2,419,874 3,605,730 3,691,062 3,046,384 1,741,497 0
31,380,005
0 $31,380,005

June 30, 2007
$14,200,709 1,939,223 2,126,695 3,309,280 2,528,476 2,357,801 1,531,911 563,356
28,557,451
0 $28,557,451

Operating revenues increased by $1,676,109 in fiscal year 2008. This was due primarily to increases in three areas. Tuition, along with one other mandatory fee, was increased during 2008. Second, both enrollment and FTE increased during the 07-08 school year. Lastly, the college received an increase in grant funding from such grants as DTAE, PELL, etc. The college also experienced an increase of 40% in Continuing Education revenues.

Dalton State College Annual Financial Report FY 2008 4

The Auxiliary revenue increase of $325,696 is due primarily to a reporting change, in which Dalton State College began recording all parking fee revenue as an auxiliary service in fiscal year 2008. This provided additional revenues of over $225,000. The College currently owns and operates all of its Auxiliary Services.

Nonoperating revenues increased by $1,505,187 for the year primarily due to an increase of $1,677,792 in State Appropriations.

The compensation and employee benefits category increased by $1,208,832 and primarily affected the Instruction, Institutional Support and Plant Operations and Maintenance categories. The increase reflects the addition of new staff positions, merit increases and an increased cost of health insurance for the employees of the institution.

Utilities increased by $139,641 during the past year. The increase was primarily associated with rising energy costs during fiscal year 2008 and affected the Plant Operations and Maintenance category.

Statement of Cash Flows

The final statement presented by Dalton State College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivit ies Non-capit al Financing Activit ies Capital and Related Financing Act ivities Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($12,381,404) 14,207,965 (1,134,251) 151,985 844,295 2,016,184
$2,860,479

June 30, 2007
($12,938,962) 12,915,977 (757,876) 209,013 (571,848) 2,588,032
$2,016,184

Dalton State College Annual Financial Report FY 2008 5

Capital Assets
Dalton State College completed a major renovation to the Bandy Gymnasium in FY2008. The $1.4 million for this project was funded by the Georgia State Financing and Investment Commission (GSFIC), as well as by institutional funding.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the notes to the financial statements.
Long Term Debt and Liabilities
Dalton State College had Long-Term Debt and Liabilities of $599,561 of which $405,201 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, Dalton State College has included the financial statements and notes for all required component units for FY2008. The Dalton State College Foundation, Inc. had investments of $14.6 million as of March 31, 2008. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Economic Outlook
The College is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The College's overall financial position is strong. An increase of 13% in State Appropriations (much of which was used for the addition of new faculty positions and MRR funding) contributed to the College's ability to generate a 2% increase in Net Assets during fiscal year 2008. The College anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the College's ability to react to unknown internal and external issues.

John Schwenn, Ph.D., President Dalton State College

Scott Bailey, VP of Fiscal Affairs Dalton State College

Dalton State College Annual Financial Report FY 2008 6

Statement of Net Assets

DALTO N S TATE CO LLEGE S TATEMEN T O F N ET AS S ETS
June 30, 2008

Dalton State C ollege

A S S ETS C u rre n t Asse ts Cash an d Cash E quiv alen t s A cco un t s Receiv able, n et (n o t e 3 ) Receiv ables - Federal Fin an cial A ssist an ce Receiv ables - Ot h er Due Fro m Co m p o n en t Un it s P ledges Receiv able Invent ories (not e 4) P rep aid it em s T o t al Curren t A sset s
Non cu rre n t Asse ts In v est m en t s (in cludin g Real E st at e) P ledges Receiv able Cap it al A sset s, n et (n o t e 6 ) O t h er A sset s T o t al N o n curren t A sset s TO TA L A S S ETS
LIA B ILITIES C u rre n t Liabilitie s A cco un t s P ay able Salaries P ay able D ep o sit s Deferred Rev en ue (no t e 7 ) Ot h er L iabilit ies D ep o sit s H eld fo r O t h er O rgan izat io n s D ue t o P rim ary Go v ern m en t Co m p en sat ed A bsen ces (curren t p o rt io n ) L ia bilit ies un der Sp lit -I n t er e st A gr e e m e n t s ( c ur r en t ) N o t es an d L o an s P ay able (curren t p o rt io n ) T o t al Curren t L iabilit ies Non cu rre n t Liabilitie s Co m p en sat ed A bsen ces (n o n curren t ) L iabilit ies un der Sp lit -I n t er est A gr eem en t s ( n o n cur ren t ) N o t es an d L o an s P ay able (n o n curren t ) T o t al No n curren t L iabilit ies TO TA L LIA B ILITIES
N ET A S S ETS In v est ed in Cap it al A sset s, n et o f relat ed debt Rest rict ed fo r No n ex p endable E x p en dable Un rest rict ed TO TA L N ET A S S ETS

$ 2 ,8 6 0 ,4 7 9 6 3 2 ,5 7 5
1 ,2 8 8 ,9 0 6 4 9 ,6 4 7
3 0 5 ,1 0 6 5 ,1 4 3
5 ,1 4 1 ,8 5 6
2 4 ,0 3 2 ,4 8 3 2 4 ,0 3 2 ,4 8 3 2 9 ,1 7 4 ,3 3 9
6 2 4 ,6 8 7 4 2 0 ,4 7 4
9 6 ,0 1 6 1 ,2 3 7
1 3 7 ,7 7 6 4 0 5 ,2 0 1
1 ,6 8 5 ,3 9 1 1 9 4 ,3 6 0
1 9 4 ,3 6 0 1 ,8 7 9 ,7 5 1
2 4 ,0 3 2 ,4 8 3
1 ,9 6 1 3 ,2 6 0 ,1 4 4 $ 2 7 ,2 9 4 ,5 8 8

C om pon e n t Un it Dalton S tate C ollege
Fo u n da ti o n , In c.
$ 1 ,0 4 0 ,6 0 6
1 2 ,7 2 4 1 ,6 8 7 ,5 3 3
1 9 6 ,1 4 1 2 ,9 3 7 ,0 0 4
1 4 ,5 5 6 ,3 4 0 9 ,9 4 7 ,0 5 1 4 ,8 0 2 ,6 3 0 3 0 ,2 1 7
2 9 ,3 3 6 ,2 3 8 3 2 ,2 7 3 ,2 4 2
6 0 ,4 2 3 1 7 ,0 1 2
8 ,5 3 3 1 7 ,1 9 0 5 0 ,8 3 3 1 5 3 ,9 9 1
1 4 6 ,4 1 1 2 ,3 2 6 ,3 9 5 2 ,4 7 2 ,8 0 6 2 ,6 2 6 ,7 9 7
2 ,4 2 5 ,4 0 2 9 ,3 3 9 ,5 3 1 2 ,1 9 4 ,3 2 5 1 5 ,6 8 7 ,1 8 7 $ 2 9 ,6 4 6 ,4 4 5

Dalton State College Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
DALTON S TATE COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Endowment Income (per spending plan) Grant s and Cont ract s Federal St at e Other Sales and Services Rents and Royalt ies Auxiliary Ent erprises Bookst ore Food Services P arking/T ransport at ion Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion Ot her Operat ing Expense P ayment s t o or on behalf of Dalt on St at e College
T ot al Operat ing Expenses Operat ing Income (loss)

Dalton State College

C om pone nt Unit
Dalton State College
Fou n dati on , In c.

$8,040,176 (1,848,045)
5,948,402 1,798,054
704,292 552,860
1,358,477 319,965 226,464 37,994 113,253
17,251,892
8,292,044 6,718,862 4,423,671
96,003 178,034 3,293,375 937,400 6,158,031 1,282,585
31,380,005 (14,128,113)

$0 3,810,468
124,629
759,484
4,694,581
133,486 13,896 73,332 130 72,947
379,630 82,100 5,218
663,627 1,424,366 3,270,215

Dalton State College Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
DALTON S TATE COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

Dalton State College

C om pone nt Unit
Dalton State College
Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENS ES ) St at e Appropriat ions Invest m ent Incom e (endowment s, auxiliary and ot her) Int erest Expense (capit al asset s) Ot her Nonoperat ing Revenues Net Nonoperat ing Revenues Income before ot her revenues, expenses, gains, or loss Capit al Grant s and Gift s St at e Addit ions t o permanent endowment s T ot al Ot her Revenues Increase in Net Asset s
NET AS S ETS Net Asset s-beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s-beginning of year, rest at ed Net Asset s-End of Year

14,337,871 151,985
(2,679) 14,487,177
359,064
250,782
250,782 609,846
26,684,742 0
26,684,742 $27,294,588

(504,958) (135,378)
(640,336) 2,629,879
1,788,685 1,788,685 4,418,564
25,227,881 0
25,227,881 $29,646,445

Dalton State College Annual Financial Report FY 2008 9

Statement of Cash Flows

DALTO N S TATE CO LLEGE S TATEMENT O F CAS H FLO W S For the Year Ended J une 3 0 , 2 0 0 8

C A S H FLO W S FR O M O P ER A TIN G A C TIV ITIES T uit io n an d Fees Gran t s an d Co n t ract s (E x ch an ge) Sales an d Serv ices P ay m en t s t o Sup p liers P aym ents t o Em ployees P ay m en t s fo r Sch o larsh ip s an d Fello wsh ip s A ux iliary E n t erp rise Ch arges: Bo o k st o re Fo o d Serv ices P ark in g/T ransp o rt at io n O t h er Organ izat io n s Ot h er Receip t s (p ay m en t s) N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
C A S H FLO W S FR O M N O N -C A P ITA L FIN A N C IN G A C TIV ITIES St at e A p p ro p riat io n s A gen cy Fun ds T ran sact io n s Gift s an d Gran t s Receiv ed fo r O t h er T h an Cap it al P urp o ses N et Cash Flo ws P ro v ided by N o n -cap it al Fin an cin g A ct iv it ies
C A S H FLO W S FR O M C A P ITA L A N D R ELA TED FIN A N C IN G A C TIV ITIES Cap it al Gran t s an d Gift s Receiv ed P urch ases o f Cap it al A sset s Net Cash used by Cap it al an d Relat ed Fin an cin g Act iv it ies
C A S H FLO W S FR O M IN V ES TIN G A C TIV ITIES Interest on Invest m ent s N et Cash P ro v ided (used) by In v est in g A ct iv it ies Net In crease/Decrease in Cash Cash an d Cash E quiv alen t s - Begin n in g o f y ear Cash an d Cash Equiv alen t s - E nd of Year
R EC O N C ILIA TIO N O F O P ER A TIN G LO S S TO N ET C A S H P R O V ID ED (U S ED ) B Y O P ER A TIN G A C TIV ITIES :
Operat ing Incom e (loss) Adjust m en t s t o Reco n cile Net In co m e (lo ss) t o Net Cash P ro v ided (used) by O p erat in g A ct iv it ies
Dep reciat io n Ch an ge in A sset s an d L iabilit ies:
Receiv ables, n et Invent ories P repaid Item s A cco un t s P ay able D eferred Rev en ue O t h er Liabilit ies Co m pen sat ed Absen ces
Net Cash P ro v ided (used) by Op erat in g Act iv it ies
* * N O N -CA SH IN VE ST IN G, N O N -CA P IT A L FIN A N CIN G, A N D CA P IT A L A N D RE L A T E D FIN A N CIN G T RA N SA CT IO N S
D alt o n St at e Co llege h ad n o n o n -cash t ran sact io n s fo r fiscal 2 0 0 8 .

Dalton State College Annual Financial Report FY 2008 10

June 30, 2008
$ 6 ,1 2 6 ,6 3 9 8 ,5 6 0 ,3 8 5 5 5 2 ,8 6 0
(1 1 ,7 5 3 ,7 8 9 ) (1 5 ,0 0 6 ,7 1 6 )
(3 ,2 9 3 ,3 7 5 )
1 ,4 1 7 ,6 0 0 3 1 8 ,1 1 2 (827) 3 7 ,9 9 4 6 5 9 ,7 1 3
(1 2 ,3 8 1 ,4 0 4 )
1 4 ,3 3 7 ,8 7 1 (1 3 5 ,2 5 5 ) 5 ,3 4 9
1 4 ,2 0 7 ,9 6 5
2 5 0 ,7 8 2 (1 ,3 8 5 ,0 3 3 ) (1 ,1 3 4 ,2 5 1 )
1 5 1 ,9 8 5 1 5 1 ,9 8 5 8 4 4 ,2 9 5 2 ,0 1 6 ,1 8 4 $ 2 ,8 6 0 ,4 7 9
($ 1 4 ,1 2 8 ,1 1 3 )
1 ,2 8 2 ,5 8 5
2 9 8 ,1 8 1 3 6 ,3 4 7 (2 ,2 7 0 ) 4 1 ,2 4 9 6 2 ,7 3 4 (1 ,4 9 4 ) 2 9 ,3 7 7
($ 1 2 ,3 8 1 ,4 0 4 )

DALTON STATE COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Dalton State College serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Dalton State College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Dalton State College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Dalton State College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Dalton State College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Dalton State College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the College's report. For FY2008, Dalton State College is reporting the activity for the Dalton State College Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the
Dalton State College Annual Financial Report FY 2008 11

State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The College accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Dalton State College Annual Financial Report FY 2008 12

Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Dalton State College.
Deposits Dalton State College does not maintain any deposits.
Dalton State College Annual Financial Report FY 2008 13

Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Dalton State College had accrued liability for compensated absences in the amount of $570,184 as of 7-1-2007. For FY2008, $442,859 was earned in compensated absences and employees were paid $413,482, for a net increase of $29,377. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $599,561.

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Assets The College's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E&G and Ot her Organized Act ivit ies T ot al Rest rict ed Expendable

$1,961 $1,961

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general

Dalton State College Annual Financial Report FY 2008 14

operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$590,398 1,129,482
14,759 1,525,505 $3,260,144

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Dalton State 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 College, and the amount that is paid by students and/or third parties making payments on the students' behalf. Certain governmental
Dalton State College Annual Financial Report FY 2008 15

grants, such as Pell grants, and other Federal, state or nongovernmental programs are recorded as either operating or nonoperating revenues in the College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $1,795,717 and the bank balance was $2,530,283. Of the College's deposits, $2,530,283 were uninsured and uncollateralized.
B. Investments At June 30, 2008, the carrying value of the College's investments was $1,049,367, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Office of Treasury and Fiscal Services investment pools as follows:
Dalton State College Annual Financial Report FY 2008 16

Investment Pools Office of T reasury and Fiscal Services Georgia Fund 1

$1,049,367

T otal Investment Pools

$1,049,367

The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1 Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 days.

Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The College does not have a formal policy for managing interest rate risk.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The College does not have a formal policy for managing credit quality risk.

Dalton State College Annual Financial Report FY 2008 17

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$192,270 392,352 632,575 49,647 764,873
2,031,717 60,589
$1,971,128

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore Food Services P hysical P lant Ot h er
T otal

$276,375 14,918 6,347 7,466
$305,106

Note 5. Notes/Loans Receivable Dalton State College does not have any note/loans receivables as of June 30, 2008

Dalton State College Annual Financial Report FY 2008 18

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Library Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$435,065 1,023,672 1,458,737
1,346,095 27,729,416
1,172,871 3,817,070 5,205,567 39,271,019
994,457 8,593,072
938,353 2,315,144 3,950,668 16,791,694
22,479,325
$23,938,062

Addi ti o n s
$0 250,782 250,782

Re ductions
$0 999,722 999,722

1,417,950
385,288 330,735 2,133,973
18,985 611,697
13,153 388,103 250,647 1,282,585
851,388
$1,102,170

408,840 23,044
431,884
400,813 23,044
423,857 8,027
$1,007,749

En di n g B a l a n ce 6/30/2008
$435,065 274,732 709,797
1,346,095 29,147,366
1,172,871 3,793,518 5,513,258 40,973,108
1,013,442 9,204,769
951,506 2,302,434 4,178,271 17,650,422
23,322,686
$24,032,483

Dalton State College Annual Financial Report FY 2008 19

Note 7. Deferred Revenue

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

Ot her Deferred Revenue T ot als

June 30, 2008 $96,016 $96,016

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Other Liabilities Compensated Absences

Beginning Balance
July 1, 2007
$570,184

Additions $442,859

Reductions

Ending Balance June 30, 2008

$413,482

$599,561

Total Long Term Obligations

$570,184

$442,859

$413,482

$599,561

Current Portion
$405,201
$405,201

Note 9. Significant Commitments
Dalton State College had no significant commitments as of June 30, 2008
Note 10. Lease Obligations
Dalton State College is obligated under one operating lease for the use of real property (land, buildings, and office facilities).
CAPITAL LEASES
Dalton State College had no capital leases for fiscal year 2008.
OPERATING LEASES
Dalton State College had only one lease for FY2008. A facility was leased for instructional classes at the following cost: $2,993 per month, or $35,916 annually.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Dalton State College Annual Financial Report FY 2008 20

Year Ending June 30: 2009 T ot al m inim um lease paym ent s

Year 1

Real P roperty and Equipm ent
Operat ing Leases
$35,916 $35,916

Dalton State College's FY2008 expense for rental of real property and equipment under operating leases was $35,916.

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Dalton State College participates in the Teachers Retirement System of Georgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Dalton State College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Dalton State College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$827,082 $795,321 $728,884

Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible
Dalton State College Annual Financial Report FY 2008 21

University system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Dalton State College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Dalton State College and the covered employees made the required contributions of $336,834 (8.13% or 8.15%) and $205,846 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Dalton State 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 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.
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.
Dalton State College Annual Financial Report FY 2008 22

Total contributions made by employees during fiscal year 2008 amounted to $43,633 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Dalton State College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Dalton State College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Dalton State College Annual Financial Report FY 2008 23

Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Dalton State College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Dalton State College (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 96 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Dalton State College recognized as incurred $434,059 of expenditures, which was net of $189,102 of participant contributions.
Dalton State College Annual Financial Report FY 2008 24

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
F acult y St aff B en efit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

Inst ruct ion
$8,257,408 1,862,005 2,444,206
115,592 246,991 101,893 1,285,327
88,521
$14,401,943

Functional Clas s ification FY2008

Academ ic Sup p o r t

St udent Ser v ic e s

$34,636 926,956 276,417

$0 1,063,637
310,553

5,866

21,009

15,456 897,408 316,776

19,291 991,285
14,099

$2,473,515

$2,419,874

Inst it ut ional Sup p o r t
$0 1,849,017
952,886 96,003 30,306
37,829 574,782
64,907
$3,605,730

Natural Classification
F acult y St aff B en efit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

P lant Op erat io n s & Maint enance

Functional Clas s ification FY2008

Sc h o la r sh ip s & Fellowships

A ux ilia r y Ent erprises

$0 736,398 374,749 (11,574)
876
759,404 1,040,907
790,302

$0 3,046,384

$0 280,849
64,860 11,574
4,385
3,527 1,368,322
7,980

$3,691,062

$3,046,384

$1,741,497

T otal E x p en ses
$8,292,044 6,718,862 4,423,671 96,003 178,034 3,293,375 937,400 6,158,031 1,282,585
$31,380,005

Dalton State College Annual Financial Report FY 2008 25

Note 16. Component Units

The Dalton State College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Dalton State College (College). The Foundation acts primarily as a fundraising organization to supplement the resources that are available to the College in support of its programs. The forty member board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is April 1 through March 31. Amounts reported due to or due from the College do not agree because of the different fiscal year ends.

During the year ended March 31, 2008, the Foundation distributed $663,627 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Fiscal Affairs Office at 650 College Drive, Dalton, GA 30720.

Investments for Component Units:

Dalton State College Foundation, Inc. holds endowment and other investments in the amount of $14.6 million. The corpus of the endowment is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.

Investments are comprised of the following amounts at March 31, 2008:

Cash held by investment organization Certificates of Deposit Corporate Bonds Equity Securities
Total Investments

Cost
$274,991 418,771
2,730,921 11,610,022
$15,034,704

Fair Value
$274,991 418,771
2,653,877 11,208,701
$14,556,340

Dalton State College Annual Financial Report FY 2008 26

Capital Assets for Component Units:

Capital Assets at March 31, 2008 were as follows:

March 31, 2008

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$2,037,963 2,037,963
2,950,796 5,527
2,956,323 191,656
2,764,667 $4,802,630

Long-term Liabilities for Component Units:

Long-term liability activity for the year ended March 31, 2008 was as follows:

Beginning Balance April 1, 2007

Additions

Reductions

Ending Balance March 31, 2008

Amounts due within
One Year

Liabilities under split interest agreement Notes and Loans Payable
Total Long Term Liabilities

$0 2,424,945
$2,424,945

$163,601 $163,601

$0 47,717
$47,717

$163,601 2,377,228
$2,540,829

$17,190 50,833
$68,023

In September 2006 Dalton State College Foundation, Inc. assumed an outstanding note payable dated February 2, 2005 related to the purchase of the Wood Valley Apartment complex. The principal balance of the note at the time of assumption was $2,475,000 and accrues interest at an annual rate of 5.54%. Interest only was payable for the first twelve months and beginning in March 2006, principle and interest became payable in monthly installments of $15,258. The note matures in March 2015 with a final payment due at that time of $1,969,256.
Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Dalton State College Annual Financial Report FY 2008 27

Year ending March 31:

2009

1

2010

2

2011

3

2012

4

2013

5

2014 through 2015

6-7

Principal

Notes and Loans Payable Interest

$50,833 53,763 56,862 59,807 63,586
2,092,377 $2,377,228

$132,263 129,333 126,234 123,289 119,510 243,070
$873,699

Total
$183,096 183,096 183,096 183,096 183,096
2,335,447 $3,250,927

The Liabilities under Split Interest Agreement represents a charitable remainder annuity trust that was established during the fiscal year by a local family naming the Foundation as trustee and ultimate beneficiary of the trust. Under the terms of the trust, the grantor is paid an annuity amount equal to nine percent (9%) of the net fair market value of the assets of the trust as of the date of the Trust in equal quarterly installments from trust income and, to the extent income is not sufficient, from principal for the lifetime of the last surviving grantor.

Dalton State College Annual Financial Report FY 2008 28

DARTON COLLEGE
Financial Report
For the Year Ended June 30, 2008

Peter J. Sireno
President

Darton College Albany, Georgia
Ronnie A. Henry
Vice President for Business and Financial Services

DARTON COLLEGE ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 12 Note 2. Deposits and Investments................................................................................................ 17 Note 3. Accounts Receivable...................................................................................................... 18 Note 4. Inventories...................................................................................................................... 18 Note 5. Notes/Loans Receivable................................................................................................. 18 Note 6. Capital Assets................................................................................................................. 19 Note 7. Deferred Revenue........................................................................................................... 20 Note 8. Long-Term Liabilities .................................................................................................... 20 Note 9. Significant Commitments............................................................................................... 20 Note 10. Lease Obligations......................................................................................................... 20 Note 11. Retirement Plans .......................................................................................................... 21 Note 12. Risk Management......................................................................................................... 25 Note 13. Contingencies................................................................................................................ 26 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 26 Note 15. Natural Classifications with Functional Classifications .............................................. 27 Note 16. Component Units .......................................................................................................... 28

DARTON COLLEGE
Management's Discussion and Analysis

Introduction
Darton College is one of the 35 institutions of higher education of the University System of Georgia. The College, located in Albany, Georgia, was founded in 1963 and has become known for its state-of-the-art technology and allied health programs. The College offers associates degrees in a wide variety of subjects. This wide range of educational opportunities attracts a highly qualified faculty and a student body of more than 4,700 students each year. The institution continues to grow as shown by the comparison numbers that follow.
Students Students Faculty (Headcount) (FTE)

FY2008

147

FY2007

143

FY2006

107

4,760 4,679 4,578

3,438 3,357 3,408

Overview of the Financial Statements and Financial Analysis
Darton College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Darton College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.
From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors. Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt,

Darton College Annual Financial Report FY 2008 1

provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Total As se ts

June 30, 2008
$6,050,364 34,920,446 40,970,810

June 30, 2007
$5,639,568 33,887,975 39,527,543

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

2,626,116 743,097
3,369,213

2,343,382 817,471
3,160,853

Net Assets: Invest ed in Capit al Asset s, net of debt Unrest rict ed Total Ne t As s e ts

34,459,181 3,142,416
$37,601,597

33,285,315 3,081,375
$36,366,690

The total assets of the institution increased by $1,443,267. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $1,032,471 in the category of Capital Assets, net. The balance of the increase is mainly in Cash and Cash Equivalents.
The total liabilities for the year increased by $208,360. The combination of the increase in total assets of $1,443,267 and the increase in total liabilities of $208,360 yields an increase in total net assets of $1,234,907. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $1,173,866.

Darton College Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$17,863,002 35,676,766 (17,813,764) 17,499,285
(314,479) 1,549,386 1,234,907 36,366,690
0 36,366,690 $37,601,597

$16,579,731 31,657,191 (15,077,460) 15,255,937
178,477 3,872,090 4,050,567 32,316,123
0 32,316,123 $36,366,690

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Darton College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$6,072,515 8,479,891 244,324 2,978,236 88,036
17,863,002
17,016,872 408,128 104,872
17,529,872
1,549,386 1,549,386 $36,942,260

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$14,232,087 383,826
2,093,763 2,365,394 4,886,316 4,384,015 4,509,504 2,821,861
0 35,676,766
30,587 $35,707,353

June 30, 2007
$5,485,175 8,082,755 240,615 2,654,763 116,423
16,579,731
15,181,317 22,096 90,901
15,294,314
3,872,090 3,872,090 $35,746,135
June 30, 2007
$12,846,728 421,229
2,202,930 2,246,890 3,538,555 2,638,467 4,089,324 2,695,437
977,631 31,657,191
38,377 $31,695,568

Operating revenues increased by $1,283,271 in fiscal 2008. Tuition & Fee revenue increased by approximately 11%. Additionally, revenue increased in the Grants and Contracts and Auxiliary categories. The Auxiliary revenue increase of $323,473 is a result of the increase in the Student Athletic Fee and an increase in the prices of books sold in the bookstore.

Darton College Annual Financial Report FY 2008 4

Nonoperating revenues increased by $2,235,558 for the year primarily due to an increase of $1,835,555 in State Appropriations.
The compensation and employee benefits category increased by $1,578,539 and primarily affected the Instruction, Institutional Support and Student Services categories. The increase reflects the addition of several faculty members, merit increases and an increased cost of health insurance for the employees of the institution.
Utilities decreased by $148,446 during the past year. The decrease was primarily associated with the hiring of a campus wide energy resource manager. We anticipate that there may be further energy savings in the future
Statement of Cash Flows
The final statement presented by Darton College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($15,866,971) 17,376,164 (1,262,746) 104,872 351,319 3,845,583
$4,196,902

June 30, 2007
($13,104,849) 15,210,004 (1,429,990) 90,901 766,066 3,079,517
$3,845,583

Capital Assets
The College had two significant capital asset projects under construction in fiscal year 2008. The Darton College Academic Services Building had an increase of $1,427,000 in Construction Work in Progress and the College also began the engineering phase for the new Nursing and Health Sciences Building to be constructed next to the Library.

Darton College Annual Financial Report FY 2008 5

For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the notes to the financial statements. Long Term Debt and Liabilities Darton College had Long-Term Debt and Liabilities of $1,280,494 of which $537,397 was reflected as current liability at June 30, 2008. For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements. Component Units In compliance with GASB Statement No. 39, Darton College has included the financial statements and notes for all required component units for FY2008. The Darton College Foundation, Inc. had investments of $1.38 million as of June 30, 2008. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units. Economic Outlook The College is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The College's overall financial position is strong, and the College was able to generate a modest increase in Net Assets in FY 2008. The College anticipates the current fiscal year will be much like last and will maintain a close watch over resources to ensure the College's ability to react to unknown internal and external issues.
Peter J. Sireno, President Darton College
Darton College Annual Financial Report FY 2008 6

Statement of Net Assets

DARTON COLLEGE S TATEMENT OF NET AS S ETS
June 30, 2008

AS S ETS C urrent Assets Cash an d Cash Equiv alen t s Sh o rt -t erm In v est m en t s Acco un t s Receiv able, n et (n o t e 3 ) Receiv ables - Federal Fin an cial Assist an ce Receiv ables - Ot her P ledges Receiv able Invent ories (not e 4) P repaid it em s T o t al Current Asset s
Noncurrent Asse ts Sh o rt -t erm In v est m en t s In v est m en t s (in cludin g Real Est at e) P ledges Receiv able Capit al Asset s, net (not e 6) T o t al No n curren t Asset s TO TAL AS S ETS
LIAB ILITIES C u rre n t Liabilitie s Acco un t s P ay able Salaries P ay able Deferred Rev enue (n o t e 7 ) Dep osit s Held fo r Ot h er Organ izat io n s Lease P urch ase Obligat io n s (curren t p o rt ion) Co m p en sat ed Absen ces (curren t p o rt io n) T o t al Current Liabilit ies Non cu rre n t Liabilitie s Lease P urch ase Obligat io n s (n o n curren t ) Co m p en sat ed Absen ces (n o ncurren t ) T o t al No n curren t Liabilit ies TO TAL LIAB ILITIES
NET AS S ETS In v est ed in Capit al Asset s, n et o f relat ed debt Rest rict ed for No n exp en dable Ex p en dable Capit al P roject s Unrest rict ed TO TAL NET AS S ETS

Darton C ollege
$4,196,902
371,688 1,303,972
177,802 6,050,364
34,920,446 34,920,446 40,970,810
209,236 766,301 771,106 342,076 149,638 387,759 2,626,116 311,627 431,470 743,097 3,369,213
34,459,181
3,142,416 $37,601,597

C om pon e n t Un it Darton C olle ge Fo u n da ti o n , In c.
$269,459 250,031
18,506 168,579
491 707,066
136,982 990,096
61,988 796,010 1,985,076 2,692,142
0
0 0
796,010 991,802 610,669 230,667
62,994 $2,692,142

Darton College Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
DARTON COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Grant s and Cont ract s Federal St at e Other Sales and Services Rents and Royalt ies Auxiliary Ent erprises Bookst ore Food Services P arking/T ransport at ion Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion P ayment s t o or on behalf of Dart on College
T ot al Operat ing Expenses Operat ing Income (loss)

Darton C ollege

C om pone nt Unit
Darton C ollege Fou n dati on , In c.

$8,926,119 (2,853,604)
7,544,875 427,229 507,787 244,324 27,553
2,058,330 101,675 1,389 674,580 142,262 60,483
17,863,002
8,637,013 7,683,653 4,362,942
106,312 177,022 4,796,035 709,264 7,596,846 1,607,679
35,676,766 (17,813,764)

$0 314,577
28,600
343,177
222,338 3,757
152,430 378,525 (35,348)

Darton College Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
DARTON COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

NO NO PERATING REVENUES (EXPENSES) State Appropriations Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e T otal Other Revenues Increase in Net Assets
NET AS SETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

Darton C ollege

C om pone nt Unit
Darton C ollege Fou n dati on , In c.

17,016,872 408,128 104,872 (30,587)
17,499,285 (314,479)
1,549,386 1,549,386 1,234,907
36,366,690 0
36,366,690 $37,601,597

(42,728)
(42,728) (78,076)
(78,076)
2,770,218 0
2,770,218 $2,692,142

Darton College Annual Financial Report FY 2008 9

Statement of Cash Flows

DARTON COLLEGE S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008

C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Auxiliary Ent erprise Charges: Bookst ore Food Services P arking/T ransport at ion Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$6,082,937 8,332,099 244,324
(13,509,430) (15,442,852)
(4,796,035)
1,924,502 88,055 1,389
694,983 201,924 311,133 (15,866,971)
17,016,872 (48,836) 408,128
17,376,164
1,549,386 (2,640,150)
(141,395) (30,587)
(1,262,746)
104,872 104,872 351,319 3,845,583 $4,196,902

Darton College Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
DARTON COLLEGE S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) BY O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries Account s P ayable Deferred Revenue Other Liabilit ies Compensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Dart on College had no non-cash t ransact ions for fiscal 2008.

June 30, 2008
($17,813,764)
1,607,679 (83,251) 23,773 234,911 106,253 (48,430) 105,858
($15,866,971)

Darton College Annual Financial Report FY 2008 11

DARTON COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Darton College serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Darton College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Darton College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Darton College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Darton College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Darton College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the College's report. For FY2008, Darton College is reporting the activity for the Darton College Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB
Darton College Annual Financial Report FY 2008 12

Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The College accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Darton College Annual Financial Report FY 2008 13

Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at cost using the weighted average method. Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Darton College.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a College residence hall.
Darton College Annual Financial Report FY 2008 14

Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Darton College had accrued liability for compensated absences in the amount of $713,371 as of 7-1-2007. For FY2008, $648,268 was earned in compensated absences and employees were paid $542,410, for a net increase of $105,858. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $819,229.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The College's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
As of June 30, 2008 the College had no expendable restricted net assets.
Darton College Annual Financial Report FY 2008 15

Restricted net assets expendable Capital Projects: This represents resources for which the College is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$478,397 1,232,517
44,412 1,387,090 $3,142,416

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Darton 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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.

Darton College Annual Financial Report FY 2008 16

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 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 College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
Darton College Annual Financial Report FY 2008 17

At June 30, 2008, the carrying value of deposits was $4,186,802 and the bank balance was $5,022,885. Of the College's deposits, $4,586,612 were uninsured. Of these uninsured deposits, $4,416,763 were collateralized with securities held by the financial institution's trust department or agent in the College's name and $169,849 were uncollateralized.

B. Investments

As of June 30, 2008 the College had no investments.

Note 3. Accounts Receivable

Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$162,403 632,423 371,688 855,232
2,021,746 346,086
$1,675,660

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore Other
T otal

$135,736 42,066
$177,802

Note 5. Notes/Loans Receivable As of June 30, 2008 Darton College had no Notes or Loans Receivable.

Darton College Annual Financial Report FY 2008 18

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Capital Leases Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$989,113 5,137,951 6,127,064
34,527,282 1,537,473 3,322,978 963,811 3,195,576
43,547,120
9,132,436 1,066,100 2,486,961
378,614 2,722,098 15,786,209
27,760,911
$33,887,975

Addi ti o n s
$0 2,008,198 2,008,198

Re du cti on s $0 0

538,939

93,013

775

631,952

775

1,007,192

71,019

282,508

149,412

97,548

775

1,607,679

775

(975,727)

0

$1,032,471

$0

En di n g B al an ce 6/30/2008
$989,113 7,146,149 8,135,262
34,527,282 1,537,473 3,861,917 963,811 3,287,814
44,178,297
10,139,628 1,137,119 2,769,469 528,026 2,818,871
17,393,113
26,785,184
$34,920,446

Darton College Annual Financial Report FY 2008 19

Note 7. Deferred Revenue

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

Ot her Deferred Revenue T ot als

June 30, 2008 $771,106 $771,106

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations

Beginning Balance
July 1, 2007
$602,660

Additions $0

Reductions

Ending Balance June 30, 2008

$141,395

$461,265

Other Liabilities Compensated Absences

713,371

648,268

542,410

819,229

Total Long Term Obligations

$1,316,031

$648,268

$683,805

$1,280,494

Current Portion
$149,638
387,759 $537,397

Note 9. Significant Commitments

The College had no significant unearned, outstanding, construction or renovation contracts executed as of June 30, 2008.

Note 10. Lease Obligations

Darton College is obligated under various operating leases for the use of equipment, and also is obligated under a capital lease for the acquisition of telephone equipment.
CAPITAL LEASES

Expenditures for fiscal year 2008 were $171,982 of which $30,587 represented interest. Total principal paid on capital leases was $141,395 for the fiscal year ended June 30, 2008. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Telephone Equipment Total Assets Held Under Capital Lease

$435,785 $435,785

Darton College Annual Financial Report FY 2008 20

Darton College has one capital lease executed for the purchase of telephone equipment in the amount of $747,060. The lease is financed through Sun Trust Bank and carries an interest rate of 5.68 percent. The term of the lease will extend until June 2011, and the outstanding liability on this lease at June 30, 2008 was $461,265.
OPERATING LEASES
Darton College's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2011. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small business equipment.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$171,982 171,982 157,652 501,616 40,351
$461,265

$112,916 111,449 76,261
$300,626

Darton College's FY2008 expense for rental of real property and equipment under operating leases was $152,788.
Note 11. Retirement Plans
Teachers Retirement System of Georgia
Plan Description Darton College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Darton College Annual Financial Report FY 2008 21

Funding Policy Employees of Darton College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Darton College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$828,142 $783,095 $754,167

Employees' Retirement System of Georgia

Plan Description Darton College participates in the Employees' Retirement System of Georgia (ERS), a costsharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age. Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a

Darton College Annual Financial Report FY 2008 22

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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The College's payroll for the year ended June 30, 2008, for employees covered by ERS was $35,429. The College's total payroll for all employees was $16,320,666.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the College pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the College amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$3,688 $3,555 $3,443

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by

Darton College Annual Financial Report FY 2008 23

the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Darton College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Darton College and the covered employees made the required contributions of $267,123 (8.13% or 8.15%) and $164,077 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Darton College participates in the Georgia Defined Contribution Plan (GDCP) which is a singleemployer 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 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.
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.
Darton College Annual Financial Report FY 2008 24

Total contributions made by employees during fiscal year 2008 amounted to $149,168 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Darton College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective selfinsured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Darton College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Darton College Annual Financial Report FY 2008 25

Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Darton College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Darton College (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 89 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Darton College recognized as incurred $437,601 of expenditures, which was net of $141,745 of participant contributions.
Darton College Annual Financial Report FY 2008 26

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses
Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Inst ruct ion
$8,589,158 1,963,270 2,329,255
71,915 12,286
1,037 1,159,803
105,363
$14,232,087

Functional Classification FY2008

Public Service

Academic Support

St udent Services

$0 192,482
66,488

$0 1,362,544
365,648

$30,855 1,522,597
369,610

16,307

16,123

32,468

2,850 105,699

9,482 210,700 129,266

122 409,742

$383,826

$2,093,763

$2,365,394

Inst it ut ional Support
$0 1,646,225
977,478 106,312
31,813
41,677 1,966,929
115,882
$4,886,316

Plant Operat ions & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Ent erprises

$0 742,717 166,544 (18,185)
3,729
652,874 1,591,877 1,244,459

$0 4,509,504

$17,000 253,818
87,919 18,185
4,667 274,245
1,222 2,152,096
12,709

$4,384,015

$4,509,504

$2,821,861

T ot al Expenses
$8,637,013 7,683,653 4,362,942 106,312 177,022 4,796,035 709,264 7,596,846 1,607,679
$35,676,766

Darton College Annual Financial Report FY 2008 27

Note 16. Component Units

Darton College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Darton College (College). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The board of trustees of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $152,430 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Treasurer at 2400 Gillionville Road, Albany, GA 31707.

Investments for Component Units:

Investments are comprised of the following amounts at June 30, 2008:

Cash held by investment organization Certificates of Deposit Corporate Bonds Equity Securities

Cost
$12,111 374,902 608,063 424,023

Fair Value
$12,111 374,902 590,964 399,132

Total Investments

$1,419,099

$1,377,109

Darton College Annual Financial Report FY 2008 28

Capital Assets for Component Units: Darton College Foundation, Inc. holds the following Capital Assets as of June 30, 2008:

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

June 30, 2008
$308,826 374,818 683,644
123,324 123,324
10,958 112,366 $796,010

Darton College Annual Financial Report FY 2008 29

EAST GEORGIA COLLEGE
Financial Report
For the Year Ended June 30, 2008

Dr. John Black
President

East Georgia College Swainsboro, Georgia
Adriance M. Galloway
Vice President for Fiscal Affairs

EAST GEORGIA COLLEGE ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows ................................................................................................................ 9 Note 1. Summary of Significant Accounting Policies ................................................................ 10 Note 2. Deposits and Investments................................................................................................ 15 Note 3. Accounts Receivable...................................................................................................... 17 Note 4. Inventories...................................................................................................................... 17 Note 5. Notes/Loans Receivable................................................................................................. 17 Note 6. Capital Assets................................................................................................................. 18 Note 7. Deferred Revenue........................................................................................................... 19 Note 8. Long-Term Liabilities .................................................................................................... 19 Note 9. Significant Commitments............................................................................................... 19 Note 10. Lease Obligations......................................................................................................... 19 Note 11. Retirement Plans .......................................................................................................... 21 Note 12. Risk Management......................................................................................................... 24 Note 13. Contingencies................................................................................................................ 25 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 25 Note 15. Natural Classifications with Functional Classifications .............................................. 27 Note 16. Component Units .......................................................................................................... 28

EAST GEORGIA COLLEGE
Management's Discussion and Analysis

Introduction

East Georgia College is one of the 35 institutions of higher education of the University System of

Georgia. The College, located in Swainsboro, Georgia, was founded in 1973 and has become known

for its state-of-the-art technology, its excellent faculty, and a caring and nurturing environment for its

students. The College offers associate degrees in a variety of subjects. This wide range of educational

opportunities attracts a highly qualified faculty and a student body that exceeds 1,900 students. The

institution's headcount enrollment increased by 15.6 percent in the Fall Semester 2007 and by 21.3

percent in the Spring Semester 2008. The institution's historical enrollment data (as of Fall semester)

follows:

Students

Students

Faculty (Headcount)

(FTE)

FY2008

44

1,987

1,779

FY2007

36

1,719

1,524

FY2006

24

1,511

1,338

Overview of the Financial Statements and Financial Analysis
East Georgia College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.
Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of East Georgia College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.
From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

East Georgia College Annual Financial Report FY 2008 1

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$1,320,586 16,894,903
471,319 18,686,808

June 30, 2007
$1,078,190 15,740,648
479,532 17,298,370

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

1,128,468 244,709
1,373,177

1,386,654 263,393
1,650,047

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

16,790,434 37,100 93,693
392,404 $17,313,631

15,599,845 37,100 9,277 2,101
$15,648,323

The total assets of the institution increased by $1,388,438. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $1,154,255 in the category of Capital Assets, net.
The total liabilities for the year decreased by ($276,870). The combination of the increase in total assets of $1,388,438 and the decrease in total liabilities of ($276,870) yields an increase in total net assets of $1,665,308. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $1,190,589.
Statement of Revenues, Expenses and Changes in Net Assets
Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking
East Georgia College Annual Financial Report FY 2008 2

operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$5,569,982 13,116,977 (7,546,995)
6,978,141
(568,854) 2,234,162 1,665,308 15,648,323
0 15,648,323 $17,313,631

$4,360,303 10,604,745 (6,244,442)
5,504,163
(740,279) 2,973,392 2,233,113 13,415,210
0 13,415,210 $15,648,323

The Statement of Revenues, Expenses, and Changes in Net Assets reflect a positive year with an increase 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:

East Georgia College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$1,887,057 3,560,390 47,761 50,643 24,131 5,569,982
6,599,746 273,930 48,500 71,544 (2,012)
6,991,708
2,234,162 2,234,162 $14,795,852

June 30, 2007
$1,535,718 2,705,742 51,156 51,854 15,833 4,360,303
5,489,057 110,051 31,807 140,786 (252,505)
5,519,196
2,973,392 2,973,392 $12,852,891

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$4,116,059 933,387 963,785 949,270
2,123,449 2,051,272 1,943,793
35,962 13,116,977
13,567 $13,130,544

June 30, 2007
$3,208,276 746,751 911,786 838,530
2,170,980 1,232,767 1,437,856
57,799 10,604,745
15,033 $10,619,778

Operating revenues increased by $1,209,679 in fiscal 2008. Tuition & Fees included a 23% increase, and revenues increased in Grants and Contracts by 32%.

East Georgia College Annual Financial Report FY 2008 4

East Georgia College is a commuter institution without a residential population. Revenues associated with auxiliary services decreased by ($1,211) during the year due primarily to a decrease in revenues from parking and transportation services.

Non-operating revenue increased by $1,472,512 for the year. State Appropriations, Grants and Contracts, and Gifts increased by $1,291,261. Investment Income decreased by ($69,242) and Other Non-operating revenues increased by $250,493.

The compensation and employee benefits category increased by $1,021,723 and primarily affected the Instruction and Student Services categories. The increase reflects an increase in staff positions, merit increases, and an increased cost of health insurance for the employees of the institution.

Utilities increased by $111,184 during the past year. The increase was primarily associated with increased electricity and water usage that was a result of a net increase in usable space of 31,512 square feet.

Statement of Cash Flows

The final statement presented by East Georgia College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($6,760,995) 6,936,629 (215,226) 81,237 41,645 779,707
$821,352

June 30, 2007
($5,665,402) 5,609,736 (332,242) 92,328 (295,580) 1,075,287
$779,707

East Georgia College Annual Financial Report FY 2008 5

Capital Assets
East Georgia College completed and capitalized the expansion and renovation of the Student Services Complex in FY2007 and FY2008. The $4.9 million for this project was funded by the Georgia State Financing and Investment Commission (GSFIC). In addition, the Campus Infrastructure and Roadway Project were substantially completed in FY2008. This project was funded by the GSFIC for $1.4 million and $125,548 from the Georgia Department of Transportation. Projected funding by GSFIC for FY2009 will be $500,000 in planning and design funds from the permanent instructional site in Statesboro.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
East Georgia College had Long-Term Debt and Liabilities of $462,867 of which $218,158 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, East Georgia College has included the financial statements and notes for all required component units for FY2008. East Georgia College Foundation, Inc. had investments of $943,936 as of June 30, 2008. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Economic Outlook
The College is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The College's overall financial position is strong. Even with a relatively flat funded year, the College was able to generate a modest increase in Net Assets. The College anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the College's ability to react to unknown internal and external issues.
Dr. John Black, President East Georgia College
East Georgia College Annual Financial Report FY 2008 6

Statement of Net Assets

EA S T GEO R GIA C O LLEGE S TA TEMEN T O F N ET A S S ETS
June 30, 2008

A S S ETS C u rre n t Asse ts Cash an d Cash E quiv alen t s Acco un t s Receiv able, n et (n o t e 3 ) Receiv ables - Federal Fin an cial A ssist an ce Receiv ables - O t h er Due Fro m Co m p o n en t U nit s P ledges Receiv able In v en t o ries (n ot e 4 ) P rep aid it em s T o t al Curren t A sset s
Non cu rren t Asse ts N o n curren t Cash In v est m en t s (in cludin g Real E st at e) Cap it al A sset s, n et (n o t e 6 ) Ot h er Asset s T o t al N o n curren t A sset s TO TA L A S S ETS
LIA B ILITIES C u rre n t Liabilitie s Acco un t s P ay able Sa lar ie s P a y a ble Co n t ract s P ay able Dep osit s Deferred Rev enue (n o t e 7 ) Ot h er L iabilit ies D ep o sit s H eld fo r O t h er O rgan izat io n s D ue t o P rim ary Go v ern m en t L ease P urch ase O bligat io n s (curren t p o rt io n ) Co m p en sat ed A bsen ces (curren t p o rt io n ) T o t al Current L iabilit ies Non cu rre n t Liabilitie s L ease P urch ase O bligat io n s (n o n curren t ) Co m p en sat ed A bsen ces (n o n curren t ) T o t al N o n curren t L iabilit ies TO TA L LIA B ILITIES
N ET A S S ETS In v est ed in Cap it al A sset s, n et o f relat ed debt Rest rict ed fo r N o n ex p en dable E x p en dable Un rest rict ed TO TA L N ET A S S ETS

Ea s t G e o rg i a C olle ge
$ 8 0 2 ,3 7 2
5 1 ,0 8 5 2 7 1 ,4 3 0
1 ,6 8 8
1 ,4 0 3 1 9 2 ,6 0 8 1 ,3 2 0 ,5 8 6
1 8 ,9 8 0 4 5 2 ,3 3 9 1 6 ,8 9 4 ,9 0 3
1 7 ,3 6 6 ,2 2 2 1 8 ,6 8 6 ,8 0 8
3 3 ,4 5 5 4 4 ,3 8 4 1 1 4 ,5 0 0
2 ,0 0 0 4 9 4 ,1 5 0 1 4 9 ,2 0 5
7 2 ,6 1 6
4 9 ,0 3 8 1 6 9 ,1 2 0 1 ,1 2 8 ,4 6 8
5 5 ,4 3 1 1 8 9 ,2 7 8 2 4 4 ,7 0 9 1 ,3 7 3 ,1 7 7
1 6 ,7 9 0 ,4 3 4
3 7 ,1 0 0 9 3 ,6 9 3 3 9 2 ,4 0 4 $ 1 7 ,3 1 3 ,6 3 1

C om pon e n t Un it Ea s t G e o r g i a C olle ge
Fo u n da ti o n , In c.
$ 1 2 9 ,7 2 5
727 2 8 ,1 5 0
1 5 8 ,6 0 2
9 4 3 ,9 3 6 1 7 5 ,9 6 5 1 2 3 ,9 5 7 1 ,2 4 3 ,8 5 8 1 ,4 0 2 ,4 6 0
1 ,6 8 8
1 ,6 8 8
0 1 ,6 8 8 1 7 5 ,9 6 5
1 ,0 5 9 ,6 5 8 1 6 5 ,1 4 9
$ 1 ,4 0 0 ,7 7 2

East Georgia College Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
EAST GEORGIA COLLEGE STATEMENT of REVENUES, EXPENSES, and CHANGES in NET ASSETS
for the Year Ended June 30, 2008

East Ge orgi a C ol l e ge

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful accou Less: Scholarship Allowances Gift s and Cont ribut ions Grant s and Cont ract s Federal St at e Sales and Services Auxiliary Ent erprises Bookst ore Food Services Parking/T ransport at ion Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefit s Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion P ayment s t o or on behalf of East Georgia College
T ot al Operat ing Expenses Operat ing Income (loss)
NO NO PERATING REVENUES (EXPENSES ) St at e Appropriat ions Grant s and Cont ract s St at e Ot her Gift s Invest ment Income (endowment s, auxiliary and ot her) Int erest Expense (capit al asset s) Ot her Nonoperat ing Revenues Net Nonoperat ing Revenues Income before ot her revenues, expenses, gains, or los Capit al Grant s and Gift s St at e T ot al Ot her Revenues Increase in Net Asset s
NET AS SETS Net Asset s-beginning of year, as originally report ed P rior Year Adjust ment s Net Asset s-beginning of year, rest at ed Net Asset s-End of Year

$3,493,022 (1,605,965)
3,552,354 8,036
47,761
28,819 2,318
18,645 861
24,131 5,569,982
2,482,480 2,869,976 1,655,186
61,803 56,280 1,965,984 514,712 2,798,497 712,059
13,116,977 (7,546,995)
6,599,746
152,877 121,053
48,500 71,544 (13,567) (2,012) 6,978,141 (568,854)
2,234,162 2,234,162 1,665,308
15,648,323 0
15,648,323 $17,313,631

C ompon e n t Un i t East Ge orgi a C ol l e ge
Fou n dati on , In c.
$0 252,896
10,720
263,616
200 96,943 40,969 138,112 125,504
(71,162) (71,162) 54,342
0 54,342 1,346,430
0 1,346,430 $1,400,772

East Georgia College Annual Financial Report FY 2008 8

Statement of Cash Flows

EA S T GEO R GIA C O L L EGE S TA TEM EN T O F C A S H FLO W S For th e Ye ar En de d J u n e 3 0 , 2 0 0 8

C A S H FL O W S FR O M O P ER A TIN G A C TIV ITIES T uit io n an d Fees Gran t s an d Co n t ract s (E x ch an ge) Sa le s a n d Se r v ic e s P a y m e n t s t o Sup p lie r s P ay m en t s t o E m p lo y ees P a y m e n t s f o r Sc h o la r sh ip s a n d F e llo wsh ip s A ux iliary E n t erp rise Ch arges: Bo o k st o re F o o d Se r v ic e s P ark in g/T ran sp o rt at io n O t h er O rgan izat io n s O t h er Receip t s (p ay m en t s) N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
C A S H FL O W S FR O M N O N - C A P ITA L FIN A N C IN G A C TIV ITIES St a t e A p p r o p r ia t io n s A gen cy Fun ds T ran sact io n s Gift s an d Gran t s Receiv ed fo r O t h er T h an Cap it al P urp o ses N et Cash Flo ws P ro v ided by N o n -cap it al Fin an cin g A ct iv it ies
C A S H FL O W S FR O M C A P ITA L A N D R EL A TED FIN A N C IN G A C TIV ITIES Cap it al Gran t s an d Gift s Receiv ed P urch ases o f Cap it al A sset s P rin cip al P aid o n Cap it al D ebt an d L eases In t erest P aid o n Cap it al D ebt an d L eases N et Cash used by Cap it al an d Relat ed Fin an cin g A ct iv it ies
C A S H FL O W S FR O M IN V ES TIN G A C TIV ITIES In t erest o n In v est m en t s P urch ase o f In v est m en t s N et Cash P ro v ided (used) by In v est in g A ct iv it ies N et In crease/D ecrease in Cash Cash an d Cash E quiv alen t s - Begin n in g o f y ear Cash an d Cash E quiv alen t s - E n d o f Y ear
R EC O N C IL IA TIO N O F O P ER A TIN G L O S S TO N ET C A S H P R O V ID ED ( U S ED ) B Y O P ER A TIN G A C TIV ITIES :
O p erat in g In co m e (lo ss) A djust m en t s t o Reco n cile N et In co m e (lo ss) t o N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
D ep reciat io n Ch an ge in A sset s an d L iabilit ies:
Receiv ables, n et In v en t o ries P rep aid It em s A cco un t s P ay able D eferred Rev en ue O t h er L iabilit ies Co m p en sat ed A bsen ces
N et Cash P ro v ided (used) by O p erat in g A ct iv it ies

* * N O N - C A SH I N VE ST I N G, N O N - C A P I T A L F IN A N C IN G, A N D C A P IT A L A N D R E L A T E D F I N A N C I N G T R A N SA C T I O N S
Fix ed asset s acquired by in currin g cap it al lease o bligat io n s Ch an ge in fair v alue o f in v est m en t s reco gn ized as a co m p o n en t o f in t erest in co m e

East Georgia College Annual Financial Report FY 2008 9

June 30, 2008
$ 1 ,9 6 1 ,9 9 3 3 ,4 3 0 ,7 9 6 4 7 ,7 6 1 (5 ,0 6 4 ,2 3 0 ) (5 ,2 9 0 ,2 5 2 ) (1 ,9 6 5 ,9 8 4 )
6 3 ,4 0 3 3 ,4 3 5
1 8 ,6 5 4 830
3 2 ,5 9 9 (6 ,7 6 0 ,9 9 5 )
6 ,5 9 9 ,7 4 6 1 4 ,4 5 3
3 2 2 ,4 3 0 6 ,9 3 6 ,6 2 9
2 ,2 3 4 ,1 6 2 (2 ,3 8 8 ,5 9 7 )
(4 7 ,2 2 4 ) (1 3 ,5 6 7 ) (2 1 5 ,2 2 6 )
9 9 ,9 8 7 (1 8 ,7 5 0 ) 8 1 ,2 3 7 4 1 ,6 4 5 7 7 9 ,7 0 7 $ 8 2 1 ,3 5 2
($ 7 ,5 4 6 ,9 9 5 )
7 1 2 ,0 5 9
(1 6 8 ,4 2 3 ) (4 3 5 )
(3 3 ,3 7 5 ) 3 0 ,8 1 2 1 2 5 ,6 2 4 7 8 ,0 0 5 4 1 ,7 3 3
($ 6 ,7 6 0 ,9 9 5 )
$ 1 0 ,8 9 0 ($ 2 8 ,4 4 3 )

EAST GEORGIA COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations East Georgia College serves the state, regional and local communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity East Georgia College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of East Georgia College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. East Georgia College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, East Georgia College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus East Georgia College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the College's report. For FY2008, East Georgia College is reporting the activity for the East Georgia College Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB
East Georgia College Annual Financial Report FY 2008 10

Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
Investments The College accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable
East Georgia College Annual Financial Report FY 2008 11

expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. East Georgia College does not maintain any resale inventories.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to East Georgia College.
Deposits Deposits represent good faith deposits from students to reserve lab kits for on-line Chemistry courses and deposits from outside organizations who will utilize college facilities after June 30, 2008.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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.
East Georgia College Annual Financial Report FY 2008 12

Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. East Georgia College had accrued liability for compensated absences in the amount of $316,665 as of 7-1-2007. For FY2008, $225,651 was earned in compensated absences and employees were paid $183,918, for a net increase of $41,733. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $358,398.

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Assets The College's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.

Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies T ot al Rest rict ed Expendable

$93,693 $93,693

East Georgia College Annual Financial Report FY 2008 13

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$21,541 388,467
1,475 (19,079) $392,404

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes East Georgia 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.

Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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,

East Georgia College Annual Financial Report FY 2008 14

Expenses, and Changes in Net Assets. Scholarship allowances are the difference between the stated charge for goods and services provided by the 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 College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $782,034 and the bank balance was $1,236,764. Of the College's deposits, $1,036,764 were uninsured. Of these uninsured deposits,
East Georgia College Annual Financial Report FY 2008 15

$1,036,764 were collateralized with securities held by the financial institution's trust department or agent in the College's name.

B. Investments

At June 30, 2008, the carrying value of the College's investments was $490,682, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows:

Investment Pools Board of Regents Short-T erm Fund Balanced Income Fund T otal Return Fund Diversified Fund

$38,343 361,426
18,519 72,394

T otal Investment Pools

$490,682

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.

Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The College does not have a formal policy for managing interest rate risk.

The Weighted Average Maturity of the Short Term Fund is 1.99 years. Of the College's total investment of $38,343 in the Short Term Fund, $38,190 is invested in debt securities.

The Weighted Average Maturity of the Balanced Income Fund is 7.84 years. Of the College's total investment of $361,426 in the Balanced Income Fund, $232,397 is invested in debt securities.

The Weighted Average Maturity of the Total Return Fund is 7.84 years. Of the College's total investment of $18,519 in the Total Return Fund, $5,852 is invested in debt securities.

The Weighted Average Maturity of the Diversified Fund is 7.84 years. Of the College's total investment of $72,394 in the Diversified Fund, $22,515 is invested in debt securities.

East Georgia College Annual Financial Report FY 2008 16

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The College does not have a formal policy for managing credit quality risk.

Note 3. Accounts Receivable

Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$48,527 9,457
51,085 1,688
214,614 325,371
1,168
$324,203

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Other T otal

$1,403 $1,403

Note 5. Notes/Loans Receivable
Notes/loans receivable consist of student loans made through the Student Government Association Loan Fund. This loan fund comprises all of the notes receivable at June 30, 2008. The use of this small loan fund has decreased as students have increased their participation in Federal and State loan programs such as subsidized and unsubsidized Stafford Loans to finance their education. In fiscal year 2008, no new loans were made to students. As of June 30, 2008, the outstanding notes receivable was $0.

East Georgia College Annual Financial Report FY 2008 17

Note 6. Capital Assets

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

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated

Beginning B al an ce s 7/1/2007
$221,959 1,919,016 2,140,975

Addi ti o n s
$0 142,223 142,223

Re ductions
$0 1,919,016 1,919,016

Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections T otal Assets Being Depreciated

0 16,589,471
421,017 1,612,742
221,502 1,106,117 19,950,849

1,316,826 2,090,114
214,596 10,890 12,693
3,645,119

366,000
255,068
207 621,275

Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections T otal Accumulated Depreciation

0 3,678,097
381,405 1,233,044
49,051 1,009,579 6,351,176

20,352 493,261
121,059 53,492 23,895
712,059

366,000
253,056
207 619,263

T otal Capital Assets, Being Depreciated, Net

13,599,673

2,933,060

2,012

Capital Assets, net

$15,740,648

$3,075,283

$1,921,028

En di n g B a l a n ce 6/30/2008
$221,959 142,223 364,182
1,316,826 18,313,585
421,017 1,572,270
232,392 1,118,603 22,974,693
20,352 3,805,358
381,405 1,101,047
102,543 1,033,267 6,443,972
16,530,721
$16,894,903

East Georgia College Annual Financial Report FY 2008 18

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $451,130 43,020
$494,150

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations

Beginning Balance
July 1, 2007
$140,803

Additions $10,890

Reductions

Ending Balance June 30, 2008

$47,224

$104,469

Other Liabilities Compensated Absences

316,665

225,651

183,918

358,398

Total Long Term Obligations

$457,468

$236,541

$231,142

$462,867

Current Portion
$49,038
169,120 $218,158

Note 9. Significant Commitments
The College did not have any significant unearned, outstanding, construction or renovation contracts as of June 30, 2008.

Note 10. Lease Obligations
East Georgia College is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.
CAPITAL LEASES
Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2009 and 2012. Expenditures for fiscal year 2008 were $60,791 of which $13,567 represented interest. Total principal paid on capital leases was $47,224 for the fiscal year ended June 30, 2008. Interest rates range from 5.50 percent to 15.40 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

East Georgia College Annual Financial Report FY 2008 19

Equipment Total Assets Held Under Capital Lease

$129,849 $129,849

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.
East Georgia College has various capital leases for equipment with an outstanding balance at June 30, 2008 in the amount of $104,469.
OPERATING LEASES
East Georgia College's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2012. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small business equipment.
In 2008, East Georgia College entered into a real property operating lease with Finger-LeFavi Properties for office space for faculty and staff at the Statesboro instructional site located near the Georgia Southern University campus. In fiscal year 2008, the monthly lease payment was $19,590 plus $2,146 monthly Common Area Maintenance fee. East Georgia College's FY2008 expense for rental of real property under operating leases was $191,962.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 P rincipal Out st anding
Less: Int erest P rincipal Out st anding

Year 1 2 3 4

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$58,391 55,416 7,075 305
121,187 16,718
$104,469

$235,386 235,422 235,330 235,080
$941,218

East Georgia College's FY2008 expense for rental of real property and equipment under operating leases was $192,236.
East Georgia College Annual Financial Report FY 2008 20

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description East Georgia College participates in the Teachers Retirement System of Georgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of East Georgia College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. East Georgia College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$302,395 $267,303 $302,018

Employees' Retirement System of Georgia

Plan Description East Georgia College participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

East Georgia College Annual Financial Report FY 2008 21

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The College's payroll for the year ended June 30, 2008, for employees covered by ERS was $42,226. The College's total payroll for all employees was $5,352,456.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the College pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the College amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$4,396 $3,600
$0

East Georgia College Annual Financial Report FY 2008 22

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy East Georgia College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
East Georgia College and the covered employees made the required contributions of $111,406 (8.13% or 8.15%) and $68,428 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description East Georgia 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.
East Georgia College Annual Financial Report FY 2008 23

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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $14,916 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. East Georgia College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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'
East Georgia College Annual Financial Report FY 2008 24

indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. East Georgia College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although East Georgia College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against East Georgia College (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
East Georgia College Annual Financial Report FY 2008 25

The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 26 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, East Georgia College recognized as incurred $154,796 of expenditures, which was net of $57,854 of participant contributions.
East Georgia College Annual Financial Report FY 2008 26

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Dep reciat ion
Total Expenses
Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Inst ruct ion
$2,479,710 184,816 647,084 4,809 6,066 20,625 55,219 690,505 27,225
$4,116,059

Functional Classification FY2008

Public Service

Academic Support

St udent Services

$1,610 148,558
41,740
10,136
1,242 716,696
13,405

$1,160 535,483 137,681
2,212 12,125
8,379 178,551
88,194

$0 538,330 174,086
6,052 6,303 1,566 7,052 206,076 9,805

$933,387

$963,785

$949,270

Inst it ut ional Support
$0 1,059,996
503,558 48,730 20,949
63,782 396,780
29,654
$2,123,449

Plant Operat ions & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Ent erprises

T ot al Expenses

$0 397,908 151,031
701
378,492 598,398 524,742
$2,051,272

$0 1,943,793 $1,943,793

$0 4,885
6
546 11,491 19,034
$35,962

$2,482,480 2,869,976 1,655,186 61,803 56,280 1,965,984 514,712 2,798,497 712,059
$13,116,977

East Georgia College Annual Financial Report FY 2008 27

Note 16. Component Units

East Georgia College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of East Georgia College (College). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The forty-four member board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $40,969 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Office of the Vice President for Fiscal Affairs at 131 College Circle, Swainsboro, GA 30401.

Investments for Component Units:

East Georgia College Foundation, Inc. holds investments in the amount of $943,936 and those investments are classified as either temporarily restricted or unrestricted. Typically, the net assets of the restricted funds are not expended and earnings on the investments may be expended as restricted by the donors. Some of the restricted net assets are defined as fully expendable by the donor for the purpose specified by the donor.

Investments are comprised of the following amounts at June 30, 2008:

Cash held by investment organization Equity Securities Investment Pools:
BOR Short Term Fund BOR Balanced Income Fund SunTrust Diversified Fund
Total Investments

Cost
$6,904 23,653
41,398 238,787 732,462
$1,043,204

Fair Value
$6,904 23,653
41,236 198,056 674,087
$943,936

East Georgia College Annual Financial Report FY 2008 28

Capital Assets for Component Units: East Georgia College Foundation, Inc. has capital assets of $175,965 at June 30, 2008 in the form of Land.
East Georgia College Annual Financial Report FY 2008 29

FORT VALLEY STATE UNIVERSITY
Financial Report
For the Year Ended June 30, 2008

Fort Valley State University Fort Valley, Georgia

Dr. Larry Rivers
President

Arthur Henderson
Vice President for Business & Finance

FORT VALLEY STATE UNIVERSITY ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 12 Note 2. Deposits and Investments............................................................................................... 17 Note 3. Accounts Receivable...................................................................................................... 19 Note 4. Inventories...................................................................................................................... 19 Note 5. Notes/Loans Receivable................................................................................................. 19 Note 6. Capital Assets................................................................................................................. 20 Note 7. Deferred Revenue........................................................................................................... 21 Note 8. Long-Term Liabilities .................................................................................................... 21 Note 9. Significant Commitments............................................................................................... 21 Note 10. Lease Obligations......................................................................................................... 21 Note 11. Retirement Plans .......................................................................................................... 23 Note 12. Risk Management......................................................................................................... 25 Note 13. Contingencies............................................................................................................... 26 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 26 Note 15. Natural Classifications with Functional Classifications .............................................. 28 Note 16. Component Units ......................................................................................................... 29

FORT VALLEY STATE UNIVERSITY
Management's Discussion and Analysis

Introduction
Fort Valley State University is one of the 35 institutions of higher education of the University System of Georgia. The University, located in Fort Valley, Georgia, was founded in 1895.
Fort Valley State University is a land-grant university with state-wide commitments and responsibilities. It is the fifth oldest diversified institution of higher education. As a comprehensive land-grant institution, the University offers associate, baccalaureate and masters degrees in a wide variety of subjects. This wide range of educational opportunities attracts a highly qualified faculty and a student body of more than 2,000 students each year. The institution's enrollment data is shown by the comparison numbers that follow.
Students Students Faculty (Headcount) (FTE)

FY2008

122

FY2007

125

FY2006

117

2,562 2,176 2,174

2,433 2,043 2,000

Overview of the Financial Statements and Financial Analysis
Fort Valley State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Fort Valley State University. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

Fort Valley State University Annual Financial Report FY 2008 1

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$5,097,422 92,439,163
2,076,736 99,613,321

June 30, 2007
$3,582,014 49,876,441
2,154,409 55,612,864

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

5,687,692 45,102,296 50,789,988

4,570,245 1,150,802 5,721,047

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

48,363,450 68,099
2,008,638 (1,616,854) $48,823,333

49,876,441 68,099
2,084,767 (2,137,490) $49,891,817

The total assets of the institution increased by $44,000,457. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $42,562,722 in the category of Capital Assets, net. The balance of the increase is mainly in cash and cash equivalent categories.
The total liabilities for the year increased by $45,068,941. The combination of the increase in total assets of $44,000,457 and the increase in total liabilities of $45,068,941 yields a decrease in total net assets of ($1,068,484).

Fort Valley State University Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$37,660,673 61,247,532 (23,586,859) 21,802,899
(1,783,960) 715,476
(1,068,484) 49,891,817
0 49,891,817 $48,823,333

$30,717,999 54,320,413 (23,602,414) 23,320,478
(281,936) 2,353,968 2,072,032 45,335,277 2,484,508 47,819,785 $49,891,817

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:

Fort Valley State University Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Federal Appropriat ions Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$3,754,304 5,376,065
16,542,809 173,910
11,640,541 173,044
37,660,673
22,799,393 591,375 73,924 (102,892)
23,361,800
715,476 715,476 $61,737,949

June 30, 2007
$4,538,830 5,049,637
14,524,794 142,940
6,222,490 239,308
30,717,999
22,971,005 418,577 89,501 (158,605)
23,320,478
2,353,968 2,353,968 $56,392,445

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$12,915,764 7,120,713 2,854,168 7,156,913 4,220,704 8,304,741 7,236,129 1,299,697
10,138,703 0
61,247,532
1,558,901 $62,806,433

June 30, 2007
$12,345,473 5,910,422 2,790,103 6,715,956 3,749,347 7,334,717 6,009,484 2,174,851 5,467,747 1,822,313
54,320,413
0 $54,320,413

Operating revenues increased by $6,942,674 in fiscal 2008. Although Tuition & Fees included a 17% decrease, revenues increased in Grants and Contracts and Auxiliary categories.

Fort Valley State University Annual Financial Report FY 2008 4

The Auxiliary revenue increase of $5,418,051 is a result of the changing environment of residential life on the University's campus. During the year, residential life placed in-service over 950 beds of new housing on the campus using the Fort Valley State University Foundation Properties, LLC in a construction and leasing relationship. The net effect to the campus is that the students actually have more on-campus residential life availability. The housing complex rental agreement commenced on August 1, 2007 and is treated as a capital lease.

The compensation and employee benefits category increased by $1,695,104 and primarily affected the Research, Institutional Support and Academic Support categories. The increase reflects the addition of staff members, merit increases and an increased cost of health insurance for the employees of the institution.

Utilities increased by $453,524 during the past year. The increase was primarily associated with the increased natural gas costs that were experienced in the winter of fiscal year 2008 and affected the Plant Operations and Maintenance category.

Statement of Cash Flows

The final statement presented by Fort Valley State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($19,608,779) 23,692,455 (2,698,690) 88,094 1,473,080 112,923
$1,586,003

June 30, 2007
($20,448,763) 23,194,424 (1,906,104) 243,905 1,083,462 (970,539)
$112,923

Fort Valley State University Annual Financial Report FY 2008 5

Capital Assets
The University had two significant capital asset additions for facilities in fiscal year 2008. The Hendricks Houses renovation was completed. Construction of the Wildcat Commons residential housing was completed and placed into service early in fiscal year 2008.
For additional information concerning Capital Assets, see Notes 1, 6, 8, 9, and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
Fort Valley State University had Long-Term Debt and Liabilities of $46,578,507 of which $1,476,211 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, Fort Valley State University has included the financial statements and notes for all required component units for FY2008. The Fort Valley State University Foundation, Inc. had investments of $5.6 million as of June 30, 2008. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Economic Outlook
The University is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The University's overall financial position is strong. Even with a relatively flat funded year, the University was able to minimize the decrease to its Net Assets. The University anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the University's ability to react to unknown internal and external issues.
Dr. Larry Rivers, President Fort Valley State University
Fort Valley State University Annual Financial Report FY 2008 6

Statement of Net Assets

FORT VALLEY STATE UNIVERSITY STATEMENT OF NET ASSETS June 30, 2008

AS S ETS C u rre n t Asse ts Cash and Cash Equivalent s Short -t erm Invest ment s Account s Receivable, net (not e 3) Receivables - Federal Financial Assist ance Receivables - Ot her Due From Component Unit s Net Invest ment in Capit al Leases Cont ribut ions Receivable P repaid it ems Not es and Mort gages Receivable T ot al Current Asset s
Non cu rre n t Asse ts Noncurrent Cash Invest ment s (including Real Est at e) Not es Receivable, net Net Invest ment in Capit al Leases Cont ribut ions Receivable Capit al Asset s, net (not e 6) Ot her Asset s T ot al Noncurrent Asset s TO TAL AS S ETS
LIAB ILITIES C u rre n t Li abi l i ti e s Account s P ayable Salaries P ayable Cont ract s P ayable Deferred Revenue (not e 7) Ot her Liabilit ies Deposit s Held for Ot her Organizat ions Due t o P rimary Government Lease P urchase Obligat ions (current port ion) Compensat ed Absences (current port ion) Revenue/Mort gage Bonds P ayable (current ) US DOE Set t lement (current port ion) Not es and Loans P ayable (current port ion) T ot al Current Liabilit ies Non cu rre n t Li abi l i ti e s Lease P urchase Obligat ions (noncurrent ) Compensat ed Absences (noncurrent ) Revenue/Mort gage Bonds P ayable (noncurrent ) US DOE Set t lement (noncurrent ) Not es and Loans P ayable (noncurrent ) T ot al Noncurrent Liabilit ies TO TAL LIABILITIES
NET AS S ETS Invest ed in Capit al Asset s, net of relat ed debt Rest rict ed for Nonexpendable Expendable Unrest rict ed TO TAL NET AS S ETS

Fort Val l e y S tate Un i ve rsi ty
$1,586,003 74,523
1,760,914 1,626,710
46,212
3,060 5,097,422
41,479 2,035,257
92,439,163 94,515,899 99,613,321
1,049,622 213,493
1,173,650 595,570
1,179,146 98,489
1,160,892 216,830
5,687,692 43,977,224
595,776 529,296 45,102,296 50,789,988
48,363,450 68,099
2,008,638 (1,616,854) $48,823,333

C ompon e n t Un i t Fort Val l e y S tate
Un i ve rsi ty Fou n dati on , In c.
$1,159,103 892,193
1,825,855 66,551
169,733 4,113,435
21,520,371 4,670,143 388,375
34,241,535 168,979
3,299,063 2,048,243 66,336,709 70,450,144
193,591 924,664
46,212
70,000 181,876 1,416,343
61,420,930 1,360,374
62,781,304 64,197,647
1,269,043 3,051,293 2,503,744
(571,583) $6,252,497

Fort Valley State University Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
FORT VALLEY S TATE UNIVERS ITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Federal Appropriat ions Grant s and Cont ract s Federal St at e Ot h er Sales and Services Rents and Royalties Auxiliary Ent erprises Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Realized/Unrealized Gains (Losses) Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefit s Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion Ot her Operat ing Expense P aym ent s t o or on behalf of Fort Valley St at e Universit y
T ot al Operat ing Expenses Operat ing Income (loss)

Fort Val l e y S tate Un i ve rsi ty

C om pon e nt Unit
Fort Val l e y S tate Un i ve rsi ty
Fou n dati on , In c.

$9,107,902 (5,353,598)
5,376,065
15,390,284 372,606 779,919 173,910
6,226,919 319,125
3,427,226 114,707 299,743
1,183,415 69,406
173,044 37,660,673
7,351,513 18,375,728
7,876,116 396,106 500,377
3,249,842 3,359,485 16,873,000 3,265,365
61,247,532 (23,586,859)

$0 726,882
997,642
(344,224) 1,380,300
534,403 26,607 31,804
896,245 1,489,059 (108,759)

Fort Valley State University Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
FORT VALLEY S TATE UNIVERS ITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

Fort Val l e y S tate Un i ve rs i ty

C om pone nt Unit
Fort Val l e y S tate Un i ve rs i ty
Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENSES) State Appropriations Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts Federal St at e Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET ASS ETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

22,799,393 591,375 73,924
(1,558,901) (102,892)
21,802,899 (1,783,960)
715,476
715,476 (1,068,484)
49,891,817 0
49,891,817 $48,823,333

783,616 (1,855,821)
(1,072,205) (1,180,964)
118,451
478,458 596,909 (584,055)
6,836,552 0
6,836,552 $6,252,497

Fort Valley State University Annual Financial Report FY 2008 9

Statement of Cash Flows
FORT VALLEY S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Federal Appropriat ions Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes P rincipal P aid on Inst allment Debt Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES P urchases of Capit al Asset s Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$2,932,376 5,393,770
17,328,797 173,910
(20,124,886) (33,539,408)
(3,645,948) (101,758) 163,527
6,226,919 319,125
3,427,226 114,707 299,743
1,183,415 69,406
170,300 (19,608,779)
22,799,393 507,964 591,375 (206,277)
23,692,455
(1,853,604) (845,086)
(2,698,690)
88,094 88,094 1,473,080 112,923 $1,586,003

Fort Valley State University Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
FORT VALLEY S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust m ent s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed asset s acquired by incurring capit al lease obligat ions Change in fair value of invest ment s recognized as a com ponent of int erest incom e Change in accrued int erest payable affect ing int erest paid Gift of capit al asset s reducing proceeds of capit al grant s and gift s

June 30, 2008
($23,586,859)
3,265,365 (37,534) (3,060) 61,769 55,321 17,705 591,553 26,961
($19,608,779)
$43,361,898 ($14,170)
($713,815) ($715,476)

Fort Valley State University Annual Financial Report FY 2008 11

FORT VALLEY STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Fort Valley State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Fort Valley State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Fort Valley State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Fort Valley State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Fort Valley State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Fort Valley State University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, Fort Valley State University is reporting the activity for the Fort Valley State University Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and
Fort Valley State University Annual Financial Report FY 2008 12

Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of 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.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Balanced Income Fund is included under Investments.
Fort Valley State University Annual Financial Report FY 2008 13

Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Fort Valley State University.
Deferred Revenues Deferred revenues include amounts received from grant and contract sponsors that have not yet been earned.
Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues,
Fort Valley State University Annual Financial Report FY 2008 14

Expenses, and Changes in Net Assets. Fort Valley State University had accrued liability for compensated absences in the amount of $1,729,707 as of 7-1-2007. For FY2008, $1,166,271 was earned in compensated absences and employees were paid $1,139,310, for a net increase of $26,961. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $1,756,668.

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Assets The University's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.

Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

Federal Loans Quasi-Endowm ent s T ot al Rest rict ed Expendable

June 30, 2008
1,967,158 41,480
$2,008,638

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet
Fort Valley State University Annual Financial Report FY 2008 15

current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$945,597 246,552
(2,809,003) ($1,616,854)

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Fort Valley State University, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria: Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.

Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 University, 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 University's financial statements. To the extent

Fort Valley State University Annual Financial Report FY 2008 16

that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $1,659,626 and the bank balance was $2,229,473. Of the University's deposits, $2,028,109 was uninsured. Of these uninsured deposits, $1,954,950 were collateralized with securities held by the financial institution's trust department or agent in the University's name and $73,159 were uncollateralized.
Fort Valley State University Annual Financial Report FY 2008 17

B. Investments At June 30, 2008, the carrying value of the University's investments was $41,479, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows:

Investment Pools Board of Regents Balanced Income Fund

$41,479

T otal Investment Pools

$41,479

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.

Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University practice is to follow the System's policy for managing interest rate risk which is contained in the investment policy guidelines for the various pooled investments.

The Weighted Average Maturity of the Balanced Income Fund is 7.84 years. Of the University's total investment of $41,479 in the Balanced Income Fund, $26,672 is invested in debt securities.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University's practice is to invest in high quality institutional money market mutual funds or other high quality short term instruments. As previously stated, the BOR Investment pool is not rated.

Fort Valley State University Annual Financial Report FY 2008 18

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$1,016,540 824,830
1,760,914 46,212
240,340 3,888,836
455,000
$3,433,836

Note 4. Inventories Fort Valley University had no Inventory at June 30, 2008.

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was $1,301,169.

Fort Valley State University Annual Financial Report FY 2008 19

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Capital Leases Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$3,762,548 1,382,221 5,144,769
62,642,058 1,506,124 7,706,939 0 6,490,231
78,345,352
21,332,559 1,352,090 5,362,818 0 5,566,213
33,613,680
44,731,672
$49,876,441

Addi ti o n s
$0 1,316,861 1,316,861

Re ductions
$0 1,382,221 1,382,221

1,501,410
1,077,938 43,361,898
55,092 45,996,338

312,205 312,205

1,331,757 406
753,665 993,091 186,446 3,265,365
42,730,973
$44,047,834

209,314
209,314 102,891 $1,485,112

En di n g B a l a n ce 6/30/2008
$3,762,548 1,316,861 5,079,409
64,143,468 1,506,124 8,472,672
43,361,898 6,545,323
124,029,485
22,664,316 1,352,496 5,907,169 993,091 5,752,659
36,669,731
87,359,754
$92,439,163

Fort Valley State University Annual Financial Report FY 2008 20

Note 7. Deferred Revenue

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

Ot her Deferred Revenue T ot als

June 30, 2008 $1,173,650 $1,173,650

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations

Beginning Balance
July 1, 2007
$0

Additions $44,075,713

Reductions

Ending Balance June 30, 2008

$0

$44,075,713

Other Liabilities Compensated Absences US DOE Settlement Total

1,729,707 952,403
2,682,110

1,166,271 1,166,271

1,139,310 206,277
1,345,587

1,756,668 746,126
2,502,794

Total Long Term Obligations

$2,682,110

$45,241,984

$1,345,587

$46,578,507

Current Portion
$98,489
1,160,892 216,830
1,377,722
$1,476,211

Note 9. Significant Commitments
The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $745,000 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.
Note 10. Lease Obligations
Fort Valley State University is obligated under various operating leases for the use equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.
CAPITAL LEASES
Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2009 and 2037. Expenditures for fiscal year 2008 were $1,711,457 of which $1,558,901 represented interest and $152,556 represented additional rent toward repairs and maintenance. Of the $1,558,901 in interest expense, $713,815 was added to the principal balance. Interest rates range from 4.50 percent to 5.50 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:
Fort Valley State University Annual Financial Report FY 2008 21

Buildings Equipment Total Assets Held Under Capital Lease

$42,341,806 27,001
$42,368,807

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.
Fort Valley State University had one capital lease with related entities in the current fiscal year. In August 2007, Fort Valley State University entered into a capital lease of $43,334,897 at 4.544 percent with the Fort Valley State University Foundation Properties, LLC whereby the University leases a building for a thirty year period that began August 2007 and expires July 2037.
Fort Valley State University also has various capital leases for equipment with an outstanding balance at June 30, 2008 in the amount of $27,001.
OPERATING LEASES
Fort Valley State University's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2012. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small business equipment.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Fort Valley State University Annual Financial Report FY 2008 22

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 2034 t hrough 2038 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$2,104,356 2,162,013 2,221,400 2,280,943 2,291,391
12,149,609 13,854,251 15,316,213 17,590,688 16,770,901 86,741,765 42,666,052 $44,075,713

$45,033 31,997 31,997 27,234
$136,261

Fort Valley State University's FY2008 expense for rental of real property and equipment under operating leases was $34,429.
Note 11. Retirement Plans
Teachers Retirement System of Georgia
Plan Description Fort Valley State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.
Funding Policy Employees of Fort Valley State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Fort Valley State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fort Valley State University Annual Financial Report FY 2008 23

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$1,622,581 $1,597,028 $1,593,422

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Fort Valley State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.

Fort Valley State University and the covered employees made the required contributions of $369,230 (8.13% or 8.15%) and $226,798 (5%), respectively.

AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.

Georgia Defined Contribution Plan

Plan Description Fort Valley State University 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.

Fort Valley State University Annual Financial Report FY 2008 24

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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $87,000 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Fort Valley State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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'
Fort Valley State University Annual Financial Report FY 2008 25

indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Fort Valley State University, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Fort Valley State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Fort Valley State University (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the
Fort Valley State University Annual Financial Report FY 2008 26

publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 280 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Fort Valley State University recognized as incurred $1,004,712 of expenditures, which was net of $427,765 of participant contributions.
Fort Valley State University Annual Financial Report FY 2008 27

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Instruction
$7,323,345 1,575,144 2,103,833
88,100 540,947 87,794 1,045,085 151,516
$12,915,764

Research
$12,204 3,107,781
825,017
107,546 54,217 63,305 2,430,502 520,141
$7,120,713

Functional Classification FY2008

Public Service

Academic Support

$0 1,453,283
427,733

$500 4,010,271 1,143,392

113,722
21,747 758,122 79,561

55,321 3,413 113,353 1,430,424 400,239

$2,854,168

$7,156,913

Student Services
$12,951 2,441,411
610,048
54,053 61,345 41,299 992,101 7,496
$4,220,704

Institutional Support
$2,513 3,923,923 2,172,900
396,106 73,617 444,148 112,637 1,157,168 21,729
$8,304,741

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

$0 1,291,338
461,322

$0

$0

572,577

131,871

3,786
2,794,384 749,676
1,935,623

1,299,697

4,232 846,075 124,966 8,309,922 149,060

$7,236,129

$1,299,697 $10,138,703

Total Expenses
$7,351,513 18,375,728 7,876,116
396,106 500,377 3,249,842 3,359,485 16,873,000 3,265,365
$61,247,532

Fort Valley State University Annual Financial Report FY 2008 28

Note 16. Component Units

Fort Valley State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Fort Valley State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $896,245 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 1005 State University Drive, Fort Valley, GA 31030 or from the Foundation's website at www.fvsu.edu.

Investments for Component Units:

Fort Valley State University Foundation, Inc. holds endowment and other investments in the amount of $5.6 million, excluding investments limited to use (bond proceeds). The $3.1 million corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.

Investments are comprised of the following amounts at June 30, 2008:

Money Market Accounts Certificates of Deposit Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds Real Estate
Total Investments

Cost
$923,540 892,193 203,473 160,602 683,340
2,767,193 92,000
$5,722,341

Fair Value
$923,540 892,193 202,529 157,107 644,207
2,650,760 92,000
$5,562,336

Fort Valley State University Annual Financial Report FY 2008 29

Capital Assets for Component Units:

Fort Valley State University Foundation, Inc. holds the following capital asset amounts at June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$298,607 1,931,926 2,230,533
1,280,326 52,600
1,332,926
264,396 1,068,530 $3,299,063

Long-term Liabilities for Component Units:

Changes in long-term liabilities for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Notes and Loans Payable Revenue/M ortgage Bonds Payable
Total Long Term Liabilities

$1,477,315 43,254,894
$44,732,209

$131,653 18,236,036
$18,367,689

$66,718 $66,718

$1,542,250 61,490,930
$63,033,180

$181,876 70,000
$251,876

Notes and Loans Payable: The Foundation has two notes payable to the Department of Agriculture, Rural Business Cooperative Services through 2031 which bear interest at 1%. The notes are collateralized by real and personal property including mortgage loans. The notes payable balances at June 30, 2008 were $1,160,702.
The Foundation has two banks loans due in 2009 at 5% which were for the purchase of a building and for Foundation operations. The loan balances at June 30, 2008 were $381,548.

Fort Valley State University Annual Financial Report FY 2008 30

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033

1 2 3 4 5 6-10 11-15 16-20 21-25

Principal

Notes and Loans Payable Interest

$181,876 300,622 51,237 51,752 52,272 269,344 283,149 297,958 54,040
$1,542,250

$27,660 23,156 10,647 10,131 9,612 40,074 26,272 11,336 1,025
$159,913

Total
$209,536 323,778 61,884 61,883 61,884 309,418 309,421 309,294 55,065
$1,702,163

Revenue Bonds Payable: In June 2006, the Development Authority of Peach County (the Authority) issued $44 million in Revenue Bonds Series 2006 (the Bonds) and entered into an agreement to loan $44 million to the Foundation for Student Housing construction. The bonds are payable solely from the Trust Estate, as defined in the Indenture. Interest rates vary from 4.0% - 5.0%. The bond liability at June 30, 2008 was $43,289,857, net of bond discount of $770,143.

In June 2008, the Authority issued $18 million in Revenue Bonds Series 2008 (the Bonds) and entered into an agreement to loan $18 million to the Foundation for additional Student Housing construction. The bonds are secured by a letter of credit issued by Wachovia Bank in favor of the Authority. The letter of credit must be renewed annually. Effective July 1, 2008, the Foundation entered into an interest rate Swap Agreement to mitigate the risk of future rate fluctuations of the variable rates on the Series 2008 Bonds. Pursuant to the Swap Agreement, the Foundation will pay a fixed rate of 4.75% to the Swap Provider in exchange for the Swap Provider's payment of a floating rate. The Swap Agreement is in the notional amount of $18,265,000. The bond liability at June 30, 2008 was $18,201,073, net of bond discount of $63,927.

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Fort Valley State University Annual Financial Report FY 2008 31

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal
$70,000 130,000 195,000 290,000 345,000 3,175,000 6,590,000 9,485,000 15,935,000 26,110,000 62,325,000 (834,070) $61,490,930

Bonds Payable Interest
$2,811,113 2,870,447 2,865,247 2,859,071 2,843,970
13,938,661 12,971,466 11,112,236
8,094,179 3,328,711 63,695,101
$63,695,101

Total
$2,881,113 3,000,447 3,060,247 3,149,071 3,188,970
17,113,661 19,561,466 20,597,236 24,029,179 29,438,711 126,020,101
(834,070) $125,186,031

Fort Valley State University Annual Financial Report FY 2008 32

GEORGIA COLLEGE & STATE UNIVERSITY
Financial Report
For the Year Ended June 30, 2008

Georgia College & State University Milledgeville, Georgia

Dorothy Leland
President

Peter W. Shields
Vice President for Business & Finance

GEORGIA COLLEGE & STATE UNIVERSITY ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 8 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 9 Statement of Cash Flows .............................................................................................................. 11 Note 1. Summary of Significant Accounting Policies ................................................................ 13 Note 2. Deposits and Investments................................................................................................ 19 Note 3. Accounts Receivable...................................................................................................... 23 Note 4. Inventories...................................................................................................................... 23 Note 5. Notes/Loans Receivable................................................................................................. 23 Note 6. Capital Assets................................................................................................................. 24 Note 7. Deferred Revenue........................................................................................................... 25 Note 8. Long-Term Liabilities .................................................................................................... 25 Note 9. Significant Commitments............................................................................................... 25 Note 10. Lease Obligations......................................................................................................... 25 Note 11. Retirement Plans .......................................................................................................... 28 Note 12. Risk Management......................................................................................................... 31 Note 13. Contingencies................................................................................................................ 32 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 32 Note 15. Natural Classifications with Functional Classifications .............................................. 34 Note 16. Component Units .......................................................................................................... 35

GEORGIA COLLEGE & STATE UNIVERSITY
Management's Discussion and Analysis

Introduction

Georgia College & State University is one of the 35 institutions of higher education of the University System of Georgia. The University, located in Milledgeville, Georgia, was founded in 1889 as Georgia Normal and Industrial College. It later became Georgia State College for Women (GSCW). In 1969 it became Georgia College and was re-established as a co-educational institution. In 1995 the Board of Regents gave Georgia College university status, a new mission, and new name, "Georgia College & State University".

As the state's designated public liberal arts university, Georgia College & State University is committed to combining the educational experiences typical of esteemed private liberal arts colleges with the affordability of public higher education. Georgia College & State University is a residential learning community that emphasizes undergraduate education and offers selected graduate programs. The faculty is dedicated to challenging students and fostering excellence in the classroom and beyond. Georgia College & State University seeks to endow its graduates with a passion for achievement, a lifelong curiosity, and exuberance for living.
Georgia College & State University offers degree programs in the Arts & Sciences, Business, Education and Health Sciences, as well as, pre-professional and Graduate Studies. There are over 5,000 students enrolled on the Milledgeville campus.
The institution continues to grow as shown by the comparison numbers that follow.
Students Students Faculty (Headcount) (FTE)

FY2008

306

FY2007

317

FY2006

260

6,249 6,040 5,662

5,815 5,591 5,202

Overview of the Financial Statements and Financial Analysis
Georgia College & State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Georgia College and State University Annual Financial Report FY 2008 1

Statement of Net Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Georgia College & State University. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and noncurrent), and Net Assets (Assets minus Liabilities). The difference between current and noncurrent assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$15,633,444 147,342,213
8,071,811 171,047,468

June 30, 2007
$11,650,447 148,312,808
6,550,463 166,513,718

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

9,038,861 101,761,111 110,799,972

7,227,913 102,472,538 109,700,451

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

50,119,094 3,171,410 5,367,762 1,589,230
$60,247,496

50,734,149 2,075,090 4,951,374 (947,346)
$56,813,267

The total assets of the institution increased by $4,533,750. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $5,504,345 in Current
Georgia College and State University Annual Financial Report FY 2008 2

Assets and Other Assets. A portion of this increase, $1,826,301, reflects a restatement of fiscal year 2007 Net Assets that represents returning the endowments from the Georgia College & State University Foundation to the Institution. This increase was primarily offset due to a decrease of ($970,595) in the category of Capital Assets, net. This decrease is attributed to depreciation.

The total liabilities for the year increased by $1,099,521. The combination of the increase in total assets of $4,533,750 and the increase in total liabilities of $1,099,521 yields an increase in total net assets of $3,434,229. The increase in total net assets is primarily in the category of Restricted and Unrestricted Assets which is offset by a decrease in Invested in Capital Assets, net of debt, in the amount of ($615,055).

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$48,559,950 87,100,854 (38,540,904) 36,718,816
(1,822,088) 3,430,016 1,607,928 56,813,267 1,826,301 58,639,568 $60,247,496

$38,595,809 81,458,892 (42,863,083) 35,627,160
(7,235,923) 1,918,711 (5,317,212) 62,130,479
0 62,130,479 $56,813,267

Georgia College and State University Annual Financial Report FY 2008 3

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase in the net assets at the end of the year. This increase includes a Prior Year Adjustment for the return of the endowment funds from the Georgia College & State University Foundation. Some highlights of the information presented on the Statement of Revenues, Expenses, and Changes in Net Assets are as follows:

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$25,637,289 382,259
1,022,197 20,937,952
580,253 48,559,950
33,154,191 5,553,767 1,204,253 465,881 (19,454)
40,358,638
3,430,016 0
3,430,016 $92,348,604

June 30, 2007
$22,320,758 382,965
1,081,880 14,068,018
742,188 38,595,809
29,833,637 4,114,928 1,343,466 822,939 35,603
36,150,573
1,257,444 661,267
1,918,711 $76,665,093

Georgia College and State University Annual Financial Report FY 2008 4

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$30,628,523 326,841 205,193
9,122,901 5,737,280 11,328,731 9,502,959 1,630,737 18,617,689
0 87,100,854
3,639,822 $90,740,676

June 30, 2007
$26,749,151 324,302 111,475
9,208,123 6,107,933 11,648,269 6,986,853 1,640,804 16,596,949 2,085,033 81,458,892
523,413 $81,982,305

Operating revenues increased by $9,964,141 in fiscal 2008. Tuition & Fees included a 15% increase, and increases were also realized in Auxiliaries.
The Auxiliary revenue increase of $6,869,934 is a result of the changing environment of residential life on the University's campus. The Freshmen residence requirement is in place; thereby producing related increases in Residence Halls, Food Service and Vending Operations. In addition, since there are increasing numbers of students at the Milledgeville campus, mandatory fee revenues for Parking/Transportation, Health Services and Athletics have significantly increased. Of significance for Auxiliaries are the capital leases that were entered into with the Georgia College & State University Foundation for the student residential facilities and the Irwin Street Parking Facility. The University operated the student residential facilities for the first full year under the capital leases during FY 2008.
Nonoperating revenues increased by $4,208,065 for the year primarily due to an increase of $3,320,554 in State Appropriations.
The compensation and employee benefits category increased by $4,667,260 and primarily affected the Instruction, Student Services, Institutional Support, and Auxiliary categories. The increase reflects merit increases and an increased cost of health insurance for the employees of the institution.
Utilities increased by $927,825 during the past year. The increase was primarily associated with the increased natural gas costs that were experienced in the winter and increased cost of electricity during fiscal year 2008 and affected the Plant Operations and Maintenance category.

Georgia College and State University Annual Financial Report FY 2008 5

Statement of Cash Flows

The final statement presented by Georgia College & State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($31,107,914) 39,846,579 (5,967,957) 818,696 3,589,404 7,501,749
$11,091,153

June 30, 2007
($32,463,689) 35,336,189 (1,837,081) 392,743 1,428,162 6,073,587
$7,501,749

Capital Assets
The University had no significant capital asset additions for facilities in fiscal year 2008.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the notes to the financial statements.
Long Term Debt and Liabilities
Georgia College & State University had Long-Term Debt and Liabilities of $103,888,848 of which $2,127,737 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.

Georgia College and State University Annual Financial Report FY 2008 6

Component Units In compliance with GASB Statement No. 39, Georgia College & State University has included the financial statements and notes for all required component units for FY2008. The Georgia College & State University Alumni Association, Inc. had investments of $5.6 million. The Georgia College & State University Foundation, Inc. had investments of $14.8 million as of June 30, 2008 and long-term debt of $111.9 million in the form of two bond issues and a note payable as of June 30, 2008. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units. Economic Outlook The University is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The University's overall financial position is strong as we concluded the year with a 6% increase in Total Net Assets. The University anticipates the current fiscal year will be positive and will maintain a close watch over resources to maintain the University's ability to react to unknown internal and external issues. Dorothy Leland, President Georgia College & State University
Georgia College and State University Annual Financial Report FY 2008 7

Statement of Net Assets

G EO R G IA C O L L EG E & S T A T E UN IV ER S IT Y S T A T EM EN T O F N ET A S S ET S June 30, 2008

C om pon e n t Un it

G e orgia C olle ge & S tate
U n i ve rs i ty

G e orgia C olle ge & S ta te U n i ve rs i ty Alum ni A s s o ci a ti o n , In c.

A S S ETS C u rre n t Asse ts Cash an d Cash E quiv alen t s Sh o r t - t e r m I n v e st m e n t s A cco un t s Receiv able, n et (n o t e 3 ) Receiv ables - Federal Fin an cial A ssist an ce Receiv ables - O t h er D ue Fro m Co m p o n en t U n it s N et In v est m en t in Cap it al L eases P ledges Receiv able D ue Fro m P rim ary Go v ern m en t In v en t o ries (n o t e 4 ) P rep aid it em s T o t al Curren t A sset s

$ 1 0 ,9 2 3 ,0 4 8 2 2 4 ,1 4 4
1 1 8 ,6 2 7 2 ,6 1 6 ,1 9 2
3 4 ,6 1 1
1 ,5 0 4 ,9 3 3 2 1 1 ,8 8 9
1 5 ,6 3 3 ,4 4 4

$ 2 8 2 ,1 8 5
50 8 ,1 1 1 1 ,7 4 8 2 9 2 ,0 9 4

Non cu rre n t Asse ts N o n curren t Cash In v est m en t s (in cludin g Real E st at e) N o t es Receiv able, n et N et In v est m en t in Cap it al L eases Cap it al A sset s, n et (n o t e 6 ) O t h er A sset s T o t al N o n curren t A sset s TO TA L A S S ETS
L IA B IL ITIES C u rre n t Liabilitie s A cco un t s P ay able Sa la r ie s P a y a ble Co n t ract s P ay able D ep o sit s D eferred Rev en ue (n o t e 7 ) O t h er L iabilit ies D ep o sit s H eld fo r O t h er O rgan izat io n s D ue t o P rim ary Go v ern m en t L ease P urch ase O bligat io n s (curren t p o rt io n ) Co m p en sat ed A bsen ces (curren t p o rt io n ) Rev en ue/M o rt gage Bo n ds P ay able (curren t ) D ue t o Co m p o n en t U n it s T o t al Curren t L iabilit ies Non cu rre n t Liabilitie s L ease P urch ase O bligat io n s (n o n curren t ) Co m p en sat ed A bsen ces (n o n curren t ) Rev en ue/M o rt gage Bo n ds P ay able (n o n curren t ) L ia bilit ie s un de r Sp lit - I n t e r e st A gr e e m e n t s ( n o n c ur r e n t ) N o t es an d L o an s P ay able (n o n curren t ) T o t al N o n curren t L iabilit ies TO TA L L IA B IL ITIES
N ET A S S ETS In v est ed in Cap it al A sset s, n et o f relat ed debt Rest rict ed fo r N o n ex p en dable E x p en dable U n rest rict ed TO TA L N ET A S S ETS

1 6 8 ,1 0 5 5 ,3 3 5 ,7 9 3 2 ,5 6 7 ,9 1 3
1 4 7 ,3 4 2 ,2 1 3
1 5 5 ,4 1 4 ,0 2 4 1 7 1 ,0 4 7 ,4 6 8
9 1 3 ,5 4 3 3 5 5 ,4 2 7
2 7 ,2 0 1 4 8 6 ,0 5 0 3 ,8 8 5 ,0 8 4 5 8 9 ,9 6 5 5 4 6 ,2 7 2
6 1 7 ,8 4 9 1 ,5 0 9 ,8 8 8
1 0 7 ,5 8 2 9 ,0 3 8 ,8 6 1
1 0 1 ,0 2 6 ,6 1 3 7 3 4 ,4 9 8
1 0 1 ,7 6 1 ,1 1 1 1 1 0 ,7 9 9 ,9 7 2
5 0 ,1 1 9 ,0 9 4
3 ,1 7 1 ,4 1 0 5 ,3 6 7 ,7 6 2 1 ,5 8 9 ,2 3 0 $ 6 0 ,2 4 7 ,4 9 6

5 ,5 5 4 ,8 2 2 8 2 ,0 1 3 4 ,5 0 0
5 ,6 4 1 ,3 3 5 5 ,9 3 3 ,4 2 9
679
2 3 ,8 0 3
2 4 ,4 8 2
0 2 4 ,4 8 2 8 2 ,0 1 3 4 ,3 0 1 ,6 8 0 1 ,4 9 6 ,0 3 8 2 9 ,2 1 6 $ 5 ,9 0 8 ,9 4 7

C om pon e n t Un it
G e orgia C olle ge & S ta te U n i ve rs i ty Fo u n da ti o n , In c.
$ 1 ,6 4 0 ,9 7 0
2 3 ,9 5 0 2 ,8 8 3 ,0 0 1
2 7 7 ,9 6 8 1 0 7 ,5 8 2
1 2 ,7 6 5 4 ,9 4 6 ,2 3 6
1 4 ,6 8 0 ,3 1 3 1 4 ,7 9 9 ,0 6 8 7 5 ,7 4 1 ,2 9 0
6 ,0 9 5 ,2 6 0 2 ,3 4 9 ,7 9 9 1 1 3 ,6 6 5 ,7 3 0 1 1 8 ,6 1 1 ,9 6 6
1 ,8 7 4 ,8 6 6
6 ,6 1 5 ,5 4 0 1 0 ,8 0 8
4 5 5 ,0 0 0 8 ,9 5 6 ,2 1 4
1 0 8 ,7 3 1 ,1 7 7 4 0 ,9 1 0
2 ,6 6 6 ,2 8 2 1 1 1 ,4 3 8 ,3 6 9 1 2 0 ,3 9 4 ,5 8 3
(1 0 ,1 5 0 ,4 8 4 ) 1 0 ,2 4 4 ,8 6 1
2 ,6 7 1 ,5 4 2 (4 ,5 4 8 ,5 3 6 ) ($ 1 ,7 8 2 ,6 1 7 )

Georgia College and State University Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets
GEORGIA COLLEGE& STATEUNIVERSITY STATEMENT of REVENUES, EXPENSES, and CHANGES in NET ASSETS
for the Year Ended June 30, 2008

REVENUES
Operating Revenues Student Tuition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues Total Operating Revenues
EXPENSES Operating Expenses
Salaries: Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Other Operating Expense Payments to or on behalf of Georgia College &State University
Total Operating Expenses Operating Income (loss)

Component Unit

Georgia College & State University

Georgia College & State University Alumni Association, Inc.

Component Unit
Georgia College & State University Foundation, Inc.

$30,267,912 (4,630,623)
241,889 15,963
124,407 1,022,197
22,221
9,793,599 2,906,084 4,165,136
744,021 871,766 2,053,065 404,281 558,032 48,559,950
19,078,325 22,353,692 12,007,723
178,866 849,759 2,487,190 4,316,957 19,331,685 6,496,657
87,100,854 (38,540,904)

$0
2,917 246,006

$0
2,306,569 474,632

358,593 3,273,169

121,717 370,640

1,014,801 7,427,764

12,169
6,551 116,911
4,851 31,456 199,379 371,317
(677)

163,977
363,403 323,725 473,697 89,333 1,122,874 92,044
217,464 2,846,517 4,581,247

Georgia College and State University Annual Financial Report FY 2008 9

Statement of Revenues, Expenses and Changes in Net Assets, Continued
GEORGIA COLLEGE& STATEUNIVERSITY STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal St at e Ot h er Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

Component Unit

Georgia College & State University

Georgia College & State University Alumni Association, Inc.

Component Unit
Georgia College & State University Foundation, Inc.

33,154,191
4,123,445 174,270
1,256,052 1,204,253
465,881 (3,639,822)
(19,454) 36,718,816 (1,822,088)
3,430,016
3,430,016 1,607,928
56,813,267 1,826,301 58,639,568 $60,247,496

(359,591)
(359,591) (360,268)
93,313 93,313 (266,955) 6,175,902 6,175,902 $5,908,947

(457,390) (11,285,175)
(11,742,565) (7,161,318)
1,333,260 1,333,260 (5,828,058)
5,871,742 (1,826,301) 4,045,441 ($1,782,617)

Georgia College and State University Annual Financial Report FY 2008 10

Statement of Cash Flows
GEORGIA COLLEGE & S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes P rincipal P aid on Inst allment Debt Int erest P aid on Inst allment Debt Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s P urchase of Invest ment s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$26,100,773 (6,930)
1,022,197 (36,187,853) (41,282,878)
(2,487,190) (472,863) 339,263
10,173,260 2,863,607 3,941,575 745,018 886,447 2,122,408 507,685 627,567
(31,107,914)
33,154,191 133,683
6,782,406 (62,733)
(160,968) 39,846,579
128,847 (2,262,818)
(355,132) (3,478,854) (5,967,957)
822,506 (3,810)
818,696 3,589,404 7,501,749 $11,091,153

Georgia College and State University Annual Financial Report FY 2008 11

Statement of Cash Flows, Continued
GEORGIA COLLEGE & S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Change in fair value of invest ment s recognized as a component of int erest income

June 30, 2008
($38,540,904)
6,496,657 (280,700)
(64,222) (51,673) (44,864) 427,006 653,684 214,693 82,409 ($31,107,914)
($356,625)

Georgia College and State University Annual Financial Report FY 2008 12

GEORGIA COLLEGE & STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Georgia College & State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Georgia College & State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Georgia College & State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Georgia College & State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Georgia College & State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Georgia College & State University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, Georgia College & State University is reporting the activity for the Georgia College & State University Alumni Association, Inc. and the Georgia College & State University Foundation, Inc.
See Note 16, Component Units, for Alumni Association and Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and
Georgia College and State University Annual Financial Report FY 2008 13

Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Georgia College and State University Annual Financial Report FY 2008 14

Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Georgia College & State University does not maintain and inventory for consumable supplies. Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Georgia College & State University.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall and an admissions application confirmation deposit. The confirmation deposits are credited to student accounts for tuition and fee at registration.
Georgia College and State University Annual Financial Report FY 2008 15

Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Georgia College & State University had accrued liability for compensated absences in the amount of $2,161,977 as of 7-1-2007. For FY2008, $1,704,883 was earned in compensated absences and employees were paid $1,622,474, for a net increase of $82,409. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $2,244,386.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia. In fiscal year 2008 a restatement of fiscal year 2007 Net Assets End of Year has been made to reflect the endowments that had been moved to the Georgia College & State University Foundation for investment management. The endowments remain with the institution and the Net Assets End of Year were restated to include the endowments.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Georgia College and State University Annual Financial Report FY 2008 16

Expendable Restricted Net Assets include the following:

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans T ot al Rest rict ed Expendable

June 30, 2008
$970,433 3,552,041
845,288 $5,367,762

Restricted net assets expendable Capital Projects: This represents resources for which the University is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$5,205,583 6,183,569 (9,799,922)
$1,589,230

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Georgia College & State University, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Georgia College and State University Annual Financial Report FY 2008 17

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans. Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 University, 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 University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances. Auxiliary Intercollegiate Athletics revenue of $2,053,065 is reported net of discounts and allowances. Auxiliary Intercollegiate Athletic Scholarships were $639,517 for fiscal year 2008. Prior Year Adjustment Georgia College and State University had a prior year adjustment increasing beginning net assets by $1,826,301. This is due to endowments funds that were transferred from the Georgia College & State University Foundation, Inc. to Georgia College & State University.
Georgia College and State University Annual Financial Report FY 2008 18

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $11,329,814 and the bank balance was $12,861,882. Of the University's deposits, $12,593,966 were uninsured. Of these uninsured deposits, $4,903,583 were collateralized with securities held by the financial institution's trust department or agent in the University's name, $47,983 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name and $7,642,400 were uncollateralized.
Georgia College and State University Annual Financial Report FY 2008 19

B. Investments
Georgia College & State University maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable federal and state laws.
The University's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

INVESTMENTS
Investment type Debt Securities
U.S. Treasuries U.S. Agencies
Implicitly Guaranteed
Other Investments Bond/Equity Mutual Funds Equity Mutual Funds Equity Securities - Domestic
Investment Pools Board of Regents Total Return Fund Office of Treasury and Fiscal Services Georgia Fund 1
Total Investments

Fair Value

Less Than 1 Year

Investment Maturity

1-5 Years

6-10 Years

$496,591
204,509 $701,100
603,753 136,709 1,951,500

$100,281 $100,281

$305,888
30,825 $336,713

$90,422
173,684 $264,106

1,758,366 147,528
$5,298,956

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.

During fiscal year 2008, the Georgia College & State University endowment funds that were transferred to the Georgia College & State University Foundation in fiscal year 2007 were transferred back to Georgia College & State University and recorded on the University's

Georgia College and State University Annual Financial Report FY 2008 20

financial records. These funds are managed by the Georgia College & State University Foundation through a management agreement.
The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1 Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 days.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. During fiscal year 2008, the University held and invested certain endowment funds. The University's policy for managing interest rate risk is:
1. The excess cash balances available should be invested for maximum earned income consistent with acceptable risk levels.
2. The amount of cash available and the length of time it may be held in investment are the principal factors in determining such investment.
3. Fixed income investments shall be limited to government agencies and corporate instruments having minimum investment grade credit ratings of Baa by Moody's and/or Standard & Poor's.
4. The minimum fixed income target shall be defined and communicated to the investment manager in the form of an Asset Allocation Guideline. The fixed income target may be altered by providing a newly executed Asset Allocation guideline to the investment manager.
The Weighted Average Maturity of the Total Return Fund is 7.84 years. Of the University's total investment of $1,758,366 in the Total Return Fund, $555,644 is invested in debt securities.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the university will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The University's policy for managing custodial credit risk for investments is:
1. The investment manager's performance shall be compared regularly with the performance of the appropriate equity or fixed income market indices.
2. The investment manager shall be responsible for custody of all securities. If the investment manager does not generally offer custodial services, the Vice President for Business and Finance and the Assistant Vice President for Financial Services/Comptroller shall have joint custodial responsibility.
Georgia College and State University Annual Financial Report FY 2008 21

3. All transactions shall be entered into on the basis of best execution, which means the best realized net price.

4. The investment manager shall be available for frequent and open communication with the Vice President for Business and Finance and the Assistant Vice President for Financial Services/Comptroller of the institution concerning all significant matters pertaining to the portfolio.

5. In the management of the portfolio, should a loss of $5,000 or more on any security transaction be contemplated, the investment manager shall contact the Vice President for Business and Finance and the Assistant Vice President for Financial Services/Comptroller for approval to execute a response regarding requests for approval within three (3) working days.

6. The investment manager will provide reports on the investment portfolio to the institution at least quarterly.

At June 30, 2008, $1,466,396 of the University's applicable investments were uninsured and held by the investment's counterparty in the University's name and $1,186,204 were uninsured and held by the investment's counterparty's trust department or agent, but not in the University's name.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University's policy for managing credit quality risk is:

1. Equity management will be expected to achieve at least average total rates of return, net of fees, over rolling five (5) year periods that equal or exceed the rates of return of the applicable indices.

2. Fixed income management will be expected to achieve at least average total rates of return, net of fees, over rolling five (5) year periods that equal or exceed the Shearson Lehman Government corporate Bond Index.

The investments subject to credit quality risk are reflected below:

Related Debt Inves tments U. S. Agencies

Fair Value
$204,509 $204,509

AAA
$174,575 $174,575

AA
$29,934 $29,934

Georgia College and State University Annual Financial Report FY 2008 22

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The university's investments are not exposed to concentration of credit risk; therefore, the university does not have a formal policy for managing concentration of credit risk.

The university does not have holdings of investments in any one issuer in concentrations of greater than 5% of total investments held.

Note 3. Accounts Receivable

Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$21,651 785,070 118,627
34,611 1,837,246 2,797,205
27,775
$2,769,430

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore Other
T otal

$1,470,397 34,536
$1,504,933

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was zero.
Georgia College and State University Annual Financial Report FY 2008 23

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Capital Leases Library Collections Capitalized Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$1,007,738 1,552,162 2,559,900
70,602,564 867,019
8,773,317 98,003,752
6,866,592 151,300
185,264,544
27,246,926 677,546
5,790,330 119,056
5,633,842 43,936
39,511,636
145,752,908
$148,312,808

Addi ti o n s
$0 3,428,994 3,428,994

Re ductions $0 0

En di n g B a l a n ce 6/30/2008
$1,007,738 4,981,156 5,988,894

817,659
993,004
325,244 5,000
2,140,907

523,333 25,314 14,424
563,071

71,420,223 867,019
9,242,988 97,978,438
7,177,412 156,300
186,842,380

2,075,179 39,016
740,807 3,368,523
268,793 4,339
6,496,657
(4,355,750)
($926,756)

497,382 7,426
14,424
519,232
43,839
$43,839

29,322,105 716,562
6,033,755 3,480,153 5,888,211
48,275 45,489,061
141,353,319
$147,342,213

Georgia College and State University Annual Financial Report FY 2008 24

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $3,649,293 235,791
$3,885,084

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations

Beginning Balance
July 1, 2007
$102,062,327

Additions $0

Reductions

Ending Balance June 30, 2008

$417,865 $101,644,462

Other Liabilities Compensated Absences Total

2,161,977 2,161,977

1,704,883 1,704,883

1,622,474 1,622,474

2,244,386 2,244,386

Total Long Term Obligations

$104,224,304

$1,704,883

$2,040,339 $103,888,848

Current Portion
$617,849
1,509,888 1,509,888 $2,127,737

Note 9. Significant Commitments
The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $5,231,056 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.
Note 10. Lease Obligations
Georgia College & State University is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.
CAPITAL LEASES
Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2009 and 2034. Expenditures for fiscal year 2008 were $4,057,687 of which $3,639,822 represented interest. Total principal paid on capital leases was $417,865 for the fiscal year ended June 30, 2008. Interest rates range from 4.10 percent to 8.30 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:
Georgia College and State University Annual Financial Report FY 2008 25

Land Buildings Equipment Total Assets Held Under Capital Lease

$373,659 97,362,912
615,525 $98,352,096

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.

Georgia College & State University had three capital leases with related entities in the current fiscal year. In June 2007, Georgia College & State University entered into a capital lease of $94,350,650 at 4.715 percent with the Georgia College & State University Foundation, a discretely presented component unit, whereby the University leases Student Housing for a twenty-seven year period that began June 15, 2007 and expires March 24, 2034. In February 2005, the University entered into a capital lease of $6,382,006 at 4.10 percent with the Georgia College & State University Foundation, whereby the University leases land and a building for a twenty-one year period that began February 1, 2005 and expires June 30, 2025. In addition, Georgia College & State University entered into a capital lease of $1,595,163 at 4.1 percent with the Georgia College & State University Foundation, whereby the University leases a Parking facility for a twenty-one year period that began September 1, 2004 and expires June 30, 2025. The outstanding liability at June 30, 2008 on these capital leases is $94,300,974 for Student Housing; $5,648,784 for the Student Center and $1,393,855 for the Parking facility.

Georgia College & State University also has various capital leases for equipment with an outstanding balance at June 30, 2008 in the amount of $300,849. These leases expire in fiscal years 2009 through 2011.

OPERATING LEASES

Georgia College & State University's non-cancellable operating leases have remaining terms of more than one year that expire in various fiscal years from 2009 through 2011. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are facilities, copiers and other small business equipment.

In fiscal year 2007, Georgia College & State University entered into a real property operating lease with the Georgia College & State University Foundation, a related party, for the Macon Graduate and Professional Programs from November 26, 2006 through November 26, 2009 for annual rentals of $238,831. This operating lease was amended on July 1, 2007 for an additional annual rental of $75,000 for additional space. The agreement does contain an option to renew or extend the Agreement at the expiration of the term on a year to year basis for three (3) consecutive years. Under this Agreement, Georgia College & State University paid $313,831 in the current year.

Georgia College and State University Annual Financial Report FY 2008 26

Following are the Operating Leases held by the University:

Property Leased

Location

Lessor

Annual Lease

Macon Graduate & Professional Programs Center

433 Cherry St Macon, Ga

GCSU Foundation $ 313,831

Pawprints Bookstore

115 S. Wilkinson St McComb Family

Milledgeville, Ga

Trust

$ 27,228

Office Space

100 E. Greene St Bank of Eastman Milledgeville, Ga

$ 35,604

Parking Lot

425 N. Clark St

Wilkinson Colonial $ 28,800

Milledgeville, Ga

Properties

Storage

121 Blandy Rd, NW Warehouse Solutions, $ 15,000

Milledgeville, Ga

LLC

Parking Lot

Tatnall Street

Norfolk Southern $ 656

Milledgeville, Ga

Corp

Depot Building

Greene Street

Norfolk Southern $ 240

Milledgeville, Ga

Corp

Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for non-cancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 2034 t hrough 2038 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$5,362,271 5,451,772 5,593,855 5,639,473 5,790,171
31,398,788 35,947,237 39,510,684 44,492,947
7,077,940 186,265,138
84,620,676 $101,644,462

$402,133 28,884 29,748
$460,765

Georgia College and State University Annual Financial Report FY 2008 27

Georgia College & State University's FY2008 expense for rental of real property and equipment under operating leases was $421,359.

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Georgia College & State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Georgia College & State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Georgia College & State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$2,141,263 $1,991,790 $1,862,778

Employees' Retirement System of Georgia

Plan Description Georgia College & State University participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Georgia College and State University Annual Financial Report FY 2008 28

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.
Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30, 2008, for employees covered by ERS was $132,431. The University's total payroll for all employees was $41,432,017.
For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.
Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.
Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:
Georgia College and State University Annual Financial Report FY 2008 29

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$12,408 $9,402 $6,346

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Georgia College & State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

Georgia College & State University and the covered employees made the required contributions of $1,115,346 (8.13% or 8.15%) and $685,535 (5%), respectively.

AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.

Georgia Defined Contribution Plan

Plan Description Georgia College & State University participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General

Georgia College and State University Annual Financial Report FY 2008 30

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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $54,938 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Georgia College & State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
Georgia College and State University Annual Financial Report FY 2008 31

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. Georgia College & State University, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Georgia College & State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Georgia College & State University (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to
Georgia College and State University Annual Financial Report FY 2008 32

life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 256 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Georgia College & State University recognized as incurred $1,064,953 of expenditures, which was net of $336,115 of participant contributions.
Georgia College and State University Annual Financial Report FY 2008 33

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses
Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Instruction

Research

Functional Classification FY2008

Public Service

Academic Support

Student Services

Institutional Support

$18,294,378 2,662,436 5,002,494
240,556 150,972 117,963 2,524,897 1,634,827

$28,994 134,803 23,485
23,485
596 111,901
3,577

$12,930 106,794 27,889
657
2,164 54,759

$708,736 4,241,014 1,226,852
324,164
199,222 1,630,279
792,634

$33,287 3,220,738
830,600
89,690
64,575 1,276,964
221,426

$0 5,665,479 3,000,475
178,866 94,824
67,172 1,920,115
401,800

$30,628,523

$326,841

$205,193

$9,122,901

$5,737,280

$11,328,731

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

Total Expenses

$0 3,508,345 1,192,405 (1,077,903)
673
2,292,692 3,419,145
167,602

$0 1,630,737

$0 2,814,083
703,523 1,077,903
75,710 705,481 1,572,573 8,393,625 3,274,791

$19,078,325 22,353,692 12,007,723
178,866 849,759 2,487,190 4,316,957 19,331,685 6,496,657

$9,502,959

$1,630,737

$18,617,689

$87,100,854

Georgia College and State University Annual Financial Report FY 2008 34

Note 16. Component Units

Georgia College & State University Alumni Association, Inc. Georgia College & State University Alumni Association, Inc. (Alumni Association) is a legally separate, tax-exempt component unit of Georgia College & State University (University). The Alumni Association acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The thirty-eight member board of the Alumni Association is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Alumni Association, the majority of resources or income thereon that the Alumni Association holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Alumni Association can only be used by, or for the benefit of the University, the Alumni Association is considered a component unit of the University and is discretely presented in the University's financial statements.

The Alumni Association is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Alumni Association's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Alumni Association distributed $199,379 to the University for both restricted and unrestricted purposes. Complete financial statements for the Alumni Association can be obtained from the Administrative Office at Campus Box 96, 100 E. Greene Street, Suite 200, Milledgeville, GA 31061.

Investments for Component Units:

Georgia College & State University Alumni Association, Inc. investments are comprised of the following amounts at June 30, 2008:

Cost

Fair Value

M oney M arket Accounts Corporate Bonds Equity Securities M utual Funds Real Estate

$255,758 1,342,565 3,007,282
554,998 3,500

$255,758 1,363,987 3,333,208
598,369 3,500

Total Investments

$5,164,103

$5,554,822

Capital Assets for Component Units:

Georgia College & State University Alumni Association, Inc. holds the following Capital Assets as of June 30, 2008:

Georgia College and State University Annual Financial Report FY 2008 35

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

June 30, 2008
$24,000 24,000
227,692 110,600 338,292 280,279
58,013 $82,013

Georgia College & State University Foundation, Inc. Georgia College & State University Foundation, Inc. (Foundation) is a legally separate, taxexempt component unit of Georgia College & State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The thirty-five member board of the Foundation is selfperpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $217,464 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at Campus Box 96, 100 E. Greene Street, Suite 200, Milledgeville, GA 31061.
Prior Period Adjustment
Effective January 1, 2007, the University transferred ownership of certain endowment assets to the Foundation. During the year ended June 30, 2008, it was determined by the Board of Regents that ownership of these assets should not have transferred; rather the Foundation should hold the assets and invest them with the other endowment assets of the Foundation. The effect on Net Assets from transferring the endowment investments back to the University is a decrease in Beginning Net Assets of ($1,826,301).

Georgia College and State University Annual Financial Report FY 2008 36

Investments for Component Units:

Georgia College & State University Foundation, Inc. holds endowment and other investments in the amount of $14.8 million. The $10.2 million corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Georgia College & State University Foundation, Inc., in conjunction with the donors, has established a spending plan whereby 5% of the calendar year-end market value of the investment based on a rolling 3 year average may be spent. 95% is to be spent based on donor intent and 5% is to be spent as an administrative fee.

Investments are comprised of the following amounts at June 30, 2008:

Money Market Accounts Corporate Bonds Equity Securities Mutual Funds Real Estate
Total Investments

Cost
$3,663,279 2,598,662 6,748,149 1,025,000 380,000
$14,415,090

Fair Value
$3,663,279 2,647,560 7,003,133 1,105,096 380,000
$14,799,068

Capital Assets for Component Units:

Georgia College & State University Foundation, Inc. holds the following Capital Assets as of June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$372,188 $1,889,906
2,262,094
3,892,722 49,139
3,941,861 108,695
3,833,166 $6,095,260

Georgia College and State University Annual Financial Report FY 2008 37

Long-term Liabilities for Component Units:
Changes in long-term liabilities for Georgia College & State University Foundation, Inc. for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Liabilities under split interest agreement Notes and Loans Payable Revenue/Mortgage Bonds Payable

$46,652 2,670,957 109,448,601

$0 161,992

$5,742 166,667 262,424

$40,910 2,666,282 109,186,177

$0 455,000

Total Long Term Liabilities

$112,166,210

$161,992

$434,833

$111,893,369

$455,000

Notes and Loans Payable During the year ending June 30, 2007, the Foundation purchased space in an office building in Macon, Georgia to house the Macon Campus of the University. A line of credit to a financial institution was taken out for the purchase and related renovation. The line requires monthly interest payments at LIBOR + 1.88% (4.3375% at June 30, 2008). The line is due October 2009 and is collateralized by certain real property and an assignment of certain rents. The balance on the line of credit at June 30, 2008 was $2,666,282.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30:

2009

1

2010

2

Princip al

Notes and Loans Payable Interest

$0 2,666,282 $2,666,282

$115,650 33,731
$149,381

Total
$115,650 2,700,013 $2,815,663

Bonds Payable On December 1, 2003, Property II, LLC entered into a loan agreement with the Development Authority of the City of Milledgeville and Baldwin County whereby the Authority would issue certain bonds totaling $7,840,000 and loan the entire proceeds to Property II, LLC. As part of the loan agreement, Property II, LLC agreed to use the proceeds to construct and equip a student center and a parking lot located on the campus of the University, to establish a debt service reserve, to establish certain amounts for capitalized interest and to pay the cost of issuance of the bonds. The principal and interest are payable solely from and secured by a lien upon certain interest in real property and certain assignments of rental income originating from rental agreements between Property II, LLC and the Board of Regents. The rental agreements are annual arrangements and commence following the issuance of a certificate of occupancy. The bonds are subject to certain optional and extraordinary mandatory redemption provisions. The serial bonds have various maturities with the final payment scheduled for September 1, 2022. The balance of the bonds at June 30, 2008 was $7,034,916, net of unamortized premium of $9,916.

Georgia College and State University Annual Financial Report FY 2008 38

On June 15, 2007, Property V, LLC entered into a loan agreement with the Development Authority of the City of Milledgeville and Baldwin County whereby the Authority would issue certain bonds totaling $102,470,000 and loan the entire proceeds to Property V, LLC. As part of the loan agreement, Property V, LLC agreed to use the proceeds to refund and redeem $89,000,000 in outstanding principal of Property III, LLC, to perform capital renovations, improvements and acquisitions, to establish a debt service reserve, to establish certain amounts for capitalized interest and to pay the cost of issuance of the bonds. The principal and interest are payable solely from and secured by a lien upon certain leasehold deeds to secure debt and certain pledged revenues and assignments of rents and leases. The bonds are subject to certain optional and extraordinary mandatory redemption provisions. The serial bonds have various maturities with the final payment scheduled for October 1, 2033. The balance of the bonds at June 30, 2008 was $102,151,261, net of unamortized discount of $318,739.

In connection with the 2007 series bonds, the Foundation entered into an interest rate swap transaction to convert its variable rate bond obligation to fixed rates. The resulting cost of funds is lower than it would have been had fixed rate borrowings been issued directly. The level of fixed rate debt resulting from the effective interest rate swap is 100% of the total bond debt of the 2007 series. Interest expense and an increase in liability from interest rate swap transactions of $5,970,968 have been recorded as of June 30, 2008. The amount was recorded based on calculated mathematical approximations of market values using certain assumptions regarding past, present, and future market conditions.

Annual debt service requirements to maturity for Bonds Payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Bond Premium/(Discount)

Princip al
$455,000 590,000 760,000 945,000
1,140,000 9,200,000 16,675,000 25,840,000 37,655,000 16,235,000 109,495,000 (308,823) $109,186,177

Bonds Payable Interest
$5,099,056 5,075,961 5,045,008 5,006,253 4,957,346
23,699,463 20,684,888 15,585,686
8,122,261 195,040
93,470,962
$93,470,962

Total
$5,554,056 5,665,961 5,805,008 5,951,253 6,097,346
32,899,463 37,359,888 41,425,686 45,777,261 16,430,040 202,965,962
(308,823) $202,657,139

Georgia College and State University Annual Financial Report FY 2008 39

GEORGIA HIGHLANDS COLLEGE
Financial Report
For the Year Ended June 30, 2008

Georgia Highlands College Rome, Georgia

J. Randy Pierce
President

Robert L. Whitaker
Vice President for Finance & Administration

GEORGIA HIGHLANDS COLLEGE ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 11 Note 2. Deposits and Investments................................................................................................ 16 Note 3. Accounts Receivable...................................................................................................... 18 Note 4. Inventories...................................................................................................................... 18 Note 5. Notes/Loans Receivable................................................................................................. 18 Note 6. Capital Assets................................................................................................................. 19 Note 7. Deferred Revenue........................................................................................................... 20 Note 8. Long-Term Liabilities .................................................................................................... 20 Note 9. Significant Commitments............................................................................................... 20 Note 10. Lease Obligations......................................................................................................... 20 Note 11. Retirement Plans .......................................................................................................... 21 Note 12. Risk Management......................................................................................................... 24 Note 13. Contingencies................................................................................................................ 25 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 26 Note 15. Natural Classifications with Functional Classifications .............................................. 27 Note 16. Component Units .......................................................................................................... 28

GEORGIA HIGHLANDS COLLEGE
Management's Discussion and Analysis

Introduction
Georgia Highlands College is one of the 35 institutions of higher education of the University System of Georgia. The College, which is a multiple campus institution with locations in Rome, Cartersville, and Marietta, Georgia, was founded in 1970 and has become known for its state-ofthe-art technology and allied health programs. The College offers associate of science and associate of arts degrees in a wide variety of subjects. This wide range of educational opportunities attracts a highly qualified faculty and a student body of over 4,000. The institution continues to grow as shown by the comparison numbers that follow.

Students Students Faculty (Headcount) (FTE)

FY2008

119

FY2007

113

FY2006

102

4,346 3,933 3,817

3,557 3,214 3,072

Overview of the Financial Statements and Financial Analysis
Georgia Highlands College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.
Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Georgia Highlands College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

Georgia Highlands College Annual Financial Report FY 2008 1

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$4,586,653 38,160,621
27,158 42,774,432

June 30, 2007
$3,623,507 33,379,650
28,365 37,031,522

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

2,371,508 254,351
2,625,859

2,456,572 210,191
2,666,763

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

38,160,621 27,160 45,833
1,914,959 $40,148,573

33,379,650 26,612 50,011
908,486 $34,364,759

The total assets of the institution increased by $5,742,910. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $4,780,971 in the category of Capital Assets, net. The balance of the increase is mainly in Cash and Cash Equivalents.
The total liabilities for the year decreased by ($40,904). The combination of the increase in total assets of $5,742,910 and the decrease in total liabilities of ($40,904) yields an increase in total net assets of $5,783,814. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $4,780,971.

Georgia Highlands College Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$11,242,545 26,523,027 (15,280,482) 15,730,256
449,774 2,411,524 2,861,298 34,364,759 2,922,516 37,287,275 $40,148,573

$9,343,974 22,699,145 (13,355,171) 13,485,485
130,314 1,681,820 1,812,134 30,052,625 2,500,000 32,552,625 $34,364,759

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Georgia Highlands College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$6,662,300 3,811,000 240,785 477,060 51,400
11,242,545
15,725,835 28,320 10,350 94,313
(128,562) 15,730,256
2,411,524 2,411,524 $29,384,325

June 30, 2007
$5,651,403 2,776,044 221,653 461,591 233,283 9,343,974
13,065,414 469,394 30,337 114,571 (194,231)
13,485,485
1,681,820 1,681,820 $24,511,279

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$11,325,507 1,494,128 1,969,449 5,158,226 4,071,344 2,320,557 183,816
26,523,027
0 $26,523,027

June 30, 2007
$10,095,747 1,313,911 1,815,797 5,507,621 2,303,801 1,779,715 (117,447)
22,699,145
0 $22,699,145

Operating revenues increased by $1,898,571 in fiscal 2008. This increase was primarily due to an 18% increase in tuition and fees related to the enrollment increase experienced by the College.
Nonoperating revenues increased by $2,244,771 for the year primarily due to an increase of $2,660,421 in State Appropriations.
Georgia Highlands College Annual Financial Report FY 2008 4

The compensation and employee benefits category increased by $1,821,224 and primarily affected the Instruction category. In addition to rate increases in salaries and benefits this increase also reflects the growth of the College.

Statement of Cash Flows

The final statement presented by Georgia Highlands College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($13,094,182) 15,758,290 (960,331) 95,521 1,799,298 313,609
$2,112,907

June 30, 2007
($12,030,290) 13,663,490 (2,441,734) 112,818 (695,716) 1,009,325
$313,609

Capital Assets
The College increased capital assets by $1,858,455. The majority of this addition is related to a major renovation of the Heritage Hall building at the Rome campus.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
Georgia Highlands College had Long-Term Debt and Liabilities of $748,401 of which $494,050 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Georgia Highlands College Annual Financial Report FY 2008 5

Component Units In compliance with GASB Statement No. 39, Georgia Highlands College has included the financial statements and notes for all required component units for FY2008. The Georgia Highlands College Foundation, Inc. had investments of $606,661 as of June 30, 2008. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units. Economic Outlook The College is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The University's overall financial position is strong. The University anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the University's ability to react to unknown internal and external issues. J. Randy Pierce, President Georgia Highlands College
Georgia Highlands College Annual Financial Report FY 2008 6

Statement of Net Assets

GEORGIA HIGHLANDS COLLEGE S TATEMENT OF NET AS S ETS June 30, 2008

AS S ETS C urrent Assets Cash and Cash Equivalent s Account s Receivable, net (not e 3) Receivables - Federal Financial Assist ance Receivables - Ot her Due From Com ponent Unit s P ledges Receivable P repaid items T ot al Current Asset s

Ge orgia H i g h l a n ds
C olle ge

C om pone nt Unit
Ge orgia Highlands College
Fou n dati on , In c.

$2,112,907
579,423 1,187,615
242,742
463,966 4,586,653

$651,614
5,155 656,769

Noncurrent Assets Invest m ent s (including Real Est at e) P ledges Receivable Capit al Asset s, net (not e 6) T ot al Noncurrent Asset s TO TAL AS S ETS
LIAB ILITIES C u rre n t Liabilitie s Account s P ayable Salaries P ayable Cont ract s P ayable Deferred Revenue (not e 7) Ot her Liabilit ies Deposit s Held for Ot her Organizat ions Due t o P rim ary Governm ent Com pensat ed Absences (current port ion) T ot al Current Liabilit ies Non cu rre n t Liabilitie s Com pensat ed Absences (noncurrent ) T ot al Noncurrent Liabilit ies TO TAL LIAB ILITIES
NET AS S ETS Invest ed in Capit al Asset s, net of relat ed debt Rest rict ed for N o n e x p e n da ble E x p en da ble Unrest rict ed TO TAL NET AS S ETS

27,158
38,160,621 38,187,779 42,774,432
138,461 101,324
16,325 1,447,554
20,213 153,581
494,050 2,371,508
254,351 254,351 2,625,859
38,160,621
27,160 45,833 1,914,959 $40,148,573

606,661 731,225 1,337,886 1,994,655
35,911
242,742 278,653
0 278,653
1,017,358 699,071 (427)
$1,716,002

Georgia Highlands College Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
GEORGIA HIGHLANDS COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Grant s and Cont ract s Federal St at e Other Sales and Services Rents and Royalt ies Auxiliary Ent erprises Bookst ore P arking/T ransport at ion Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefit s Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion Ot her Operat ing Expense
T ot al Operat ing Expenses Operat ing Income (loss)

C om pone nt Unit

Ge orgia Highlands C olle ge

Ge orgia Highlands College
Fou n dati on , In c.

$7,990,105 (1,327,805)
3,519,761 7,049
284,190 240,785
2,100
171,611 19,133
286,316 49,300
11,242,545
6,676,678 6,670,622 3,829,389
48,692 254,804 2,334,187 1,113,413 4,397,915 1,197,327
26,523,027 (15,280,482)

$0 469,460
30,800
500,260
265,775 5,100
174,748 9,100
125,525 580,248 (79,988)

Georgia Highlands College Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
GEORGIA HIGHLANDS COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

C om pone nt Unit

Ge orgia Highlands C olle ge

Ge orgia Highlands College
Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts St at e Ot her Gift s Investment Income (endowments, auxiliary and other) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET ASS ETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

15,725,835
25,775 2,545
10,350 94,313 (128,562) 15,730,256 449,774
2,411,524
2,411,524 2,861,298
34,364,759 2,922,516
37,287,275 $40,148,573

(55,238)
(55,238) (135,226)
546,314 546,314 411,088
1,304,914 0
1,304,914 $1,716,002

Georgia Highlands College Annual Financial Report FY 2008 9

Statement of Cash Flows
GEO RGIA HIGHLANDS CO LLEGE S TATEMENT O F CAS H FLO W S For the Year Ended J une 3 0 , 2 0 0 8
C A S H FLO W S FR O M O P ER A TIN G A C TIV ITIES T uit io n an d Fees Gran t s an d Co n t ract s (E x ch an ge) Sales an d Serv ices P ay m en t s t o Sup p liers P aym ents t o Em ployees P ay m en t s fo r Sch o larsh ip s an d Fello wsh ip s A ux iliary E n t erp rise Ch arges: Bo o k st o re P ark in g/T ransp o rt at io n O t h er O rgan izat io n s Ot h er Receip t s (p ay m en t s) N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
C A S H FLO W S FR O M N O N -C A P ITA L FIN A N C IN G A C TIV ITIES St at e A p p ro p riat io n s Agen cy Fun ds T ran sact io n s Gift s an d Gran t s Receiv ed fo r O t h er T h an Cap it al P urp o ses N et Cash Flo ws P ro v ided by N o n -cap it al Fin an cin g A ct iv it ies
C A S H FLO W S FR O M C A P ITA L A N D R ELA TED FIN A N C IN G A C TIV ITIES Cap it al Gran t s an d Gift s Receiv ed P urch ases o f Cap it al A sset s Net Cash used by Cap it al an d Relat ed Fin an cin g Act iv it ies
C A S H FLO W S FR O M IN V ES TIN G A C TIV ITIES Int erest o n Inv est m en t s N et Cash P ro v ided (used) by In v est in g A ct iv it ies Net In crease/Decrease in Cash Cash an d Cash E quiv alen t s - Begin n in g o f y ear Cash an d Cash E quiv alen t s - E nd of Year
R EC O N C ILIA TIO N O F O P ER A TIN G LO S S TO N ET C A S H P R O V ID ED (U S ED ) B Y O P ER A TIN G A C TIV ITIES :
Operat ing Incom e (loss) Adjust m en t s t o Reco n cile Net In co m e (lo ss) t o Net Cash P ro v ided (used) by O p erat in g A ct iv it ies
Dep reciat io n Ch an ge in A sset s an d L iabilit ies:
Receiv ables, n et P repaid Item s A cco un t s P ay able D eferred Rev en ue O t h er Liabilit ies Co m pen sat ed Absen ces
N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
* * N O N -CA SH IN VE ST IN G, N O N -CA P IT A L FIN A N CIN G, A N D CA P IT A L A N D RE L A T E D FIN A N CIN G T RA N SA CT IO N S
Ch an ge in fair v alue o f in v est m en t s reco gn ized as a co m p o n en t o f in t erest in co m e
Georgia Highlands College Annual Financial Report FY 2008 10

June 30, 2008
$ 6 ,6 1 6 ,6 4 6 5 ,3 7 1 ,4 7 5 2 4 0 ,7 8 5 (9 ,6 6 5 ,3 7 7 )
(1 3 ,2 5 1 ,9 1 2 ) (2 ,3 3 4 ,1 8 7 )
1 3 1 ,6 3 6 2 2 ,4 4 5
2 8 1 ,6 0 8 (5 0 7 ,3 0 1 ) (1 3 ,0 9 4 ,1 8 2 )
1 5 ,7 2 5 ,8 3 5 (6 ,2 1 5 ) 3 8 ,6 7 0
1 5 ,7 5 8 ,2 9 0
2 ,4 1 1 ,5 2 4 (3 ,3 7 1 ,8 5 5 )
(9 6 0 ,3 3 1 )
9 5 ,5 2 1 9 5 ,5 2 1 1 ,7 9 9 ,2 9 8 3 1 3 ,6 0 9 $ 2 ,1 1 2 ,9 0 7
($ 1 5 ,2 8 0 ,4 8 2 )
1 ,1 9 7 ,3 2 7
8 2 7 ,7 3 0 8 ,4 2 2
(3 5 ,0 1 0 ) 1 6 2 ,9 5 9 (6 9 ,4 3 5 )
9 4 ,3 0 7
($ 1 3 ,0 9 4 ,1 8 2 )
($ 1 ,2 0 8 )

GEORGIA HIGHLANDS COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Georgia Highlands College serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Georgia Highlands College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Georgia Highlands College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Georgia Highlands College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Georgia Highlands College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Georgia Highlands College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, Georgia Highlands College is reporting the activity for the Georgia Highlands College Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB
Georgia Highlands College Annual Financial Report FY 2008 11

Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
Investments The College accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable
Georgia Highlands College Annual Financial Report FY 2008 12

expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average-cost basis. The college has no inventories as of June 30th, 2008.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Georgia Highlands College.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Georgia Highlands College had accrued liability for compensated absences in the amount of $654,094 as of 7-1-2007. For FY2008, $524,568 was
Georgia Highlands College Annual Financial Report FY 2008 13

earned in compensated absences and employees were paid $430,261, for a net increase of $94,307. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $748,401.

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Assets The College's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.

Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies T ot al Rest rict ed Expendable

$45,833 $45,833

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal
Georgia Highlands College Annual Financial Report FY 2008 14

Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$110,572 1,587,385
217,002 $1,914,959

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Georgia Highlands 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 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 College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.

Georgia Highlands College Annual Financial Report FY 2008 15

Restatement of Prior Year Net Assets
Georgia Highlands College has a restatement of prior year net assets increasing beginning net assets by $2,922,516. This restatement was the result of a comprehensive review of capital asset useful lives and represents a depreciation expense correction on several assets.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $2,109,936 and the bank balance was $2,871,576. Of the College's deposits, $2,771,576 were uninsured. Of these uninsured deposits, $2,771,576 were collateralized with securities held by the financial institution's trust department or agent in the College's name.
Georgia Highlands College Annual Financial Report FY 2008 16

B. Investments At June 30, 2008, the carrying value of the College's investments was $27,158, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows:

Investment Pools Board of Regents Balanced Income Fund

$27,158

T otal Investment Pools

$27,158

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.
Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The College does not have a formal policy for managing interest rate risk.
The Weighted Average Maturity of the Balanced Income Fund is 7.84 years. Of the College's total investment of $27,158 in the Balanced Income Fund, $17,463 is invested in debt securities.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The College does not have a formal policy for managing credit quality risk.

Georgia Highlands College Annual Financial Report FY 2008 17

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$389,071 9,222
579,423 242,742 893,250 2,113,708 103,928
$2,009,780

Note 4. Inventories The College had no inventories at June 30, 2008:

Note 5. Notes/Loans Receivable Georgia Highlands College had no Notes or Loans receivable as of June 30, 2008.

Georgia Highlands College Annual Financial Report FY 2008 18

Note 6. Capital Assets

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

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated

(Re stated) Beginning B al an ce s
7/1/2007
$3,069,490 1,885,657 4,955,147

Addi ti o n s
$0 2,712,966 2,712,966

Re du cti on s
$0 203,837 203,837

Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Library Collections T otal Assets Being Depreciated

1,739,103 36,945,353
1,149,942 2,313,223 2,547,813 44,695,434

278,029 268,624 546,653

6,388 6,388

Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Library Collections T otal Accumulated Depreciation

1,140,561 8,013,783
756,098 1,514,009 1,923,964 13,348,415

(17,605) 922,191
56,935 126,470 109,336 1,197,327

6,388 6,388

T otal Capital Assets, Being Depreciated, Net

31,347,019

(650,674)

0

Capital Assets, net

$36,302,166

$2,062,292

$203,837

En di n g B al an ce 6/30/2008
$3,069,490 4,394,786 7,464,276
1,739,103 36,945,353
1,149,942 2,591,252 2,810,049 45,235,699
1,122,956 8,935,974
813,033 1,640,479 2,026,912 14,539,354
30,696,345
$38,160,621

Georgia Highlands College Annual Financial Report FY 2008 19

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $1,047,019 400,535
$1,447,554

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Other Liabilities Compensated Absences

Beginning Balance
July 1, 2007
$654,094

Additions $524,568

Reductions

Ending Balance June 30, 2008

$430,261

$748,401

Total Long Term Obligations

$654,094

$524,568

$430,261

$748,401

Current Portion
$494,050
$494,050

Note 9. Significant Commitments
The College had significant unearned, outstanding, construction or renovation contracts executed in the amount of $586,477 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.
Note 10. Lease Obligations
Georgia Highlands College is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment.
CAPITAL LEASES
Georgia Highlands College does not have any capital leases as of June 30, 2008.
OPERATING LEASES
Georgia Highlands College's noncancellable operating leases having remaining terms of more than one year expire in fiscal year 2009. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or

Georgia Highlands College Annual Financial Report FY 2008 20

replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small business equipment.

Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 T ot al m inim um lease paym ent s

Year 1

Real P roperty and Equipm ent
Operat ing Leases
$188,311 $188,311

Georgia Highlands College FY2008 expense for rental of real property and equipment under operating leases was $186,531.

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Georgia Highlands College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Georgia Highlands College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Georgia Highlands College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$743,243 $663,994 $665,258

Georgia Highlands College Annual Financial Report FY 2008 21

Employees' Retirement System of Georgia
Plan Description Georgia Highlands College participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age. Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The College's payroll for the year ended June 30, 2008, for employees covered by ERS was $108,290. The College's total payroll for all employees was $13,347,300.
For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the College pays the remainder on behalf of the employee.
Georgia Highlands College Annual Financial Report FY 2008 22

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the College amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$11,273 $7,850 $5,862

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Georgia Highlands College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.

Georgia Highlands College Annual Financial Report FY 2008 23

Georgia Highlands College and the covered employees made the required contributions of $273,119 (8.13% or 8.15%) and $169,909 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Georgia Highlands 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $63,496 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Georgia Highlands College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans.
Georgia Highlands College Annual Financial Report FY 2008 24

The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Georgia Highlands College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Georgia Highlands College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Georgia Highlands College (an organizational unit of the Board of Regents of the University 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, 2008.
Georgia Highlands College Annual Financial Report FY 2008 25

Note 14. Post-Employment Benefits Other Than Pension Benefits Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 100 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Georgia Highlands College recognized as incurred $449,013 of expenditures, which was net of $141,421 of participant contributions.
Georgia Highlands College Annual Financial Report FY 2008 26

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
F acult y St aff B en efit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

Inst ruct ion
$6,678,227 1,542,136 1,893,472
134,938
16,723 700,110 359,901
$11,325,507

Functional Clas s ification FY2008

Academ ic Sup p o r t

St udent Ser v ic e s

$0 887,294 265,320

$0 1,237,443
339,642

30,591
2,536 225,435
82,952

43,592 13,630
962 334,180

$1,494,128

$1,969,449

Inst it ut ional Sup p o r t
($1,549) 2,510,536 1,164,040
48,692 43,265
96,470 1,505,807 (209,035)
$5,158,226

Natural Classification
F acult y St aff B en efit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

P lant Op erat io n s & Maint enance
$0 474,310 151,737
1,737
992,168 1,495,967
955,425
$4,071,344

Functional Clas s ification FY2008

Sc h o la r sh ip s & Fellowships

A ux ilia r y Ent erprises

$0

$0

18,903

15,178

2,320,557

681
4,554 136,416
8,084

$2,320,557

$183,816

T otal E x p en ses
$6,676,678 6,670,622 3,829,389 48,692 254,804 2,334,187 1,113,413 4,397,915 1,197,327
$26,523,027

Georgia Highlands College Annual Financial Report FY 2008 27

Note 16. Component Units

Georgia Highlands College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Georgia Highlands College. The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The twenty-five member board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $0 to the University. Complete financial statements for the Foundation can be obtained from the Administrative Office at 3175 Cedartown Hwy Rome, GA 30161.

Investments for Component Units:
Georgia Highlands College Foundation, Inc. holds endowment and other investments in the amount of $606,661. Georgia Highlands College Foundation, in conjunction with the donors, has established a spending plan whereby 100% of the earnings may be used for academic scholarships.

Investments are comprised of the following amounts at June 30, 2008:

Government and Agency Securities Equity Securities Mutual Funds
Total Investments

Cost
$143,954 281,263 128,451
$553,668

Fair Value
$157,789 307,852 141,020
$606,661

Georgia Highlands College Annual Financial Report FY 2008 28

GAINESVILLE STATE COLLEGE
Financial Report
For the Year Ended June 30, 2008

Gainesville State College Gainesville, Georgia

Dr. Martha T. Nesbitt
President

Mr. Paul Glaser
VP for Business & Finance

GAINESVILLE STATE COLLEGE ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 11 Note 2. Deposits and Investments............................................................................................... 16 Note 3. Accounts Receivable...................................................................................................... 17 Note 4. Inventories...................................................................................................................... 17 Note 5. Notes/Loans Receivable................................................................................................. 17 Note 6. Capital Assets................................................................................................................. 18 Note 7. Deferred Revenue........................................................................................................... 19 Note 8. Long-Term Liabilities .................................................................................................... 19 Note 9. Significant Commitments............................................................................................... 19 Note 10. Lease Obligations......................................................................................................... 19 Note 11. Retirement Plans .......................................................................................................... 20 Note 12. Risk Management......................................................................................................... 22 Note 13. Contingencies................................................................................................................ 22 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 23 Note 15. Natural Classifications with Functional Classifications .............................................. 24 Note 16. Component Units .......................................................................................................... 25

GAINESVILLE STATE COLLEGE
Management's Discussion and Analysis

Introduction
Gainesville State College is one of the 35 institutions of higher education of the University System of Georgia. The College, located south of Gainesville, Georgia, was founded in 1964 and has been recognized as one of the premier two-year colleges in the state. Specializing in a strong core curriculum and quality support services, the College initially offered Associates of Arts, Associate of Science, and Associate of Applied Science degrees. Beginning in the fall of 2006, the College, under its new designation as a State College, began offering a limited number of four year baccalaureate degrees. With a second campus south of Athens, Georgia, the College enjoys both high student satisfaction ratings and high retention rates and has integrated technology into both the curriculum and administrative services. The institution attracts a highly qualified faculty and student body of almost 7,500 students. The institution continues to grow as shown by the comparative data that follows.

FY2008 FY2007 FY2006

Students Students Faculty (Headcount) (FTE)

176

7,474

6,364

165

6,719

5,593

132

5,985

4,892

Overview of the Financial Statements and Financial Analysis
Gainesville State College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.
Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Gainesville State College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

Gainesville State College Annual Financial Report FY 2008 1

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Total As se ts

June 30, 2008
$11,340,544 26,654,677 37,995,221

June 30, 2007
$9,483,486 22,290,884 31,774,370

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

3,901,360 425,543
4,326,903

2,929,496 361,474
3,290,970

Net Assets: Invest ed in Capit al Asset s, net of debt Unrest rict ed Total Ne t As s e ts

26,654,677 7,013,641
$33,668,318

22,290,884 6,192,516
$28,483,400

The total assets of the institution increased by $6,220,851. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $4,363,793 in the category of Capital Assets, net. The balance of the increase is mainly in the Cash and Cash Equivalents category.
The total liabilities for the year increased by $1,035,933. The combination of the increase in total assets of $6,220,851 and the increase in total liabilities of $1,035,933 yields an increase in total net assets of $5,184,918. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $4,363,793.

Gainesville State College Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$23,686,504 42,694,431 (19,007,927) 20,542,390
1,534,463 3,650,455 5,184,918 28,483,400
0 28,483,400 $33,668,318

$17,724,995 36,378,921 (18,653,926) 19,195,230
541,304 447,264 988,568 27,494,832
0 27,494,832 $28,483,400

The Statement of Revenues, Expenses, and Changes in Net Assets reflect a positive year with an increase 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:

Gainesville State College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$13,282,443 4,492,451 751,001 3,519,189 1,641,420
23,686,504
19,370,700 680,111 37,321 484,076 (29,818)
20,542,390
3,650,455 3,650,455 $47,879,349

June 30, 2007
$10,702,690 3,230,891 558,068 3,047,163 186,183
17,724,995
17,873,267 727,476 131,123 489,228 (25,864)
19,195,230
447,264 447,264 $37,367,489

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$15,702,073 161,964
5,023,038 3,907,845 5,076,564 6,356,935 3,074,524 3,391,488
0 42,694,431
0 $42,694,431

June 30, 2007
$13,264,478 107,871
3,940,535 2,924,263 3,968,993 6,428,804 2,080,788 2,623,801 1,039,388 36,378,921
0 $36,378,921

Operating revenues increased by $5,961,509 in fiscal 2008. Although Tuition & Fees included a 24% increase, revenues also increased in Grants and Contracts, Auxiliary and Other categories.

Gainesville State College Annual Financial Report FY 2008 4

The Auxiliary revenue increase of $472,026 is a result of increased enrollment at Gainesville State College. Future plans include an expanded bookstore to accommodate the increase in student enrollment and other increased activities for Auxiliary services.

Nonoperating revenues increased $1,347,160 for the year primarily due to an increase of $1,497,433 in State Appropriations.

The compensation and employee benefits category increased by $3,227,481 and primarily affected the Instruction, Academic Support and Institutional Support categories. The increase reflects the addition of faculty members, merit increases, and an increased cost of health insurance for the employees of the institution.

Utilities increased by $121,045 during the past year. The increase was primarily associated with the increased natural gas costs that were experienced in the winter of fiscal year 2008 and affected the Plant Operations and Maintenance category.

Statement of Cash Flows

The final statement presented by Gainesville State College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($16,963,397) 19,953,849 (1,767,222) 484,076 1,707,306 8,298,063
$10,005,369

June 30, 2007
($16,533,423) 18,719,626 (1,220,819) 489,228 1,454,612 6,843,451
$8,298,063

Gainesville State College Annual Financial Report FY 2008 5

Capital Assets The College had two significant capital asset additions for facilities in fiscal year 2008. The new Parking Lot was completed in the fall of 2007 and the Student Center addition/renovation began in the fall 2007 and is expected to be completed in FY2009.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the notes to the financial statements.
Long Term Debt and Liabilities Gainesville State College had Long-Term Debt and Liabilities of $922,762 of which $497,219 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units In compliance with GASB Statement No. 39, Gainesville State College has included the financial statements and notes for all required component units for FY2008. The Gainesville State College Foundation, Inc. had investments of $11.5 million as of December 31, 2007. The Gainesville State College Foundation, Inc. had no long-term debt. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Economic Outlook The College is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The College's overall financial position is strong. With our continued annual increase, the College was able to generate a significant increase in Net Assets. The College anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the College's ability to react to unknown internal and external issues.
Dr. Martha T. Nesbitt, President Gainesville State College
Gainesville State College Annual Financial Report FY 2008 6

Statement of Net Assets

GAINES VILLE S TATE COLLEGE S TATEMENT OF NET AS S ETS June 30, 2008

AS S ETS C urrent Assets Cash and Cash Equivalent s Account s Receivable, net (not e 3) Receivables - Federal Financial Assist ance Receivables - Ot her P ledges Receivable Inventories (not e 4) P repaid items T ot al Current Asset s
Noncurrent Assets Noncurrent Cash Invest m ent s (including Real Est at e) P ledges Receivable Capit al Asset s, net (not e 6) T ot al Noncurrent Asset s TO TAL AS S ETS
LIAB ILITIES C u rre n t Liabilitie s Account s P ayable Cont ract s P ayable Deferred Revenue (not e 7) Deposit s Held for Ot her Organizat ions Com pensat ed Absences (current port ion) T ot al Current Liabilit ies Non cu rre n t Liabilitie s Com pensat ed Absences (noncurrent ) T ot al Noncurrent Liabilit ies TO TAL LIAB ILITIES
NET AS S ETS Invest ed in Capit al Asset s, net of relat ed debt Rest rict ed for N o n e x p e n da ble E x p en da ble Unrest rict ed TO TAL NET AS S ETS

G ai n e s vi l l e State C ollege
$10,005,369 56,906
594,500 404,273 279,496 11,340,544
26,654,677 26,654,677 37,995,221
818,187 520,660 1,907,995 157,299 497,219 3,901,360 425,543 425,543 4,326,903
26,654,677
7,013,641 $33,668,318

C om pone nt Unit G ai n e svi l l e S tate
College Fou n dati on , In c.
$0
12,185 31,976
44,161
1,138,598 11,488,191
228,377 8,400
12,863,566 12,907,727
86,440
86,440
0 86,440
8,400 3,385,860 7,720,098 1,706,929 $12,821,287

Gainesville State College Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
GAINES VILLE S TATE COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

C om pone nt Unit

Gai n e svi l l e S tate College

Gai n e s vi l l e S tate College
Fou n dati on , In c.

REVENUES

Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Endowment Income (per spending plan) Grant s and Cont ract s Federal St at e Other Sales and Services Auxiliary Ent erprises Bookst ore Food Services P arking/T ransport at ion Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion P ayment s t o or on behalf of Gainesville St at e College
T ot al Operat ing Expenses Operat ing Income (loss)

$14,725,127 (1,442,684)
4,357,698 14,753
120,000 751,001
3,465,177 10,010 21,365 22,637
1,641,420 23,686,504
10,375,156 9,203,914 5,450,221 119,568 365,090 3,084,263 1,069,784
11,481,708 1,544,727
42,694,431 (19,007,927)

$0 707,599 344,624
105,744 1,157,967
241,200 777,645 1,018,845 139,122

Gainesville State College Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
GAINES VILLE S TATE COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

G ai n e svi l l e S tate College

C om pone nt Unit
G ai n e s vi l l e S tate College
Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal St at e Ot her Gift s Investment Income (endowments, auxiliary and other) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET ASS ETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

19,370,700
526,985 23,633
129,493 37,321
484,076 (29,818) 20,542,390 1,534,463
3,650,455
3,650,455 5,184,918
28,483,400 0
28,483,400 $33,668,318

369,371
369,371 508,493
136,641 136,641 645,134
12,176,153 0
12,176,153 $12,821,287

Gainesville State College Annual Financial Report FY 2008 9

Statement of Cash Flows

GAINESVILLE STATE COLLEGE STATEMENT OF CASH FLOWS For the Year Ended June 30, 2008

C ASH FLO WS FRO M O PERATING AC TIVITIES T uition and Fees Grants and Cont ract s (Exchange) Sales and Services Payments t o Suppliers Payments t o Employees Payments for Scholarships and Fellowships Auxiliary Ent erprise Charges: Bookst ore Food Services Parking/T ransport at ion Ot her Organizations Other Receipts (payments) Net Cash Provided (used) by Operat ing Activities
C ASH FLO WS FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Other T han Capit al Purposes Net Cash Flows Provided by Non-capit al Financing Act ivit ies
C ASH FLO WS FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received Purchases of Capit al Asset s Net Cash used by Capital and Related Financing Act ivit ies
C ASH FLO WS FRO M INVESTING AC TIVITIES Interest on Invest ment s Net Cash Provided (used) by Invest ing Activities Net Increase/Decrease in Cash Cash and Cash Equivalents - Beginning of year Cash and Cash Equivalents - End of Year
REC O NC ILIATIO N O F O PERATING LO SS TO NET C ASH PRO VIDED (USED) BY O PERATING AC TIVITIES:
Operat ing Income (loss) Adjustments t o Reconcile Net Income (loss) to Net Cash Provided (used) by Operating Act ivit ies
Dep reciat ion Change in Assets and Liabilit ies:
Receivables, net Invent ories Prepaid It ems Account s Payable Deferred Revenue Ot her Liabilit ies Compensated Absences
Net Cash Provided (used) by Operat ing Activit ies
** NON-CASH INVEST ING, NON-CAPIT AL FINANCING, AND CAPIT AL AND RELAT ED FINANCING T RANSACT IONS
Gainesville State College had no non-cash transactions during fiscal 2008.

Gainesville State College Annual Financial Report FY 2008 10

June 30, 2008
$13,570,992 4,493,386 751,001
(18,421,199) (19,457,314)
(3,090,869)
3,468,535 10,010 14,525 22,637
1,674,899 (16,963,397)
19,370,700 (134,283) 717,432
19,953,849
3,650,455 (5,417,677) (1,767,222)
484,076 484,076 1,707,306 8,298,063 $10,005,369
($19,007,927)
1,544,727
(82,685) (9,674)
(57,391) 199,942 392,061 (57,127) 114,677
($16,963,397)

GAINESVILLE STATE COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Gainesville State College serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Gainesville State College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Gainesville State College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Gainesville State College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Gainesville State College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Gainesville State College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the College's report. For FY2008, Gainesville State College is reporting the activity for the Gainesville State College Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB
Gainesville State College Annual Financial Report FY 2008 11

Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The College accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Gainesville State College Annual Financial Report FY 2008 12

Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Gainesville State College.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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.
Gainesville State College Annual Financial Report FY 2008 13

Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Gainesville State College had accrued liability for compensated absences in the amount of $808,085 as of 7-1-2007. For FY2008, $714,708 was earned in compensated absences and employees were paid $600,031, for a net increase of $114,677. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $922,762.

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Assets The College's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$24,084 4,036,623 2,952,934 $7,013,641

Gainesville State College Annual Financial Report FY 2008 14

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Gainesville State 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 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 College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.
Gainesville State College Annual Financial Report FY 2008 15

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $10,000,949 and the bank balance was $10,463,275. Of the College's deposits, $9,963,275 were uninsured. Of these uninsured deposits, $9,963,275 were collateralized with securities held by the financial institution's trust department or agent in the College's name.
B. Investments
Gainesville State College has no Investments as of June 30, 2008.
Gainesville State College Annual Financial Report FY 2008 16

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$377,779 66,553 56,906
152,102 653,340
1,934
$651,406

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore T otal

$404,273 $404,273

Note 5. Notes/Loans Receivable Gainesville State College had no loans receivable as of June 30, 2008.

Gainesville State College Annual Financial Report FY 2008 17

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Library Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$105,849
105,849
2,163,888 29,963,592
1,188,698 2,720,799 2,001,772 38,038,749
364,940 10,899,149
994,999 1,788,446 1,806,180 15,853,714
22,185,035
$22,290,884

Addi ti o n s
$0 4,555,598 4,555,598

Re ductions $0 0

576,496 269,950
422,941 113,352 1,382,739

303,555 105,076 408,631

102,162 1,026,312
10,970 324,614
80,669 1,544,727
(161,988)
$4,393,610

273,738 105,076 378,814
29,817
$29,817

En di n g B al an ce 6/30/2008
$105,849 4,555,598 4,661,447
2,740,384 30,233,542
1,188,698 2,840,185 2,010,048 39,012,857
467,102 11,925,461
1,005,969 1,839,322 1,781,773 17,019,627
21,993,230
$26,654,677

Gainesville State College Annual Financial Report FY 2008 18

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $1,770,128 137,867
$1,907,995

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Other Liabilities Compensated Absences

Beginning Balance
July 1, 2007
$808,085

Additions $714,708

Reductions

Ending Balance June 30, 2008

$600,031

$922,762

Total Long Term Obligations

$808,085

$714,708

$600,031

$922,762

Current Portion
$497,219
$497,219

Note 9. Significant Commitments
The College had no unearned, outstanding, construction or renovation contracts executed as of June 30, 2008.
Note 10. Lease Obligations
Gainesville State College had no outstanding capital or operating lease obligations at June 30, 2008. Gainesville State College had no expense for rental of real property and equipment under operating leases in FY2008.

Gainesville State College Annual Financial Report FY 2008 19

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Gainesville State College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Gainesville State College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Gainesville State College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$1,065,944 $947,090 $931,369

Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible University system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Gainesville State College Annual Financial Report FY 2008 20

Funding Policy Gainesville State College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
Gainesville State College and the covered employees made the required contributions of $390,669 (8.13% or 8.15%) and $239,976 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Gainesville State 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $99,302 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.
Gainesville State College Annual Financial Report FY 2008 21

Note 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Gainesville State College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Gainesville State College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Gainesville State College expects such amounts, if any, to be immaterial to its overall financial position.
Gainesville State College Annual Financial Report FY 2008 22

Litigation, claims and assessments filed against Gainesville State College (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 105 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Gainesville State College recognized as incurred $414,428 of expenditures, which was net of $171,376 of participant contributions.
Gainesville State College Annual Financial Report FY 2008 23

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses
Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Dep reciat ion
Total Expenses

Inst ruct ion
$10,304,603 1,426,019 2,673,493 6,254 110,271 9,739 6,220 1,110,592 54,882
$15,702,073

Functional Classification FY2008

Public Service

Academic Support

St udent Services

$3,050 84,150 31,074

$67,503 2,335,997
653,308

$0 2,164,751
583,476

1,064

95,597

89,281

42,626

18,065 1,725,163
127,405

3,295 1,062,035
5,007

$161,964

$5,023,038

$3,907,845

Inst it ut ional Support
$0 1,985,153 1,143,760
119,568 65,932
7,588 1,638,645
115,918
$5,076,564

P lan t Op erat io n s & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary En t erp rises

$0 1,058,132
342,069 (27,827)
2,945
1,034,374 2,711,761 1,235,481

$0 3,074,524

$0 149,712
23,041 21,573
242 3,190,886
6,034

$6,356,935

$3,074,524

$3,391,488

T otal Expenses
$10,375,156 9,203,914 5,450,221 119,568 365,090 3,084,263 1,069,784
11,481,708 1,544,727
$42,694,431

Gainesville State College Annual Financial Report FY 2008 24

Note 16. Component Units

Gainesville State College Foundation, Inc. is a legally separate, tax-exempt component unit of Gainesville State College. The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The sevenmember board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 to December 31.

During the year ended December 31, 2007, the Foundation distributed $777,645 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 3820 Mundy Mill Road, Oakwood, GA.

Investments for Component Units:

Gainesville State College Foundation, Inc. holds endowment and other investments in the amount of $11.5 million. Gainesville State College Foundation, Inc., in conjunction with the donors, has established a spending plan whereby 50% of the earnings may be used for academic scholarships. The remaining 50% of the earnings are set aside as a reserve.

Investments are comprised of the following amounts at December 31, 2007:

Cash held by investment organization Money Market Accounts Certificates of Deposit Equity Securities Mutual Funds
Total Investments

Cost
$944,800 339,458 564,000
1,372,742 7,041,811
$10,262,811

Fair Value
$1,577,112 339,458 564,000
1,631,085 7,376,536
$11,488,191

Gainesville State College Annual Financial Report FY 2008 25

Capital Assets for Component Units:
Gainesville State College Foundation, Inc. holds the following Capital Assets as of December 31, 2007:

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets, Net

$8,400 8,400
$8,400

Gainesville State College Annual Financial Report FY 2008 26

GEORGIA PERIMETER COLLEGE
Financial Report
For the Year Ended June 30, 2008

Georgia Perimeter College Atlanta, Georgia

Dr. Anthony S. Tricoli
President

Ronald L. Carruth
Executive Vice President for Financial and Administrative Affairs

GEORGIA PERIMETER COLLEGE ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ............................................................................ 1 Statement of Net Assets ...................................................................................................... 7 Statement of Revenues, Expenses and Changes in Net Assets........................................... 8 Statement of Cash Flows .................................................................................................. 10 Note 1. Summary of Significant Accounting Policies .................................................... 11 Note 2. Deposits and Investments................................................................................... 17 Note 3. Accounts Receivable.......................................................................................... 19 Note 4. Inventories.......................................................................................................... 19 Note 5. Notes/Loans Receivable..................................................................................... 19 Note 6. Capital Assets..................................................................................................... 20 Note 7. Deferred Revenue............................................................................................... 21 Note 8. Long-Term Liabilities ........................................................................................ 21 Note 9. Significant Commitments................................................................................... 21 Note 10. Lease Obligations............................................................................................. 21 Note 11. Retirement Plans .............................................................................................. 22 Note 12. Risk Management............................................................................................. 24 Note 13. Contingencies................................................................................................... 24 Note 14. Post-Employment Benefits Other Than Pension Benefits ............................... 25 Note 15. Natural Classifications with Functional Classifications .................................. 26 Note 16. Component Units ............................................................................................. 27

GEORGIA PERIMETER COLLEGE
Management's Discussion and Analysis

Introduction
Georgia Perimeter College is one of the 35 institutions of higher education of the University System of Georgia. The College has six convenient locations along the major access corridors of metropolitan Atlanta. Georgia Perimeter College was founded by the DeKalb County Board of Education in 1958 and later became a College in 1964. Georgia Perimeter College is the largest two year college and the third largest institution in the University System of Georgia. The institution continues to grow as shown by the comparison numbers that follow.

Students Students Faculty (Headcount) (FTE)

FY2008

503

21,473 15,954

FY2007

516

19,955 14,964

FY2006

492

20,461 15,327

Overview of the Financial Statements and Financial Analysis

Georgia Perimeter College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Georgia Perimeter College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Georgia Perimeter College Annual Financial Report FY 2008 1

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$37,204,668 88,822,016 1,045,501
127,072,185

June 30, 2007
$25,577,111 91,165,960 1,055,328
117,798,399

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

20,588,021 1,648,844
22,236,865

13,559,831 1,642,292
15,202,123

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Capital P rojects Unrest rict ed Total Ne t As s e ts

88,822,016 31,338
329,824 1,000,216 14,651,926 $104,835,320

91,165,960 31,338 80,901
1,000,216 10,317,861 $102,596,276

The total assets of the institution increased by $9,273,786. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $6,326,406 in the cash and cash equivalents category. An increase of $5,260,076 was also noted in the receivables categories.
The total liabilities for the year increased by $7,034,742. The combination of the increase in total assets of $9,273,786 and the increase in total liabilities of $7,034,742 yields an increase in total net assets of $2,239,044. The increase in total net assets is primarily in the category of Unrestricted Net Assets, in the amount of $4,334,065.

Georgia Perimeter College Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$68,443,110 130,991,566 (62,548,456)
64,505,426
1,956,970 282,074
2,239,044 102,596,276
0 102,596,276 $104,835,320

$64,031,575 125,359,016 (61,327,441)
62,924,660
1,597,219 8,601,634 10,198,853 92,397,423
0 92,397,423 $102,596,276

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Georgia Perimeter College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$37,701,585 22,790,360 1,495,439 5,618,108 837,618 68,443,110
63,597,031 0
852,037 56,358
64,505,426
282,074 282,074 $133,230,610

June 30, 2007
$33,900,003 22,578,165 1,271,727 4,751,107 1,530,573 64,031,575
59,476,678 929,484
1,020,577 1,497,921 62,924,660
8,601,634 8,601,634 $135,557,869

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$48,693,677 4,000
12,095,568 12,189,461 24,144,889 17,040,607 12,637,399
4,185,965 0
130,991,566
0 $130,991,566

June 30, 2007
$48,890,215 0
9,348,802 12,256,413 26,376,026
8,008,629 12,398,470
5,471,863 2,608,598 125,359,016
0 $125,359,016

Operating revenues increased by $4,411,535 in fiscal 2008. Although Tuition & Fees included an 11% increase, revenues decreased in the Other operating revenue category.

Georgia Perimeter College Annual Financial Report FY 2008 4

Nonoperating revenues increased by $1,580,766 for the year primarily due to an increase of $4,120,353 in State Appropriations accompanied by reductions totaling $2,539,587 in the categories of Gifts, Investment Income and Other Nonoperating revenues.

The compensation and employee benefits category increased by $4,959,871 and primarily affected the Academic Support and Institutional Support categories The increase reflects the growth of distance learning programs, merit increases as well as an increased cost of health insurance for the employees of the institution.

Utilities decreased by ($42,658) during the past year. While the price of natural gas increased significantly, the College was no longer paying utilities for the Lawrenceville campus or the Rockdale Center.

Statement of Cash Flows

The final statement presented by Georgia Perimeter College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($55,168,468) 64,892,928 (4,250,091) 852,037 6,326,406 16,999,215
$23,325,621

June 30, 2007
($61,477,062) 66,122,713 (3,129,530) 1,020,577 2,536,698 14,462,517
$16,999,215

Georgia Perimeter College Annual Financial Report FY 2008 5

Capital Assets
The College did not have significant capital asset additions for facilities in fiscal year 2008.
Georgia Perimeter College completed a major upgrade of the electrical system. The $93,670 used for this project was funded by the Georgia State Financing and Investment Commission (GSFIC). Other improvements funded by the GSFIC included asbestos abatement and roof repair projects totaling over $188,000. Projected funding by GSFIC for FY2009 will be approximately the same.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the notes to the financial statements.
Long Term Debt and Liabilities
Georgia Perimeter College had Long-Term Debt and Liabilities of $3,282,931 of which $1,634,087 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, Georgia Perimeter College has included the financial statements and notes for Georgia Perimeter College Foundation, Inc. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Economic Outlook
The College is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The College's overall financial position is strong. Even with a relatively flat funded year, the College was able to generate a modest increase in Net Assets. The College anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the College's ability to react to unknown internal and external issues.
Dr. Anthony S. Tricoli, President Georgia Perimeter College
Georgia Perimeter College Annual Financial Report FY 2008 6

Statement of Net Assets

GEO RGIA P ERIMETER CO LLEGE S TATEMENT O F NET AS S ETS June 30, 2008

A S S ETS C urre nt Assets Cash an d Cash E quiv alen t s Sh o rt -t erm In v est m en t s Acco un t s Receiv able, n et (n o t e 3) Receiv ables - Federal Fin an cial Assist an ce Receiv ables - Ot h er Invent ories (not e 4) P repaid it em s T o t al Current A sset s
Non cu rre n t Asse ts No n curren t Cash In v est m en t s (in cludin g Real E st at e) No t es Receiv able, n et Cap it al Asset s, n et (n o t e 6) Ot her Asset s T o t al No n curren t Asset s TO TA L A S S ETS
LIA B ILITIES C u rre n t Liabilitie s Acco un t s P ay able Salaries P ay able Co nt ract s P ay able Deferred Rev enue (n o t e 7) Ot h er Liabilit ies Depo sit s Held fo r Ot h er Organ izat io n s Co m p en sat ed A bsen ces (curren t p o rt io n ) Rev en ue/M o rt gage Bo n ds P ay able (curren t ) T o t al Curren t L iabilit ies Non cu rre n t Liabilitie s Co m p en sat ed A bsen ces (n o n curren t ) Rev en ue/M o rt gage Bo n ds P ay able (n o n curren t ) T o t al No n curren t L iabilit ies TO TA L LIA B ILITIES
N ET A S S ETS In v est ed in Capit al Asset s, n et o f relat ed debt Rest rict ed for No n ex p en dable E x p en dable Capit al P roject s Unrest rict ed TO TA L N ET A S S ETS

Ge orgia Perim e te r
C olle ge
$22,282,656 17,846
3,583,548 11,151,649
166,776 2,193
37,204,668
1,042,965
2,536 88,822,016
89,867,517 127,072,185
1,464,965 749,451 41,323
11,618,130 240,816
4,839,249 1,634,087
20,588,021
1,648,844
1,648,844 22,236,865
88,822,016
31,338 329,824 1,000,216 14,651,926 $104,835,320

C om pon e n t Un it Ge orgia Perim e te r
C olle ge Fo u n da ti o n , In c.
$ 1 8 9 ,2 8 5
7 ,9 9 1
1 9 7 ,2 7 6
2 ,7 3 7 ,4 7 7 1 ,3 1 8 ,6 4 7 5 4 ,4 3 8 ,0 4 0 1 ,9 1 3 ,7 1 4 6 0 ,4 0 7 ,8 7 8 6 0 ,6 0 5 ,1 5 4
3 ,5 1 2 ,9 2 1 1 ,5 3 9 ,9 8 0
4 3 0 ,0 0 0 5 ,4 8 2 ,9 0 1
4 7 ,8 2 5 ,0 0 0 4 7 ,8 2 5 ,0 0 0 5 3 ,3 0 7 ,9 0 1
1 0 ,8 3 0 ,2 3 1 6 ,1 9 4 ,1 8 2 3 7 8 ,1 9 2
(1 0 ,1 0 5 ,3 5 2 ) $ 7 ,2 9 7 ,2 5 3

Georgia Perimeter College Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
GEORGIA PERIMETER COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

C om pone nt Unit

Georgia Perim eter College

Ge orgia Pe rim e te r C olle ge
Fou n dati on , In c.

REVENUES

Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Grant s and Cont ract s Federal St at e Other Sales and Services Rents and Royalt ies Auxiliary Ent erprises Bookst ore Food Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion Ot her Operat ing Expense P ayment s t o or on behalf of Georgia P erim et er College
T ot al Operat ing Expenses Operat ing Income (loss)

$46,294,821 (8,593,236)
21,745,743 893,255 151,362
1,495,439 5,754
952,494 24,363
1,191,972 3,449,279
831,864 68,443,110
30,285,802 37,895,832 15,977,329
269,767 792,722 13,523,314 3,022,275 24,263,541 4,960,984
130,991,566 (62,548,456)

950,405
950,405
517,420 377,607
49,782 247,093 1,191,902 (241,497)

Georgia Perimeter College Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
GEORGIA PERIMETER COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

C om pone nt Unit

Georgia Perim eter College

Ge orgia Pe rim e te r C olle ge
Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENSES) State Appropriations Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET AS S ETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

63,597,031 852,037
56,358 64,505,426
1,956,970
282,074
282,074 2,239,044
102,596,276 0
102,596,276 $104,835,320

400,199 (520,959)
(120,760) (362,257)
36,983 36,983 (325,274)
4,941,202 2,681,325 7,622,527 $7,297,253

Georgia Perimeter College Annual Financial Report FY 2008 9

Statement of Cash Flows

GEO RGIA PERIMETER COLLEGE S TATEMENT O F CAS H FLOW S For the Year Ended J une 3 0 , 2 0 0 8

C A S H FLO W S FR O M O P ER A TIN G A C TIV ITIES T uit io n an d Fees Gran t s an d Co n t ract s (E x ch an ge) Sales an d Serv ices P ay m en t s t o Sup p liers P aym ents t o Em ployees P ay m en t s fo r Sch o larsh ip s an d Fello wsh ip s L o an s Issued t o St uden t s an d E m p lo y ees Aux iliary E n t erp rise Ch arges: Bookst ore Fo o d Serv ices In t erco llegiat e At h let ics O t h er Organ izat io n s Ot her Receipt s (paym ent s) Net Cash P ro v ided (used) by O p erat in g Act iv it ies
C A S H FLO W S FR O M N O N -C A P ITA L FIN A N C IN G A C TIV ITIES St at e A p p ro p riat io n s Agen cy Fun ds T ran sact io n s Gift s an d Gran t s Receiv ed fo r O t h er T h an Cap it al P urp o ses N et Cash Flo ws P ro v ided by N o n -cap it al Fin an cin g A ct iv it ies
C A S H FLO W S FR O M C A P ITA L A N D R ELA TED FIN A N C IN G A C TIV ITIES Cap it al Gran t s an d Gift s Receiv ed P urch ases o f Cap it al Asset s Net Cash used by Cap it al an d Relat ed Fin an cin g Act iv it ies
C A S H FLO W S FR O M IN V ES TIN G A C TIV ITIES Int erest on Invest m ent s Net Cash P ro v ided (used) by In v est in g Act iv it ies Net Increase/Decrease in Cash Cash an d Cash Equiv alen t s - Begin n in g o f y ear Cash an d Cash Equiv alen t s - E nd of Year

R EC O N C ILIA TIO N O F O P ER A TIN G LO S S TO N ET C A S H P R O V ID ED (U S ED ) B Y O P ER A TIN G A C TIV ITIES :
Operat ing Incom e (loss) Adjust m en t s t o Reco n cile Net In co m e (lo ss) t o Net Cash P ro v ided (used) by Op erat in g Act iv it ies
Depreciat ion Ch an ge in Asset s an d L iabilit ies:
Receiv ables, n et Invent ories P repaid Item s Not es Receiv able, Net A cco un t s P ay able Deferred Rev en ue Ot h er Liabilit ies Co m pen sat ed Absen ces
Net Cash P ro v ided (used) by Op erat in g Act iv it ies

Georgia Perimeter College Annual Financial Report FY 2008 10

June 30, 2008
$38,253,157 23,144,598 1,495,440 (43,015,599) (68,028,047) (13,523,314) 9,827
2,026,721 (331,182)
1,166,478 3,307,163
326,290 (55,168,468)
63,597,031 1,292,539 3,358
64,892,928
282,074 (4,532,165) (4,250,091)
852,037 852,037 6,326,406 16,999,215 $23,325,621
($62,548,456)
4,960,984
(5,260,075) (39,745) 9,827 (553) (99,120)
7,956,452 (167,704) 19,922
($55,168,468)

GEORGIA PERIMETER COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Georgia Perimeter College serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Georgia Perimeter College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Georgia Perimeter College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Georgia Perimeter College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Georgia Perimeter College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Georgia Perimeter College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the College's report. For FY2008, Georgia Perimeter College is reporting the activity for the Georgia Perimeter College Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB
Georgia Perimeter College Annual Financial Report FY 2008 11

Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The College accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable
Georgia Perimeter College Annual Financial Report FY 2008 12

expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at cost on the first-in, first-out ("FIFO") basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Georgia Perimeter College.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a College residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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.
Georgia Perimeter College Annual Financial Report FY 2008 13

Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Georgia Perimeter College had accrued liability for compensated absences in the amount of $3,263,009 as of 7-1-2007. For FY2008, $2,381,244 was earned in compensated absences and employees were paid $2,361,322, for a net increase of $19,922. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $3,282,931.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The College's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Georgia Perimeter College Annual Financial Report FY 2008 14

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans Quasi-Endowm ent s T ot al Rest rict ed Expendable

$164,546 17,543
136,324 11,411
$329,824

Restricted net assets expendable Capital Projects: This represents resources for which the College is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$122,591 9,908,467
181,614 4,439,254 $14,651,926

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Georgia Perimeter 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Georgia Perimeter College Annual Financial Report FY 2008 15

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans. Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 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 College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.
Georgia Perimeter College Annual Financial Report FY 2008 16

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $20,219,974 and the bank balance was $21,460,806. Of the College's deposits, $21,440,441 were uninsured. Of these uninsured deposits, $21,440,441 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the College's name.
Georgia Perimeter College Annual Financial Report FY 2008 17

B. Investments At June 30, 2008, the carrying value of the College's investments was $3,095,492, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Office of Treasury and Fiscal Services investment pools as follows:

Investment Pools Office of T reasury and Fiscal Services Georgia Fund 1

$3,095,492

T otal Investment Pools

$3,095,492

The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1 Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 days.
Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The College does not have a formal policy for managing interest rate risk.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The College does not have a formal policy for managing credit quality risk.

Georgia Perimeter College Annual Financial Report FY 2008 18

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$6,922,190 627,924
3,583,548 5,138,071 16,271,733 1,536,536
$14,735,197

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

P hysical P lant T otal

$166,776 $166,776

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the College for amounts cancelled under these provisions. As the College determines that loans are uncollectible and not eligible for reimbursement by the Federal government, the loans are written off and assigned to the U.S. Department of Education. At June 30, 2008 there is no allowance for uncollectible loans receivable.

Georgia Perimeter College Annual Financial Report FY 2008 19

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Capital Leases Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$4,420,776 5,567,801 9,988,577
106,303,206 4,784,924
12,976,055 12,412,802 136,476,987
34,368,673 2,555,307 8,193,743 0
10,181,881 55,299,604
81,177,383
$91,165,960

Addi ti o n s
$0 597,122 597,122

Re ductions
$0 503,633 503,633

145,195
3,098,310 878,056
4,121,561

8,736 8,579 2,878,029 297,444 3,192,788

2,660,760 95,013
1,679,556 30,419
495,236 4,960,984
(839,423)
($242,301)

96,335 6,541
1,194,458
297,444 1,594,778
1,598,010
$2,101,643

En di n g B a l a n ce 6/30/2008
$4,420,776 5,661,290
10,082,066
106,439,665 4,776,345
13,196,336 12,993,414 137,405,760
36,933,098 2,643,779 8,678,841 30,419
10,379,673 58,665,810
78,739,950
$88,822,016

Georgia Perimeter College Annual Financial Report FY 2008 20

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $11,052,419 565,711
$11,618,130

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Other Liabilities Compensated Absences

Beginning Balance
July 1, 2007
$3,263,009

Additions $2,381,244

Reductions

Ending Balance June 30, 2008

$2,361,322

$3,282,931

Current Portion
$1,634,087

Total Long Term Obligations

$3,263,009

$2,381,244

$2,361,322

$3,282,931

$1,634,087

Note 9. Significant Commitments

The College had significant unearned, outstanding, construction or renovation contracts executed in the amount of $1,156,099 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.

Note 10. Lease Obligations

Georgia Perimeter College had no capital or operating leases at June 30, 2008.

Georgia Perimeter College had no expense for rental of real property and equipment under operating leases in FY2008.

Georgia Perimeter College Annual Financial Report FY 2008 21

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Georgia Perimeter College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Georgia Perimeter College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Georgia Perimeter College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$3,411,494 $3,394,465 $3,043,707

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Georgia Perimeter College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in

Georgia Perimeter College Annual Financial Report FY 2008 22

accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
Georgia Perimeter College and the covered employees made the required contributions of $1,425,447 (8.13% or 8.15%) and $875,551 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Georgia Perimeter 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $731,020 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.
Georgia Perimeter College Annual Financial Report FY 2008 23

Note 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Georgia Perimeter College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Georgia Perimeter College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Georgia Perimeter College expects such amounts, if any, to be immaterial to its overall financial position.
Georgia Perimeter College Annual Financial Report FY 2008 24

Litigation, claims and assessments filed against Georgia Perimeter College (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 286 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Georgia Perimeter College recognized as incurred $1,302,306 of expenditures, which was net of $424,570 of participant contributions.
Georgia Perimeter College Annual Financial Report FY 2008 25

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Dep reciat ion
Total Expenses
Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Inst ruct ion
$29,180,012 6,644,167 7,101,924
347,840 252,595 116,611 4,612,220 438,308
$48,693,677

Functional Classification FY2008

P ublic Service

Academic Support

St udent Services

$0

$1,054,053

7,102,214

1,460,494

$42,101 7,700,911 1,819,840

4,000

120,844 7,700
32,520 1,485,189
832,554

130,582 297,071
43,177 2,150,787
4,992

$4,000

$12,095,568

$12,189,461

Inst it ut ional Support
$9,636 10,866,968
3,996,525 269,767 114,670
577,899 7,548,156
761,268
$24,144,889

Plant Operat ions & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Ent erprises

$0 $4,952,751
1,478,474 (111,948)
23,586
2,226,239 5,585,590 2,885,915

$0 12,637,399

$0 628,821 120,072 111,948
55,200 328,549
25,829 2,877,599
37,947

$17,040,607

$12,637,399

$4,185,965

T otal Expenses
$30,285,802 37,895,832 15,977,329 269,767 792,722 13,523,314 3,022,275 24,263,541 4,960,984
$130,991,566

Georgia Perimeter College Annual Financial Report FY 2008 26

Note 16. Component Units
Georgia Perimeter College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Georgia Perimeter College (College). The Foundation is a nonprofit entity comprised of a volunteer group entrusted with the oversight for private fund raising to benefit Georgia Perimeter College. The Foundation provides volunteer leadership to the college's development and fund raising programs. In addition, the board monitors the administration of the assets of the Foundation, resulting in a broadening of opportunities for learning by students and a continued investment in faculty and staff. The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that has adopted Statement of Financial Accounting Standards (SFAS) No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 through December 31.
During the year ended December 31, 2007, the Foundation distributed $247,093 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 3251 Panthersville Rd, Decatur, GA 30034.
Prior Period Adjustment:
In the year ending December 31, 2006, the Foundation received the proceeds of a bond issuance and reported the proceeds and bond liability in its financial statements. It was subsequently discovered that Newton County was obligated for the debt and therefore, a gift to the Foundation of $2,550,000 should have been recognized instead of the bond liability. This error correction in 2007 includes bond principal and accrued interest for 2006. The beginning net assets of the Foundation were increased by $2,681,325 as a result of the correction.
Investments for Component Units:
Georgia Perimeter College Foundation, Inc. holds endowment and other investments in the amount of $1,318,647. Investments are comprised of the following amounts at December 31, 2007:
Georgia Perimeter College Annual Financial Report FY 2008 27

Money Market Accounts Certificates of Deposit Government and Agency Securities Corporate Bonds Equity Securities
Total Investments

Cost
$154,209 721,000 15,000 75,000 395,166
$1,360,375

Fair Value
$154,209 725,184 15,000 75,000 349,254
$1,318,647

Capital Assets for Component Units:

Georgia Perimeter College Foundation, Inc. holds the following Capital Assets as of December 31, 2007:
December 31, 2007

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$3,000,000 26,689,930 29,689,930
24,192,829 932,888
25,125,717
377,607 24,748,110 $54,438,040

Long-term Liabilities for Component Units:

Changes in long-term liabilities for component units for the fiscal year ended December 31, 2007 are shown below:

Revenue/Mortgage Bonds Payable Total Long Term Liabilities

Beginning Balance January 1, 2007

Prior Year Adjustment

Adjusted Beginning Bal. January 1, 2007

$25,245,000

(2,550,000)

22,695,000

$25,245,000 ($2,550,000)

$22,695,000

Additions

Reductions

Ending Balance December 31, 2007

Amounts due within
One Year

$25,560,000

$0

$48,255,000

$430,000

$25,560,000

$0

$48,255,000

$430,000

On December 29, 2005, the Newton County Industrial Revenue Authority effected a revenue bond issue "Series 2005" in the amount of $22,695,000. These proceeds will fund a building project. Rental payments from the Board of Regents of the University System of Georgia will be used to amortize this bonded indebtedness. The repayment of this debt is due in annual installments ranging from $430,000 to $1,400,000 through 2035 at 4.6% per annum. The

Georgia Perimeter College Annual Financial Report FY 2008 28

outstanding principal obligation on the Series 2005 bonds was $22,695,000 at December 31, 2007.

In addition, two additional bond issuances were effected during 2007 that are accounted for on the Foundation's books.

Georgia Gwinnett College Real Estate Parking I, LLC Project Incremental Draw Revenue Bonds Series 2007A - These funds will be used to construct a parking facility and a student center on the Georgia Gwinnett College campus. Rental payments from the Board of Regents of the University System of Georgia will be used to amortize this bonded indebtedness. The repayment of this debt will be due in annual principal installments ranging from $55,000 to $2,105,000 through 2032 at a variable interest rate (4.15% as of December 31, 2007). GGC Real Estate Parking I, LLC's indebtedness under the 2007A Series bonds is $15,315,000 at December 31, 2007.

Georgia Perimeter College Real Estate Student Support I, LLC Project Incremental Draw Revenue Bonds Series 2007A These funds will be used to construct several facilities on four campuses of Georgia Perimeter College. Rental payments from the Board of Regents of the University System of Georgia will be used to amortize this bond indebtedness. The repayment of this debt will be due in annual principal installments ranging from $450,000 to $4,725,000 through 2035 at a variable interest rate (4.19% as of December 31, 2007). Georgia Perimeter College Real Estate Student Support I, LLC's indebtedness under the 2007A Series bonds is $10,245,000 at December 31, 2007.

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending December 31: 2008 2009 2010 2011 2012 2013 through 2019 2020 through 2024 2025 through 2029

1 2 3 4 5 6-10 11-15 16-20

Principal
$430,000 970,000
1,100,000 1,645,000 1,705,000 11,010,000 16,730,000 14,665,000 $48,255,000

Bonds Payable Interest
$5,828,601 4,293,763 4,612,051 4,569,770 5,255,236 2,551,325
18,647,966 14,330,576 $60,089,288

Total
$6,258,601 5,263,763 5,712,051 6,214,770 6,960,236
13,561,325 35,377,966 28,995,576 $108,344,288

Georgia Perimeter College Annual Financial Report FY 2008 29

GEORGIA STATE UNIVERSITY
Financial Report
For the Year Ended June 30, 2008

Carl V. Patton
President

Georgia State University Atlanta, Georgia
Jerry J. Rackliffe
Vice President for Finance & Administration

GEORGIA STATE UNIVERSITY ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ............................................................................ 1 Statement of Net Assets ...................................................................................................... 7 Statement of Revenues, Expenses and Changes in Net Assets........................................... 9 Statement of Cash Flows .................................................................................................. 11 Note 1. Summary of Significant Accounting Policies .................................................... 13 Note 2. Deposits and Investments................................................................................... 18 Note 3. Accounts Receivable.......................................................................................... 21 Note 4. Inventories.......................................................................................................... 21 Note 5. Notes/Loans Receivable..................................................................................... 21 Note 6. Capital Assets..................................................................................................... 22 Note 7. Deferred Revenue............................................................................................... 23 Note 8. Long-Term Liabilities ........................................................................................ 23 Note 9. Significant Commitments................................................................................... 23 Note 10. Lease Obligations............................................................................................. 24 Note 11. Retirement Plans .............................................................................................. 26 Note 12. Risk Management............................................................................................. 29 Note 13. Contingencies................................................................................................... 30 Note 14. Post-Employment Benefits Other Than Pension Benefits ............................... 30 Note 15. Natural Classifications with Functional Classifications .................................. 32 Note 16. Special Items .................................................................................................... 33 Note 17. Component Units ............................................................................................. 33

GEORGIA STATE UNIVERSITY
Management's Discussion and Analysis

Introduction
Georgia State University is one of the 35 institutions of higher education of the University System of Georgia. The University, located in Atlanta, Georgia, was founded in 1913. The University offers baccalaureate, masters and doctoral degrees in a wide variety of subjects. This wide range of educational opportunities attracts a highly qualified faculty and a student body of more than 26,000 students each year. The comparison numbers follow.

Students Students Faculty (Headcount) (FTE)

FY2008 FY2007 FY2006

1,126 1,048
934

27,134 26,135 25,967

23,764 22,748 22,635

Overview of the Financial Statements and Financial Analysis

Georgia State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Georgia State University. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Georgia State University Annual Financial Report FY 2008 1

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$203,306,722 499,490,342 6,602,469 709,399,533

June 30, 2007
$163,413,445 328,827,899 6,518,372 498,759,716

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

61,338,463 238,341,461 299,679,924

52,840,699 45,547,700 98,388,399

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Capital P rojects Unrest rict ed Total Ne t As s e ts

260,030,830 45,781
9,826,994 335,535
139,480,469 $409,719,609

284,921,124 49,957
10,976,247 1,763,282
102,660,707 $400,371,317

The total assets of the institution increased by $210,639,817. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $170,662,443 in the category of Capital Assets, net. The balance of the increase is mainly in cash and cash equivalents, receivables and prepaid items categories.
The total liabilities for the year increased by $201,291,525. The combination of the increase in total assets of $210,639,817 and the increase in total liabilities of $201,291,525 yields an increase in total net assets of $9,348,292. The net increase in total net assets is primarily a decrease in the category of Invested in Capital Assets, net of debt, in the amount of $24,890,294 and an increase in Unrestricted in the amount of $36,819,762.

Georgia State University Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$260,515,175 470,146,551 (209,631,376) 243,895,956
34,264,580 (21,521,340) 12,743,240 400,371,317
(3,394,948) 396,976,369 $409,719,609

$237,916,539 425,057,948 (187,141,409) 210,827,321
23,685,912 7,687,024
31,372,936 368,998,381
0 368,998,381 $400,371,317

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Georgia State University Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s and Special It em s St at e Capit al Gift s and Grant s Ot her Capit al Gift s and Grant s Special It em s
T ot al Capit al Gift s and Grant s and Special It em s
T ot al Revenues

June 30, 2008
$127,673,904 80,534,547 10,372,728 38,777,690 3,156,306
260,515,175
228,180,842 8,225,126
12,373,240 5,801,670 93,478
254,674,356
10,033,611 1,072,192
(32,627,143) (21,521,340) $493,668,191

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$158,614,525 78,559,136 26,562,665 57,247,474 26,055,120 38,676,798 34,804,662 16,524,709 33,101,462
470,146,551
10,778,400 $480,924,951

June 30, 2007
$111,233,207 76,812,343 13,632,930 32,312,724 3,925,335
237,916,539
200,710,980 6,736,565 79,187 7,468,797 (1,052,420)
213,943,109
7,530,520 156,504 0
7,687,024 $459,546,672
June 30, 2007
$147,644,503 64,411,421 22,132,658 47,576,942 22,525,634 45,898,767 34,325,981 14,537,933 26,004,109
425,057,948
3,115,788 $428,173,736

Georgia State University Annual Financial Report FY 2008 4

Operating revenues increased by $22,598,636 in fiscal year 2008. In addition to a Tuition & Fees increase of 15%, revenues also increased in Grants and Contracts and Auxiliary categories.

The Auxiliary revenue increase of $6,464,966 is a result of the changing environment of residential life on the University's campus. During the year, residential life transferred the University Village which was institutionally owned to Georgia Institute of Technology. However, at the same time, Georgia State University Foundation, a related party, constructed over 2,000 beds of new housing on the campus. The net effect to the campus is that the students actually have more on-campus residential life availability. The increase in revenue for Auxiliary reflects higher rental rates for the new facility and increases in Transportation and Other Organizations categories.

Nonoperating revenues increased by $40,731,247 for the year primarily due to an increase of $27,469,862 in State Appropriations and $12,294,053 in Gifts.

The compensation and employee benefits category increased by $24,233,373 and primarily affected the Instruction, Research, Student Services and Institutional Support categories.

Utilities increased by $613,379 during the past year.

Statement of Cash Flows

The final statement presented by Georgia State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($180,548,361) 247,717,628 (60,329,197) 5,805,915 12,645,985 134,757,442
$147,403,427

June 30, 2007
($172,295,428) 209,811,643 (29,214,867) 7,464,241 15,765,589 118,991,853
$134,757,442

Georgia State University Annual Financial Report FY 2008 5

Capital Assets
During fiscal year 2008 (fiscal year 2009 Capital Budget), Georgia State University was approved for another capital project. The $12.8 million building is located in Alpharetta and is apportioned $8.9 million to Georgia State and $3.9 million to Georgia Perimeter College. The two institutions will share the completed facility, and it is expected to be ready for occupancy in Spring Semester 2010. The 50,000 square foot building will be used primarily to teach both graduate and undergraduate Business and Education classes. As noted last year, in fiscal year 2006, the State Legislature approved funding for the 213,000 square foot Science Teaching Laboratory building, and this remains the University's top capital priority. Additionally, in its 6 year capital funding plan the Board of Regents has included in its Major Capital Funding List our proposal for a 330,000 square foot Humanities Building and another classroom building.
For additional information concerning Capital Assets, see Notes 1, 6, 8, 9 and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
Georgia State University had Long-Term Debt and Liabilities of $251,309,804 of which $12,968,343 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, Georgia State University has included the financial statements and notes for all required component units for FY2008. The Georgia State University Foundation, Inc. had endowment and other investments of $166.4 million, bonds payable of $248.7 million and long term capital leases of $9.0 million as of June 30, 2008. The Georgia State University Research Foundation, Inc. had endowment and other investments of $4.1 million and bonds payable of $91.1 million. Details are available in Note 1, Summary of Significant Accounting Policies and Note 17, Component Units.
Economic Outlook
The University anticipates the current fiscal year will be challenging with budget cuts on the horizon at the state level, but will continue to maintain a close watch over resources providing the University with the flexibility to react to internal and external situations that may develop. The University's overall financial position is strong.
Carl V. Patton, President Georgia State University
Georgia State University Annual Financial Report FY 2008 6

Statement of Net Assets

GEORGIA STATEUNIVERSITY STATEMENT OF NET ASSETS
June 30, 2008

Component Unit

Georgia State Un i ve rs i ty

Georgia State Un i ve rs i ty
Foundation, Inc.

ASSETS Current Assets Cash and Cash Equivalents Accounts Receivable, net (note 3) Receivables - Federal Financial Assistance Receivables - Other Due From Component Units Net Investment in Capital Leases Pledges Receivable Contributions Receivable Due From Primary Government Inventories (note 4) Prepaid items T otal Current Assets

$146,838,067 16,434,478 20,384,968 5,569,143
137,560 13,942,506 203,306,722

$707,639
228,251 8,667
2,912,018 4,692,227
87,050
94,861 8,730,713

Noncurrent Assets Noncurrent Cash Short-term Investments Investments (including Real Estate) Notes Receivable, net Net Investment in Capital Leases Pledges Receivable Capital Assets, net (note 6) Other Assets T otal Noncurrent Assets TO TAL ASSETS

565,360 47,785
5,989,324
499,490,342 506,092,811 709,399,533

338,026 29,826,142 136,542,949
164,731,097 2,134,797
60,769,373 7,264,119
401,606,503 410,337,216

Component Unit Georgia State Un i ve rs i ty Re s e arch
Foundation, Inc.
$96,241,998
4,362,101
617,605 5,933,858 107,155,562
1,928,092 4,099,891
9,072,492 1,189,033 16,289,508 123,445,070

Georgia State University Annual Financial Report FY 2008 7

Statement of Net Assets, Continued

GEORGIA STATEUNIVERSITY STATEMENT OF NET ASSETS
June 30, 2008

Component Unit

Georgia State Un i ve rs i ty

Georgia State Un i ve rs i ty
Foundation, Inc.

LIABILITIES Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deposit s Deferred Revenue (note 7) Other Liabilities Deposits Held for Other Organizations Due to Primary Government Lease Purchase Obligations (current portion) Compensated Absences (current portion) Revenue/Mortgage Bonds Payable (current) Liabilities under Split-Interest Agreements (current) Due to Component Units T otal Current Liabilities Noncurrent Liabilities Lease Purchase Obligations (noncurrent) Deferred Revenue (noncurrent) Compensated Absences (noncurrent) Revenue/Mortgage Bonds Payable (noncurrent) Liabilities under Split-Interest Agreements (noncurrent) T otal Noncurrent Liabilities TO TAL LIABILITIES
NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Capital Projects Unrest rict ed TO TAL NET ASSETS

8,409,720 875,595 349,821 5,461
35,744,027 212,368
2,155,523
6,616,468 6,351,875
617,605 61,338,463
232,843,044
5,498,417
238,341,461 299,679,924
260,030,830
45,781 9,826,994
335,535 139,480,469 $409,719,609

4,669,063
4,533,379 735,724 945,374 759,993
11,515,000 37,769
23,196,302
8,240,033 957,767 37,738
237,197,747 214,591
246,647,876 269,844,178
6,293,093
74,178,687 45,185,029
14,836,229 $140,493,038

Component Unit Georgia State Un i ve rs i ty Re s e arch
Foundation, Inc.
2,696,580
5,933,858
4,623,769
8,667 13,262,874
91,090,710 91,090,710 104,353,584
8,585,212 2,000,000
890,010 7,616,264 $19,091,486

Georgia State University Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets
GEORGIA STATEUNIVERSITY STATEMENT of REVENUES, EXPENSES, andCHANGES in NET ASSETS
for the Year Ended June 30, 2008

REVENUES
Operating Revenues Student Tuition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Intercollegiate Athletics Other Organizations Other Operating Revenues Total Operating Revenues
EXPENSES Operating Expenses
Salaries: Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to other Component Units Payments to or on behalf of Georgia State University
Total Operating Expenses Operating Income (loss)

Georgia State University

Component Unit
Georgia State University
Foundation, Inc.

Component Unit
Georgia State University Research
Foundation, Inc.

$142,693,539 (15,019,635)
62,055,403 7,137,024 11,342,120 10,372,728 40,051
17,840,885 1,137,476
211,677 6,103,199 8,560,153 4,924,300 3,116,255 260,515,175

$0 8,123,113 3,703,391
18,919,692
30,746,196

92,511,850 151,941,095
55,064,828 591,308
4,816,672 19,472,085 10,530,729 111,656,658 23,561,326
470,146,551 (209,631,376)

2,530,602 576,878
1,385,903 550,483
2,405,733 69,361
9,567,410 2,461,587
509,754 20,057,711 10,688,485

$0
36,183,144 2,710,164 9,820,216
48,713,524
1,865 1,256,720
171,763 48,315 46,847,040 48,325,703 387,821

Georgia State University Annual Financial Report FY 2008 9

Statement of Revenues, Expenses and Changes in Net Assets, Continued
GEORGIA STATEUNIVERSITY STATEMENT of REVENUES, EXPENSES, andCHANGES in NET ASSETS
for the Year Ended June 30, 2008

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Ot her Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Ot her Special Item - Capital Asset T ransfer Special Item - Bond Defeasance Additions to permanent endowments T otal Other Revenues and Special Items Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

Georgia State University

Component Unit
Georgia State University
Foundation, Inc.

Component Unit
Georgia State University Research
Foundation, Inc.

228,180,842
8,225,126 12,373,240
5,801,670 (10,778,400)
93,478 243,895,956
34,264,580
10,033,611 1,072,192 (7,916,649) (24,710,494)
(21,521,340) 12,743,240
400,371,317 (3,394,948)
396,976,369 $409,719,609

(6,359,645) (16,734,039)
(23,093,684) (12,405,199)
1,532,421 1,532,421 (10,872,778)
151,487,789 (121,973)
151,365,816 $140,493,038

(29,628) 489,998 460,370 848,191
0 848,191 18,243,295
0 18,243,295 $19,091,486

Georgia State University Annual Financial Report FY 2008 10

Statement of Cash Flows

GEORGIA S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008

C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P roceeds from Sale of Capit al Asset s P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$130,457,199 77,335,704 10,372,729
(169,267,064) (243,316,001)
(20,250,882) (5,863,738) 5,435,012
17,499,674 931,213 150,802
6,208,831 8,264,931 5,006,335 (3,513,106) (180,548,361)
228,180,842 (1,061,580) 20,598,366
247,717,628
10,033,611 9,488,360
(62,991,447) (6,081,321)
(10,778,400) (60,329,197)
5,805,915 5,805,915 12,645,985 134,757,442 $147,403,427

Georgia State University Annual Financial Report FY 2008 11

Statement of Cash Flows, Continued
GEORGIA S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust m ent s t o Reconcile Net Incom e (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed asset s acquired by incurring capit al lease obligat ions Change in fair value of invest m ent s recognized as a com ponent of int erest incom e Special It em - Capit al Asset T ransfer Special It em - Bond Defeasance Gift of capit al asset s reducing proceeds of capit al grant s and gift s

June 30, 2008
($209,631,376)
23,561,326 (5,509,906)
9,158 (428,726) (1,013,384) 4,998,976 5,725,932 855,770 883,869 ($180,548,361)
$161,885,192 ($4,245)
($7,916,649) ($24,710,494)
($1,072,192)

Georgia State University Annual Financial Report FY 2008 12

GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Georgia State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Georgia State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Georgia State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Georgia State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Georgia State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Georgia State University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, Georgia State University is reporting the activity for the Georgia State University Foundation, Inc. and the Georgia State University Research Foundation, Inc.
See Note 17, Component Units, for more information.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and
Georgia State University Annual Financial Report FY 2008 13

Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Georgia State University reports summer school revenue and expenses in the subsequent fiscal year.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Total Return Fund is included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Georgia State University Annual Financial Report FY 2008 14

Inventories Consumable supplies and Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Georgia State University.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall and deposits from tenants for retail rental space.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net
Georgia State University Annual Financial Report FY 2008 15

Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Georgia State University had accrued liability for compensated absences in the amount of $10,966,424 as of July 1, 2007. For FY2008, $8,652,914 was earned in compensated absences and employees were paid $7,769,046, for a net increase of $883,868. The ending balance as of June 30, 2008 in accrued liability for compensated absences was $11,850,292.

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Assets The University's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.

Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans T ot al Rest rict ed Expendable

June 30, 2008
$3,234,054 6,468,880 124,060
$9,826,994

Georgia State University Annual Financial Report FY 2008 16

Restricted net assets expendable Capital Projects: This represents resources for which the University is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$20,911,316 26,388,543 117,753 92,062,857
$139,480,469

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Georgia State University, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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

Georgia State University Annual Financial Report FY 2008 17

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 University, 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 University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Restatement of Prior Year Net Assets In fiscal 2008, the University determined that the University Lofts rental agreement with the Georgia State University Foundation met the criteria for capital lease treatment. This agreement commenced in fiscal 2005 and was accounted for as an operating lease through fiscal 2007. The lease treatment correction resulted in an increase to Capital Assets, net of $36,353,918, an increase to Lease Purchase Obligations liability of $39,748,866, resulting in a net decrease to Net Assets of $3,394,948 as of July 1, 2007.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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
Georgia State University Annual Financial Report FY 2008 18

States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.

The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

At June 30, 2008, the carrying value of deposits was $11,974,859 and the bank balance was $17,751,354. Of the University's deposits, $17,742,575 were uninsured. Of these uninsured deposits, $17,742,575 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name.

B. Investments At June 30, 2008, the carrying value of the University's investments was $135,435,465, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents and Office of Treasury and Fiscal Services investment pools as follows:

Investment Pools Board of Regents T otal Return Fund Sub T otal

$47,785 47,785

Office of T reasury and Fiscal Services Georgia Fund 1
Sub T otal

135,387,680 135,387,680

T otal Investment Pools

$135,435,465

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.
The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of

Georgia State University Annual Financial Report FY 2008 19

1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1 Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 days. Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University's policy for managing interest rate risk is to comply with University policy and applicable Federal and State laws. The University's policy for managing interest rate risk for Endowment Funds is that the average maturity of the fixed income portfolio shall not exceed ten years and for Operating Funds the average maturity of the fixed income portfolio shall not exceed two years. The Weighted Average Maturity of the Total Return Fund is 7.84 years. Of the University's total investment of $47,785 in the Total Return Fund, $15,100 is invested in debt securities. Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University's policy for managing credit quality risk is to comply with University policy and applicable Federal and State laws. The University's policy for managing credit quality risk is that all debt issues must be investment grade with ratings of at least BAA by Moody's and Standard and Poor's at the time of purchase as defined by the University System of Georgia. The Georgia Fund 1 investment is rated AAA by Standard and Poor's. As previously stated, the BOR Total Return Fund Investment is not rated.
Georgia State University Annual Financial Report FY 2008 20

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Georgia St at e Financing and Invest m ent Com m ission Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$4,637,667 13,030,897 16,434,478
1,208,351 5,569,143 5,232,325 46,112,861 3,724,272
$42,388,589

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

P hysical P lant Other
T otal

$110,778 26,782
$137,560

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was approximately $295,471.

Georgia State University Annual Financial Report FY 2008 21

Note 6. Capital Assets

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

Capital Assets, Not Being Depreciated: Land Capitalized Collections Construction Work-in-Progress
Total Capital Assets Not Being Depreciated

Restated Beginning Balances 7/1/2007

Special Item Transfer

$42,411,854

$0

176,083

35,927,280

78,515,217

0

Additions
$0 54,583 16,419,893 16,474,476

Reductions
$0
21,417,034 21,417,034

Capital Assets, Being Depreciated: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Total Assets Being Depreciated

9,259,657 371,382,181
1,463,019 64,729,648 1,557,733 96,775,111 545,167,349

(72,150,026) (466,803)
(72,616,829)

1,924,239 198,527,564
934,492 10,794,638
602,389 8,090,043 220,873,365

310,000 6,386
6,256,277 450,520 133,855
7,157,038

Less: Accumulated Depreciation Infrastructure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections Total Accumulated Depreciation

1,365,482 139,644,580
894,344 44,826,011
391,087 71,379,245 258,500,749

(18,964,108) (280,578)
(19,244,686)

428,668 14,732,981
81,794 3,424,023
288,184 4,605,676 23,561,326

2,154,465 179,904 133,856
2,468,225

Total Capital Assets, Being Depreciated, Net

286,666,600

(53,372,143)

197,312,039

4,688,813

Capital Assets, net

$365,181,817

($53,372,143) $213,786,515

$26,105,847

Ending Balance 6/30/2008
$42,411,854 230,666
30,930,139 73,572,659
11,183,896 497,449,719
1,924,322 69,268,009 1,709,602 104,731,299 686,266,847
1,794,150 135,413,453
695,560 46,095,569
499,367 75,851,065 260,349,164
425,917,683
$499,490,342

Georgia State University Annual Financial Report FY 2008 22

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Research Ot her Deferred Revenue
T ot als

June 30, 2008
$23,212,607 6,621,072 5,910,348
$35,744,027

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations
Other Liabilities Compensated Absences Total
Total Long Term Obligations

Restated Beginning
Balance July 1, 2007
$83,655,641

Additions $161,885,192

Reductions

Ending Balance June 30, 2008

$6,081,321 $239,459,512

Current Portion
$6,616,468

10,966,424 10,966,424
$94,622,065

8,652,914 8,652,914
$170,538,106

7,769,046 7,769,046
$13,850,367

11,850,292 11,850,292
$251,309,804

6,351,875 6,351,875
$12,968,343

Note 9. Significant Commitments
The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $14,198,292 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.
In May 2007, Georgia State University entered into a lease agreement with Panther Place, LLC, for a complex of buildings collectively known as "25 Park Place". The lease agreement commences the day after the lease agreement between Panther Place, LLC, and SunTrust Bank has been terminated but no later than May 31, 2012. After the termination of the SunTrust lease and the University's lease has commenced, the University will have the exclusive right, privilege, and option of renewing or extending the agreement at the expiration of the initial one year term on a year-to-year for consecutive one-year periods until June 30, 2037. This activity is not reflected in the accompanying basic financial statements.

Georgia State University Annual Financial Report FY 2008 23

Note 10. Lease Obligations

Georgia State University is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.
Capital Leases

Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2008 and 2039. Expenditures for fiscal year 2008 were $16.9 million of which $10.8 million represented interest. Total principal paid on capital leases was $6.1 million for the fiscal year ended June 30, 2008. Interest rates range up to 10.5 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Infrastructure Buildings Equipment Total Assets Held Under Capital Lease

$3,215,715 234,019,454
1,210,235 $238,445,404

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are not offered to Georgia State University at the expiration of the lease terms.
Georgia State University has four capital leases associated with buildings. In July 2001, Georgia State University entered into a capital lease valued at $34,650,000 with an effective interest rate of 6.985 percent with the Georgia State University Foundation (Foundation), whereby the University leases the Student Recreation Center for a twenty-year period that began July 2001 and expires June 2021. In March 2000, the University entered into a capital lease valued at $14,038,328 with an effective interest rate of 6.985 percent with the Foundation, whereby the University leases the Alpharetta Center for a twenty-year period that began March 2000 and expires February 2020. In January 2005, the University entered into a capital lease valued at $39,965,234 with an effective interest rate of 7.362 percent with the Foundation, whereby the University leases the Lofts for a twenty-seven year period that began January 2005 and expires August 2032. In August 2007, Georgia State University entered into a capital lease valued at $161,330,000 for a new dormitory complex with an effective interest rate of 5.50% with the Georgia State University Foundation. The University leases the University Commons for a 30 year period. The outstanding principal liability at June 30, 2008 on these capital building leases is $27,457,253, $10,389,287, $39,482,261, and $158,596,107 respectively. Each year the monthly payments for these leases will increase by the greater of 2 percent or the CPI.
Georgia State University also has various capital leases for equipment and software with an outstanding balance at June 30, 2008 in the amount of $3,534,604.

Georgia State University Annual Financial Report FY 2008 24

Operating Leases
Georgia State University's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2008 through 2015. Certain operating leases provide for renewal options for periods from one to four years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small business equipment.
In addition to building leases renewed from FY07, during FY08, Georgia State University entered into a building lease with Park Plaza Property, Inc., for two suites in the Park Plaza Property in Decatur. This lease has one-year renewable options through June 30, 2009 only.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 2034 t hrough 2038 2039 t hrough 2043 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31-35

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$18,765,385 20,009,369 20,270,513 20,092,592 20,209,008
106,950,642 97,538,108 79,351,453 77,386,738 63,056,518 12,785,396
536,415,722
296,956,210 $239,459,512

$7,015,644 7,103,309 6,459,949 5,367,832 5,031,308 504,000
$31,482,042

Georgia State University's FY2008 expense for rental of real property and equipment under operating leases was $6,627,182.

Georgia State University Annual Financial Report FY 2008 25

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Georgia State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Georgia State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Georgia State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$10,535,476 $9,727,493 $9,434,148

Employees' Retirement System of Georgia

Plan Description Georgia State University participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Georgia State University Annual Financial Report FY 2008 26

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30, 2008, for employees covered by ERS was $885,394. The University's total payroll for all employees was $244,452,945.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$92,322 $100,794 $76,414

Georgia State University Annual Financial Report FY 2008 27

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Georgia State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Georgia State University and the covered employees made the required contributions of $7,211,877 (8.13% or 8.15%) and $4,431,364 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Georgia State University 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.
Georgia State University Annual Financial Report FY 2008 28

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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $607,127 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Georgia State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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'
Georgia State University Annual Financial Report FY 2008 29

indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Georgia State University, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Georgia State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Georgia State University (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
Georgia State University Annual Financial Report FY 2008 30

The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 897 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Georgia State University recognized as incurred $4,496,592 of expenditures, which was net of $1,822,429 of participant contributions.
Georgia State University Annual Financial Report FY 2008 31

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Instruction
$70,584,827 35,796,556 25,866,407
4,636 1,824,679 1,363,942
820,237 15,086,583 7,266,658
$158,614,525

Research
$20,853,301 28,881,891 5,865,566
45 1,391,131 1,289,210
119,498 18,175,033 1,983,461
$78,559,136

Functional Classification FY2008

Public Service

Academic Support

$763,301 7,325,600 1,733,055
352,935 310,598 82,691 15,947,309 47,176

$290,073 28,579,313 7,027,117
342 685,238
400 858,513 14,321,008 5,485,470

$26,562,665

$57,247,474

Student Services

Institutional Support

$16,548 14,817,426 3,562,345
3,265 275,659 100,711 254,140 6,077,863 947,163

$2,800 22,320,253 7,357,535
581,887 215,991
4,507 263,738 7,255,045 675,042

$26,055,120

$38,676,798

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

$0 10,161,771 2,842,026
22,212
6,545,042 13,113,059 2,120,552

$0
16,402,717 121,992

$1,000 4,058,285
810,777 1,133 48,827
1,586,870 21,558,766 5,035,804

$34,804,662

$16,524,709

$33,101,462

Total Expenses
$92,511,850 151,941,095 55,064,828
591,308 4,816,672 19,472,085 10,530,729 111,656,658 23,561,326
$470,146,551

Georgia State University Annual Financial Report FY 2008 32

Note 16. Special Items
Georgia State University transferred its University Village Student Housing Complex to Georgia Institute of Technology, a University System of Georgia institution, effective July 1, 2007. The complex contained approximately 2,000 student housing beds, 790 parking spaces, and site amenities.
Georgia Institute of Technology provided consideration for the complex totaling $45,455,494. The net book value of the capital asset transfer to Georgia Institute of Technology at July 1, 2007 was $53,372,143. The difference of $7,916,649 is reported as a Special Item Capital Asset Transfer on the Statements of Revenues, Expenses and Changes in Net Assets and Cash Flows. See Note 6 for additional information.
As a result of the capital asset transfer, Georgia State University was required to defease the associated bonds that were issued by GSFIC to construct the housing complex. To accomplish this requirement, a portion of the consideration reflected above was paid directly to GSFIC at the time of the asset transfer in the amount of $24,710,494. The bond defeasance is reported as a Special Item Bond Defeasance on the Statements of Revenues, Expenses and Changes in Net Assets and Cash Flows.
Note 17. Component Units
Georgia State University Foundation, Inc. Georgia State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Georgia State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The 37 member board of the Foundation, of which 6 members are exofficio, is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources that the Foundation holds and invests are restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $509,754 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Foundation's Office at One Park Place South, Suite 533, Atlanta, GA 30303 or from the Foundation's website at www.gsu.edu.
Georgia State University Annual Financial Report FY 2008 33

Prior Period Adjustment:

During the year ended June 30, 2008 the Foundation determined that it had incorrectly classified two properties leased to the University as property and equipment instead of as direct financing leases. The 2007 consolidated financial statements have therefore been restated to properly present these assets as Net Investments in Capital Leases. The effect of the restatement was a decrease in unrestricted net assets as of June 30, 2007 of $121,973, a decrease in property and equipment of $35,697,615, and an increase in net investment in capital leases of $35,575,642.

Investments for Component Units:

Georgia State University Foundation, Inc. holds endowment and other investments in the amount of $166.4 million. The Foundation determines the spendable amounts for endowment funds using a total return formula and makes no spending allocations to restricted funds from the operating portfolio. Income from the operating portfolio is used to fund the Foundation's administrative activities pursuant to an unrestricted spending policy. The Trustees of the Foundation adopted an endowment spending policy that provides for the allocation of endowment funds at the rate of 70% of the previous year's allocation plus 30% of the current year's market values at a spending rate of 4.5% of the market value of the endowment funds. A 1% management fee is used to fund the Foundation's administrative activities. The balance of the return is applied to the value of the endowment funds.

Investments are comprised of the following amounts at June 30, 2008:

Money Market Accounts Equity Securities Mutual Funds Real Estate
Total Investments

Cost
$53,537,924 64,349,345 37,191,485 3,744,498
$158,823,252

Fair Value
$53,537,924 70,825,752 36,644,994 5,360,421
$166,369,091

Capital Assets for Component Units:
Georgia State University Foundation, Inc. holds the following Capital Assets as of June 30, 2008:

Georgia State University Annual Financial Report FY 2008 34

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

June 30, 2008
$7,227,900 7,227,900
71,321,399 981,351
72,302,750 18,761,277 53,541,473 $60,769,373

Long-term Liabilities for Component Units:

Changes in long-term liabilities for Georgia State University Foundation, Inc. for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within One Year

Compensated Absences Liabilities under split interest agreement Capital Lease Obligations Revenue/Mortgage Bonds Payable Other Long Term Liabilities

$33,520 260,992 9,722,456 250,674,710 5,812,394

$4,218

$0 8,632 722,430 1,961,963 5,812,394

$37,738 252,360 9,000,026 248,712,747
0

$0 37,769 759,993 11,515,000

Total Long Term Liabilities

$266,504,072

$4,218

$8,505,419

$258,002,871

$12,312,762

Capital Lease Obligations
Alpharetta Campus Facilities Capital Lease On September 23, 1998, $10,600,000 of revenue bonds were issued by the Development Authority of Alpharetta, Georgia, (the "Development Authority") for the purpose of financing the costs of acquiring, constructing and installing educational facilities which are located in the City of Alpharetta and are to be leased by the Foundation. The bonds are special limited obligation bonds payable by the Development Authority from lease payments made to it by the Foundation. The lease obligates the Foundation, on a limited recourse basis, to make lease payments sufficient to pay 83.5% of principal and interest on the bonds with the balance to be paid by the Development Authority. The Foundation in turn subleased the facilities to the Board of Regents of the University System of Georgia (the "Board of Regents") for the use of the University. The liability of the Foundation is limited to the interest of the Foundation in the project and the rents, profits, issues, products and proceeds thereof. The City of Alpharetta is obligated to make 100% of the principal and interest payments on the bonds to the extent rental
Georgia State University Annual Financial Report FY 2008 35

payments derived from the project are insufficient for such purposes. The Foundation has entered into a lease with the University on this property. As the lease is classified as a capital lease by the University, the Foundation has recorded the asset as a net investment in capital leases on the Statement of Net Assets.

Rialto Center Facilities Capital Lease During 1994, the Foundation purchased and has since renovated facilities currently occupied by the University's School of Music. The project included the purchase and renovation of two existing office buildings. The Foundation also entered into a long term land lease for the renovation and use of an existing performing arts theater, the Rialto Theater. The project was financed through contributions to the Foundation and through bonds issued by the Downtown Development Authority of the City of Atlanta (the "Authority"), the proceeds of which were loaned to The University Financing Foundation ("TUFF"). The Foundation has entered into long term lease commitments with TUFF to provide for the debt service payments on the bonds and other bond financing related expenses. The Foundation then leases the facilities to the University through a series of one year renewable lease agreements. At the end of the lease period or the retirement of the bonds, whichever occurs first, the title to the two office buildings will pass to the Foundation. Therefore, the Foundation has classified this lease as a capital lease and has recorded it as an asset under property and equipment in the consolidated statements of financial position. During 2004, the 1994 bonds issued by the Authority were refunded to obtain savings in debt service and to obtain funds for improvements to the Rialto Theater. Accordingly, the Authority entered into a new loan agreement with TUFF and a new agreement with the Foundation as the guarantor of the bonds. The guarantee is expressly limited to the unrestricted income and unrestricted assets of the Foundation. The terms of the long-term lease commitment between TUFF and the Foundation were modified to reflect the new interest rate of the bonds, the additional proceeds available for capital improvements, the additional bond financing related expenses and the extension of the term of the lease through November 1, 2015.

Annual debt service requirements to maturity for capital lease obligations are as follows:

Year ending June 30:

2009

1

2010

2

2011

3

2012

4

2013

5

2014 through 2018

6-10

2019 through 2023

11-15

Total minimum lease payments

Less: Interest

Principal Outstanding

Capital Leases
$1,214,618 1,212,585 1,209,232 1,208,651 1,210,863 4,700,743 691,415 11,448,107 2,448,081 $9,000,026

Interest expense related to the capital lease obligation for Alpharetta for the year ending June 30, 2008 totaled $281,064.

Interest expense related to the TUFF lease obligation for Rialto for the year ending June 30, 2008 totaled $212,029.

Georgia State University Annual Financial Report FY 2008 36

Rialto Ground Lease Pursuant to the lease agreement between the Foundation and TUFF, the lease payments include the cost of an underlying ground lease on the Rialto Theater property. At the end of the lease term, TUFF will transfer all interests in the ground lease to the Foundation. The Foundation has the option to renew the ground lease with the owner through December 31, 2045, once the Authority bond obligations are satisfied.

Future minimum lease payments under the ground lease as of June 30, 2008 are as follows:

Ground Lease

Year ending June 30:

2009

1

$69,410

2010

2

69,410

2011

3

69,410

2012

4

69,410

2013

5

69,410

2014 through 2016

6-8

167,741

Total

$514,791

Revenue Bonds Payable

Student Recreation Center Bonds On October 15, 1998, $33,430,000 of revenue bonds were issued by the Atlanta Development Authority ("ADA") with the proceeds loaned to the Foundation for the purpose of financing the acquisition, construction, improvement and equipping of a student recreation center for the benefit of the University. The bonds are special limited obligation bonds of the ADA, payable from funds received from the Foundation pursuant to a promissory note between the ADA and the Foundation. The Foundation leases the facilities to the Board of Regents for the use of the University. The Foundation's liability on the note is limited to its interest in the project and the rents and revenues from the project, including amounts received pursuant to the rental agreement with the Board of Regents. Payment of principal and interest on the bonds are insured by AMBAC Assurance Corporation. Principal payments are to be made annually until October 1, 2018. Interest is paid semi-annually through 2018 at a rate specified in the revenue bonds ranging from 3.60% to 4.60%. Interest expense for the year ended June 30, 2008 totaled $1,085,059.

Piedmont Ellis Bonds On September 8, 2005, a total of $161,330,000 revenue bonds (tax-exempt $158,410,000 and taxable $2,920,000) were issued by the ADA on behalf of the Foundation with the proceeds used for the purpose of financing the acquisition, construction and equipping of certain land, buildings and personal property to be used as a student housing project. The project has 1,994 beds, including community activity facilities, site amenities and parking for 786 vehicles. There was a 22 month construction schedule for the project which was completed and opened for occupancy for the fall semester of 2007. The real property upon which the project is located is owned by the Board of Regents and leased to the Foundation pursuant to a Ground Lease. After construction was completed, the Foundation leased the facility to the Board of Regents on an annually renewable basis for a term of 33 years for the use and benefit of the University. Moody's Investors Services Inc. has assigned the series 2005 Bonds the rating of "Aaa" based

Georgia State University Annual Financial Report FY 2008 37

upon the issuance of the policy by the Bond Insurer. Principal payments are to be made annually starting September 1, 2009 and ending September 1, 2036. Interest is paid semi-annually through 2036 at a rate specified in the revenue bonds ranging from 3.875% to 5.0%. Interest expense for the year ended June 30, 2008 totaled $7,762,468.

Panther Place Bonds On May 31, 2007, $58,385,000 of revenue bonds (tax-exempt $49,175,000 and taxable $9,210,000) were issued by the ADA on behalf of the Foundation with the proceeds used to finance the costs of acquiring land, buildings, improvements, machinery, fixtures, furnishings, equipment and other real and personal property to be used for office space. SunTrust Banks, Inc. as the seller and the current tenant may remain in the building for up to five years. Upon expiration of the lease or early termination by SunTrust Banks, Inc. the Foundation will lease the property to the Board of Regents on an annually renewable basis. The Foundation began making semi-annual interest payments on January 1, 2008 at a rate of 4.289% on tax-exempt bonds and 5.409% on taxable bonds. Interest expense for the year ended June 30, 2008 totaled $3,186,562.

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal
$11,515,000 13,045,000 13,375,000 13,805,000 22,865,000 28,585,000 27,515,000 31,680,000 40,440,000 40,250,000
243,075,000 5,637,747
$248,712,747

Bonds Payable Interest
$11,385,338 11,253,067 11,092,477 10,878,877 10,252,053 47,235,109 39,310,737 30,526,309 19,285,184 5,331,090
196,550,241
$196,550,241

Total
$22,900,338 24,298,067 24,467,477 24,683,877 33,117,053 75,820,109 66,825,737 62,206,309 59,725,184 45,581,090
439,625,241 5,637,747
$445,262,988

Interest Rate Swap Agreement
On May 29, 2007, the Foundation entered into an interest rate swap agreement related to the Panther Place revenue bond issue utilized to purchase the SunTrust building. The Foundation has accounted for the interest rate swap agreement in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. By using a derivative financial instrument to hedge exposure to a change in interest rates, the financing is exposed to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the additional funds, which creates repayment risk for the financing. The financing policy also requires that all derivative contracts be governed by an International Swaps and Derivatives Association Master Agreement. Market risk is the adverse
Georgia State University Annual Financial Report FY 2008 38

effect on the value of a financial instrument that results from a change in interest rates. The bond financing was constructed with an interest rate swap contract to convert the variable rate bonds into a synthetic fixed rate debt at the time the debt was offered, with the intent to reduce borrowing costs. Interest rate swaps used with the issuance of tax-exempt debt must be recorded as assets or liabilities in the statements of financial position, depending on whether the swap is in a gain or a loss position, at fair value. Unrealized gains or losses for a given period must be reflected in the earnings for that period. In volatile environments, this can result in large differences from one period to the next.
The swap provider, Ambac Financial Services, calculated the fair value in accordance with generally accepted accounting principles in the United States of America using a proprietary valuation model, which they developed and had tested by external auditors. The model calculates future cash flows by projecting forward rates, and then discounts those cash flows at their present value. All rates used in valuation are mid-market levels (mid-way between bid and ask) or are model based mid-market levels when mid-market levels are not available. The fair value provided takes certain factors into consideration, including the liquidity of the swap market and the uniqueness of the deal structure. The fair value of the interest rate swap agreement is recognized in the accompanying Statement of Net Assets at $4,533,379 and is reported as "Other Liabilities" at June 30, 2008 and as "Interest Expense" in the Statement of Revenues, Expenses and Changes in Net Assets for the year ended June 30, 2008.
Georgia State University Research Foundation, Inc. Georgia State University Research Foundation, Inc. (Research Foundation) is a legally separate, tax-exempt component unit of Georgia State University (University) and was established to contribute to the scientific, literary, educational, and charitable functions of the University in securing gifts, contributions, and grants from individuals, private organizations, and public agencies, and in obtaining contracts with such individuals or entities for the performance of sponsored research, development, or other programs by the various colleges, schools, departments or other units of the University. Most of the research grants awarded to the Research Foundation are subcontracted to the University, which is responsible for the fiscal administration of the grants.
The Research Foundation's results for fiscal 2008 include Science Park, LLC (the "Company"), a component unit of the Research Foundation, which was organized as a not-for-profit limited liability company on August 9, 2006 with its sole member the Research Foundation. The Company was created to develop a 248,806 square foot science research facility (the "Project"). Upon completion of the Project, the Company will lease the facility to the Board of Regents of the University System of Georgia for the use and benefit of Georgia State University. No financial activity occurred prior to July 1, 2007.
The ten member board of the Research Foundation is self-perpetuating and consists of faculty and administrators of the University. Because the resources held by the Research Foundation can only be used by or for the benefit of the University, the Research Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
Georgia State University Annual Financial Report FY 2008 39

The Research Foundation is considered a special-purpose government entity engaged only in business-type activities and is required to follow all applicable GASB pronouncements. The Research Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Research Foundation paid to the University $45,828,253 in grant revenue and $1,018,787 for support of research activities. Complete financial statements for the Research Foundation can be obtained from the office of the Georgia State University Research Foundation, Inc., Alumni Hall, 30 Courtland Street, Suite 219, Atlanta, GA 30303.
Deposits and Investments for Component Units:
Deposits:
The custodial credit risk for deposits is the risk that in the event of a bank failure, the Research Foundation's deposits may not be recovered. 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, notes, certificates of indebtedness, or other direct obligations of the United
States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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, 2008, the Research Foundation's carrying amount of deposits was $7,566,660, and the bank balance was $7,952,968. Of the bank balance, $100,000 was covered by FDIC insurance at June 30, 2008, and $5,920,793 was collateralized by the State of Georgia pledging pool which thereby guarantees collateralization of any uninsured bank deposit balances. The remaining uncollateralized balance of $1,932,175 consists of cash equivalents held by investment custodians.
Georgia State University Annual Financial Report FY 2008 40

Investments:

The Research Foundation's investments at June 30, 2008 are presented below. All investments are presented by investment type.

Fair Value

Investment Maturity 1-5 Years

Investment type Debt Securities
Mutual Bond Fund

$907,151 $907,151

$907,151 $907,151

Other Investments Bond/Fixed Income Mutual Funds Equity Securities - Domestic Equity Securities - International Real Estate Investment Fund
Investment Pools Office of Treasury and Fiscal Services Georgia Fund 1

535,162 1,495,167
934,011 228,400
90,603,430

$94,703,321

The above investments are included in the Statement of Net Assets as follows:

Cash and Cash Equivalents Investments unrestricted Investments restricted expendable Total investments

$90,603,430 3,484,293 615,598
$94,703,321

All investments with the exception of equity securities of $28,665 and investment pools of $90,603,430 at June 30, 2008, are held by the Georgia State University Foundation on behalf of the Research Foundation and are held by outside investment managers.

Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The Research Foundation's policy for managing interest rate risk is divided between short-term and long-term investments. Short-term investments will have a maximum maturity of eighteen months to five years depending on the type of investment. Longterm investments are managed using a planning timeline of five years or more and overall risk measurements rather than specific maturity limits.

Georgia State University Annual Financial Report FY 2008 41

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Research Foundation's investment policies are consistent with the investment policies of Georgia State University Foundation. The Research Foundation does not have a formal policy related to credit quality risk of investments.

The Research Foundation's investments as of June 30, 2008 are presented below. All investments are presented by investment type and fixed income securities are presented by credit quality ratings.

Related Debt Investments Mutual Bond Fund

Fair Value
$907,151 $907,151

AAA
$541,160 $541,160

AA
$35,712 $35,712

A

BBB

BB

$57,760 $57,760

$61,152 $61,152

$64,332 $64,332

B

Unrated

$146,670 $146,670

$365 $365

The Georgia Fund 1 investment is rated AAAm by Standard & Poor's.

Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the Research Foundation will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The Research Foundation does not have a formal policy for managing custodial credit risk for investments.

At June 30, 2008, $4,099,891 of the Research Foundation's applicable investments were uninsured and held by the Research Foundation's counterparty in the Research Foundation's name.

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an entity's investment in a single issuer. The Research Foundation's policy for managing concentration of credit risk is divided amongst investment types as follows for the year ended June 30, 2008:

Domestic equities

44%

Alternative investments 22%

Bonds

16%

Real estate

11%

International equities

7%

Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or a deposit. The Research Foundation's investments are not exposed to foreign currency risk as securities denominated in currencies other than the U.S. dollar are not permissible by the Research Foundation's investment policy.

Georgia State University Annual Financial Report FY 2008 42

Capital Assets for Component Units:

Georgia State University Research Foundation, Inc. had the following Capital Asset activity for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land (and other assets) Construction Work-in-Progress
Total Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Total Assets Being Depreciated
Less: Accumulated Depreciation Buildings Facilities and Other improvements Total Accumulated Depreciation

Beginning Balances 7/1/2007
$1,643,990
1,643,990
3,947,210 307,186
4,254,396
595,713 277,867 873,580

Additions
$0 1,592,461 1,592,461

Reductions $0 0

Ending Balance 6/30/2008
$1,643,990 1,592,461 3,236,451

2,626,988 2,626,988

6,574,198

307,186

0

6,881,384

170,386 1,377
171,763

766,099

279,244

0

1,045,343

Total Capital Assets, Being Depreciated, Net Capital Assets, net

3,380,816 $5,024,806

2,455,225 $4,047,686

0

5,836,041

$0

$9,072,492

Long-term Liabilities for Component Units:

Changes in long-term liabilities for Georgia State University Research Foundation, Inc. for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Revenue/M ortgage Bonds Payable

$0

$91,090,710

$0

$91,090,710

$0

Total Long Term Liabilities

$0

$91,090,710

$0

$91,090,710

$0

$90,205,000 Bond Issue -- The Series 2007 Bonds are being issued pursuant to a Trust Indenture and Security Agreement dated as of December 1, 2007 (the "Indenture"), between the Atlanta Development Authority (the "Authority") and Branch Banking and Trust Company, Wilson, North Carolina as trustee (the "Trustee"). The Authority will loan proceeds of the sale of the Series 2007 Bonds to the Company, pursuant to the terms and provisions of a Loan Agreement dated as of December 1, 2007 (the "Loan Agreement"), between the Authority and the Company. The Company's obligations under the Loan Agreement will be evidenced by a Promissory Note dated as of December 1, 2007 (the "Promissory Note").
Georgia State University Annual Financial Report FY 2008 43

The Company will use proceeds of the Series 2007 Bonds to (i) finance or refinance, in whole or in part, the cost of the acquisition, construction and equipping of approximately 248,806 square foot research facility (the "Project") to be located in a new Georgia State University Science Park on the campus of the University; (ii) fund a debt service reserve fund for the Series 2007 Bonds; (iii) fund capitalized interest for the Series 2007 Bonds; and (iv) pay costs of issuance of the Series 2007 Bonds.

Term bonds under the Loan Agreement bear interest payable semiannually on January 1 and July 1 at fixed rates ranging from 4.75% to 5.25% depending on the schedule of bond maturities. Serial bonds under the loan agreement bear interest payable semi-annually on January 1 and July at the rate of 4.50% until July 1, 2014 when the interest rates increases to 5.00%. Principal payments are due on July 1 beginning in 2011 and continuing until 2039.

The following is a summary as of June 30, 2008, of principal and interest payments due under all borrowings during each of the next five years ending June 30 and five-year increments thereafter:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038 2039
Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31

Principal
$0 0
1,470,000 1,535,000 1,605,000 9,270,000 11,830,000 15,075,000 19,210,000 24,540,000 5,670,000 90,205,000
885,710 $91,090,710

Bonds Payable Interest
$4,482,350 4,482,350 4,482,350 4,416,200 4,347,125 20,492,500
17,931,500 14,685,562 10,533,125 5,218,250
283,500 91,354,812
$91,354,812

Total
$4,482,350 4,482,350 5,952,350 5,951,200 5,952,125
29,762,500 29,761,500 29,760,562 29,743,125 29,758,250
5,953,500 181,559,812
885,710 $182,445,522

Georgia State University Annual Financial Report FY 2008 44

GORDON COLLEGE
Financial Report
For the Year Ended June 30, 2008

Gordon College Barnesville, Georgia

Dr. Lawrence Weill
President

George J. Turner
Vice President for Finance & Administration

GORDON COLLEGE ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ............................................................................ 1 Statement of Net Assets ...................................................................................................... 7 Statement of Revenues, Expenses and Changes in Net Assets........................................... 8 Statement of Cash Flows .................................................................................................. 10 Note 1. Summary of Significant Accounting Policies .................................................... 12 Note 2. Deposits and Investments................................................................................... 17 Note 3. Accounts Receivable.......................................................................................... 19 Note 4. Inventories.......................................................................................................... 19 Note 5. Notes/Loans Receivable..................................................................................... 19 Note 6. Capital Assets..................................................................................................... 20 Note 7. Deferred Revenue............................................................................................... 21 Note 8. Long-Term Liabilities ........................................................................................ 21 Note 9. Significant Commitments................................................................................... 21 Note 10. Lease Obligations............................................................................................. 21 Note 11. Retirement Plans .............................................................................................. 23 Note 12. Risk Management............................................................................................. 26 Note 13. Contingencies................................................................................................... 27 Note 14. Post-Employment Benefits Other Than Pension Benefits ............................... 27 Note 15. Natural Classifications with Functional Classifications .................................. 29 Note 16. Component Units ............................................................................................. 30

GORDON COLLEGE
Management's Discussion and Analysis

Introduction
Gordon College is one of the 35 institutions of higher education of the University System of Georgia. The College, located in Barnesville, Georgia, was founded in 1852 and has become known for its quality instructional programs. The College began as a military college and after several transformations joined the USG in 1972 as an associate level institution with a distinctive legacy of excellence in scholarship and service. Gordon College was considered a two-year residential college from 1972 until May 2006 when the Board of Regents approved a change in the College's mission to become a State College. With this change, Gordon College can now offer bachelor's degrees, the first of which is in Early Childhood Education which started in the Fall of 2007. The institution continues to grow as shown by the comparison numbers that follow.
Students Students Faculty (Headcount) (FTE)

FY2008

109

FY2007

107

FY2006

99

3,703 3,596 3,500

3,212 3,091 3,014

Overview of the Financial Statements and Financial Analysis
Gordon College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Gordon College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

Gordon College Annual Financial Report FY 2008 1

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$9,045,080 44,532,658
10,633 53,588,371

June 30, 2007
$7,715,224 43,408,200
10,633 51,134,057

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

2,923,066 15,316,717 18,239,783

2,448,774 15,690,172 18,138,946

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

28,911,181 13,053
6,424,354 $35,348,588

27,408,894 13,053
5,573,164 $32,995,111

The total assets of the institution increased by $2,454,314. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $1,124,458 in the category of Capital Assets, net. The balance of the increase is mainly in receivable categories.
The total liabilities for the year increased by $100,837. The combination of the increase in total assets of $2,454,314 and the increase in total liabilities of $100,837 yields an increase in total net assets of $2,353,477. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $1,502,287.

Gordon College Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$16,215,076 29,121,776 (12,906,700) 13,272,073
365,373 1,988,104 2,353,477 32,995,111
0 32,995,111 $35,348,588

$14,840,747 27,930,959 (13,090,212) 11,631,508
(1,458,704) 247,408
(1,211,296) 34,206,407
0 34,206,407 $32,995,111

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Gordon College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$4,467,327 4,790,028 54,473 6,817,913 85,335
16,215,076
13,079,450 374,041 366,658 216,347
14,036,496
1,988,104 1,988,104 $32,239,676

June 30, 2007
$4,152,176 4,102,686 66,733 6,345,808 173,344
14,840,747
11,526,460 748,260 395,237 (256,223)
12,413,734
247,408 247,408 $27,501,889

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$9,338,992 1,814,809 1,796,334 4,375,359 3,413,690 2,649,320 5,733,272
29,121,776
764,423 $29,886,199

June 30, 2007
$8,495,527 1,436,009 1,798,718 4,222,745 3,688,393 2,292,990 5,216,865 779,712
27,930,959
782,226 $28,713,185

Operating revenues increased by $1,374,329 in fiscal 2008. Although Tuition & Fees included an 8% increase, revenues decreased in Sales and Services and Other categories.
The Auxiliary revenue increase of $472,105 is a result of the changing environment of residential life on the College's campus.
Gordon College Annual Financial Report FY 2008 4

Nonoperating revenues increased by $1,622,762 for the year primarily due to an increase of $1,552,990 in State Appropriations.

The compensation and employee benefits category increased by $1,298,673 and affected the College in every category. The increase reflects the addition of faculty members, merit increases and an increased cost of health insurance for the employees of the institution.

Utilities increased by $55,005 during the past year. The increase was primarily associated with the increased utility costs that were experienced in fiscal year 2008 and affected the Plant Operations and Maintenance category.

Statement of Cash Flows

The final statement presented by Gordon College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivit ies Non-capit al Financing Activit ies Capital and Related Financing Act ivities Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($10,456,660) 13,519,168 (2,949,136) 366,658 480,030 6,411,422
$6,891,452

June 30, 2007
($11,168,580) 12,374,363 (1,058,372) 395,237 542,648 5,868,774
$6,411,422

Capital Assets

The College had two significant capital asset additions for facilities in fiscal year 2008. The Student Success Center addition will be completed for the 2008 Fall semester. Gordon College completed the Spencer Parking Lot during fiscal year 2008, adding much needed new parking spaces.

For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the notes to the financial statements.

Gordon College Annual Financial Report FY 2008 5

Long Term Debt and Liabilities Gordon College had Long-Term Debt and Liabilities of $16,092,099 of which $775,382 was reflected as current liability at June 30, 2008. For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements. Component Units In compliance with GASB Statement No. 39, Gordon College has included the financial statements and notes for all required component units for FY2008. Gordon College Foundation, Inc. had investments of $8.3 million as of December 31, 2007. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units. Economic Outlook The College is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The College's overall financial position is strong. Even with a relatively flat funded year, the College was able to generate a modest increase in Net Assets. The College anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the College's ability to react to unknown internal and external issues.
Dr. Lawrence Weill, President Gordon College
Gordon College Annual Financial Report FY 2008 6

Statement of Net Assets

GO R D O N C O L LEGE S T A TEM EN T O F N ET A S S ETS
June 30, 2008

G ordon C olle ge

A S S ETS C u rre n t Asse ts Cash an d Cash E quiv alen t s A cco un t s Receiv able, n et (n o t e 3 ) Receiv ables - Federal Fin an cial A ssist an ce Receiv ables - O t h er In v en t o ries (n o t e 4 ) P rep aid it em s T o t al Curren t A sset s
Non cu rre n t Asse ts N o n curren t Cash Sh o r t - t e rm I n v e st m e n t s In v est m en t s (in cludin g Real E st at e) N o t es Receiv able, n et Cap it al A sset s, n et (n o t e 6 ) O t h er A sset s T o t al N o n curren t A sset s TO TA L A S S ETS
L IA B IL ITIES C u rre n t Liabilitie s A cco un t s P ay able Sa la r ie s P a y a ble D ep o sit s D eferred Rev en ue (n o te 7 ) O t h er L iabilit ies D ep o sit s H eld fo r O t h er O rgan izat io n s L ease P urch ase O bligat io n s (curren t p o rt io n ) Co m p en sat ed A bsen ces (curren t p o rt io n ) Rev en ue/M o rt gage Bo n ds P ay able (curren t ) L ia bilit ie s un de r Sp lit - In t e r e st A gr e e m e n t s (c ur re n t ) N o t es an d L o an s P ay able (curren t p o rt io n ) T o t al Curren t L iabilit ies Non cu rre n t Liabilitie s L ease P urch ase O bligat io n s (n o n curren t ) Co m p en sat ed A bsen ces (n o n curren t ) Rev en ue/M o rt gage Bo n ds P ay able (n o n curren t ) L ia bilit ie s un de r Sp lit - In t e r e st A gr e e m e n t s (n o n c ur re n t ) N o t es an d L o an s P ay able (n o n curren t ) T o t al N o n curren t L iabilit ies TO TA L L IA B IL ITIES
N ET A S S ETS In v est ed in Cap it al A sset s, n et o f relat ed debt Rest rict ed fo r N o n ex p en dable E x p en dable U n rest rict ed TO TA L N ET A S S ETS

$ 6 ,8 9 1 ,4 5 2 2 6 9 ,7 2 7
1 ,2 6 6 ,1 2 4 3 0 5 ,0 9 2 3 1 2 ,6 8 5
9 ,0 4 5 ,0 8 0
1 0 ,6 3 3 4 4 ,5 3 2 ,6 5 8 4 4 ,5 4 3 ,2 9 1 5 3 ,5 8 8 ,3 7 1
6 4 5 ,3 4 1 1 3 4 ,6 2 2 2 0 6 ,2 5 0 6 4 1 ,7 3 2 1 4 6 ,8 0 2 3 7 2 ,9 3 7 3 9 9 ,5 0 6 3 7 5 ,8 7 6
2 ,9 2 3 ,0 6 6 1 5 ,2 2 1 ,9 7 1
9 4 ,7 4 6
1 5 ,3 1 6 ,7 1 7 1 8 ,2 3 9 ,7 8 3
2 8 ,9 1 1 ,1 8 1
1 3 ,0 5 3 6 ,4 2 4 ,3 5 4 $ 3 5 ,3 4 8 ,5 8 8

C om pon e n t Un it G ordon C olle ge Fo u n da ti o n , In c.
$ 2 4 2 ,8 0 5
2 4 2 ,8 0 5
1 3 ,8 1 6 ,1 8 3 5 ,5 0 5 ,3 9 4 2 ,7 5 3 ,6 0 9
2 0 ,6 2 0 ,1 9 1 1 ,2 1 3 ,9 2 2
4 3 ,9 0 9 ,2 9 9 4 4 ,1 5 2 ,1 0 4
3 1 9 ,3 5 5
4 1 5 ,0 0 0 7 ,9 8 7
1 9 3 ,6 4 2 9 3 5 ,9 8 4
3 3 ,8 1 5 ,1 9 0 4 1 ,6 8 8
1 ,8 5 3 ,3 0 0 3 5 ,7 1 0 ,1 7 8 3 6 ,6 4 6 ,1 6 2
(1 ,6 6 5 ,9 8 8 ) 1 ,9 7 1 ,5 9 8
2 0 4 ,3 9 8 6 ,9 9 5 ,9 3 4 $ 7 ,5 0 5 ,9 4 2

Gordon College Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
GORDON COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008
C om pone nt Unit

Gordon C olle ge

Gordon C olle ge Fou n dati on , In c.

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful accou Less: Scholarship Allowances Gift s and Cont ribut ions Grant s and Cont ract s Federal Other Sales and Services Rents and Royalt ies Auxiliary Ent erprises Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion Ot her Operat ing Expense P ayment s t o or on behalf of Gordon College
T ot al Operat ing Expenses Operat ing Income (loss)

$6,657,513 (2,190,186)
4,787,924 2,104
54,473 47,251
2,863,835 1,890,702 1,415,867
157,414 80,576
386,716 22,803 38,084
16,215,076
6,562,013 5,789,022 3,412,386
79,603 159,455 2,774,872 1,455,156 6,947,358 1,941,911
29,121,776 (12,906,700)

$0 117,371
1,068,468
1,185,839
5,995 47,257 374,499 58,263 37,409 523,423 662,416

Gordon College Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
GORDON COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008
C om pone nt Unit

Gordon C olle ge

Gordon C olle ge Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENSES) State Appropriations Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or los Capital Grants and Gifts St at e Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET AS SETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

13,079,450 374,041 366,658 (764,423) 216,347
13,272,073 365,373
1,988,104
1,988,104 2,353,477
32,995,111 0
32,995,111 $35,348,588

1,122,675 (733,346)
389,329 1,051,745
119,329 119,329 1,171,074
6,334,868 0
6,334,868 $7,505,942

Gordon College Annual Financial Report FY 2008 9

Statement of Cash Flows

GORDON COLLEGE S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008

C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$4,612,372 4,564,751 54,473
(11,894,646) (12,263,955)
(2,833,604)
3,085,268 1,833,795 1,419,260
154,649 79,841
396,415 22,485
312,236 (10,456,660)
13,079,450 65,677
374,041 13,519,168
1,043,140 (2,850,024)
(377,829) (764,423) (2,949,136)
366,658 366,658 480,030 6,411,422 $6,891,452

Gordon College Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
GORDON COLLEGE STATEMENT OF CASH FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Gordon College had no non-cas h trans actions during fis cal 2008.

June 30, 2008
($12,906,700)
1,941,911 166,276 (38,513) (32,622) 174,745 93,654 81,610 62,979
($10,456,660)

Gordon College Annual Financial Report FY 2008 11

GORDON COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Gordon College serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Gordon College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Gordon College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Gordon College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Gordon College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Gordon College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the College's report. For FY2008, Gordon College is reporting the activity for the Gordon College Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB
Gordon College Annual Financial Report FY 2008 12

Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The College accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Gordon College Annual Financial Report FY 2008 13

Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Gordon College.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a College residence hall.
Gordon College Annual Financial Report FY 2008 14

Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Gordon College had accrued liability for compensated absences in the amount of $407,644 as of 7-1-2007. For FY2008, $437,695 was earned in compensated absences and employees were paid $374,717, for a net increase of $62,978. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $470,622.

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Assets The College's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Federal Loans T ot al Rest rict ed Expendable

$13,053 $13,053

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet
Gordon College Annual Financial Report FY 2008 15

current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$2,963,394 3,097,744 363,216
$6,424,354

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Gordon 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 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

Gordon College Annual Financial Report FY 2008 16

either operating or nonoperating revenues in the College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $1,532,079 and the bank balance was $1,716,076. Of the College's deposits, $1,616,076 were uninsured. Of these uninsured deposits, $1,616,076 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the College's name.
Gordon College Annual Financial Report FY 2008 17

B. Investments

At June 30, 2008, the carrying value of the College's investments was $5,356,873, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents Short-Term Fund as follows:

Investment Pools Board of Regents Short-T erm Fund

$5,356,873

T otal Investment Pools

$5,356,873

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.
Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The College does not have a formal policy for managing interest rate risk.
The Weighted Average Maturity of the Short Term Fund is 1.99 years. Of the College's total investment of $5,356,873 in the Short Term Fund, $5,335,445 is invested in debt securities.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The College does not have a formal policy for managing credit quality risk.

Gordon College Annual Financial Report FY 2008 18

Note 3. Accounts Receivable

Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Georgia St at e Financing and Invest m ent Com m ission Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$36,448 219,078 269,727 994,964 133,535 1,653,752 117,901
$1,535,851

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore T otal

$305,092 $305,092

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the College for amounts cancelled under these provisions. As the College determines that loans are uncollectible and not eligible for reimbursement by the Federal government, the loans are written off and assigned to the U.S. Department of Education. The College does not have an allowance for uncollectible loans.

Gordon College Annual Financial Report FY 2008 19

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$408,874 11,390
420,264
1,420,878 34,568,359
736,681 3,838,801 16,387,313 2,692,415 59,644,447
492,666 10,002,703
419,706 2,515,074 1,147,112 2,079,250 16,656,511
42,987,936
$43,408,200

Addi ti o n s
$160,833 2,402,571 2,563,404

Re du cti on s
$0 209,187 209,187

En di n g B al an ce 6/30/2008
$569,707 2,204,774 2,774,481

111,000 209,187 121,261
54,359 495,807

20,581
29,920 (50,500)
420,799 420,800

1,400,297 34,679,359
915,948 4,010,562 16,387,313 2,325,975 59,719,454

50,411 708,691
47,514 340,786 655,493 139,016 1,941,911
(1,446,104)
$1,117,300

17,965 147,532
36,321 49,879
385,448 637,145
(216,345)
($7,158)

525,112 10,563,862
430,899 2,805,981 1,802,605 1,832,818 17,961,277
41,758,177
$44,532,658

Gordon College Annual Financial Report FY 2008 20

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $631,064 10,668 $641,732

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations

Beginning Balance
July 1, 2007
$15,999,306

Additions $0

Reductions

Ending Balance June 30, 2008

$377,829

$15,621,477

Other Liabilities Compensated Absences
Total Long Term Obligations

407,644 $16,406,950

437,695 $437,695

374,717 $752,546

470,622 $16,092,099

Current Portion
$399,506
375,876 $775,382

Note 9. Significant Commitments
The College executed a rental agreement for a student housing complex with Gordon College Properties Foundation II, LLC in January 2007. The rental agreement commences in fiscal 2009 and will expire in fiscal 2038. The present value of the minimum lease payments over the life of the rental agreement is $18,890,190.
Note 10. Lease Obligations
CAPITAL LEASES
Capital leases are payable in monthly installments and have terms expiring in 2031. Expenditures for fiscal year 2008 were $1,142,252 of which $764,423 represented interest. Total principal paid on capital leases was $377,829 for the fiscal year ended June 30, 2008. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Buildings Total Assets Held Under Capital Lease

$14,584,708 $14,584,708

Gordon College Annual Financial Report FY 2008 21

Certain capital lease provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.

Gordon College had one capital lease with related entities in the current fiscal year. In August 2005, Gordon College entered into a capital lease of $16,387,313 at 4.83 percent with the Gordon College Properties, LLC a discretely presented component unit, whereby the College leases a building for a twenty-five year period that began August 2005 and expires June 2031. The outstanding liability at June 30, 2008 on this capital lease was $15,621,477.

OPERATING LEASES

Gordon College had no operating leases as of June 30, 2008.

Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25

Real P roperty and Equipm ent
Capit al Leases
$1,145,206 1,142,594 1,143,749 1,143,828 1,146,824 5,748,109 5,781,166 5,799,711 2,429,647
25,480,834 9,859,357
$15,621,477

Gordon College had no expense for rental of real property and equipment under operating leases in FY2008.

Gordon College Annual Financial Report FY 2008 22

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Gordon College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Gordon College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Gordon College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$694,544 $642,393 $543,411

Employees' Retirement System of Georgia

Plan Description Gordon College participates in the Employees' Retirement System of Georgia (ERS), a costsharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Gordon College Annual Financial Report FY 2008 23

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The College's payroll for the year ended June 30, 2008, for employees covered by ERS was $118,005. The College's total payroll for all employees was $12,351,035.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the College pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the College amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$12,360 $11,837 $8,549

Gordon College Annual Financial Report FY 2008 24

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Gordon College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Gordon College and the covered employees made the required contributions of $282,571 (8.13% or 8.15%) and $167,944 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Gordon College participates in the Georgia Defined Contribution Plan (GDCP) which is a singleemployer 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.
Gordon College Annual Financial Report FY 2008 25

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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $43,028 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Gordon College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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'
Gordon College Annual Financial Report FY 2008 26

indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Gordon College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Gordon College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Gordon College (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
Gordon College Annual Financial Report FY 2008 27

The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25% As of June 30, 2008, there were 36 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Gordon College recognized as incurred $158,510 of expenditures, which was net of $64,350 of participant contributions.
Gordon College Annual Financial Report FY 2008 28

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

N atural Classification
F acu lt y St aff B en efit s Personal Services T ravel Scholarship s and Fellow ship s U tilities Sup p lies and O thers Services D ep reciation
T otal Exp enses
Natural Classification
F acult y St aff B en efit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

Inst ruct io n
$6,562,013 403,561
1,687,537
37,722
43,822 494,446 109,891
$9,338,992

Fu n ctio nal Clas s ificatio n FY2008

Academ ic Sup p o rt

St uden t Serv ices

$0 796,140 207,326

$0 1,110,861
302,073

13,416
5,117 570,139 222,671

41,684 2,000
12,927 322,583
4,206

$1,814,809

$1,796,334

P lant Op erat io n s & Maint enance
$0 1,043,152
348,250 162
9,978
1,080,576 844,515 87,057
$3,413,690

Functional Clas s ification FY2008

Sc h o la r sh ip s & Fellowships

A ux ilia r y Ent erprises

$0 2,649,320

$0 592,128 140,439
158 13,319 123,552 236,374 3,886,066 741,236

$2,649,320

$5,733,272

Inst it ut io nal Sup p o rt
$0 1,843,180
726,761 79,283 43,336
76,340 829,609 776,850
$4,375,359
T otal E x p en ses
$6,562,013 5,789,022 3,412,386 79,603 159,455 2,774,872 1,455,156 6,947,358 1,941,911
$29,121,776

Gordon College Annual Financial Report FY 2008 29

Note 16. Component Units

Gordon College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Gordon College (College). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The fortyfour member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 through December 31.

During the year ended December 31, 2007, the Foundation distributed $37,409 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 419 College Drive, Barnesville, GA 30204.

Investments for Component Units:

Gordon College Foundation, Inc. holds non-real estate investments in the amount of $5.5 million. The Foundation also holds investments in real property valued at $2.8 million.

Investments are comprised of the following amounts at December 31, 2007:

Cost

Fair Value

M utual Funds Venture Capital Real Estate

$2,917,893 130
2,753,609

$5,505,264 130
2,753,609

Total Investments

$5,671,632

$8,259,003

Gordon College Annual Financial Report FY 2008 30

Capital Assets for Component Units:

The following represents Gordon College Foundation, Inc.'s Capital Assets as of December 31, 2007:

December 31, 2007

Capital Assets not being Depreciated: Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$8,286,475 8,286,475
12,649,270 582,676
13,231,946 898,230
12,333,716 $20,620,191

Long-term Liabilities for Component Units: Long-term liability activity for the year ended December 31, 2007 was as follows:

Beginning Balance January 1, 2007

Additions

Reductions

Ending Balance December 31, 2007

Amounts due within
One Year

Liabilities under split interest agreement Notes and Loans Payable Revenue/Mortgage Bonds Payable
Total Long Term Liabilities

$57,249 0
15,099,554
$15,156,803

$0 2,046,942 18,890,190
$20,937,132

$7,574 (240,446) ($232,872)

$49,675 2,046,942 34,230,190
$36,326,807

$7,987 193,642 415,000
$616,629

Notes and Loans Payable
In July 2007, Gordon College Properties Foundation, LLC purchased real estate located on Georgia Avenue in Barnesville Georgia. Two properties were purchased and each was financed with a one-year note payable to First National Bank of Barnesville with interest due at maturity at 8.25%. The notes in the amount of $142,592 and $51,050 are due on June 30, 2008.

In October 2007, Gordon College Properties Foundation, LLC acquired 70 acres of vacant land on Collier Road in Barnesville, Georgia. To purchase the land, the LLC received proceeds from

Gordon College Annual Financial Report FY 2008 31

a note payable in the amount of $1,853,300 from United Bank. Interest of 6.88% is due annually with the total principal due in October 2009.

These real estate purchases were made with the intent that Gordon College would purchase the properties from the Foundation at such time that funds are available. The associated real estate is reported as Investments on the Statement of Net Assets.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending December 31

2008

1

2009

2

Princip al

Notes and Loans Payable Interest

Total

$193,642 1,853,300 $2,046,942

$143,482 127,507
$270,989

$337,124 1,980,807 $2,317,931

Bonds Payable

Series 2004 Bonds

On August 1, 2004, the Barnesville-Lamar County Industrial Development Authority issued certain bonds totaling $16,135,000. Proceeds of the sale of the Bonds were loaned to Gordon College Properties Foundation, LLC (Properties, LLC) whose sole member is Gordon College Foundation, Inc. Proceeds of the Series 2004 Bonds were used by Properties, LLC to finance or reimburse, in whole or in part, the cost of the construction and equipping of a new student housing complex containing approximately 459 beds, including related parking for approximately 597 vehicles and road and pedestrian walkway improvements (the Project) located on the campus of Gordon College; fund capitalized interest on the Series 2004 Bonds; fund a debt service reserve fund for the Series 2004 Bonds; and pay costs of issuance of the Series 2004 Bonds. The real property upon which the Project is located is owned by the Board of Regents of the University System of Georgia and is leased by the Board of Regents to the Properties, LLC pursuant to a Ground Lease. Pursuant to a Rental Agreement, the Properties, LLC rents the project, on an annually-renewable basis, to the Board of Regents for use by the College. The Board of Regents makes monthly fixed rental payments for the use and occupancy of the Project, in amounts that the Properties, LLC estimates will be sufficient to pay, among other things, debt service on the Series 2004 Bonds. Interest rates on the Series 2004 bonds range from 3% to 5%. The balance owed on the bonds at December 31, 2007 was $15,340,000.

Series 2006 Bonds

On December 14, 2006, the Barnesville-Lamar County Industrial Development Authority issued certain bonds totaling $19,285,000. Proceeds of the sale of the Bonds were loaned to Gordon College Properties Foundation II, LLC (Properties II, LLC) whose sole member is Gordon College Foundation, Inc. Proceeds of the Series 2006 Bonds were used by Properties II, LLC to finance or reimburse, in whole or in part, the cost of the construction and equipping of a new student housing complex containing approximately 405 beds and related amenities (the Project) located on the campus of Gordon College; fund capitalized interest on the Series 2006 Bonds;

Gordon College Annual Financial Report FY 2008 32

pay the premium for a debt reserve surety bond and pay costs of issuance of the Series 2006 Bonds. The real property upon which the Project is located is owned by the Board of Regents of the University System of Georgia and is leased by the Board of Regents to the Properties II, LLC pursuant to a Ground Lease. Pursuant to a Rental Agreement, the Properties II, LLC will rent the project, on an annually-renewable basis, to the Board of Regents for use by the College. The Board of Regents will make monthly fixed rental payments for the use and occupancy of the Project, in amounts that the Properties II, LLC estimates will be sufficient to pay, among other things, debt service on the Series 2006 Bonds. Interest rates on the Series 2006 bonds range from 3.5% to 4.5%. The balance owed on the bonds at December 31, 2007 was $18,890,190, which is net of ($394,810) bond discount.

Annual debt service requirements to maturity for Student Housing bonds payable are as follows:

Year ending December 31 2008 2009 2010 2011 2012 2013 through 2017 2018 through 2022 2023 through 2027 2028 through 2032 2033 through 2037 2038 through 2042

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31-35

Bond Premium/(Discount)

Princip al

Bonds Payable Interest

$415,000 430,000 460,000 490,000 530,000
3,435,000 4,940,000 7,150,000 7,805,000 7,180,000 1,790,000 34,625,000 (394,810) $34,230,190

$1,522,163 1,509,713 1,495,388 1,480,125 1,462,538 6,950,240 6,069,865 4,706,734 2,790,501 1,207,267 38,615
29,233,149
$29,233,149

Total
$1,937,163 1,939,713 1,955,388 1,970,125 1,992,538
10,385,240 11,009,865 11,856,734 10,595,501
8,387,267 1,828,615 63,858,149 (394,810) $63,463,339

Gordon College Annual Financial Report FY 2008 33

GEORGIA SOUTHERN UNIVERSITY
Financial Report
For the Year Ended June 30, 2008

Georgia Southern University Statesboro, Georgia

Dr. Bruce Grube
President

Dr. Ron Core
Vice President for Business and Finance

GEORGIA SOUTHERN UNIVERSITY ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 8 Statement of Revenues, Expenses and Changes in Net Assets..................................................... 12 Statement of Cash Flows .............................................................................................................. 16 Note 1. Summary of Significant Accounting Policies ................................................................ 18 Note 2. Deposits and Investments............................................................................................... 23 Note 3. Accounts Receivable...................................................................................................... 25 Note 4. Inventories...................................................................................................................... 25 Note 5. Notes/Loans Receivable................................................................................................. 25 Note 6. Capital Assets................................................................................................................. 26 Note 7. Deferred Revenue........................................................................................................... 27 Note 8. Long-Term Liabilities .................................................................................................... 27 Note 9. Significant Commitments............................................................................................... 28 Note 10. Lease Obligations......................................................................................................... 28 Note 11. Retirement Plans .......................................................................................................... 31 Note 12. Risk Management......................................................................................................... 35 Note 13. Contingencies............................................................................................................... 35 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 36 Note 15. Natural Classifications with Functional Classifications .............................................. 37 Note 16. Component Units ......................................................................................................... 38

GEORGIA SOUTHERN UNIVERSITY
Management's Discussion and Analysis

Introduction
Georgia Southern University is the largest and most comprehensive center of higher education in the southern half of Georgia. A residential campus of more than 16,500 students, Georgia Southern is one of the top universities of choice in Georgia for new freshmen; every state and 86 nations are represented in the student body. The University's hallmark is a superior undergraduate experience emphasizing academic distinction, excellent teaching, and student success in its eight Colleges: Liberal Arts and Social Sciences, Business Administration, Education, Health and Human Sciences, Jack N. Averitt College of Graduate Studies, Allen E. Paulson College of Science and Technology, College of Information Technology and Jiann-Ping Hsu College of Public Health.
Students Students Faculty (Headcount) (FTE)

FY2008

755

16,841 15,396

FY2007

719

16,425 14,962

FY2006

709

16,646 15,183

Overview of the Financial Statements and Financial Analysis
Georgia Southern University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Georgia Southern University. The Statement of Net Assets presents end-ofyear data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

Georgia Southern University Annual Financial Report FY 2008 1

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$48,149,366 341,242,917
5,518,234 394,910,517

June 30, 2007
$49,327,838 329,451,662
5,426,013 384,205,513

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

23,527,005 115,903,908 139,430,913

19,508,628 115,685,896 135,194,524

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

224,019,863 2,465,814 3,396,413
25,597,514 $255,479,604

212,925,169 2,464,884 3,329,191
30,291,745 $249,010,989

The total assets of the institution increased by $10,705,004. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $11,791,255 in the category of Capital Assets, net.
The total liabilities for the year increased by $4,236,389. The combination of the increase in total assets of $10,705,004 and the increase in total liabilities of $4,236,389 yields an increase in total net assets of $6,468,615. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $11,094,694.

Georgia Southern University Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$125,420,929 215,326,268 (89,905,339) 86,909,877
(2,995,462) 9,464,077 6,468,615 249,010,989
0 249,010,989 $255,479,604

$114,822,248 198,378,275 (83,556,027) 85,256,447
1,700,420 6,521,136 8,221,556 240,789,433
0 240,789,433 $249,010,989

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Georgia Southern University Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$52,396,163 21,274,242 2,591,913 47,888,508 1,270,103
125,420,929
92,448,227 1,695,944 2,379,109 (3,997,240)
92,526,040
8,879,183 584,894
9,464,077 $227,411,046

June 30, 2007
$46,491,392 19,899,194 2,421,972 44,572,971 1,436,719
114,822,248
85,881,056 1,305,679 2,759,922 838,715
90,785,372
5,082,680 1,438,456 6,521,136 $212,128,756

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$76,965,995 3,117,421 2,530,964
15,324,733 16,835,210 23,044,542 24,402,401
6,982,943 46,122,059 215,326,268
5,616,163 $220,942,431

June 30, 2007
$67,691,281 3,556,807 2,848,445
14,844,183 16,973,346 21,409,218 23,696,530
5,797,572 41,560,893 198,378,275
5,528,925 $203,907,200

Operating revenues increased by $10,598,681 in fiscal 2008. Tuition and Fee revenues increased 12.7% primarily due to increases in headcount and FTE coupled with increased student retention

Georgia Southern University Annual Financial Report FY 2008 4

rates. Sponsored revenue increased as a result of increased institution wide initiatives to expand research activities.
The Auxiliary revenue increase of $3,315,537 is a result of growth and the changing environment of residential life on the University's campus. Analysis indicates that students who live on campus and/or become involved in the campus community perform better academically. Institution wide focus on enrollment management has resulted in more students living on campus as well as off-campus students spending more of their out of classroom time on campus. A direct result of these efforts has been increases in student retention rates. Increased retention rates improve graduation rates and increase tuition and auxiliary revenues. Nearly all Auxiliary units experienced increases in revenues during 2008, with the greatest increase being realized in Food Services.
Non-operating revenues increased by $1,740,668 for the year primarily due to an increase of $6,567,171 in State Appropriations. The increase in State Appropriations was realized primarily from the funding formula as a result of increasing enrollment in the past two years.
The compensation and employee benefits category increased by $10,658,482 and primarily affected the Instruction category. Increases in Instruction are the result of campus initiatives to convert more part-time faculty positions to regular faculty. Regular full time faculty pool provides a more stable academic environment resulting in increases in retention and graduation rates.
Utilities increased by $304,432 during the past year. Increases are an indicator of higher fuel costs in the later portion of 2008. This trend of higher utility cost is expected to carry over into fiscal year 2009.
Statement of Cash Flows
The final statement presented by Georgia Southern University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.
Georgia Southern University Annual Financial Report FY 2008 5

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($73,287,153) 94,318,554 (23,957,610) (62,848) (2,989,057) 31,894,540
$28,905,483

June 30, 2007
($66,450,881) 87,038,270 (19,315,095) 2,181,840 3,454,134 28,440,406
$31,894,540

Capital Assets
The University completed several major building renovations during 2008. Two older residence halls were converted to faculty office space. The new office locations allowed conversion of office space in academic buildings to classroom spaces. One facility, Cone Hall was renovated to house the newly created College of Public Health. Cost of renovations was completed by redirection of University funds.
Infrastructure additions were completed to enhance campus lighting and roadways as part of a master plan initiative to move traffic to the perimeter of campus thus creating a walking campus. Enhancements to lighting and roadways promote a safer campus environment for students, faculty and staff.
For additional information concerning Capital Assets, see Notes 1, 6, 8, 9, and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
Georgia Southern University had Long-Term Debt and Liabilities of $122,070,286 of which $6,166,378 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, Georgia Southern University has included the financial statements and notes for all required component units for FY2008.
For additional information concerning Component Units, see Notes 1 and 16 in the Notes to the Financial Statements.

Georgia Southern University Annual Financial Report FY 2008 6

Economic Outlook Budget reductions at the State level will present a challenging financial environment for the institution in the coming fiscal year. The University is in the beginning stages of analyzing financial consequences of the current reduction, as well as potential for additional reductions. We anticipate enrollment numbers for fall 2008 to provide significant growth of the freshman class which will increase tuition revenues. Dr. Bruce Grube, President Georgia Southern University
Georgia Southern University Annual Financial Report FY 2008 7

Statement of Net Assets

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF NET ASSETS June 30, 2008
Component Unit

Component Unit

Ge orgi a S ou th e rn Un i ve rs i ty

Georgia Southern Un i ve rs i ty
Foundation, Inc.

Georgia Southern Un i ve rs i ty Housing
Foundation, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, net (note 3) Receivables - Federal Financial Assistance Receivables - Other Due From Component Units Net Investment in Capital Leases Contributions Receivable Due From Primary Government Inventories (note 4) Prepaid items T otal Current Assets

$28,905,483 5,873,153
1,461,940 4,319,220
999,861
2,141,444 4,448,265 48,149,366

$153,630 39,796,167
34,378 1,138,733
41,122,908

$2,256,088
12,842 418,368 2,865,009
443,116 5,995,423

Noncurrent Assets Noncurrent Cash Short-term Investments Investments (including Real Estate) Notes Receivable, net Net Investment in Capital Leases Receivables Other Contributions Receivable Capital Assets, net (note 6) Other Assets T otal Noncurrent Assets TO TAL ASSETS

2,465,814 8,927
3,043,493
341,242,917 346,761,151 394,910,517

1,314,719
3,282,305 418,082 117,821
5,132,927 46,255,835

66,397,407
99,973,406 100,000
17,917,378 296,253
184,684,444 190,679,867

Georgia Southern University Annual Financial Report FY 2008 8

Statement of Net Assets, Continued

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF NET ASSETS June 30, 2008
Component Unit

Component Unit

Ge orgi a S ou th e rn Un i ve rs i ty

Georgia Southern Un i ve rs i ty
Foundation, Inc.

Georgia Southern Un i ve rs i ty Housing
Foundation, Inc.

LIABILITIES Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deposit s Deferred Revenue (note 7) Deposits Held for Other Organizations Due to Primary Government Lease Purchase Obligations (current portion) Compensated Absences (current portion) Revenue/Mortgage Bonds Payable (current) Due to Component Units Notes and Loans Payable (current portion) T otal Current Liabilities Noncurrent Liabilities Lease Purchase Obligations (noncurrent) Deferred Revenue (noncurrent) Compensated Absences (noncurrent) Revenue/Mortgage Bonds Payable (noncurrent) Liabilities under Split-Interest Agreements (noncurrent) Notes and Loans Payable (noncurrent) T otal Noncurrent Liabilities TO TAL LIABILITIES
NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Unrest rict ed TO TAL NET ASSETS

2,147,714 1,108,777 1,998,245
536,575 10,597,920
926,939
3,499,714 2,581,636
44,457 85,028 23,527,005
111,515,242
2,265,596
2,123,070 115,903,908 139,430,913
224,019,863
2,465,814 3,396,413 25,597,514 $255,479,604

58,041
50,000 20,586
418,368 546,995
140,764 140,764 687,759 418,082 28,944,692 13,496,937 2,708,365 $45,568,076

3,045,152 826,061 80,468 42,120
2,800,000
6,793,801
1,776,985 176,896,654
178,673,639 185,467,440
7,752,799
5,820,075 (8,360,447) $5,212,427

Georgia Southern University Annual Financial Report FY 2008 9

Statement of Net Assets, Continued

GEORGIA S OUTHERN UNIVERS ITY S TATEMENT OF NET AS S ETS June 30, 2008
C om pone nt Unit

Southe rn Booste rs, In c. (G e orgi a S ou th e rn Un i ve rs i ty)

AS S ETS C urrent Assets Cash and Cash Equivalent s Short -t erm Invest m ent s Account s Receivable, net (not e 3) Receivables - Federal Financial Assist ance Receivables - Ot her Due From Com ponent Unit s Net Invest m ent in Capit al Leases Cont ribut ions Receivable Due From P rim ary Governm ent Inventories (note 4) P repaid it ems T ot al Current Asset s
Noncurre nt Asse ts Noncurrent Cash Short -t erm Invest m ent s Invest m ent s (including Real Est at e) Not es Receivable, net Net Invest m ent in Capit al Leases Receivables Ot her Cont ribut ions Receivable Capit al Asset s, net (not e 6) Ot her Asset s T ot al Noncurrent Asset s TO TAL AS S ETS

$1,111,527 509,836 38,000 590,665
2,250,028
431,070 1,649,282 2,080,352 4,330,380

C om pone nt Unit Ge orgia Southern
Un i ve rsi ty Re se arch &
S e rvi ce Fou n dati on , In c.
$1,645,699
1,011,426
44,457 131,453 2,833,035
0 2,833,035

Georgia Southern University Annual Financial Report FY 2008 10

Statement of Net Assets, Continued

GEORGIA S OUTHERN UNIVERS ITY S TATEMENT OF NET AS S ETS June 30, 2008
C om pone nt Unit

Southe rn Booste rs, In c. (G e orgi a S ou th e rn Un i ve rs i ty)

LIAB ILITIES C u rre n t Liabilitie s Account s P ayable Salaries P ayable Cont ract s P ayable Deposit s Deferred Revenue (not e 7) Deposit s Held for Ot her Organizat ions Due t o P rim ary Governm ent Lease P urchase Obligat ions (current port ion) Com pensat ed Absences (current port ion) Revenue/M ort gage Bonds P ayable (current ) Due t o Com ponent Unit s Not es and Loans P ayable (current port ion) T ot al Current Liabilit ies Non cu rre n t Liabilitie s Lease P urchase Obligat ions (noncurrent ) Deferred Revenue (noncurrent ) Com pensat ed Absences (noncurrent ) Revenue/M ort gage Bonds P ayable (noncurrent ) Liabilit ies under Split -Int erest Agreem ent s (noncurrent ) Not es and Loans P ayable (noncurrent ) T ot al Noncurrent Liabilit ies TO TAL LIAB ILITIES
NET AS S ETS Invest ed in Capit al Asset s, net of relat ed debt Rest rict ed for N o n e x p en da ble E x p e n da ble Unrest rict ed TO TAL NET AS S ETS

46,735
93,350
383,102 523,187
170,871 170,871 694,058 1,289,825 2,098,094 248,403 $3,636,322

C om pone nt Unit Ge orgia Southern
Un i ve rsi ty Re se arch &
S e rvi ce Fou n dati on , In c.
7,373
1,121,876 276,357 957,741
2,363,347
0 2,363,347
469,688 $469,688

Georgia Southern University Annual Financial Report FY 2008 11

Statement of Revenues, Expenses and Changes in Net Assets
GEORGIA SOUTHERN UNIVERSITY STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

Component Unit

Component Unit

REVENUES
Operating Revenues Student Tuition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues Total Operating Revenues
EXPENSES Operating Expenses
Salaries: Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to or on behalf of Georgia Southern University
Total Operating Expenses Operating Income (loss)

Georgia Southern University

Georgia Southern University
Foundation, Inc.

Georgia Southern University Housing
Foundation, Inc.

$64,013,107 (11,616,944)
18,548,937 749,720
1,975,585 2,591,913
45,799
15,159,797 10,709,647 9,675,456 2,734,499 3,091,721 6,517,122
266 1,224,304 125,420,929
45,952,126 59,382,821 29,264,558
467,289 2,170,938 9,811,459 8,031,281 47,081,194 13,164,602
215,326,268 (89,905,339)

$0 3,562,759 1,368,571
225,783 210,688
147,941 5,515,742
138,338 1,910,717
1,667 2,544,332 4,595,054
920,688

$0
5,697,312
60,000 5,757,312
38,915 505,513 544,428 5,212,884

Georgia Southern University Annual Financial Report FY 2008 12

Statement of Revenues, Expenses and Changes in Net Assets, Continued
GEORGIA SOUTHERN UNIVERSITY STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

Component Unit

Component Unit

Georgia Southern University

Georgia Southern University
Foundation, Inc.

Georgia Southern University Housing
Foundation, Inc.

NO NO PERATING REVENUES (EXPENSES) State Appropriations Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Other Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

92,448,227 1,695,944 2,379,109 (5,616,163) (3,997,240) 86,909,877 (2,995,462)
8,879,183 584,894
9,464,077 6,468,615
249,010,989 0
249,010,989 $255,479,604

(3,347,804)
(3,347,804) (2,427,116)
1,788,418 1,788,418 (638,698)
46,206,774 0
46,206,774 $45,568,076

553,638 (5,103,067)
80,468 (4,468,961)
743,923
0 743,923
4,468,504 0
4,468,504 $5,212,427

Georgia Southern University Annual Financial Report FY 2008 13

Statement of Revenues, Expenses and Changes in Net Assets, Continued
GEORGIA S OUTHERN UNIVERS ITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Endowm ent Incom e (per spending plan) Grant s and Cont ract s Federal St at e Other Sales and Services Rents and Royalties Auxiliary Ent erprises Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion P ayment s t o or on behalf of Georgia Sout hern Universit y
T ot al Operat ing Expenses Operat ing Incom e (loss)

C om pone nt Unit
S ou th e rn B oos te rs , In c.
(Ge orgia S ou th e rn Un i ve rs i ty)

C om pone n t Unit
Ge orgia Southe rn Un i ve rsi ty Re se arch & S e rvi ce
Fou n dati on , In c.

$0 1,744,776
43,025 176,400

$0
4,012,695 566,846 377,014

303,962 2,268,163

4,956,555

1,077,402 20,079
909,111 2,006,592
261,571

121,129
4,854,603 4,975,732
(19,177)

Georgia Southern University Annual Financial Report FY 2008 14

Statement of Revenues, Expenses and Changes in Net Assets, Continued
GEORGIA S OUTHERN UNIVERS ITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

C om pone nt Unit
S ou th e rn B oos te rs , In c.
(Ge orgia S ou th e rn Un i ve rs i ty)

C om pone n t Unit
Ge orgia Southe rn Un i ve rsi ty Re se arch & S e rvi ce
Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENSES) State Appropriations Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Ot her Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET AS S ETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

69,607 (38,949)
30,658 292,229
0 292,229
3,344,093 0
3,344,093 $3,636,322

57,336
57,336 38,159
0 38,159 382,329 49,200 431,529 $469,688

Georgia Southern University Annual Financial Report FY 2008 15

Statement of Cash Flows
GEORGIA S OUTHERN UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s P urchase of Invest ment s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$53,153,418 21,255,216 2,591,913 (89,100,682)
(104,665,662) (9,811,459) (602,523) 432,797
15,270,848 10,925,522
9,946,092 2,757,379 3,100,172 6,713,479 (164,956) 4,911,293 (73,287,153)
92,448,227 170,309
1,700,018 94,318,554
9,464,077 (25,106,454)
(2,699,070) (5,616,163) (23,957,610)
2,379,109 (2,441,957)
(62,848) (2,989,057) 31,894,540 $28,905,483

Georgia Southern University Annual Financial Report FY 2008 16

Statement of Cash Flows, Continued
GEORGIA S OUTHERN UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed asset s acquired by incurring capit al lease obligat ions Loss on Disposal of Buildings Not Fully Depreciat ed Cancellat ion of Capit al Lease Obligat ion

June 30, 2008
($89,905,339)
13,164,602 3,448,850 (108,129) (830,843) (169,725) (254,260) 1,241,042 (97,796) 224,445
($73,287,153)
$3,552,724 $3,968,154 ($157,093)

Georgia Southern University Annual Financial Report FY 2008 17

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Georgia Southern University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Georgia Southern University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Georgia Southern University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Georgia Southern University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Georgia Southern University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Georgia Southern University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, Georgia Southern University is reporting the activity for the Georgia Southern University Foundation Inc., Georgia Southern University Housing Foundation, Inc. and subsidiaries, Southern Boosters, Inc. and Georgia Southern University Research and Service Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999
Georgia Southern University Annual Financial Report FY 2008 18

by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets.
Georgia Southern University Annual Financial Report FY 2008 19

Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories for Food Services are valued at cost using the average-cost basis. Resale Inventories for Bookstore and other services are valued at cost using the first-in, first-out ("FIFO") basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Prepaid Items Payments made to vendors and local government organizations for services that will benefit periods beyond June 30, 2008, are recorded as prepaid items.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in
Georgia Southern University Annual Financial Report FY 2008 20

progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Georgia Southern University.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Georgia Southern University had accrued liability for compensated absences in the amount of $4,622,787 as of 7-1-2007. For FY2008, $3,360,813 was earned in compensated absences and employees were paid $3,136,368, for a net increase of $224,445. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $4,847,232.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Georgia Southern University Annual Financial Report FY 2008 21

Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans T ot al Rest rict ed Expendable

$220,027 3,121,904
54,482 $3,396,413

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$2,211,090 16,418,742
111,000 6,856,682 $25,597,514

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Georgia Southern University, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Georgia Southern University Annual Financial Report FY 2008 22

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 University, 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 University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Auxiliary Intercollegiate Athletics revenue of $6,517,122 is reported net of discounts and allowances of $1,068,229.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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.
Georgia Southern University Annual Financial Report FY 2008 23

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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.

The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

At June 30, 2008, the carrying value of deposits was $37,061,120 and the bank balance was $39,060,511. Of the University's deposits, $38,560,511 were uninsured. Of these uninsured deposits, $38,528,431 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name, and $32,080 were uncollateralized.

B. Investments Georgia Southern University maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable federal and state laws.

The University's investments as of June 30, 2008 are presented below. The University held an investment in a life insurance policy as noted below. All other funds are held in either demand or time deposits as described in the Deposit section of Note 2 above.

Other Investments: Life Insurance Policy Cash Surrender Value

$8,927

Georgia Southern University Annual Financial Report FY 2008 24

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$320,620 1,596,195 1,461,940
999,861 2,539,102 6,917,718
136,697
$6,781,021

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

Bookst ore Food Services P hysical P lant Other
T otal

June 30, 2008
$1,705,534 104,451 267,584 63,875
$2,141,444

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was approximately $0

Georgia Southern University Annual Financial Report FY 2008 25

Note 6. Capital Assets

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

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated

Beginning B al an ce s 7/1/2007
$4,737,316 15,772,491 20,509,807

Addi ti o n s
$0 22,165,052 22,165,052

Re du cti on s
$0 15,944,523 15,944,523

Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections T otal Assets Being Depreciated

14,063,303 261,107,483
1,726,693 19,670,020 119,403,628 35,427,249 451,398,376

1,464,267 14,074,955
405,301 2,109,497 3,552,724 1,253,832 22,860,576

9,425,508
1,055,839 157,092 28,962
10,667,401

Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections T otal Accumulated Depreciation

11,042,473 78,444,317
382,070 14,624,146
8,857,192 29,106,323 142,456,521

245,901 6,383,114
178,342 1,718,303 3,382,752 1,256,190 13,164,602

5,443,024 (11,564) 970,312 111,419 28,962
6,542,153

T otal Capital Assets, Being Depreciated, Net

308,941,855

9,695,974

4,125,248

Capital Assets, net

$329,451,662

$31,861,026

$20,069,771

En di n g B al an ce 6/30/2008
$4,737,316 21,993,020 26,730,336
15,527,570 265,756,930
2,131,994 20,723,678 122,799,260 36,652,119 463,591,551
11,288,374 79,384,407
571,976 15,372,137 12,128,525 30,333,551 149,078,970
314,512,581
$341,242,917

Georgia Southern University Annual Financial Report FY 2008 26

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $9,626,231 971,689
$10,597,920

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations

Beginning Balance
July 1, 2007
$114,237,857

Additions $3,552,724

Reductions

Ending Balance June 30, 2008

$2,775,625 $115,014,956

Current Portion
$3,499,714

Other Liabilities Compensated Absences Notes and Loans Total

4,622,787 2,288,636 6,911,423

3,360,813 3,360,813

3,136,368 80,538
3,216,906

4,847,232 2,208,098 7,055,330

2,581,636 85,028
2,666,664

Total Long Term Obligations

$121,149,280

$6,913,537

$5,992,531 $122,070,286

$6,166,378

Notes and Loans Payable: Included in total long-term liabilities is a $3,000,000 note payable with the University System of Georgia. The note was originally payable to Georgia Education Authority (University), (GEA(U)), and issued in October 1991 for the purpose of financing construction of a student resident hall through U.S. Department of Education Academic Housing Facility Loan Program. In 2008, the University System of Georgia paid off the debt to GEA(U). Georgia Southern University continues to render payments according to the original amortization schedule to the University System of Georgia. The note carries an interest rate of 5.50% and is due semiannually through the year 2025. The outstanding balance at June 30, 2008 is $2,208,098. Annual maturities are as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2025
Totals

Principal
$85,028 89,769 94,774 100,058 105,637 623,384 817,661 291,787 $2,208,098

Interest

Total

$120,292 115,551 110,546 105,262
99,683 403,217 208,939
16,193 $1,179,683

$205,320 205,320 205,320 205,320 205,320 1,026,601 1,026,600 307,980 $3,387,781

Georgia Southern University Annual Financial Report FY 2008 27

Note 9. Significant Commitments

The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $2,769,160 as of June 30, 2008 for the new Welcome Center/Alumni Center and the Softball Pavilion. This amount is not reflected in the accompanying basic financial statements.

During the year, the Georgia Southern University Housing Foundation entered into an agreement to purchase and renovate University Villas with the intention of entering into a Capital Lease with the University to provide Student Housing. The actual terms of the lease have not yet been determined, but will be executed and in place in August, 2008.

Note 10. Lease Obligations

Georgia Southern University is obligated under various operating leases for the use of real property (buildings and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.
CAPITAL LEASES

Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2009 and 2031. Expenditures for fiscal year 2008 were $8,109,608 of which $5,491,076 represented interest. Total principal paid on capital leases was $2,618,532 for the fiscal year ended June 30, 2008. Interest rates range from 3.77 percent to 7.84 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Buildings Equipment Total Assets Held Under Capital Lease

$106,774,863 3,895,872
$110,670,735

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.
Georgia Southern University had a capital lease with related entities in the current fiscal year. In October 2002, Georgia Southern University entered into a capital lease of $42,668,051 at 4.89 percent with the Georgia Southern University Housing Foundation, Inc., an affiliated organization, whereby the University leases buildings (Southern Courtyard and Southern Pines) for a twenty-seven year period that began September 2003 and expires October 2031. The outstanding liability at June 30, 2008 for this capital leases was $38,361,044.
Georgia Southern University had a capital lease with related entities in the current fiscal year. In July 2005, Georgia Southern University entered into a capital lease of $2,230,350 at 4.94 percent with the Georgia Southern University Housing Foundation, Inc., an affiliated organization, whereby the University leases a facility (Clements Baseball Stadium) for a twenty-four year

Georgia Southern University Annual Financial Report FY 2008 28

period that began August 2005 and expires July 2029. The outstanding liability at June 30, 2008, for this capital lease was $2,076,676.
Georgia Southern University had a capital lease with related entities in the current fiscal year. In July 2005, Georgia Southern University entered into a capital lease of $694,056 at 4.94 percent with the Georgia Southern University Housing Foundation, Inc., an affiliated organization, whereby the University leases a facility (Athletic Training Center) for a twenty-four year period that began August 2005 and expires July 2029. The outstanding liability at June 30, 2008, for this capital lease was $646,195.
Georgia Southern University had a capital lease with related entities in the current fiscal year. In July 2005, Georgia Southern University entered into a capital lease of $1,677,441 at 4.94 percent with the Georgia Southern University Housing Foundation, Inc., an affiliated organization, whereby the University leases a facility (Soccer Stadium) for a twenty-four year period that began August 2005 and expires July 2029. The outstanding liability at June 30, 2008 for this capital lease was $1,561,750.
Georgia Southern University had a capital lease with related entities in the current fiscal year. In July 2005, Georgia Southern University entered into a capital lease of $30,179,998 at 4.94 percent with the Georgia Southern University Housing Foundation, Inc., an affiliated organization, whereby the University leases buildings (Eagle Village) for a twenty-four year period that began August 2005 and expires July 2030. The outstanding liability at June 30, 2008, for this capital lease was $28,202,071.
Georgia Southern University had a capital lease with related entities in the current fiscal year. In August 2006, Georgia Southern University entered into a capital lease of $40,264,057 at 4.73 percent with the Georgia Southern University Housing Foundation, Inc., an affiliated organization, whereby the University leases buildings (Recreational Activities Complex-RAC) for a twenty-five year period that began August 2006 and expires July 2031. The outstanding liability at June 30, 2008, for this capital lease was $40,487,613. This lease includes $1,087,059 of capitalized interest.
In June 2008, Georgia Southern University's project to install a University owned and operated voice over IP campus fiber and telephone system was materially complete. The project was funded by a five year capital equipment lease with Sun Trust Bank under lease agreement between Sun Trust Bank and the University System of Georgia. Total lease liability is $3,409,806. The first of 60 monthly payments will begin August 1, 2008 with an interest rate of 3.77%.
Georgia Southern University also has various other capital leases for equipment with an outstanding balance at June 30, 2008 in the amount of $269,801.
OPERATING LEASES
Georgia Southern University's non-cancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2008 through 2009. Certain operating leases
Georgia Southern University Annual Financial Report FY 2008 29

provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are office space, copiers and other small business equipment.
In 2006, Georgia Southern University entered into a real property operating lease with an unrelated party for storage space in the former Winn-Dixie building for monthly rental payments of $19,400. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $232,800 in the current year.
In 2007, Georgia Southern University entered into a real property operating lease with an unrelated party for office space at College Plaza Unit #4 for monthly rental payments of $9,232. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $110,784 in the current year.
In 2007, Georgia Southern University entered into a real property operating lease with an unrelated party for office space at Georgia Avenue Building #810 for monthly rental payments of $1,000. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $12,000 in the current year.
In 2007, Georgia Southern University entered into a real property operating lease with an unrelated party for storage space at the Costume Shop for monthly rental payments of $2,500. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $30,000 in the current year.
In 2007, Georgia Southern University entered into a real property operating lease with an unrelated party for office space in Building #7 at the Skidaway Institute of Oceanography for monthly rental payments of $875. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $10,097 in the current year.
In 2008, Georgia Southern University entered into a real property operating lease with an unrelated party for office space in the Market District Center for monthly rental payments of $1,323. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $1,323 in the current year.
In 2008, Georgia Southern University entered into a real property operating lease with an unrelated party for office space in the Harvey House for monthly rental payments of $3,400. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $6,800 in the current year.
In 2008, Georgia Southern University entered into a real property operating lease with an unrelated party for Atlanta office space for monthly rental payments of $3,200. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $34,332 in the current year.
Georgia Southern University Annual Financial Report FY 2008 30

In 2008, Georgia Southern University entered into a real property operating lease with a related party for Lodge, Village and Cambridge Apartments for monthly rental payments of $5,000. The agreement contains a renewal option on a year-to-year basis. Under this agreement, the University paid $30,000 in the current year.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for non-cancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$9,054,070 9,057,101 8,999,858 8,973,640 8,938,303
40,870,483 39,567,865 40,528,807 20,752,633 186,742,760 71,727,804 $115,014,956

$551,160 $551,160

Georgia Southern University's FY2008 expenses for rental of real property and equipment under operating leases were $605,892.
Note 11. Retirement Plans
Teachers Retirement System of Georgia
Plan Description Georgia Southern University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.
Funding Policy Employees of Georgia Southern University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Georgia Southern University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer
Georgia Southern University Annual Financial Report FY 2008 31

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

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$4,403,648 $4,074,725 $3,867,088

Employees' Retirement System of Georgia

Plan Description Georgia Southern University participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Georgia Southern University Annual Financial Report FY 2008 32

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 University's payroll for the year ended June 30, 2008, for employees covered by ERS was $304,514. The University's total payroll for all employees was $105,334,947.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$31,755 $25,615 $18,074

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Georgia Southern University Annual Financial Report FY 2008 33

Funding Policy Georgia Southern University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
Georgia Southern University and the covered employees made the required contributions of $3,510,534 (8.13% or 8.15%) and $2,155,658 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Georgia Southern University 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $361,614 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.
Georgia Southern University Annual Financial Report FY 2008 34

Note 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Georgia Southern University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Georgia Southern University, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Georgia Southern University expects such amounts, if any, to be immaterial to its overall financial position.
Georgia Southern University Annual Financial Report FY 2008 35

Litigation, claims and assessments filed against Georgia Southern University (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 664 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Georgia Southern University recognized as incurred $2,898,310 of expenditures, which was net of $1,096,566 of participant contributions.
Georgia Southern University Annual Financial Report FY 2008 36

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Instruction
$44,912,993 9,642,222 13,168,720 592 790,486 148,389 327,250 7,516,907 458,436
$76,965,995

Research
$626,409 946,812 171,809
181,044 24,366 6,360 1,119,377 41,244
$3,117,421

Functional Classification FY2008

Public Service

Academic Support

$59,571 1,127,665
211,873 58
73,403 193,354 17,135 803,456 44,449

$352,969 8,454,516 2,116,445
9,666 321,846 91,375 99,100 2,488,288 1,390,528

$2,530,964

$15,324,733

Student Services

Institutional Support

$0 9,917,151 2,366,975
(8,711) 206,164 157,374 217,740 3,830,079 148,438

$184 10,752,072 6,692,776
457,973 187,913
173,275 4,491,276
289,073

$16,835,210

$23,044,542

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

Total Expenses

$0 7,541,510 2,459,224 (447,440)
44,266
5,102,146 4,594,593 5,108,102

$0 6,982,943

$0 11,000,873 2,076,736
455,151 365,816 2,213,658 2,088,275 22,237,218 5,684,332

$45,952,126 59,382,821 29,264,558
467,289 2,170,938 9,811,459 8,031,281 47,081,194 13,164,602

$24,402,401

$6,982,943

$46,122,059 $215,326,268

Georgia Southern University Annual Financial Report FY 2008 37

Note 16. Component Units

Georgia Southern University Foundation, Inc. Georgia Southern University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Georgia Southern University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $2,544,332 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at P.O. Box 8040, Statesboro, GA 30460.

Investments for Component Units:

Georgia Southern University Foundation, Inc. holds endowment and other investments of approximately $41 million. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by donors. Georgia Southern University Foundation, Inc., in conjunction with the donors, has established a spending plan whereby 5% of the three year moving average of the endowment fair market value may be used for academic scholarships. The remaining earnings are set aside as a reserve.

Investments are comprised of the following amounts at June 30, 2008:

Cost

Fair Value

Money Market Accounts Mutual Funds Real Estate

$235,552 39,219,701 1,314,719

$235,552 39,560,615 1,314,719

Total Investments

$40,769,972

$41,110,886

Georgia Southern University Annual Financial Report FY 2008 38

Capital Assets for Component Units:

Georgia Southern University Foundation, Inc. had the following Capital Assets at June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$395,860 395,860
50,000 50,000 27,778 22,222 $418,082

Long-Term Liabilities for Component Units
Georgia Southern Foundation, Inc. had $140,764 in Liabilities Under Split-interest Agreements as of June 30, 2008.

Georgia Southern University Housing Foundation, Inc. Georgia Southern University Housing Foundation, Inc. and Subsidiaries (GSUHF) is a legally separate, tax-exempt component unit of Georgia Southern University (University). GSUHF acts primarily as an organization to issue bonds where the funds are utilized to construct student housing and other university facilities that are available to the University in support of its programs. The board of the GSUHF is self-perpetuating and consists of employees and friends of the University. Because this organization's purpose is for the benefit of the University, GSUHF is considered a component unit of the University and is discretely presented in the University's financial statements.
GSUHF is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. GSUHF's fiscal year is July 1 through June 30.
Complete financial statements for GSUHF can be obtained from Dabbs, Hickman, Hill and Cannon, LLP, P.O. Box 727, Statesboro, GA 30459.

Georgia Southern University Annual Financial Report FY 2008 39

Capital Assets for Component Units

Georgia Southern University Housing Foundation, Inc. had $ 17,917,378 in Construction Work in Progress at June 30, 2008.

Long-Term Liabilities for Component Units

Changes in long-term liabilities for the Housing Foundation for the fiscal year ended June 30, 2008 are shown below:

Revenue/Mortgage Bonds Payable Total Long Term Liabilities

Beginning Balance July 1, 2007
$112,450,827
$112,450,827

Additions $69,000,000 $69,000,000

Reductions $1,754,173 $1,754,173

Ending Balance June 30, 2008

Amounts due within
One Year

$179,696,654 $2,800,000

$179,696,654 $2,800,000

Georgia Southern University Housing Foundation One, LLC has a bond obligation to Wachovia Bank for the construction of the student housing facilities, funded by the proceeds of the bond issuance. The Development Authority of Bulloch County issued $38,180,000 of Student Housing Lease Revenue Bonds, Series 2002. The bonds were issued in $5,000 denominations, and consist of $22,930,000 Serial Bonds, maturing annually through 2022; $5,000,000 Term I Bonds, due August 1, 2028; and $10,250,000 Term II Bonds, due August 1, 2028. Pursuant to the loan agreement, the Foundation grants a pledge and assignment of and grants a lien upon and security interest in the loan agreement, the deed, and the development agreement in favor of Wachovia Bank, as security for the payment of the bonds. Principal payments are due every July 25th, commencing in 2004. Interest payments are due every January and July 25th, commencing in 2003. Interest rates vary from 3% to 5% over the obligation term. The balance of the bond obligation was $35,035,000 as of June 30, 2008.
Georgia Southern University Housing Foundation Two, LLC has a bond obligation to BB&T for the construction of the student housing facilities, funded by the proceeds of the bond issuance. The Development Authority of Bulloch County issued $35,900,000 of Student Housing Lease Revenue Bonds, Series 2004. The bonds were issued in $5,000 denominations, and consist of $19,375,000 Serial Bonds, maturing annually through 2024; $4,035,000 Term I Bonds, due August 1, 2019; $5,885,000 Term II Bonds, due August 1, 2027; and $6,605,000 Term III Bonds, due August 1, 2030. Pursuant to the loan agreement, the Foundation grants a pledge and assignment of and grants a lien upon and security interest in the loan agreement, the deed, and the development agreement in favor of BB&T, as security for the payment of the bonds. Principal payments are due every August 1st, commencing in 2005. Interest payments are due every February and August 1st commencing on August 1, 2004. Interest rates vary from 2.75% to 5.25% over the obligation term. The balance of the bond obligation was $34,170,000 as of June 30, 2008.

Georgia Southern University Annual Financial Report FY 2008 40

Georgia Southern University Housing Foundation Three, LLC has a bond obligation to BB&T for the construction of the recreation facilities, funded by the proceeds of the bond issuance. The Development Authority of Bulloch County issued $40,540,000 of Student Housing Lease Revenue Bonds, Series 2005A (tax-exempt) and 2005B (non-exempt). The bonds were issued in $5,000 denominations, and consist of $13,235,000 Serial 2005A Bonds, maturing annually through 2021; $9,800,000 Term I 2005A Bonds, due August 1, 2026; $7,135,000 Term II 2005A Bonds, due August 1, 2029; $5,360,000 Term III 2005A Bonds, due August 1, 2031; and $5,010,000 Serial 2005B Bonds, maturing annually through 2012. Pursuant to the loan agreement, the Foundation grants a pledge and assignment of and grants a lien upon and security interest in the loan agreement, the deed, and the development agreement in favor of BB&T, as security for the payment of the bonds Principal payments are due every August 1st, commencing in 2008. Interest payments are due every February and August 1st, commencing on August 1, 2005. Interest rates vary from 3.5% to 5.25% over the obligation term. The balance of the bond obligation was $40,540,000 as of June 30, 2008.
Georgia Southern University Housing Foundation Four, LLC has a bond obligation to BB&T for the acquisition and renovation of 472 beds of student housing, and the construction of four new buildings which will house 1,000 new beds of student housing. This project also includes the design, development and construction of approximately 8,700 square feet of retail space. The student housing and the retail space will be funded by the proceeds of the bond issuance. The Development Authority of Bulloch County issued $69,000,000 of Student Housing Revenue Bonds, Series 2008. The bonds were issued in $5,000 denominations, and consist of $69,000,000 Serial Bonds, maturing annually through 2039. Pursuant to the loan agreement, the Foundation grants a pledge and assignment of and grants a lien upon and security interest in the loan agreement, the deed, and the development agreement in favor of BB&T, as security for the payment of the bonds. Principal payments are due every July 1st, commencing in 2009. Interest payments are due every January and July 1st, commencing on July 1, 2008. Interest rates vary from 3% to 5% over the obligation term. The balance of the bond obligation was $69,000,000 as of June 30, 2008.
Annual debt service requirements to maturity for revenue bonds payable are as follows:
Georgia Southern University Annual Financial Report FY 2008 41

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038 2039 through 2043

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31-35

Bond Premium/(Discount)

Principal

Bonds Payable Interest

$2,800,000 3,850,000 3,915,000 4,255,000 4,395,000
25,650,000 32,710,000 41,480,000 36,615,000 19,125,000
3,950,000 178,745,000
951,654 $179,696,654

$6,249,103 8,559,264 8,444,236 8,289,020 8,125,201
37,770,723 31,080,775 22,007,349
9,742,000 6,143,919 1,308,275 147,719,865
$147,719,865

Total
$9,049,103 12,409,264 12,359,236 12,544,020 12,520,201 63,420,723 63,790,775 63,487,349 46,357,000 25,268,919
5,258,275 326,464,865
951,654 $327,416,519

Southern Boosters, Inc. Southern Boosters, Inc. is a legally separate, tax-exempt component unit of Georgia Southern University (University). The fifty-two member board of Southern Boosters is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Southern Boosters, the majority of resources or income thereon that Southern Boosters holds and invests is restricted to the athletic activities of the University by the donors. Because these restricted resources held by Southern Boosters can only be used by, or for the benefit of, the University and their management role is significant to the accomplishment of the University's mission, Southern Boosters is considered a component unit of the University and is discretely presented in the University's financial statements.
Southern Boosters, Inc. is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. Southern Booster's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, Southern Boosters, Inc. distributed $550,000 to the University for athletic scholarship support and approximately $359,111 for the support of other University programs.
Complete financial statements for Southern Boosters, Inc. can be obtained from the Administrative Office at P.O. Box 811501, Statesboro, GA 30460.
Investments for Component Units:
Southern Boosters, Inc. holds the following investments as of June 30, 2008:

Georgia Southern University Annual Financial Report FY 2008 42

Certificates of Deposit Total Investments

Cost
$509,836 $509,836

Fair Value
$509,836 $509,836

Capital Assets for Component Units

Southern Boosters, Inc. has the following Capital Assets as of June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$80,301 80,301
1,614,828 95,585
1,710,413 141,432
1,568,981 $1,649,282

Long-Term Liabilities for Component Units

Southern Boosters, Inc. has a Note Payable to Sea Island Bank, payable in annual installments of $35,220 including interest at a variable rate (5.0% at June 30, 2008), through September 14, 2013, unsecured. The original note amount was $279,000 and the principal balance outstanding on the note at June 30, 2008 was $194,516.

Southern Boosters, Inc. obtained new financing in 2006 with a Note Payable to Park Avenue Bank. Interest is payable in quarterly installments at a variable rate (5.0% at June 30, 2008) and the note matures on January 15, 2009. This debt is secured by the Golf Practice facility. The outstanding principal balance was $359,457 at June 30, 2008.

Changes in long-term liabilities for Southern Boosters, Inc. for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Notes and Loans Payable

$578,802

$0

$24,829

$553,973

$383,102

Total Long Term Liabilities

$578,802

$0

$24,829

$553,973

$383,102

Georgia Southern University Annual Financial Report FY 2008 43

Annual requirements to maturity for notes payable are as follows:

Year ending June 30:

2009

1

2010

2

2011

3

2012

4

2013

5

2014 through 2018

6-10

Notes and Loans Payable

Principal

Interest

Total

383,102 24,968 26,466 28,054 29,737 61,646
$553,973

$29,548 10,252 8,754 7,166 5,483 3,082
$64,285

$412,650 35,220 35,220 35,220 35,220 64,728
$618,258

Georgia Southern University Research and Service Foundation, Inc. Georgia Southern University Research and Service Foundation, Inc. (the Research Foundation) is a legally separate, tax-exempt component unit of Georgia Southern University (University). The Research Foundation serves to enhance the research mission of the University by securing sponsored research funding and by providing funding of special research initiatives. All University intellectual property developed through these research programs are managed by the Research Foundation. The six member board of the Foundation consists of designated University personnel, appointees of several University constituent groups, and individuals selected by the Research Foundation itself. Although the University does not control the timing or amount of receipts from the Research Foundation, all sponsored research awards are subcontracted to the University and other resources and related income are restricted to benefit the research mission of the University. Consequently, the Research Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Research Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Research Foundation's fiscal year is July 1 through June 30.
During fiscal year 2008, the Research Foundation transferred $4,854,603 in sponsored research to the University. Complete financial statements for the Research Foundation can be obtained from the Administrative Office at P.O. Box 8005, Statesboro, GA 30460.
Restatement of Prior Year Net Assets
During the year ended June 30, 2008, a correction was made to prior year grants receivable. The effect of the error increased Beginning Net Assets by $49,200.

Georgia Southern University Annual Financial Report FY 2008 44

GEORGIA SOUTHWESTERN STATE UNIVERSITY
Financial Report
For the Year Ended June 30, 2008

Georgia Southwestern State University Americus, Georgia

Dr. Kendall A. Blanchard
President

W. Cody King
Vice President for Business and Finance

GEORGIA SOUTHWESTERN STATE UNIVERSITY ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 12 Note 2. Deposits and Investments............................................................................................... 17 Note 3. Accounts Receivable...................................................................................................... 19 Note 4. Inventories...................................................................................................................... 19 Note 5. Notes/Loans Receivable................................................................................................. 19 Note 6. Capital Assets................................................................................................................. 20 Note 7. Deferred Revenue........................................................................................................... 21 Note 8. Long-Term Liabilities .................................................................................................... 21 Note 9. Significant Commitments............................................................................................... 21 Note 10. Lease Obligations......................................................................................................... 21 Note 11. Retirement Plans .......................................................................................................... 22 Note 12. Risk Management......................................................................................................... 25 Note 13. Contingencies............................................................................................................... 26 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 27 Note 15. Natural Classifications with Functional Classifications .............................................. 28 Note 16. Component Units ......................................................................................................... 29

GEORGIA SOUTHWESTERN STATE UNIVERSITY
Management's Discussion and Analysis

Introduction
Georgia Southwestern State University is one of the 35 institutions of higher education of the University System of Georgia. The University, located in Americus, Georgia, was founded in 1906. The University offers baccalaureate and masters degrees in a wide variety of subjects. This wide range of educational opportunities attracts a highly qualified faculty and a student body of more than 2,400 students each year.

Students Students Faculty (Headcount) (FTE)

FY2008

113

FY2007

107

FY2006

103

2,405 2,457 2,427

2,128 2,161 2,123

Overview of the Financial Statements and Financial Analysis
Georgia Southwestern State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.
Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Georgia Southwestern State University. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and noncurrent), and Net Assets (Assets minus Liabilities). The difference between current and noncurrent assets will be discussed in the footnotes to the financial statements.
From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Georgia Southwestern State University Annual Financial Report FY 2008 1

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$7,759,759 45,953,519
1,222,348 54,935,626

June 30, 2007
$6,662,054 44,298,746
1,228,407 52,189,207

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

3,695,239 360,137
4,055,376

4,116,865 329,713
4,446,578

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

45,953,519 355,225
1,259,770 3,311,736 $50,880,250

44,298,746 398,221
1,252,025 1,793,637 $47,742,629

The total assets of the institution increased by $2,746,419. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $1,654,773 in the category of Capital Assets, net.
The total liabilities for the year decreased by ($391,202). The combination of the increase in total assets of $2,746,419 and the decrease in total liabilities of ($391,202) yields an increase in total net assets of $3,137,621.

Georgia Southwestern State University Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$20,120,645 34,306,119 (14,185,474) 14,506,254
320,780 2,816,841 3,137,621 47,742,629
0 47,742,629 $50,880,250

$19,489,130 33,735,259 (14,246,129) 12,630,439
(1,615,690) 3,286,288 1,670,598 46,072,031
0 46,072,031 $47,742,629

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Georgia Southwestern State University Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$5,408,835 7,015,912 2,280,906 5,242,790 172,202
20,120,645
14,337,080 0
169,174 0
14,506,254
1,576,660 1,240,181 2,816,841 $37,443,740

June 30, 2007
$5,540,292 6,522,603 2,098,894 5,079,978 247,363
19,489,130
12,227,642 76,178
336,269 (9,650)
12,630,439
3,286,288 0
3,286,288 $35,405,857

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$12,482,811 75,049
1,106,184 2,367,021 2,266,912 4,950,509 4,385,006 1,781,822 4,890,805 34,306,119
0 $34,306,119

June 30, 2007
$11,893,985 191,746
1,030,849 2,144,253 2,118,258 4,181,968 5,505,887 1,903,507 4,764,806 33,735,259
0 $33,735,259

Operating revenues increased by $631,515 in fiscal 2008. Tuition & Fees included a 2% decrease while revenues increased in Grants and Contracts, Auxiliary and Sales and Services.

Georgia Southwestern State University Annual Financial Report FY 2008 4

Nonoperating revenues increased by $1,875,815 for the year primarily due to an increase of $2,109,438 in State Appropriations.
The compensation and employee benefits category increased by $1,389,158 and primarily affected the Instruction category. The increase reflects merit increases and an increased cost of health insurance for the employees of the institution.
Utilities decreased by ($89,075) during the past year. The decrease was primarily associated with a moderate winter in fiscal year 2008 and affected the Plant Operations and Maintenance category.
Statement of Cash Flows
The final statement presented by Georgia Southwestern State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($11,953,435) 14,344,416 (1,144,237) 232,844 1,479,588 4,743,333
$6,222,921

June 30, 2007
($12,901,288) 12,306,147 (28,648) 274,787 (349,002) 5,092,335
$4,743,333

Capital Assets
The University had one significant capital asset addition for facilities in fiscal year 2008. The Georgia Southwestern Golf and Conference Center was donated to the University in May of 2008.

Georgia Southwestern State University Annual Financial Report FY 2008 5

For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the notes to the financial statements. Long Term Debt and Liabilities Georgia Southwestern State University had Long-Term Debt and Liabilities of $789,448 of which $429,311 was reflected as current liability at June 30, 2008. For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements. Component Units In compliance with GASB Statement No. 39, Georgia Southwestern State University has included the financial statements and notes for all required component units for FY2008. The details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units. Economic Outlook The University is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The University's overall financial position is strong. The University anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the University's ability to react to unknown internal and external issues.
Dr. Kendall A. Blanchard, President Georgia Southwestern State University
Georgia Southwestern State University Annual Financial Report FY 2008 6

Statement of Net Assets
GEO R GIA S O UTHW ES TER N S TA TE UN IV ER S IT Y S TA T EM EN T O F N ET A S S ETS June 30, 2008

A S S ETS C u rre n t Asse ts Cash an d Cash E quiv alen t s Sh o r t - t e r m I n v e st m e n t s A cco un t s Receiv able, n et (n o t e 3 ) Receiv ables - Federal Fin an cial A ssist an ce Receiv ables - O t h er P ledges Receiv able In v en t o ries (n o t e 4 ) P rep aid it em s T o t al Curren t A sset s
Non cu rre n t Asse ts N o n curren t Cash In v est m en t s (in cludin g Real E st at e) N o t es Receiv able, n et P ledges Receiv able Cap it al A sset s, n et (n o t e 6 ) O t h er A sset s T o t al N o n curren t A sset s TO TA L A S S ETS
L IA B IL ITIES C u rre n t Liabilitie s A cco un t s P ay able Sa la r ie s P a y a ble Ben efit s P ay able Co n t ract s P ay able D ep o sit s D eferred Rev en ue (n o t e 7 ) O t h er L iabilit ies D ep o sit s H eld fo r O t h er O rgan izat io n s Co m p en sat ed A bsen ces (curren t p o rt io n ) Rev en ue/M o rt gage Bo n ds P ay able (curren t ) T o t al Curren t L iabilit ies Non cu rre n t Liabilitie s Co m p en sat ed A bsen ces (n o n curren t ) Rev en ue/M o rt gage Bo n ds P ay able (n o n curren t ) T o t al N o n curren t L iabilit ies TO TA L L IA B IL ITIES
N ET A S S ETS In v est ed in Cap it al A sset s, n et o f relat ed debt Rest rict ed fo r N o n ex p en dable E x p en dable U n rest rict ed TO TA L N ET A S S ETS

G e orgia S ou th we ste rn S ta te U n i ve rs i ty
$ 6 ,2 2 2 ,9 2 1
4 0 ,0 4 0 9 1 7 ,0 9 0
3 9 0 ,1 5 3 1 8 9 ,5 5 5 7 ,7 5 9 ,7 5 9
5 6 3 ,6 1 8 6 5 8 ,7 3 0
4 5 ,9 5 3 ,5 1 9
4 7 ,1 7 5 ,8 6 7 5 4 ,9 3 5 ,6 2 6
7 1 ,3 5 7 1 0 7 ,2 2 9
1 2 ,9 9 7 4 8 ,6 0 4 1 7 2 ,3 6 6 2 ,7 7 6 ,5 1 1 2 2 ,2 3 9 5 4 ,6 2 5 4 2 9 ,3 1 1
3 ,6 9 5 ,2 3 9
3 6 0 ,1 3 7
3 6 0 ,1 3 7 4 ,0 5 5 ,3 7 6
4 5 ,9 5 3 ,5 1 9
3 5 5 ,2 2 5 1 ,2 5 9 ,7 7 0 3 ,3 1 1 ,7 3 6 $ 5 0 ,8 8 0 ,2 5 0

C om pon e n t Un it G e orgia
S ou th we ste rn Fo u n da ti o n , In c.
$ 1 ,4 3 8 ,1 4 1 2 ,0 4 5 ,9 5 3
3 ,7 9 5 3 3 8 ,3 8 0
3 ,8 2 6 ,2 6 9
2 ,5 4 7 ,0 1 6 2 2 ,5 7 7 ,5 1 7
2 5 3 ,6 5 8 2 1 ,5 7 9 ,3 4 2
7 3 7 ,7 6 4 4 7 ,6 9 5 ,2 9 7 5 1 ,5 2 1 ,5 6 6
1 0 6 ,1 7 6
1 7 ,3 7 0
1 3 ,9 6 7 6 5 ,0 0 0 2 0 2 ,5 1 3
2 6 ,9 1 4 ,8 9 4 2 6 ,9 1 4 ,8 9 4 2 7 ,1 1 7 ,4 0 7
(2 ,1 9 6 ,0 2 7 ) 1 0 ,0 0 3 ,1 7 8
4 ,4 2 0 ,6 2 0 1 2 ,1 7 6 ,3 8 8 $ 2 4 ,4 0 4 ,1 5 9

Georgia Southwestern State University Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets

GEORGIA S OUTHWES TERN S TATE UNIVERS ITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Grant s and Cont ract s Federal St at e Other Sales and Services Rents and Royalt ies Auxiliary Ent erprises Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion Ot her Operat ing Expense P ayment s t o or on behalf of Georgia Sout hwest ern St at e Universit y
T ot al Operat ing Expenses Operat ing Income (loss)

G e orgi a S ou th we s te rn S tate Un i ve rs i ty

C om pone nt Unit
G e orgi a S ou th we ste rn Fou n dati on , In c.

$7,841,624 (2,432,789)
4,093,057 294,565
2,628,290 2,280,906
5,595
1,573,447 1,080,553 1,230,317
68,098 330,212 871,642
88,521 166,607 20,120,645
6,262,153 8,640,771 4,728,098
102,405 297,715 2,226,514 1,463,859 8,980,130 1,604,474
34,306,119 (14,185,474)

$0 563,700
1,221,333
(283,264) 1,501,769
143,353 34,789 16,029
912,269 185,038 1,653,246 2,944,724 (1,442,955)

Georgia Southwestern State University Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued

GEORGIA S OUTHWES TERN S TATE UNIVERS ITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

G e orgi a S ou th we s te rn S tate Un i ve rs i ty

C om pone nt Unit
G e orgi a S ou th we ste rn Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENSES) State Appropriations Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Ot her Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET AS S ETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

14,337,080 169,174
14,506,254 320,780
1,576,660 1,240,181
2,816,841 3,137,621
47,742,629 0
47,742,629 $50,880,250

(837,958) (1,279,254) (1,372,980) (3,490,192) (4,933,147)
1,345,679 1,345,679 (3,587,468)
27,991,627 0
27,991,627 $24,404,159

Georgia Southwestern State University Annual Financial Report FY 2008 9

Statement of Cash Flows
GEORGIA S OUTHWES TERN S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES P roceeds from Sales and Mat urit ies of Invest m ent s Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$5,504,959 7,181,945 2,280,906
(15,595,689) (14,836,843)
(2,226,514) (57,254)
1,670,498 1,170,540 1,224,428
67,919 335,503 926,527 (14,528) 414,168 (11,953,435)
14,337,080 7,336
14,344,416
1,576,660 (2,720,897) (1,144,237)
16,587 216,257 232,844 1,479,588 4,743,333 $6,222,921

Georgia Southwestern State University Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
GEORGIA S OUTHWES TERN S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Change in fair value of invest ment s recognized as a component of int erest income Gift of capit al asset s reducing proceeds of capit al grant s and gift s

June 30, 2008
($14,185,474)
1,604,474 428,821 3,123 (50,061) 62,617 34,725 190,570 (2,424) (39,806)
($11,953,435)
($47,083) ($1,240,181)

Georgia Southwestern State University Annual Financial Report FY 2008 11

GEORGIA SOUTHWESTERN STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Georgia Southwestern State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Georgia Southwestern State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Georgia Southwestern State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Georgia Southwestern State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Georgia Southwestern State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Georgia Southwestern State University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, Georgia Southwestern State University is reporting the activity for the Georgia Southwestern Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB
Georgia Southwestern State University Annual Financial Report FY 2008 12

Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool.
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.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of
Georgia Southwestern State University Annual Financial Report FY 2008 13

Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Georgia Southwestern State University.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary activities prior to the end of the fiscal year but related to the subsequent accounting period. Deferred
Georgia Southwestern State University Annual Financial Report FY 2008 14

revenues also include amounts received from grant and contract sponsors that have not yet been earned.
Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Georgia Southwestern State University had accrued liability for compensated absences in the amount of $749,642 as of 7-1-2007. For FY2008, $537,451 was earned in compensated absences and employees were paid $497,645, for a net increase of $39,806. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $789,448.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Expendable Restricted Net Assets include the following:
Georgia Southwestern State University Annual Financial Report FY 2008 15

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans T ot al Rest rict ed Expendable

June 30, 2008
$189,706 802,010 268,054
$1,259,770

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$915,741 620,675 33,175
1,742,145 $3,311,736

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Georgia Southwestern State University, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.

Georgia Southwestern State University Annual Financial Report FY 2008 16

Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 University, 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 University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association.
Georgia Southwestern State University Annual Financial Report FY 2008 17

6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.

The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

At June 30, 2008, the carrying value of deposits was $2,950,511 and the bank balance was $3,484,660. Of the University's deposits, $3,337,043 were uninsured. Of these uninsured deposits, $3,337,043 were collateralized with securities held by the financial institution's trust department or agent in the University's name.

B. Investments Georgia Southwestern State University maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable federal and state laws. The University's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment ty p e Bond/Equity M utual Funds
Investment Pools Office of T reasury and Fiscal Services Georgia Fund 1
T otal Investments

$563,618
3,266,810 $3,830,428

The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1 Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 days.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk.

Georgia Southwestern State University Annual Financial Report FY 2008 18

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$180,107 288,627 40,040 512,452
1,021,226 64,096
$957,130

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore Other
T otal

$332,462 57,691
$390,153

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was approximately $27,497.

Georgia Southwestern State University Annual Financial Report FY 2008 19

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$529,207 1,060,592 1,589,799
57,164,408 1,267,167 2,972,621 6,384,597
67,788,793
16,352,867 1,129,988 2,425,322 5,171,669
25,079,846
42,708,947
$44,298,746

Addi ti o n s
$554,800 616,316
1,171,116

Re du cti on s
$0 90,016 90,016

1,916,694
93,981 167,472 2,178,147

259,067 12,020
271,087

1,319,919
153,643 130,912 1,604,474
573,673
$1,744,789

259,067 12,020
271,087
0
$90,016

En di n g B al an ce 6/30/2008
$1,084,007 1,586,892 2,670,899
59,081,102 1,267,167 2,807,535 6,540,049
69,695,853
17,672,786 1,129,988 2,319,898 5,290,561
26,413,233
43,282,620
$45,953,519

Georgia Southwestern State University Annual Financial Report FY 2008 20

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $1,259,130 1,517,381
$2,776,511

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

O the r Liabilitie s Compensated Absences

Beginning Balance
July 1, 2007
$749,642

Addi ti o n s $537,451

Re ductions

En di n g Balance June 30, 2008

$497,645

$789,448

Total Long Te rm O bligations

$749,642

$537,451

$497,645

$789,448

C u rre n t Porti on
$429,311
$429,311

Note 9. Significant Commitments
The University has no known significant commitments not reflected in the accompanying basic financial statements.
Note 10. Lease Obligations
CAPITAL LEASES
Georgia Southwestern State University has no capital leases.
OPERATING LEASES
Georgia Southwestern State University's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2011. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small business equipment.

Georgia Southwestern State University Annual Financial Report FY 2008 21

Future commitments of noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 T ot al m inim um lease paym ent s

Year 1 2 3

Real P roperty and Equipm ent
Operat ing Leases
$14,801 12,763 5,078
$32,642

Georgia Southwestern State University's FY2008 expense for rental of real property and equipment under operating leases was $16,938.

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Georgia Southwestern State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Georgia Southwestern State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Georgia Southwestern State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$737,530 $701,424 $672,470

Georgia Southwestern State University Annual Financial Report FY 2008 22

Employees' Retirement System of Georgia
Plan Description Georgia Southwestern State University participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age. Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30, 2008, for employees covered by ERS was $16,517. The University's total payroll for all employees was $14,902,924.
For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.
Georgia Southwestern State University Annual Financial Report FY 2008 23

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$1,719 $0 $0

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Georgia Southwestern State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Georgia Southwestern State University Annual Financial Report FY 2008 24

Georgia Southwestern State University and the covered employees made the required contributions of $422,131 (8.13% or 8.15%) and $259,306 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Georgia Southwestern State University 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $25,001 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Georgia Southwestern State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of
Georgia Southwestern State University Annual Financial Report FY 2008 25

the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Georgia Southwestern State University, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Georgia Southwestern State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Georgia Southwestern State University (an organizational unit of the Board of Regents of the University 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, 2008.
Georgia Southwestern State University Annual Financial Report FY 2008 26

Note 14. Post-Employment Benefits Other Than Pension Benefits Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 162 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Georgia Southwestern State University recognized as incurred $703,625 of expenditures, which was net of $263,681 of participant contributions.
Georgia Southwestern State University Annual Financial Report FY 2008 27

Note 15. Natural Classifications with Functional Classifications

The University's operating expenses by functional classification for FY2008 are shown below:
Functional Classification FY2008

Natural Classification

Instruction

Research

Public Service

Academic Support

Student Services

Institutional Support

Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities
Supplies and Others Services Depreciation

$6,173,155 1,773,359 1,972,625
75,352 35,989 67,152 2,385,179

$18,642 8,914 5,023
2,920 3,451
773 33,072 2,254

$31,929 569,684 153,575
32,912 23,856 12,060 279,950 2,218

$2,500 1,461,943
396,900
29,748
6,132 321,977 147,821

$3,977 1,271,051
336,519
88,977 32,223 19,510 513,002 1,653

$0 2,216,398 1,400,545
102,405 41,860 7,715 24,873 1,100,265 56,448

Total Expenses

$12,482,811

$75,049

$1,106,184

$2,367,021

$2,266,912

$4,950,509

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

$0 742,140 232,861 (214,500)
2,572
1,217,066 1,082,343 1,322,524

$0 56,244
1,725,578

$31,950 597,282 173,806 214,500 23,374 397,702 116,293 3,264,342 71,556

$4,385,006

$1,781,822

$4,890,805

Total Expenses
$6,262,153 8,640,771 4,728,098
102,405 297,715 2,226,514 1,463,859 8,980,130 1,604,474
$34,306,119

Georgia Southwestern State University Annual Financial Report FY 2008 28

Note 16. Component Units

The Georgia Southwestern Foundation, Inc (Foundation) is a legally separate, tax-exempt component unit of Georgia Southwestern State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The thirty-six member board of the Foundation is selfperpetuating and consists of graduates and friends of the University, and members of the local community. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $1,653,246 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Georgia Southwestern State University Business Office, 800 Georgia Southwestern State University Drive, Americus, GA 31709.

Investments for Component Units:

Georgia Southwestern Foundation holds endowment and other investments in the amount of $24.6 million. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors.

M oney M arket Accounts Certificates of Deposit Corporate Bonds & Fixed Income Funds Equity Securities & Funds

Cost
$1,066,144 2,045,953 2,023,991
18,636,412

Fair Value
$1,066,144 2,045,953 2,010,197
19,501,176

Total Investments

$23,772,500

$24,623,470

Georgia Southwestern State University Annual Financial Report FY 2008 29

Capital Assets for Component Units: Georgia Southwestern Foundation, Inc. holds the following Capital Assets as of June 30, 2008:

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

June 30, 2008
$131,199 224,384 355,583
21,766,967 987,111
22,754,078 1,530,319 21,223,759 $21,579,342

Long-term Liabilities for Component Units:
The Americus-Sumter Payroll Department Authority ("PDA") issued $27,365,000 of its Revenue Bonds (GSW Foundation Housing, LLC Student Housing Project), Series 2005 ("the Bonds"). The proceeds of the sale of the Bonds have been loaned to the GSW Foundation Housing, LLC pursuant to the terms and provision of a Loan Agreement and Assignment of Gross Revenues and Certain Agreements and Accounts, dated November 1, 2005, between the PDA and the Company. The proceeds are being used to construct 2 student housing buildings and parking facilities for use by the University.
The bonds mature in the year 2037 and have interest rates ranging from 4% to 5.125%. Longterm liability activity for the year ended June 30, 2008 is as follows:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within One Year

Revenue/Mortgage Bonds Payable

$27,233,914

$0

$254,020

$26,979,894

$65,000

Georgia Southwestern State University Annual Financial Report FY 2008 30

Debt Service Obligations

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal
$65,000 105,000 145,000 190,000 235,000 2,010,000 3,760,000 5,220,000 6,570,000 8,815,000 27,115,000 (135,106) $26,979,894

Bonds Payable Interest
$1,274,108 1,271,508 1,267,308 1,261,507 1,253,907 6,073,617 5,492,738 4,495,212 3,151,881 1,232,050
26,773,836
$26,773,836

Total
$1,339,108 1,376,508 1,412,308 1,451,507 1,488,907 8,083,617 9,252,738 9,715,212 9,721,881
10,047,050 53,888,836
(135,106) $53,753,730

Georgia Southwestern State University Annual Financial Report FY 2008 31

GEORGIA GWINNETT COLLEGE
Financial Report
For the Year Ended June 30, 2008

Georgia Gwinnett College Lawrenceville, Georgia

Dr. Daniel J. Kaufman
President

Mr. Edwin Beauchamp
Vice President for Business and Finance

GEORGIA GWINNETT COLLEGE ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 8 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 9 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 11 Note 2. Deposits and Investments............................................................................................... 15 Note 3. Accounts Receivable...................................................................................................... 16 Note 4. Inventories...................................................................................................................... 16 Note 5. Notes/Loans Receivable................................................................................................. 16 Note 6. Capital Assets................................................................................................................. 17 Note 7. Deferred Revenue........................................................................................................... 18 Note 8. Long-Term Liabilities .................................................................................................... 18 Note 9. Significant Commitments............................................................................................... 18 Note 10. Lease Obligations......................................................................................................... 18 Note 11. Retirement Plans .......................................................................................................... 19 Note 12. Risk Management......................................................................................................... 23 Note 13. Contingencies............................................................................................................... 23 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 24 Note 15. Natural Classifications with Functional Classifications .............................................. 25

GEORGIA GWINNETT COLLEGE
Management's Discussion and Analysis

Introduction
Georgia Gwinnett College is one of the 35 institutions of higher education of the University System of Georgia. The College, located in Lawrenceville, Georgia, was founded in 2006 and has become known as the "Campus of Tomorrow" because of its unique mission emanating from the Board of Regents. Georgia Gwinnett College uses state-of-the-art instructional technology, advanced learning methodology, and online courses to matriculate students. Georgia Gwinnett College currently offers baccalaureate degrees in business administration, biology, psychology, and has numerous programs currently in development. The opportunity to be part of the first new college in the 21st century with a focus on the use of technology attracts a highly qualified faculty and a growing student body as indicated below:

FY2008 FY2007

Students Students Faculty (Headcount) (FTE)

103

788

695

22

118

76

Overview of the Financial Statements and Financial Analysis
Georgia Gwinnett College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.
Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Georgia Gwinnett College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

Georgia Gwinnett College Annual Financial Report FY 2008 1

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Total As se ts

June 30, 2008
$6,316,433 58,890,305 65,206,738

June 30, 2007
$3,251,859 44,060,961 47,312,820

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

3,642,102 27,554,241 31,196,343

2,134,579 14,367,398 16,501,977

Net Assets: Invest ed in Capit al Asset s, net of debt Unrest rict ed Total Ne t As s e ts

30,951,807 3,058,588
$34,010,395

29,216,838 1,594,005
$30,810,843

The total assets of the institution increased by $17,893,918. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $3,033,991 in Cash and Cash Equivalents and $14,829,344 in the category of Capital Assets, net.
The total liabilities for the year increased by $14,694,366. The combination of the increase in total assets of $17,893,918 and the increase in total liabilities of $14,694,366 yields an increase in total net assets of $3,199,552. The increase in total net assets is in the categories of Invested in Capital Assets, net of debt, in the amount of $1,734,969 and Unrestricted Net Assets in the amount of $1,464,583.

Georgia Gwinnett College Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$3,539,008 24,783,440 (21,244,432) 22,067,191
822,759 2,376,793 3,199,552 30,810,843
0 30,810,843 $34,010,395

$2,376,587 11,262,658 (8,886,071) 10,554,018
1,667,947 2,939,953 4,607,900 26,202,943
0 26,202,943 $30,810,843

The Statement of Revenues, Expenses, and Changes in Net Assets reflect a positive year with an increase 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:

Georgia Gwinnett College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$2,112,665 74,039
987,274 365,030 3,539,008
23,007,927 12,449
100,151 17,387
23,137,914
2,376,793 2,376,793 $29,053,715

June 30, 2007
$739,822 2,936
1,229,000 404,829
2,376,587
10,943,548 0
71,873 319,631 11,335,052
2,939,953 2,939,953 $16,651,592

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$9,813,577 3,143,845 1,508,238 8,138,105 1,629,343 550,332 0
24,783,440
1,070,723 $25,854,163

June 30, 2007
$2,606,689 2,090,785 609,100 4,443,240 1,511,235 1,307 302
11,262,658
781,034 $12,043,692

Operating revenues increased by $1,162,421 in fiscal 2008. During FY 2008, Georgia Gwinnett College increased its student count to nearly 800 students, which significantly increased operating revenues for both tuition and fee revenue.
The Auxiliary revenue is a result of the parking fee charged to all students attending classes on campus. This fee will pay for a new parking deck that opened in fiscal year 2008. Other

Georgia Gwinnett College Annual Financial Report FY 2008 4

Auxiliary revenue includes Dining Dollars. In addition, the College receives income from the Bookstore that is currently outsourced.

Nonoperating revenues increased by $11,802,862 for the year primarily due to an increase of $12,064,379 in State Appropriations.

The compensation and employee benefits category increased by $10,494,815 and primarily affected the Instruction, Academic Support, and Institutional Support categories. The increase reflects the addition of staff and faculty members hired by Georgia Gwinnett College and the corresponding increase to benefits.

Utilities increased by $327,059 during the past year. The increase was primarily associated with the addition of new buildings and a Parking Deck and a general increase in utility costs that affected the Plant Operations and Maintenance category.

Statement of Cash Flows

The final statement presented by Georgia Gwinnett College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($17,323,547) 23,191,743 (2,934,356) 100,151 3,033,991 2,801,004
$5,834,995

June 30, 2007
($7,416,483) 11,169,190 (2,462,467)
71,873 1,362,113 1,438,891
$2,801,004

Capital Assets
The College had two significant capital asset additions in fiscal year 2008. Phase II to Academic Building C was completed. The Academic building will provide much needed classroom and
Georgia Gwinnett College Annual Financial Report FY 2008 5

office space for the campus. This addition was funded by the Georgia State Financing and Investment Commission (GSFIC). The second significant capital addition was a Parking Deck that was funded by GGC Real Estate Parking I, LLC, a related party.
For additional information concerning Capital Assets, see Notes 1, 6, 8, 9 and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
Georgia Gwinnett College had Long-Term Debt and Liabilities of $28,543,895 of which $989,654 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, Georgia Gwinnett College is not including the financial statements and notes for any component units for FY2008. The Georgia Gwinnett College Foundation does not meet the criteria to consider it significant for component unit reporting at this time.
Economic Outlook
Georgia Gwinnett College recently received its Candidacy for the Southern Association of Colleges and Schools (SACS). GGC will continue working with the (SACS) on the accreditation process. This will consist of a thorough review of academic, administrative, and financial components of the College. Accreditation standards for a new institution are particularly stringent. The requirements can be seen by the progressive steps of candidacy, initial accreditation, five year reaccreditation and accreditation of each substantive change. Only after this time period does an institution go on the standard ten year cycle. The standards involve maintaining sufficient funding for academic programs, faculty, library resources and technology. It is essential that GGC demonstrate solid on-going financial footing to support its needs and growth as we are completing the accreditation process. College administrators recognize this process to be vital to future enrollment and success; therefore, substantial resources and efforts will be dedicated toward achievement of the various milestones of accreditation.
As Georgia Gwinnett College continues to grow, it will be engaged in a number of activities that will have substantial impact on both its short and long term financial outlook. Included in these activities will be the hiring of additional faculty to teach students at all levels, integration of technology-related functions for enrollment, admission, and matriculation, and other routine components of administering an educational institution. Additionally, college administrators will continue development of the GGC Foundation that has already had two extremely successful years of fundraising and operation.
Georgia Gwinnett College Annual Financial Report FY 2008 6

Also critical to the future of the institution is the construction of facilities to meet the needs of students, faculty, staff, and the community. This is also an important part of the SACS accreditation process. During the next year the College will begin construction of a state of the art $28.5 million Learning Resource Center, funded by the Georgia Legislature, and overseen by the Georgia State Investment and Financing Commission. This new library learning resource center is vital both for SACS accreditation and as a critical resource for Georgia Gwinnett College's student body.
Additionally, the Georgia State Financing and Investment Commission (GSFIC), with the approval of the Georgia legislature, financed the second phase of the academic building C. The funding was provided by General Obligation bonds issued by the State of Georgia. Phase II was completed in fall 2007 and provided 24,000 additional square feet of space for classrooms and faculty offices. At the end of fiscal year 2008, construction costs financed by GSFIC totaled slightly over $5 million. In addition the College completed construction of a parking deck financed through private funding and paid for by a new student parking fee. Additionally, the Board of Regents approved a $100 Student Center facility fee and increased the student recreation fee from $20 to $40 for FY 2008. These new fees will be used to build a new Student Center and to provide approximately 30-50,000 square feet of student recreation space.
As a new and rapidly growing institution, GGC is at a different stage of life than is any other USG institution, and has unique budget considerations, constraints and requirements. Operating new facilities, educating thousands of additional students and supporting corresponding increases in faculty require sizable incremental budgets. This funding will come from several sources including the budget of the Board of Regents, special initiative funds from the General Assembly, or a combination of public and private dollars. Without adequate funding from these sources, Georgia Gwinnett College will not be able to acquire the personnel and administrative resources necessary to meet the anticipated demand for student enrollment from the community.
2008-2009 will be an exciting time for Georgia Gwinnett College. While there are many pressing needs for the College, the Gwinnett community, the General Assembly, and the Board of Regents have consistently supported the institution through its transition. We look forward to this continued support in meeting the objectives of the newest publicly funded state institution in the Nation.
Dr. Daniel J. Kaufman, President Georgia Gwinnett College
Georgia Gwinnett College Annual Financial Report FY 2008 7

Statement of Net Assets
GEORGIA GWINNETT COLLEGE STATEMENT OF NET ASSETS June 30, 2008
AS S ETS Current Assets Cash and Cash Equivalent s Account s Receivable, net (not e 3) Receivables - Ot her P repaid Items T ot al Current Asset s
Noncurre nt Asse ts Capit al Asset s, net (not e 6) T ot al Noncurrent Asset s TO TAL AS S ETS
LIAB ILITIES C u rre n t Liabi li tie s Account s P ayable Salaries P ayable Deferred Revenue (not e 7) Ot her Liabilit ies Deposit s Held for Ot her Organizat ions Lease P urchase Obligat ions (current port ion) Compensat ed Absences (current port ion) T ot al Current Liabilit ies Non cu rre n t Li abil iti e s Lease P urchase Obligat ions (noncurrent ) Compensat ed Absences (noncurrent ) T ot al Noncurrent Liabilit ies TO TAL LIABILITIES
NET AS S ETS Invest ed in Capit al Asset s, net of relat ed debt Unrest rict ed
TO TAL NET AS S ETS

June 30, 2008
$5,834,995
479,448 1,990
6,316,433
58,890,305 58,890,305 65,206,738
1,349,565 7,858
1,124,766 26,877
143,382 657,902 331,752 3,642,102
27,280,596 273,645
27,554,241 31,196,343
30,951,807 3,058,588
$34,010,395

Georgia Gwinnett College Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets

GEORGIA GWINNETT COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES

June 30, 2008

Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Sales and Services Rents and Royalt ies Auxiliary Ent erprises Bookst ore P arking/T ransport at ion Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Ut ilit ies Supplies and Ot her Services Depreciat ion
T ot al Operat ing Expenses Operat ing Income (loss)
NO NO PERATING REVENUES (EXPENS ES ) St at e Appropriat ions Gift s Invest m ent Incom e (endowment s, auxiliary and ot her) Int erest Expense (capit al asset s) Ot her Nonoperat ing Revenues Net Nonoperat ing Revenues Income before ot her revenues, expenses, gains, or loss Capit al Grant s and Gift s St at e T ot al Ot her Revenues Increase in Net Asset s
NET AS S ETS Net Asset s-beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s-beginning of year, rest at ed
Net Asset s-End of Year

$2,136,338 (23,673) 74,039 258,376
133,839 777,950
75,485 106,654 3,539,008
6,348,618 7,153,276 3,024,920
112 206,196 884,300 5,289,580 1,876,438 24,783,440 (21,244,432)
23,007,927 12,449
100,151 (1,070,723)
17,387 22,067,191
822,759
2,376,793 2,376,793 3,199,552
30,810,843 0
30,810,843 $34,010,395

Georgia Gwinnett College Annual Financial Report FY 2008 9

Statement of Cash Flows

GEORGIA GWINNETT COLLEGE STATEMENT OF CASH FLOWS For the Year Ended June 30, 2008

C ASH FLO W S FRO M O PERATING AC TIVITIES T uition and Fees Grant s and Cont ract s (Exchange) Sales and Services Payment s t o Suppliers Payment s t o Employees Auxiliary Ent erprise Charges: Bookst ore Food Services Parking/T ransport at ion Ot her Organizat ions Ot her Receipt s (payment s) Net Cash Provided (used) by Operat ing Act ivit ies
C ASH FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al Purposes Ot her Nonoperat ing Receipt s Net Cash Flows Provided by Non-capit al Financing Act ivit ies
C ASH FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received Purchases of Capit al Asset s Principal Paid on Capit al Debt and Leases Int erest Paid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C ASH FLO W S FRO M INVESTING AC TIVITIES Int erest on Invest ment s Net Cash Provided (used) by Invest ing Activities Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year
REC O NC ILIATIO N O F O PERATING LO SS TO NET C ASH PRO VIDED (USED) BY O PERATING AC TIVITIES:
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash Provided (used) by Operating Act ivit ies
Depreciat ion Change in Assets and Liabilit ies:
Receivables, net Prepaid It ems Account s Payable Deferred Revenue Ot her Liabilit ies Compensat ed Absences
Net Cash Provided (used) by Operat ing Act ivit ies

** NON-CASH INVEST ING, NON-CAPIT AL FINANCING, AND CAPIT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed asset s acquired by incurring capit al lease obligat ions Int erest on capit al lease obligat ions paid by St at e Agency on behalf of College

Georgia Gwinnett College Annual Financial Report FY 2008 10

June 30, 2008
$2,243,549 116,020 74,039
(8,854,426) (13,199,783)
133,839 1,078,821
793,169 92,270
198,955 (17,323,547)
23,007,927 142,566 41,087 163
23,191,743
2,376,793 (3,936,346)
(624,945) (749,858) (2,934,356)
100,151 100,151 3,033,991 2,801,004 $5,834,995
($21,244,432)
1,876,438
(70,193) 610
802,618 1,111,024
(132,041) 332,429
($17,323,547)
$13,719,320 $320,865

GEORGIA GWINNETT COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Georgia Gwinnett College serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Georgia Gwinnett College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Georgia Gwinnett College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Georgia Gwinnett College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Georgia Gwinnett College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Georgia Gwinnett College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Unit - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. For FY2008, Georgia Gwinnett College does not have any foundations or affiliated organizations that qualify as component units.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. The financial statements have been prepared
Georgia Gwinnett College Annual Financial Report FY 2008 11

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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
Georgia Gwinnett College Annual Financial Report FY 2008 12

To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC.
Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Georgia Gwinnett College had accrued liability for compensated absences in the amount of $272,969 as of 7-1-2007. For FY2008, $491,526 was earned in compensated absences and employees were paid $159,098, for a net increase of $332,428. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $605,397.
Noncurrent Liabilities Noncurrent liabilities include liabilities that will not be paid within the next fiscal year; and capital lease obligations with contractual maturities greater than one year.
Net Assets The College's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.
Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.
Georgia Gwinnett College Annual Financial Report FY 2008 13

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$1,781,497 1,277,091
$3,058,588

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Georgia Gwinnett 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances and (2) sales and services of auxiliary enterprises, net of scholarship allowances.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 College's behalf. Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs are recorded as either operating or non-operating revenues in the College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances. The College currently does not receive any Government grants, such as Pell grants or other Federal grants.

Georgia Gwinnett College Annual Financial Report FY 2008 14

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $5,834,995 and the bank balance was $6,259,324. Of the College's deposits, $6,259,324 were uninsured. Of these uninsured deposits, $6,259,324 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the College's name.
B. Investments Georgia Gwinnett College had no investments at June 30, 2008.
Georgia Gwinnett College Annual Financial Report FY 2008 15

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Other
Less Allowance for Doubt ful Account s Net Account s Receivable

$6,784 472,664 479,448
0
$479,448

Note 4. Inventories Georgia Gwinnett College had no inventories at June 30, 2008. Note 5. Notes/Loans Receivable Georgia Gwinnett College had no Notes or Loans receivable as of June 30, 2008.

Georgia Gwinnett College Annual Financial Report FY 2008 16

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Equipment Capital Leases Library Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation Buildings Equipment Capital Leases Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$3,793,448 3,793,448
25,197,506 1,456,545
17,279,804 1,164,077
45,097,932
1,926,039 1,040,440 1,544,386
319,554 4,830,419
40,267,513
$44,060,961

Addi ti o n s
$1,577,599 1,577,599

Re du cti on s
$5,371,047 5,371,047

5,586,534 558,362
13,719,320 646,264
20,510,480

154,142
77,384 231,526

679,671 548,611 525,182 122,974 1,876,438
18,634,042
$20,211,641

142,891 77,385
220,276 11,250
$5,382,297

En di n g B al an ce 6/30/2008
$0 0
30,784,040 1,860,765
30,999,124 1,732,957
65,376,886
2,605,710 1,446,160 2,069,568
365,143 6,486,581
58,890,305
$58,890,305

Georgia Gwinnett College Annual Financial Report FY 2008 17

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $224,766 900,000
$1,124,766

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations

Beginning Balance
July 1, 2007
$14,844,123

Additions $13,719,320

Reductions

Ending Balance June 30, 2008

$624,945

$27,938,498

Other Liabilities Compensated Absences Total

272,969 272,969

491,526 491,526

159,098 159,098

605,397 605,397

Total Long Term Obligations

$15,117,092

$14,210,846

$784,043

$28,543,895

Current Portion
$657,902
331,752 331,752 $989,654

Note 9. Significant Commitments
The College executed two rental agreements with a related party during fiscal 2008 for a Student Services building and a Student Recreation center. Both rental agreements commence in fiscal 2009 and expire in fiscal 2032. The present value of the minimum lease payments for each rental agreement is approximately $7.8 million and $6.2 million, respectively. These amounts are not reflected in the accompanying basic financial statements.
Note 10. Lease Obligations
Georgia Gwinnett College is obligated under two capital leases for the acquisition of real property.
CAPITAL LEASES
Georgia Gwinnett College has two capital leases payable in monthly and semi-annual installments with the terms expiring in fiscal 2023 and 2032. Expenditures for fiscal year 2008 were $1,695,668, of which $1,070,723 represented interest expense. Principal paid on capital leases was $624,945. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:
Georgia Gwinnett College Annual Financial Report FY 2008 18

Buildings

$28,929,556

Future commitments for capital leases as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 T ot al m inim um lease paym ent s
Less: Int erest Less: Execut ory cost s P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25

Real P roperty and Equipm ent
Capit al Leases
$2,091,839 2,093,384 2,109,976 2,510,933 2,543,295
12,200,042 11,936,164
5,964,608 4,764,196 46,214,437 16,502,970 1,772,969 $27,938,498

Georgia Gwinnett College's FY2008 expense for rental of real property and equipment under operating leases was $0.
Note 11. Retirement Plans
Teachers Retirement System of Georgia
Plan Description Georgia Gwinnett College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.
Funding Policy Employees of Georgia Gwinnett College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Georgia Gwinnett College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Georgia Gwinnett College Annual Financial Report FY 2008 19

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$507,371 $265,393 $64,331

Employees' Retirement System of Georgia

Plan Description Georgia Gwinnett College participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in

Georgia Gwinnett College Annual Financial Report FY 2008 20

the ERS. Both employer and employee contributions are established by State statute. The College's payroll for the year ended June 30, 2008, for employees covered by ERS was $78,200. The College's total payroll for all employees was $13,501,894.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the College pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the College amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$8,141 $0 $0

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Georgia Gwinnett College Annual Financial Report FY 2008 21

Funding Policy Georgia Gwinnett College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
Georgia Gwinnett College and the covered employees made the required contributions of $554,490 (8.13% or 8.15%) and $340,570 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Georgia Gwinnett 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $38,487 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.
Georgia Gwinnett College Annual Financial Report FY 2008 22

Note 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Georgia Gwinnett College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Georgia Gwinnett College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. 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 expenditure that is disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Georgia Gwinnett College expects such amounts, if any, to be immaterial to its overall financial position.
Georgia Gwinnett College Annual Financial Report FY 2008 23

Litigation, claims and assessments filed against Georgia Gwinnett College (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were no employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits.
Georgia Gwinnett College Annual Financial Report FY 2008 24

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
F acult y St aff B en efit s Personal Services T ravel U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

Inst ruct ion
$6,250,011 88,167
1,436,146
54,185 63,394 836,911 1,084,763
$9,813,577

Functional Clas s ification FY2008

Academ ic Sup p o r t

St udent Ser v ic e s

$96,000 2,030,901
480,780

$0 1,078,916
271,606

37,199 7,136
302,748 189,081

23,012 134,704

$3,143,845

$1,508,238

Inst it ut ional Sup p o r t
$2,607 3,762,799
775,672 112
90,932 271,970 3,244,352 (10,339)
$8,138,105

Natural Classification
F acult y St aff B en efit s Personal Services T ravel U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

P lant Operat ions & Maintenance

Functional Clas s ification FY2008

A ux ilia r y Ent erprises

Unallocat ed E x p en se s

$0

$0

$0

180,574

11,919

60,533

183

868 541,800 832,275
13,293

303,310 234,920

(364,720) 364,720

$1,629,343

$550,332

$0

T otal E x p en se s
$6,348,618 7,153,276 3,024,920 112 206,196 884,300 5,289,580 1,876,438
$24,783,440

Georgia Gwinnett College Annual Financial Report FY 2008 25

KENNESAW STATE UNIVERSITY
Financial Report
For the Year Ended June 30, 2008
Kennesaw State University Atlanta, Georgia

Dr. Daniel S. Papp , Ph.D.
President
Dr. Ashok Roy, Ph.D., CIA, CBA
Asst. Vice President Financial Services

Dr. Randy Hinds, Ed.D.
Vice President Operations
Susan Dalton, MBA, CPA
Controller

KENNESAW STATE UNIVERSITY ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ............................................................................ 1 Statement of Net Assets ...................................................................................................... 7 Statement of Revenues, Expenses and Changes in Net Assets........................................... 8 Statement of Cash Flows .................................................................................................. 10 Note 1. Summary of Significant Accounting Policies .................................................... 12 Note 2. Deposits and Investments................................................................................... 17 Note 3. Accounts Receivable.......................................................................................... 20 Note 4. Inventories.......................................................................................................... 20 Note 5. Notes/Loans Receivable..................................................................................... 20 Note 6. Capital Assets..................................................................................................... 21 Note 7. Deferred Revenue............................................................................................... 22 Note 8. Long-Term Liabilities ........................................................................................ 22 Note 9. Significant Commitments................................................................................... 22 Note 10. Lease Obligations............................................................................................. 22 Note 11. Retirement Plans .............................................................................................. 25 Note 12. Risk Management............................................................................................. 28 Note 13. Contingencies................................................................................................... 29 Note 14. Post-Employment Benefits Other Than Pension Benefits ............................... 29 Note 15. Natural Classifications with Functional Classifications .................................. 31 Note 16. Component Units ............................................................................................. 32

KENNESAW STATE UNIVERSITY
Management's Discussion and Analysis

Introduction
Kennesaw State University is one of the 35 institutions of higher education of the University System of Georgia. The University, located in Kennesaw, Georgia, was founded in 1963 and is recognized as a highly valued resource for the region's educational, economic, social, and cultural advancement. The University offers baccalaureate, masters, and doctoral degrees in a wide variety of subjects. This wide range of educational opportunities attracts a highly qualified faculty and a growing student body as shown by the comparison numbers that follow.
Students Students Faculty (Headcount) (FTE)

FY2008

748

20,607 18,076

FY2007

710

19,854 17,183

FY2006

629

18,556 15,931

Overview of the Financial Statements and Financial Analysis
Kennesaw State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Kennesaw State University. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.
From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Kennesaw State University Annual Financial Report FY 2008 1

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$51,701,646 198,322,542
4,450,970 254,475,158

June 30, 2007
$46,138,698 171,488,933
4,734,442 222,362,073

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

33,310,061 64,405,470 97,715,531

25,556,900 50,830,198 76,387,098

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

134,149,719 763,115
2,985,355 18,861,438 $156,759,627

122,398,041 787,991
3,177,009 19,611,934 $145,974,975

The total assets of the institution increased by $32,113,085. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $26,833,609 in the category of Capital Assets, net. The balance of the increase is mainly in cash.
The total liabilities for the year increased by $21,328,433. The combination of the increase in total assets of $32,113,085 and the increase in total liabilities of $21,328,433 yields an increase in total net assets of $10,784,652. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $11,751,678.

Kennesaw State University Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and non-operating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$113,903,454 195,654,451 (81,750,997) 83,495,302
1,744,305 9,040,347 10,784,652 145,974,975
0 145,974,975 $156,759,627

$99,554,252 177,679,811 (78,125,559)
79,915,648
1,790,089 8,455,725 10,245,814 135,729,161
0 135,729,161 $145,974,975

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Kennesaw State University Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$66,144,896 16,069,649 5,865,519 24,962,597 860,793
113,903,454
82,056,394 2,567,675 1,189,848 1,393,424 (13,301)
87,194,040
7,924,687 1,115,660 9,040,347 $210,137,841

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$82,827,889 950,601
3,866,424 21,123,134 10,882,590 28,967,810 19,003,180
8,018,266 20,014,557 195,654,451
3,698,738 $199,353,189

June 30, 2007
$58,464,228 13,301,802 4,538,012 22,027,156 1,223,054 99,554,252
75,030,494 2,870,424 2,952,946 1,945,268 (115,128)
82,684,004
8,136,105 319,620
8,455,725 $190,693,981
June 30, 2007
$75,547,083 959,037
4,002,773 19,213,021
9,746,067 25,525,207 17,970,101
6,547,114 18,169,408 177,679,811
2,768,356 $180,448,167

Kennesaw State University Annual Financial Report FY 2008 4

Operating revenues increased by $14,349,202 in fiscal 2008, reflecting an increase in Tuition and Fees, Grants and Contracts, and Auxiliary enterprises. The increase in tuition and fees was attributable to a 7% increase in tuition rates and a 4% increase in enrollment.

The Auxiliary revenue increase was $2, 935, 441, with the largest dollar increase being in Parking and Intercollegiate Athletics.

Non-operating revenues increased by $4,510,036 for the year primarily due to an increase of $7,025,900 in State Appropriations.

The compensation and employee benefits category increased by $12,850,840. The increase reflects additional staff and faculty, merit increases, and an increased cost of health insurance for the employees of the institution.

Utilities increased by $516,238 during the past year. The increase was primarily associated with the increased electricity usage due to new space, affecting the Plant Operations and Maintenance category.

Statement of Cash Flows

The final statement presented by Kennesaw State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($63,911,388) 88,145,012 (15,374,234) 1,765,340 10,624,730 24,476,658
$35,101,388

June 30, 2007
($68,757,661) 80,769,952 (7,726,646) 499,886 4,785,531 19,691,127
$24,476,658

Kennesaw State University Annual Financial Report FY 2008 5

Capital Assets
Kennesaw State University had $36 million in capital asset additions in fiscal year 2008, of which $7.5 million was funded by the Georgia State Financing and Investment Commission (GSFIC), primarily for completion of the Performance Hall.
The University also entered into three new capital leases with the Foundation. The leases added $17.2 million to capital assets for KSU Center and additional space in Chastain Pointe and Town Point.
For additional information concerning Capital Assets, see Notes 1, 6, 8, 9, and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
Kennesaw State University had Long-Term Debt and Liabilities of $69,834,641 of which $5,429,171 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, Kennesaw State University has included the financial statements and notes for all required component units for FY2008. Kennesaw State University Foundation, Inc. had investments of $25.5 million as of June 30, 2008. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Economic Outlook
At this time, like all public universities, the University is facing budgetary pressures emanating from the current economic downturn being experienced in the State and the nation. While the University's overall current financial position appears strong, the University will maintain a close watch over resources to address the University's ability to react to any predicted shortfalls in the State's budget. Although the scale of the challenges presented by an uncertain economic environment is great, in our opinion, the University is positioned to meet these challenges.
Dr. Daniel S. Papp, President Kennesaw State University
Kennesaw State University Annual Financial Report FY 2008 6

Statement of Net Assets

K EN N ES A W S T A T E U N IV ER S IT Y S T A T EM EN T O F N ET A S S ET S June 30, 2008

A S S ETS C u rre n t A sse ts C a sh a n d C a sh E quiv a le n t s Sh o rt -t e rm In v e st m e n t s A c c o un t s R e c e iv a ble , n e t (n o t e 3 ) R e c e iv a ble s - F e de ra l F in a n c ia l A ssist a n c e R e c e iv a ble s - O t h e r D ue F ro m C o m p o n en t U n it s L e a se s R e c e iv a ble P le dge s R e c e iv a ble D ue F ro m P rim a ry G o v e rn m e n t In v e n t o rie s (n o t e 4 ) P re p a id it e m s O t h er A sset s T o t al C urren t A sset s
N o n cu rre n t A sse ts N o n curren t C ash In v e st m e n t s (in cludin g R e al E st at e ) N o t e s R e c eiv a ble , n e t L e a se s R e c e iv a ble P le dge s R e c e iv a ble C ap it a l A sse t s, n e t (n o t e 6 ) O t h er A sset s T o t al N o n curren t A sset s TO TA L A S S ETS
L IA B IL ITIES C u rre n t Lia bilitie s A c c o un t s P a y a ble Sa la r ie s P a y a ble C o n t rac t s P a y able D e p o sit s D eferred R ev en ue (n o te 7 ) O t h e r L ia bilit ie s D e p o sit s H e ld fo r O t h e r O rga n iz a t io n s D ue t o P rim a ry Go v e rn m e n t L e a se P urc h a se O bliga t io n s (c urre n t p o rt io n ) C o m p e n sa t e d A bse n ce s (c urre n t p o rt io n ) R e v e n ue /M o rt ga ge B o n ds P a y a ble (c urre n t ) L ia bilit ie s un de r Sp lit -In t e re st A gre e m e n t s (c urre n t ) D ue t o C o m p o n e n t U n it s N o t e s a n d L o a n s P a y a ble (c urre n t p o rt io n ) T o t a l C urre n t L ia bilit ie s N o n cu rre n t Lia bilitie s L e a se P urc h a se O bliga t io n s (n o n c urre n t ) D eferred R ev en ue (n o n curren t) C o m p en sat ed A bsen ces (n o n curren t ) R e v e n ue /M o rt ga ge B o n ds P a y a ble (n o n c urre n t ) L ia bilit ie s un de r Sp lit -In t e re st A gre e m e n t s (n o n c urre n t ) T o t a l N o n c urre n t L ia bilit ie s TO TA L L IA B IL ITIES
N ET A S S ETS In v e st e d in C a p it a l A sse t s, n e t o f re la t e d de bt R est rict e d fo r N o n e x p e n da ble E x p e n da ble U n re st ric t e d TO TA L N ET A S S ETS

K e n n e sa w S ta te U n ive rs ity
$ 3 4 ,8 9 5 ,3 4 5 3 ,0 0 0 ,0 0 0 2 ,0 6 0 ,7 0 8 4 ,8 9 6 ,3 7 8 1 ,0 9 4 ,1 7 9
1 ,1 8 9 ,1 1 0 4 ,5 6 5 ,9 2 6 5 1 ,7 0 1 ,6 4 6
2 0 6 ,0 4 3 3 ,8 7 5 ,1 0 0
3 6 9 ,8 2 7
1 9 8 ,3 2 2 ,5 4 2 2 0 2 ,7 7 3 ,5 1 2 2 5 4 ,4 7 5 ,1 5 8
5 ,6 8 1 ,9 8 4 4 2 0 ,3 5 2 7 5 7 ,5 0 4
1 6 ,6 0 3 ,0 0 8 4 ,2 0 0 ,7 5 4 2 ,1 7 2 ,7 6 4 3 ,2 5 6 ,4 0 7
2 1 7 ,2 8 8 3 3 ,3 1 0 ,0 6 1 6 2 ,0 0 0 ,0 5 9
2 ,4 0 5 ,4 1 1
6 4 ,4 0 5 ,4 7 0 9 7 ,7 1 5 ,5 3 1
1 3 4 ,1 4 9 ,7 1 9 7 6 3 ,1 1 5
2 ,9 8 5 ,3 5 5 1 8 ,8 6 1 ,4 3 8 $ 1 5 6 ,7 5 9 ,6 2 7

C om pon e n t U n it K e n n e sa w S ta te
U n ive rs ity Fo u n d a ti o n , In c.
$ 2 ,6 1 2 ,4 4 4
6 6 1 ,2 2 7
6 ,0 1 9 ,5 7 5 7 7 7 ,5 2 8 2 1 7 ,2 8 8
9 5 8 ,8 3 1 2 7 0 ,4 3 0 1 1 ,5 1 7 ,3 2 3
5 1 ,2 1 8 ,0 6 8 2 5 ,5 0 6 ,2 6 4
9 9 ,6 6 6 ,2 2 2 1 ,4 3 7 ,6 3 7
1 5 3 ,9 3 9 ,0 8 8 8 ,9 5 3 ,0 6 6
3 4 0 ,7 2 0 ,3 4 5 3 5 2 ,2 3 7 ,6 6 8
7 ,2 6 2 ,9 7 0
5 ,3 1 1 ,6 2 6 6 2 ,6 8 6
4 ,8 3 8 ,9 1 0 5 4 8 ,5 4 8
1 ,0 9 4 ,1 7 9
4 ,4 0 0 ,0 0 0 2 0 ,0 1 2
5 6 1 ,2 9 4 2 4 ,1 0 0 ,2 2 5
4 1 ,8 2 1 ,7 4 1
2 6 5 ,9 9 9 ,2 1 3 1 8 3 ,8 6 0
3 0 8 ,0 0 4 ,8 1 4 3 3 2 ,1 0 5 ,0 3 9
2 ,8 8 6 ,8 0 3
1 7 ,6 7 5 ,0 5 3 6 ,0 4 1 ,2 9 5
(6 ,4 7 0 ,5 2 2 ) $ 2 0 ,1 3 2 ,6 2 9

Kennesaw State University Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
KENNES AW S TATE UNIVERS ITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

Ke n n e saw S tate Un i ve rs i ty

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful accou Less: Scholarship Allowances Gift s and Cont ribut ions Endowment Income (per spending plan) Grant s and Cont ract s Federal St at e Other Sales and Services Rents and Royalt ies Auxiliary Ent erprises Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion P ayment s t o or on behalf of Kennesaw St at e Universit y
T ot al Operat ing Expenses Operat ing Income (loss)

$74,445,923 (8,301,027)
13,633,476 1,819,760 616,413 5,865,519 65,323
898,580 8,730,690
446,463 5,641,742 2,140,912 5,981,904 1,122,306
795,470 113,903,454
53,296,278 51,136,752 25,157,556
408,245 2,389,370 10,028,743 4,138,851 39,939,216 9,159,440
195,654,451 (81,750,997)

C om pone nt Unit Ke n n e saw S tate
Un i ve rs i ty Fou n dati on , In c.
$0 3,538,262
125,902
97,000 19,647,185
23,408,349
1,962,795 57,384
1,737,093 4,756,855 3,171,627 4,662,283 16,348,037 7,060,312

Kennesaw State University Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
KENNES AW S TATE UNIVERS ITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

Ke n n e saw S tate Un i ve rs i ty

C om pone nt Unit
Ke n n e saw S tate Un i ve rs i ty
Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal St at e Ot h er Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or los Capital Grants and Gifts St at e Ot h er Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET AS SETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

82,056,394
1,554,108 3,788
1,009,779 1,189,848 1,393,424 (3,698,738)
(13,301) 83,495,302
1,744,305
7,924,687 1,115,660
9,040,347 10,784,652
145,974,975 0
145,974,975 $156,759,627

(8,604,837)
(8,604,837) (1,544,525)
3,052,369 3,052,369 1,507,844
18,624,785 0
18,624,785 $20,132,629

Kennesaw State University Annual Financial Report FY 2008 9

Statement of Cash Flows
KENNES AW S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P roceeds from Sale of Capit al Asset s P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES P roceeds from Sales and Mat urit ies of Invest m ent s Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$67,012,120 15,924,017 5,865,519 (66,228,008)
(103,930,310) (10,028,743) (274,939) 309,687
1,120,060 8,512,479
449,066 6,404,752 2,224,551 6,032,227 1,141,726 1,554,408 (63,911,388)
82,056,394 1,879,601 4,209,017
88,145,012
2,663,715 29,853
(12,253,494) (2,115,570) (3,698,738)
(15,374,234)
278,838 1,486,502 1,765,340 10,624,730 24,476,658 $35,101,388

Kennesaw State University Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
KENNES AW S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed asset s acquired by incurring capit al lease obligat ions Change in fair value of invest ment s recognized as a component of int erest income Gift of capit al asset s reducing proceeds of capit al grant s and gift s

June 30, 2008
($81,750,997)
9,159,440 198,462 (166,546)
4,828,961 34,748
1,459,671 1,607,737
215,074 502,062 ($63,911,388)
$17,197,501 ($93,078)
($6,376,632)

Kennesaw State University Annual Financial Report FY 2008 11

KENNESAW STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Kennesaw State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Kennesaw State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Kennesaw State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Kennesaw State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Kennesaw State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Kennesaw State University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, Kennesaw State University is reporting the activity for the Kennesaw State University Foundation, Inc. See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. The financial statements have been prepared in accordance with
Kennesaw State University Annual Financial Report FY 2008 12

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 University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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 intraUniversity transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the Board of Regents Short-Term Investment Pool.
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.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, and the Board of Regents Total Return Fund are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made
Kennesaw State University Annual Financial Report FY 2008 13

pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Resale Inventories are valued at cost using the first-in, first-out ("FIFO") basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC transferred capital additions valued at $10.9 million to Kennesaw State University, of which $4.5 million had previously been deposited by the University with GSFIC.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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.
Kennesaw State University Annual Financial Report FY 2008 14

Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Kennesaw State University had accrued liability for compensated absences in the amount of $5,159,755 as of 7-1-2007. For FY2008, $3,921,873 was earned in compensated absences and employees were paid $3,419,810, for a net increase of $502,063. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $5,661,818.

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as non-current assets.

Net Assets The University's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.

Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans T erm Endowm ent s T ot al Rest rict ed Expendable

$229,112 376,424 108,772
2,271,047 $2,985,355

Kennesaw State University Annual Financial Report FY 2008 15

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$1,591,586 7,663,494 9,606,358
$18,861,438

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Kennesaw State University, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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

Kennesaw State University Annual Financial Report FY 2008 16

Changes in Net Assets. Scholarship allowances are the difference between the stated charge for goods and services provided by the University, 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 University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $24,021,145 and the bank balance was $26,068,669. Of the University's deposits, $25,968,669 were uninsured. Of these uninsured deposits, $2,900,000 were collateralized with securities held by the financial institution's trust department or agent in the University's name, and $23,068,669 were uncollateralized.
Kennesaw State University Annual Financial Report FY 2008 17

B. Investments Kennesaw State University maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable federal and state laws.

The University's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

INVESTMENTS
Investment type Debt Securities
M utual Bond Fund

Fair Value

Investment Maturity

1-5 Years

6-10 Years

$916,598

$458,299

$458,299

Other Investments Equity M utual Funds
Investment Pools Board of Regents Short-Term Fund Legal Fund Balanced Income Fund Total Return Fund
Total Investments

1,649,575
13,964,243 1,079,647 149,118 80,162
$17,839,343

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at:
http://www.audits.state.ga.us/internet/searchRpts.html
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk.
The Weighted Average Maturity of the Short Term Fund is 1.99 years. Of the University's total investment of $13,964,243 in the Short Term Fund, $13,908,387 is invested in debt securities.
Kennesaw State University Annual Financial Report FY 2008 18

The Weighted Average Maturity of the Legal Fund is 3.84 years. Of the University's total investment of $1,079,647 in the Legal Fund, $1,069,930 is invested in debt securities.

The Weighted Average Maturity of the Balanced Income Fund is 7.84 years. Of the University's total investment of $149,118 in the Balanced Income Fund, $95,883 is invested in debt securities.

The Weighted Average Maturity of the Total Return Fund is 7.84 years. Of the University's total investment of $80,162 in the Total Return Fund, $25,331 is invested in debt securities.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk.

The investments subject to credit quality risk are reflected below:

Related Debt Investments M utual Bond Fund

Fair Value

U nrat ed

$916,598 $916,598

$916,598 $916,598

Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or a deposit. At June 30, 2008, $381,915 or 2% of Kennesaw State University's investments were invested in international equity mutual funds. Due to the diversity of the fund portfolios and the immateriality of these investments compared to total investments, the University does not consider there to be any significant foreign currency risk. The University does not have a formal policy for managing exposure to foreign currency risk.

Kennesaw State University Annual Financial Report FY 2008 19

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Georgia St at e Financing and Invest m ent Com m ission Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$1,023,375 410,577
2,060,708 546,055
1,094,179 3,650,618 8,785,512
734,247
$8,051,265

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore Health Clinic
T otal

$1,146,102 43,008
$1,189,110

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was approximately $0.

Kennesaw State University Annual Financial Report FY 2008 20

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Capitalized Collections Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections Capitalized Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$5,334,656 2,264,181 2,335,328 9,934,165
2,028,332 134,395,726
4,240,142 12,822,400 52,108,504 19,548,279
912,400 226,055,783
1,084,570 29,582,515
2,208,977 8,313,830 7,720,945 15,249,088
341,090 64,501,015
161,554,768
$171,488,933

Addi ti o n s
$0 522,475 3,256,214 3,778,689

Re du cti on s
$0
1,383,864 1,383,864

En di n g B al an ce 6/30/2008
$5,334,656 2,786,656 4,207,678
12,328,990

1,260,415 11,125,483
445,351 3,312,890 17,197,501
244,738 55,000
33,641,378

1,205,868 2,200
1,208,068

3,288,747 145,521,209
4,685,493 14,929,422 69,306,005 19,790,817
967,400 258,489,093

101,370 3,365,803
108,012 1,503,194 3,163,274
894,175 23,612
9,159,440
24,481,938
$28,260,627

1,162,714 2,200
1,164,914 43,154
$1,427,018

1,185,940 32,948,318
2,316,989 8,654,310 10,884,219 16,141,063
364,702 72,495,541
185,993,552
$198,322,542

Kennesaw State University Annual Financial Report FY 2008 21

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $12,326,592 4,276,416
$16,603,008

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Le as e s Lease Obligations

Beginning Balance
July 1, 2007
$49,090,892

Additions $17,197,501

Re du cti on s

Ending Balance June 30, 2008

$2,115,570

$64,172,823

Other Liabilities Compensated Absences T ot al

5,159,755 5,159,755

3,921,873 3,921,873

3,419,810 3,419,810

5,661,818 5,661,818

Total Long Term Obligations

$54,250,647

$21,119,374

$5,535,380

$69,834,641

Current Portion $2,172,764
3,256,407 3,256,407 $5,429,171

Note 9. Significant Commitments
The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $2,665,780 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.
Note 10. Lease Obligations
Kennesaw State University is obligated under capital leases and installment purchase agreements for the acquisition of real property.
CAPITAL LEASES
Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2019 and 2030. Expenditures for fiscal year 2008 were $6.2 million of which $3.7 million represented interest and $0.4 million represented executory costs. Total principal paid on capital leases was $2.1 million for the fiscal year ended June 30, 2008. Interest rates range from 5.50 percent to 9.14 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Kennesaw State University Annual Financial Report FY 2008 22

Land Buildings Total Assets Held Under Capital Lease

$1,814,402 58,421,787 $60,236,189

All capital leases are for one-year terms and provide for renewal options covering the remaining term. Non-renewal is considered a remote possibility. Most of the leases indicate that the property will be donated to the University at the end of the lease term.
Kennesaw State University had nine capital leases with Kennesaw State University Foundation, Inc., a discretely presented component unit, in the current fiscal year.
In May 2002, Kennesaw State University entered into a capital lease of $3,965,768 at 9.14 percent whereby the University leases nine houses for a twenty-five year period that expires April 2027. The outstanding liability at June 30, 2008 on this capital lease is $3,587,583.
In August 2002, the University entered into a capital lease of $21,016,938 at 4.7 percent whereby the University leases two parking decks for a twenty-four year period that expires July 2026. In August 2003, the lease payments increased because additional space was added to one of the decks, bringing the value of the lease to $24,093,887. The decks are constructed on land owned by the University and leased to Kennesaw State University Foundation, Inc. for $1.00 annually for a period of 25 years commencing in June 2001. At the expiration of the ground lease, ownership of the parking decks transfers to the University. The outstanding liability at June 30, 2008 on this capital lease is $20,210,105.
In January 2004, the University entered into a capital lease of $2,718,028 at 5.5 percent whereby the University leases a portion of a building for a twenty-five year period that expires June 2029. The University has the right of first refusal to lease additional space in the building complex. Should the cumulative value of the rent payments equal the value of the Foundation's financing instrument and all additional rent under the terms of the agreement, Kennesaw State University Foundation, Inc. will gift the property to the University. In December 2004, the University entered into a capital lease at 5.5 percent for additional space in the complex, bringing the value of the lease to $3,378,929. In February 2007, the University substituted space and added additional space in a capital lease at 5.5 percent bringing the value of the lease to $4,326,537. In September 2007, the University entered into a capital lease at 5.5 percent for additional space in the complex, bringing the value of the lease to $6,232,158. The outstanding liability at June 30, 2008 on these capital leases is $5,841,323.
In February 2004, the University entered into a capital lease of $200,000 at 2.0 percent whereby the University leases a house for a fifteen-year period that expires January 2019. The outstanding liability at June 30, 2008 on this capital lease is $147,201.
In September 2004, the University entered into a capital lease of $14,323,134 at 5.79 percent whereby the University leases a parking deck for a twenty-five year period that expires August 31, 2029. The deck is constructed on land owned by the University and leased to Kennesaw State University Foundation, Inc. for $197,600 annually for a period of twenty-five years commencing in

Kennesaw State University Annual Financial Report FY 2008 23

September 2004. At the expiration of the ground lease, ownership of the parking deck transfers to the University. The outstanding liability at June 30, 2008 on this capital lease is $13,163,798.
In April 2006, the University entered into a capital lease of $4,015,944 at 8.22 percent whereby the University leases a portion of an office building for a twenty-four year period that expires June 30, 2030. The University is obligated to lease additional space in the building as it becomes available. At the expiration of the lease, ownership of the building transfers to the University. In September 2006, the University entered into a capital lease at 8.22 percent for additional space in the complex, bringing the value of the lease to $4,157,971. In July 2007, January 2008, April 2008, and May 2008 the University entered into additional capital leases at 8.22 percent for additional space in the complex, bringing the value of the lease to $7,955,987. The outstanding liability at June 30, 2008 on these capital leases is $7,743,675.
In April 2006, the University entered into a capital lease of $1,814,402 at 5.07 percent whereby the University leases 7.242 acres of unimproved land for a twenty-four year period that expires June 30, 2030. At the expiration of the lease, ownership of the land transfers to the University. The outstanding liability at June 30, 2008 on this capital lease is $1,723,100.
In November 2006, the University entered into a capital lease of $1,041,207 at 5.38 percent whereby the University leases classroom space in a multi-purpose building for a twenty-three year period that expires June 30, 2030. The building is constructed on land owned by the University and leased to Kennesaw State University Foundation, Inc. for $10 for a twenty-five year period commencing in June 2004. At the expiration of the ground lease, ownership of the building transfers to the University. The outstanding liability at June 30, 2008 on this capital lease is $956,448.
In July 2007, the University entered into a capital lease for an office/classroom building of $11,493,855 at 7.09 percent whereby the University leases a portion of a building for a twelve year period that expires June 30, 2019. The outstanding liability at June 30, 2008 on this capital lease is $10,799,590.
OPERATING LEASES
Kennesaw State University's noncancellable operating lease was amended during Fiscal Year 2008 and was classified as a capital lease.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) having remaining terms in excess of one year as of June 30, 2008, were as follows:
Kennesaw State University Annual Financial Report FY 2008 24

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 T ot al m inim um lease paym ent s
Less: Int erest Less: Execut ory cost s (if paid) P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25

Real P roperty and Equipm ent
Capit al Leases
$6,489,584 6,487,185 6,487,488 6,487,092 6,484,723
32,394,487 26,613,253 21,488,525
4,408,816 117,341,153
43,195,619 9,972,711
$64,172,823

Kennesaw State University had no expense for rental of real property and equipment under operating leases in FY2008.

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Kennesaw State University participates in the Teachers Retirement System of Georgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy

Employees of Kennesaw State University who are covered by TRS are required by State statute to

contribute 5% of their gross earnings to TRS. Kennesaw State University makes monthly employer

contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute

and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate

was 9.28% for covered employees. Employer contributions for the current fiscal year and the

preceding two fiscal years are as follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$4,662,513 $4,117,654 $3,772,319

Kennesaw State University Annual Financial Report FY 2008 25

Employees' Retirement System of Georgia
Plan Description Kennesaw State University participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.
Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30, 2008, for employees covered by ERS was $31,977. The University's total payroll for all employees was $104,433,030.
For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.
Kennesaw State University Annual Financial Report FY 2008 26

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$3,505 $2,820
$566

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts or invest in mutual funds from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts or based on their account balance at the time of distribution.

Funding Policy Kennesaw State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

Kennesaw State University and the covered employees made the required contributions of $3,303,609 (8.13% or 8.15%) and $2,029,151 (5%), respectively.

Kennesaw State University Annual Financial Report FY 2008 27

AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Kennesaw State University 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $479,910 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Kennesaw State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective selfinsured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two
Kennesaw State University Annual Financial Report FY 2008 28

different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Kennesaw State University, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a SelfInsurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Kennesaw State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Kennesaw State University (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-331, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System
Kennesaw State University Annual Financial Report FY 2008 29

of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 255 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Kennesaw State University recognized as incurred $1,213,160 of expenditures, which was net of $389,272 of participant contributions.
Kennesaw State University Annual Financial Report FY 2008 30

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Instruction
$49,637,402 9,547,955 12,676,005
1,147,139 386,860 319,658
8,866,974 245,896
$82,827,889

Research
$280,653 364,422 64,000
25,638 0
259 213,878
1,751
$950,601

Functional Classification FY2008

Public Service

Academic Support

Student Services

Institutional Support

$431,167 1,925,564
508,875
178,108 4,900 36,626
773,372 7,812

$2,425,225 9,984,144 2,760,741
376,017 400
122,722 4,341,613 1,112,272

($15,657) 6,618,970 1,528,477
138,417 23,274 85,013 2,283,575 220,521

$41,841 14,632,833 5,504,558
410,794 242,050
1,200 192,384 6,930,303 1,011,847

$3,866,424 $21,123,134 $10,882,590

$28,967,810

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

Total Expenses

$0 4,151,494 1,130,760 (104,822)
28,108
3,228,435 5,261,809 5,307,396

$0 8,018,266

$495,647 3,911,370
984,140 102,273 253,893 1,593,843 153,754 11,267,692 1,251,945

$53,296,278 51,136,752 25,157,556
408,245 2,389,370 10,028,743 4,138,851 39,939,216 9,159,440

$19,003,180

$8,018,266

$20,014,557 $195,654,451

Kennesaw State University Annual Financial Report FY 2008 31

Note 16. Component Units

The Kennesaw State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Kennesaw State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The Foundation also constructs buildings and facilities for use by the University and then leases the completed buildings to the institution. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $4,662,283 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 1000 Chastain Road, Mailbox 910, Kennesaw, GA 30144, or from the Foundation's website at www.kennesaw.edu/foundation.

Investments for Component Units:

Kennesaw State University Foundation, Inc. holds endowment and other investments in the amount of $25.5 million. The $14.1 million corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Kennesaw State University Foundation, Inc., in conjunction with the donors, has established a spending plan whereby 4% of the scholarship balance, in excess of $400, may be used for academic scholarships. The remaining 96% of the balance is set aside as a reserve.

Investments are comprised of the following amounts at June 30, 2008:

Cost

Fair Value

Money Market Accounts Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds Joint Ventures/Partnerships

$1,037,701 5,993,073 2,546,066 15,892,885 2,735,816
20,304

$1,037,701 5,373,354 2,537,368 13,682,852 2,863,007
11,982

Total Investments

$28,225,845

$25,506,264

Kennesaw State University Annual Financial Report FY 2008 32

Capital Assets for Component Units:

Kennesaw State University Foundation, Inc. holds the following Capital Assets as of June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$6,006,139 68,492,095 74,498,234
90,546,722 3,654,007
94,200,729 14,759,875 79,440,854 $153,939,088

Long-term Debt for Component Units:

Changes in long-term liabilities for the Foundation for the fiscal year ended June 30, 2008 are shown below:

Liabilities under split interest agreement Notes and Loans Payable Revenue/Mortgage Bonds Payable Other Long Term Liabilities
Total Long Term Liabilities

Beginning Balance July 1, 2007
$223,884 2,220,615 181,790,167
0
$184,234,666

Additions
$0 561,294 93,123,701 548,548
$94,233,543

Reductions $20,012
2,220,615 4,514,655
$6,755,282

Ending Balance June 30, 2008
$203,872 561,294
270,399,213 548,548
$271,712,927

Amounts due within
One Year
$20,012 561,294 4,400,000 548,548
$5,529,854

Notes and Loans Payable During the year ending June 30, 2008, the Foundation entered into an unsecured line of credit of $5,000,000 with a financial institution to provide interim financing for new dining hall construction. The line of credit bears interest at the 30 day LIBOR plus 1.5% (3.96% at June 30, 2008) and matures April 2009. The line of credit balance was $561,294 at June 30, 2008.

Kennesaw State University Annual Financial Report FY 2008 33

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30:

2009

1

Principal

Notes and Loans Payable Interest

$561,294 $561,294

$18,000 $18,000

Total
$579,294 $579,294

Revenue Bonds Payable During the year ending June 30, 2004, the Foundation assumed Educational Facilities Revenue Bonds, Series 1998, issued by the Development Authority of Cobb County. The Series 1998 bonds were issued to finance the acquisition of an existing facility. The Foundation assumed the bonds in conjunction with acquiring the property that the bonds originally financed. The obligations of the Foundation under the bond documents are nonrecourse obligations. The bonds were issued in the aggregate amount of $15,990,000 and will mature in August 2031, subject to mandatory and optional redemption provisions. The bonds bear interest payable on the first business day of each month at a variable interest rate determined weekly. Interest accrues at the weekly rate until converted to another variable rate or the fixed rate in accordance with the terms of the Indenture. The outstanding principal obligation on the Series 1998 bond issue was $10,865,000 at June 30, 2008.
When the Foundation assumed the 1998 Series bonds, they also assumed an interest-rate swap transaction that was entered into originally to convert a portion of its variable-rate bond obligations to fixed rates. A liability from interest-rate swap transactions of $548,548 has been recorded as of June 30, 2008 and is reported in Other Liabilities on the Statement of Net Assets.
When the Foundation assumed the 1998 Series bonds, they also assumed a forward purchase agreement that was entered into originally to produce a guaranteed yield to the trustee. A receivable from forward purchase agreement transactions of $270,430 has been recorded as of June 30, 2008 and is reported in Other Assets on the Statement of Net Assets.
During the year ended June 30, 2005, the Development Authority of Cobb County issued revenue bonds and loaned the proceeds to the Foundation. The Series 2004 bonds were issued in the aggregate principal amount of $155,060,000. The bonds consist of six series and were issued to finance the cost of construction of 132 beds of new student housing, purchase and renovate the property known as "Chastain Pointe", refund the 2003A and 2003B bond series, including payment of swap termination fees, and finance or refinance certain parking facilities. The bonds bear interest payable semiannually at a fixed interest rate set at issuance. Interest will accrue at the fixed rate until converted to another fixed rate in accordance with the terms of the Indenture. The outstanding principal obligations on the Series 2004 bond issues were $148,065,000 at June 30, 2008.
During the year ended June 30, 2007, the Development Authority of Cobb County issued revenue bonds and loaned the proceeds to the Foundation. The Series 2006A and B bonds were issued to repay an interim loan incurred to finance the acquisition of an office building on approximately 6.3 acres, Town Point, the acquisition of approximately 7.2 acres of unimproved land for future development, to pay the cost of issuance of the 2006 bonds and to pay a portion of the premium for a
Kennesaw State University Annual Financial Report FY 2008 34

surety bond. The bonds were issued in the aggregate principal amount of $15,055,000. The Series 2006A bonds will mature in July 2031, subject to mandatory and optional redemption provisions. The Series 2006B bonds will mature in July 2013, subject to mandatory and optional redemption provisions. The bonds bear interest payable semiannually at a fixed interest rate set at issuance. Interest will accrue at the fixed rate until converted to another fixed rate in accordance with the terms of the Indenture. At June 30, 2008, the applicable interest rates range from 4% to 5.34%. The outstanding principal obligations on the Series 2006 bond issues were $14,685,000 at June 30, 2008.
During the year ended June 30, 2008, the Development Authority of Cobb County issued revenue bonds and loaned the proceeds to the Foundation. The Series 2007 bonds were issued to finance the costs of acquisition, construction and equipping of a parking deck containing approximately 2,500 parking spaces on land leased by KSU Central Parking Deck Real Estate Foundation, LLC, and to fund capitalized interest, debt service reserve, and pay a portion of the costs of issuance of the Series 2007 Parking Facilities Bonds. The bonds were issued in the aggregate amount of $38,550,000 and will mature in July 2038, subject to mandatory and optional redemption provisions. The bonds bear interest, payable semiannually, at a fixed interest rate set at issuance. Interest will accrue at the fixed rate until converted to another fixed rate in accordance with the terms of the Indenture. At June 30, 2008, the applicable interest rates ranged from 4% to 4.75%. The outstanding principal obligation on the Series 2007 bond issue was $38,550,000 at June 30, 2008.
During the year ended June 30, 2008, the Development Authority of Cobb County issued student housing revenue bonds and loaned the proceeds to the Foundation. The Series 2007A, B and C bonds were issued in the aggregate principal amount of $53,320,000 to finance the acquisition, construction, renovation, furnishing and equipping of student housing to be located on the campus of Kennesaw State University on land leased by Village II Real Estate Foundation, LLC, fund a debt service reserve, fund capitalized interest on the Series 2007 bonds, and pay all or a portion of the costs of issuing the Series 2007 bonds. The Series 2007 bonds will mature in July 2038, subject to mandatory and optional redemption provisions. The bonds bear interest, payable semiannually, at a fixed interest rate set at issuance. Interest accrues at the fixed rate until converted to another fixed rate in accordance with the terms of the Indenture. At June 30, 2008 the applicable interest rates ranged from 3.5% to 5.25%. The outstanding principal obligations on the Series 2007A, B and C bond issues were $53,320,000 at June 30, 2008.
Kennesaw State University Annual Financial Report FY 2008 35

Annual debt service requirements to maturity for the bond issues detailed above are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038 2039 through 2043
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31-35

Principal
$4,400,000 6,105,000 6,340,000 6,585,000 6,830,000
38,380,000 42,575,000 50,505,000 48,755,000 49,365,000
5,645,000 265,485,000
4,914,213 $270,399,213

Bonds Payable Interest
$12,097,845 11,918,914 11,712,508 11,506,406 11,284,434 52,474,361 43,682,816 32,177,650 18,405,094 8,496,495 141,131 213,897,654
$213,897,654

Total
$16,497,845 18,023,914 18,052,508 18,091,406 18,114,434 90,854,361 86,257,816 82,682,650 67,160,094 57,861,495 5,786,131
479,382,654 4,914,213
$484,296,867

Kennesaw State University Annual Financial Report FY 2008 36

MACON STATE COLLEGE
Financial Report
For the Year Ended June 30, 2008

Macon State College Macon, Georgia

David A. Bell, Ph. D.
President

Levy G. Youmans, Jr.
Vice President for Fiscal Affairs

MACON STATE COLLEGE ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ............................................................................ 1 Statement of Net Assets ...................................................................................................... 7 Statement of Revenues, Expenses and Changes in Net Assets........................................... 8 Statement of Cash Flows .................................................................................................. 10 Note 1. Summary of Significant Accounting Policies .................................................... 12 Note 2. Deposits and Investments................................................................................... 17 Note 3. Accounts Receivable.......................................................................................... 19 Note 4. Inventories.......................................................................................................... 19 Note 5. Notes/Loans Receivable..................................................................................... 19 Note 6. Capital Assets..................................................................................................... 20 Note 7. Deferred Revenue............................................................................................... 21 Note 8. Long-Term Liabilities ........................................................................................ 21 Note 9. Significant Commitments................................................................................... 21 Note 10. Lease Obligations............................................................................................. 21 Note 11. Subsequent Event ............................................................................................. 22 Note 12. Retirement Plans .............................................................................................. 22 Note 13. Risk Management............................................................................................. 25 Note 14. Contingencies................................................................................................... 26 Note 15. Post-Employment Benefits Other Than Pension Benefits ............................... 27 Note 16. Natural Classifications with Functional Classifications .................................. 28 Note 17. Component Units ............................................................................................. 29

MACON STATE COLLEGE
Management's Discussion and Analysis

Introduction
Macon State College is one of the 35 institutions of higher education of the University System of Georgia. Since its inception, the College has grown and expanded in many areas. Initially offering two-year transfer programs, career programs, and one-year certificates, the College received approval from the Board of Regents in October 1996 to begin offering baccalaureate programs in Information Technology, Health Service Administration, and Health Information Management. Since that time other baccalaureate degrees have been added, including new baccalaureate degrees in Early Childhood Education, Nursing, History and English. In June 2008, the Board of Regents granted approval to Macon State College to launch a bachelor of science in education with a major in middle grades starting fall semester 2009. The program will be the nation's first undergraduate degree to give students the opportunity to earn dual certification in general and special education to teach children in the fourth through eighth grades. These programs and degrees have further expanded the College's level of programming and services to the region.
The College's main campus, located in Macon, Georgia, is complemented by the Warner Robins Campus in Warner Robins, Georgia. Enrollment at the College has increased over 75% since its mission changed in 1996. Enrollment for fall semester 2007 continued to increase with a total enrollment of 6,464 students. The continued emphasis on its focused mission and its professionally oriented baccalaureate degrees has positioned the College to continue as a major economic driver in the Central Georgia region. The institution continues to grow as shown by the comparison numbers that follow.
Students Students Faculty (Headcount) (FTE)

FY2008

202

FY2007

199

FY2006

160

6,464 6,244 6,150

4,957 4,744 4,624

Overview of the Financial Statements and Financial Analysis
Macon State College is proud to present its financial statements for fiscal year 2008. The emphasis of discussion about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Macon State College Annual Financial Report FY 2008 1

Statement of Net Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Macon State College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$9,034,883 57,980,212
1,141,074 68,156,169

June 30, 2007
$9,386,208 47,782,073
348,637 57,516,918

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

3,759,519 795,247
4,554,766

4,284,888 644,345
4,929,233

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - expendable Capital P rojects Unrest rict ed Total Ne t As s e ts

57,980,212 1,272,559 53,431 4,295,201
$63,601,403

47,782,073 1,360,993 53,431 3,391,188
$52,587,685

Macon State College Annual Financial Report FY 2008 2

The total assets of the institution increased by $10,639,251. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $10,198,139 in the category of Capital Assets, net.

The total liabilities for the year decreased by ($374,467). The combination of the increase in total assets of $10,639,251 and the decrease in total liabilities of ($374,467) yields an increase in total net assets of $11,013,718. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $10,198,139.

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$14,801,971 48,824,166 (34,022,195) 33,375,832
(646,363) 11,660,081 11,013,718 52,587,685
0 52,587,685 $63,601,403

$14,362,421 44,007,999 (29,645,578) 29,575,628
(69,950) 410,902 340,952 52,246,733
0 52,246,733 $52,587,685

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:
Macon State College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$9,860,609 524,670 374,498
3,737,502 304,692
14,801,971
22,456,234 9,611,942 50,000 195,726 1,061,930
33,375,832
11,660,081 0
11,660,081 $59,837,884

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$20,084,694 158,377
2,592,708 3,518,058 5,935,918 6,841,562 6,514,939 3,177,910
0 48,824,166
0 $48,824,166

June 30, 2007
$9,440,469 667,623 439,702
3,535,184 279,443
14,362,421
19,801,038 8,950,091 329,975 500,024 (5,500)
29,575,628
260,902 150,000 410,902 $44,348,951
June 30, 2007
$18,685,342 252,093
2,309,554 2,931,665 5,391,739 4,208,917 6,107,257 3,151,599
969,833 44,007,999
0 $44,007,999

Macon State College Annual Financial Report FY 2008 4

Operating revenues increased by $439,550 in fiscal year 2008. Although Tuition & Fees revenue increased by over 4%, Grants and Contracts and Sales and Services revenues decreased.

Nonoperating revenues increased by $3,800,204 for the year primarily due to an increase of $2,655,196 in State Appropriations.

Capital Gifts and Grants increased by $11,249,179 in fiscal year 2008 due to construction funds received from the Georgia State Financing and Investment Commission (GSFIC) for construction of Macon State College's new conference center.

Operating expenses increased by $4,816,167 in fiscal year 2008. A substantial part of this increase was in Instruction expenses which increased by $1,399,352, or 7.5%, primarily due to the addition of faculty members, merit increases and an increased cost of health insurance for the employees of the institution.

Statement of Cash Flows

The final statement presented by Macon State College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($32,907,709) 32,249,238 (3,390,332) (591,555) (4,640,358) 7,075,457
$2,435,099

June 30, 2007
($27,680,188) 29,209,544 (609,361) 1,237,182 2,157,177 4,918,280
$7,075,457

Macon State College Annual Financial Report FY 2008 5

Capital Assets Capital additions were approximately $11.9 million during fiscal 2008, primarily in the Construction Work in Progress category and were related to the Professional Sciences Building. For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the notes to the financial statements. Long Term Debt and Liabilities Macon State College had Long-Term Debt and Liabilities of $1,285,335 of which $490,088 was reflected as current liability at June 30, 2008. For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements. Component Units In compliance with GASB Statement No. 39, Macon State College has included the financial statements and notes for all required component units for FY2008. The Macon State College Foundation, Inc. had endowment and other investments of $7,124,443 as of June 30, 2008. Economic Outlook The College is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The College's overall financial position is strong. Even with a relatively flat funded year, the College was able to generate a generous increase in Net Assets. The College anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the College's ability to react to unknown internal and external issues.
David A. Bell, President Macon State College
Macon State College Annual Financial Report FY 2008 6

Statement of Net Assets

MACO N S TATE CO LLEGE S TATEMENT O F NET AS S ETS
June 30, 2008

A S S ETS C urre nt Asse ts Cash an d Cash Equiv alen t s Sh o rt -t erm In v est m en t s Acco un t s Receiv able, n et (n o t e 3 ) Receiv ables - Federal Fin an cial Assist an ce Receiv ables - Ot h er P ledges Receiv able Invent ories (not e 4) P repaid it em s T o t al Current Asset s
Noncurrent Asse ts No n curren t Cash In v est m en t s (in cludin g Real E st at e) P ledges Receiv able Cap it al Asset s, n et (n o t e 6 ) Ot her Asset s T o t al No n curren t Asset s TO TA L A S S ETS
LIA B ILITIES C u rre n t Liabilitie s Acco un t s P ay able Salaries P ay able Deferred Rev enue (n o t e 7 ) Ot h er Liabilit ies Dep o sit s Held fo r Ot h er Organ izat io n s Co m p en sat ed A bsen ces (curren t p o rt io n ) No t es an d Lo an s P ay able (current po rt io n ) T o t al Current Liabilit ies Non cu rre n t Liabilitie s Co m p en sat ed A bsen ces (n o n curren t ) T o t al No n curren t L iabilit ies TO TA L LIA B ILITIES
N ET A S S ETS In v est ed in Cap it al Asset s, n et o f relat ed debt Rest rict ed for No n ex p en dable Ex p en dable Capit al P roject s Unrest rict ed TO TA L N ET A S S ETS

Macon S tate C olle ge
$2,435,099 99,962
84,909 5,665,769
560,830 188,314 9,034,883
1,141,074
57,980,212
59,121,286 68,156,169
330,029 117,921 2,230,735 132,592 458,154 490,088
3,759,519
795,247 795,247 4,554,766
57,980,212
1,272,559 53,431
4,295,201 $63,601,403

C om pon e n t Un it Macon State C olle ge
Fo u n da ti o n , In c.
$496,453
2,159 106,198
604,810
285,734 7,124,443
81,774 32,054 7,524,005 8,128,815
121,097
226,061 347,158
0 347,158
6,294,127 915,221 572,309
$7,781,657

Macon State College Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
MACON S TATE COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

Macon State College

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful accou Less: Scholarship Allowances Gift s and Cont ribut ions Grant s and Cont ract s Federal St at e Sales and Services Rents and Royalt ies Auxiliary Ent erprises Bookst ore Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion P ayment s t o or on behalf of Macon St at e College
T ot al Operat ing Expenses Operat ing Income (loss)

$13,433,937 (3,573,328)
64,314 460,356 374,498
27,500
3,700,663 36,839
277,192 14,801,971
13,874,603 8,753,362 6,216,879 190,689 346,867 6,514,939 1,306,535 9,890,967 1,729,325
48,824,166 (34,022,195)

C om pone nt Unit Macon State College
Fou n dati on , In c.
$0 498,331
1,750
500,081
86,151 567,728 653,879 (153,798)

Macon State College Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
MACON S TATE COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

C om pone nt Unit

Macon State College

Macon State College
Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal St at e Ot h er Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or los Capital Grants and Gifts St at e Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET AS SETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

22,456,234
9,172,885 113,216 325,841 50,000 195,726
1,061,930 33,375,832
(646,363)
11,660,081
11,660,081 11,013,718
52,587,685 0
52,587,685 $63,601,403

(537,834) (3,177)
(541,011) (694,809)
68,736 68,736 (626,073)
8,407,730 0
8,407,730 $7,781,657

Macon State College Annual Financial Report FY 2008 9

Statement of Cash Flows

MACON S TATE COLLEGE S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008

C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Auxiliary Ent erprise Charges: Bookst ore Food Services Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s P urchase of Invest ment s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$9,551,661 341,955 374,498
(17,803,727) (22,500,958)
(6,514,939) (20,636)
3,203,773 (141,907)
36,839 565,732 (32,907,709)
22,456,234 31,063
9,761,941 32,249,238
8,703,488 (12,093,820)
(3,390,332)
284,530 (876,085) (591,555) (4,640,358) 7,075,457 $2,435,099

Macon State College Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
MACON S TATE COLLEGE S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries Ot her Asset s P repaid Items Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Change in fair value of invest ment s recognized as a component of int erest income

June 30, 2008
($34,022,195)
1,729,325 (634,736) (119,317) 555,394
(41,712) (150,634) (249,602) (126,655) 152,423 ($32,907,709)
($88,804)

Macon State College Annual Financial Report FY 2008 11

MACON STATE COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations The purpose of Macon State College is to advance the intellectual, cultural, social, economic, recreational, and physical development of those within commuting distance of the College's two campuses. The Institution's primary objective is to provide students with the knowledge and skills needed for full constructive lives in a rapidly changing and increasingly global environment. The College is strongly committed to quality education and student success through excellence and innovation in teaching.
Reporting Entity Macon State College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Macon State College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Macon State College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Macon State College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Macon State College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the College's report. For FY2008, Macon State College is reporting the activity for the Macon State College Foundation, Inc.
See Note 17, Component Units, for Foundation notes.
Macon State College Annual Financial Report FY 2008 12

Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The College accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a
Macon State College Annual Financial Report FY 2008 13

component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Resale inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Macon State College.
Macon State College Annual Financial Report FY 2008 14

Deposits Macon State College did not hold any student deposits at June 30, 2008.

Deferred Revenues Deferred revenues include amounts received for tuition and fees 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Macon State College had accrued liability for compensated absences in the amount of $1,132,911 as of 7-1-2007. For FY2008, $676,609 was earned in compensated absences and employees were paid $524,185, for a net increase of $152,424. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $1,285,335.

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Assets The College's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies Inst it ut ional Loans T erm Endowm ent s T ot al Rest rict ed Expendable

$82,901 137,687 1,051,971 $1,272,559

Macon State College Annual Financial Report FY 2008 15

Restricted net assets expendable Capital Projects: This represents resources for which the College is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$440,715 976,053
2,878,433 $4,295,201

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Macon State 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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.

Macon State College Annual Financial Report FY 2008 16

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 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 College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
Macon State College Annual Financial Report FY 2008 17

At June 30, 2008, the carrying value of deposits was $559,241 and the bank balance was $5,249,385. Of the College's deposits, $5,149,423 were uninsured but collateralized with securities held by the financial institution's trust department or agent in the College's name.

B. Investments

At June 30, 2008, the carrying value of the College's investments was $3,110,971, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows:

Investment Pools Board of Regents Short-T erm Fund Diversified Fund

$1,969,897 1,141,074

T otal Investment Pools

$3,110,971

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.
Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The College does not have a formal policy for managing interest rate risk.
The Weighted Average Maturity of the Short Term Fund is 1.99 years. Of the College's total investment of $1,969,897 in the Short Term Fund, $1,962,018 is invested in debt securities.
The Weighted Average Maturity of the Diversified Fund is 7.84 years. Of the College's total investment of $1,141,074 in the Diversified Fund, $354,874 is invested in debt securities.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The College does not have a formal policy for managing credit quality risk.

Macon State College Annual Financial Report FY 2008 18

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Georgia St at e Financing and Invest m ent Com m ission Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$461,945 595,754 84,909
2,956,593 1,797,566 5,896,767
146,089
$5,750,678

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore T otal

$560,830 $560,830

Note 5. Notes/Loans Receivable Macon State College did not have any notes/loans receivable at June 30, 2008.

Macon State College Annual Financial Report FY 2008 19

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$2,518,062 1,151,638 3,669,700
53,153,879 2,746,914 2,028,725 3,679,459
61,608,977
12,019,389 837,970
1,459,345 3,179,900 17,496,604
44,112,373
$47,782,073

Addi ti o n s
$0 11,660,081 11,660,081

Re du cti on s
$0 166,356 166,356

260,170 173,569 433,739
1,189,525 337,471 71,060 131,269
1,729,325
(1,295,586)
$10,364,495

93,622 4,129
97,751
93,622
4,129 97,751
0 $166,356

En di n g B al an ce 6/30/2008
$2,518,062 12,645,363 15,163,425
53,153,879 2,746,914 2,195,273 3,848,899
61,944,965
13,115,292 1,175,441 1,530,405 3,307,040
19,128,178
42,816,787
$57,980,212

Macon State College Annual Financial Report FY 2008 20

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $2,228,583 2,152
$2,230,735

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Beginning Balance
July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Other Liabilities Compensated Absences

$1,132,911

$676,609

$524,185

$1,285,335

Total Long Term Obligations

$1,132,911

$676,609

$524,185

$1,285,335

Current Portion
$490,088 $490,088

Note 9. Significant Commitments
Macon State College did not have any unrecorded significant commitments as of June 30, 2008.
Note 10. Lease Obligations
CAPITAL LEASES
Macon State College had no capital leases or installment purchase agreements for the acquisition of real property or equipment during fiscal 2008.
OPERATING LEASES
Macon State College's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2012. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small business equipment.

Macon State College Annual Financial Report FY 2008 21

Future commitments for noncancellable operating leases having remaining terms in excess of

one year as of June 30, 2008, were as follows:

Real P roperty and

Equipm ent

Operat ing Leases

Year Ending June 30:

Year

2009

1

$67,552

2010

2

54,552

2011

3

54,552

2012

4

54,552

T ot al m inim um lease paym ent s

$231,208

Macon State College's FY2008 expense for rental of real property and equipment under operating leases was $82,280.

Note 11. Subsequent Event

The College was struck by a tornado on May 11, 2008. Insurance proceeds of $2,850,844 were received during fiscal year 2009 for debris removal and repairs.

Note 12. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Macon State College participates in the Teachers Retirement System of Georgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Macon State College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Macon State College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$1,130,675 $1,075,983 $1,020,941

Macon State College Annual Financial Report FY 2008 22

Employees' Retirement System of Georgia
Plan Description Macon State College participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age. Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The College's payroll for the year ended June 30, 2008, for employees covered by ERS was $240,914. The College's total payroll for all employees was $22,627,965.
For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the College pays the remainder on behalf of the employee.
Macon State College Annual Financial Report FY 2008 23

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the College amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$25,079 $17,386 $7,174

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible University System employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Macon State College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

Macon State College Annual Financial Report FY 2008 24

Macon State College and the covered employees made the required contributions of $616,326 (8.13% or 8.15%) and $378,611 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Macon State 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $60,028 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 13. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Macon State College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The
Macon State College Annual Financial Report FY 2008 25

reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Macon State College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 14. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Macon State College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Macon State College (an organizational unit of the Board of Regents of the University 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, 2008.
Macon State College Annual Financial Report FY 2008 26

Note 15. Post-Employment Benefits Other Than Pension Benefits Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 101 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Macon State College recognized as incurred $547,497 of expenditures, which was net of $242,600 of participant contributions.
Macon State College Annual Financial Report FY 2008 27

Note 16. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Inst ruct ion
$13,847,923 1,063,941 3,448,683
232,187
91,930 1,344,605
55,425
$20,084,694

Functional Classification FY2008

Public Service

Academic Support

St udent Services

$12,000 57,854 15,156

$1,000 1,560,998
396,929

$13,680 2,055,996
541,174

1,606

19,322

43,323

2,025 69,736

50,194 376,068 188,197

33,808 825,173
4,904

$158,377

$2,592,708

$3,518,058

Inst it ut ional Support
$0 2,885,231 1,473,162
190,689 45,495
60,323 1,407,811 (126,793)
$5,935,918

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Op erat ions & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Ent erprises

$0 797,072 264,264

$0

$0

332,270

77,511

3,360
1,064,327 3,112,964 1,599,575

6,514,939

1,574
3,928 2,754,610
8,017

$6,841,562

$6,514,939

$3,177,910

T ot al Expenses
$13,874,603 8,753,362 6,216,879 190,689 346,867 6,514,939 1,306,535 9,890,967 1,729,325
$48,824,166

Macon State College Annual Financial Report FY 2008 28

Note 17. Component Units

Macon State College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Macon State College (College). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The twenty-four member board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $567,728 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Development & Alumni Affairs Office at 100 College Station Drive, Macon, GA 31206.

Investments for Component Units:

Macon State College Foundation, Inc. holds endowment and other investments in the amount of $7,124,443. The endowment is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Macon State College Foundation, in conjunction with the donors, has established a spending plan whereby 4-6% of the three-year rolling average may be expended. The remaining percentage stays intact.

Investments are comprised of the following amounts at June 30, 2008:

Equity Securities Real Estate SunTrust Pooled Investments
Total Investments

Cost
$6 304,554 7,156,585
$7,461,145

Fair Value
$6 304,554 6,819,883
$7,124,443

Macon State College Annual Financial Report FY 2008 29

Long-term Debt for Component Units:

Changes in long-term liabilities for the Foundation for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Notes and Loans Payable Total Long Term Liabilities

$0

$226,061

$0

$226,061

$0

$226,061

$226,061

$0

$226,061

$226,061

Notes and Loans Payable The Foundation has a note payable with BB&T in the amount of $226,061 as of June 30, 2008. This note has a variable interest rate at .375% less than prime and is payable in consecutive monthly installments of principal and interest of $25,705 with the final payment due during the year ending June 30, 2009. This note is secured by real estate.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year end ing June 30:

2009

1

Total Notes and Loans Payable

Pr inc ip al

Notes and Loans Payable Interest

$ 226 ,0 61 $ 226 ,0 61

$ 7,363 $ 7,363

T ota l
$ 233 ,4 24 $ 233 ,4 24

Macon State College Annual Financial Report FY 2008 30

MEDICAL COLLEGE OF GEORGIA
Financial Report
For the Year Ended June 30, 2008

Medical College of Georgia Augusta, Georgia

Daniel W. Rahn, M.D.
President

William R. Bowes, MBA
Vice President for Finance/CFO

MEDICAL COLLEGE OF GEORGIA ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ............................................................................ 1 Statement of Net Assets ...................................................................................................... 7 Statement of Revenues, Expenses and Changes in Net Asset .......................................... 11 Statement of Cash Flows .................................................................................................. 15 Note 1. Summary of Significant Accounting Policies .................................................... 17 Note 2. Deposits and Investments................................................................................... 23 Note 3. Accounts Receivable.......................................................................................... 26 Note 4. Inventories.......................................................................................................... 26 Note 5. Notes/Loans Receivable..................................................................................... 26 Note 6. Capital Assets..................................................................................................... 27 Note 7. Deferred Revenue............................................................................................... 28 Note 8. Long-Term Liabilities ........................................................................................ 28 Note 9. Significant Commitments................................................................................... 28 Note 10. Lease Obligations............................................................................................. 28 Note 11. Retirement Plans .............................................................................................. 30 Note 12. Risk Management............................................................................................. 36 Note 13. Contingencies................................................................................................... 37 Note 14. Post-Employment Benefits Other Than Pension Benefits ............................... 37 Note 15. Natural Classifications with Functional Classifications .................................. 38 Note 16. Component Units ............................................................................................. 39

MEDICAL COLLEGE OF GEORGIA
Management's Discussion and Analysis

Introduction
Medical College of Georgia (MCG), the oldest school of medicine in Georgia, was incorporated in 1828 as the Medical Academy of Georgia and is one of the 35 institutions of higher education of the University System of Georgia. The College, located in Augusta, Georgia, has become known for its world-class instructional, clinical and research programs. The college offers more than 40 academic programs in allied health sciences, dentistry, graduate studies, medicine, and nursing at the baccalaureate, masters, doctoral, and professional levels. Additionally, MCG offers residency training in medical and dental specialty areas. This wide range of educational opportunities attracts a highly qualified faculty and student body. A brief historical comparison of full time faculty and student levels is shown by the comparison numbers that follow.
Students Students Faculty (Headcount) (FTE)

FY2008

644

FY2007

629

FY2006

612

2,862 2,696 2,585

2,752 2,642 2,522

Overview of the Financial Statements and Financial Analysis
Medical College of Georgia is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Medical College of Georgia. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

Medical College of Georgia Annual Financial Report FY 2008 1

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$111,128,807 289,104,730 50,059,564 450,293,101

June 30, 2007
$102,528,923 287,279,113 49,755,879 439,563,915

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

90,051,160 40,958,883 131,010,043

87,504,201 41,997,809 129,502,010

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Capital P rojects Unrest rict ed Total Ne t As s e ts

260,440,796 1,612,466
62,446,417 5,000,000
(10,216,621) $319,283,058

257,535,916 1,756,794
65,285,087 387,687
(14,903,579) $310,061,905

The total assets of the institution increased by $10,729,186. A review of the Statement of Net Assets will reveal that the increase was primarily due to a net increase in Cash and Short-term Investments of $8,481,159 and an increase in Prepaid Items of $4,822,901.
The total liabilities for the year increased by $1,508,033. The combination of the increase in total assets of $10,729,186 and the increase in total liabilities of $1,508,033 yields an increase in total net assets of $9,221,153. The increase in total net assets is primarily in the category of Restricted - Capital Projects of $4,612,313.

Medical College of Georgia Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$418,062,501 590,268,506 (172,206,005) 173,068,284
862,279 8,358,874 9,221,153 310,061,905
0 310,061,905 $319,283,058

$391,604,839 548,851,488 (157,246,649) 157,685,908
439,259 36,019,087 36,458,346 273,603,559
0 273,603,559 $310,061,905

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Medical College of Georgia Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$24,151,307 377,137,993
8,834,807 7,048,026
890,368 418,062,501
161,597,858 7,231,443 3,999,416 2,346,798 (111,540)
175,063,975
8,353,317 5,557
8,358,874 $601,485,350

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises P at ient Care (MCG only)
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$141,635,295 40,735,964 96,673,997 18,787,075 3,731,271 39,969,306 24,183,285 1,552,322 7,344,846
215,655,145 590,268,506
1,995,691 $592,264,197

June 30, 2007
$21,614,072 354,482,232
7,934,939 6,670,880
902,716 391,604,839
141,914,536 9,937,205 3,494,387 4,660,985 (284,669)
159,722,444
35,231,667 787,420
36,019,087 $587,346,370
June 30, 2007
$125,064,499 38,756,421 97,227,853 17,126,406 2,116,743 45,828,736 17,721,499 1,247,631 7,045,444
196,716,256 548,851,488
2,036,536 $550,888,024

Medical College of Georgia Annual Financial Report FY 2008 4

Operating revenues increased by $26,457,662 in fiscal 2008. Revenue increased in all categories including a 12% increase in tuition & fees.

Nonoperating revenues increased by $15,341,531 for the year primarily due to an increase of $19,683,322 in State Appropriations.

The compensation and employee benefits category increased by $9,306,889 and primarily affected the Instruction, Plant Operations and Maintenance, and Patient Care categories. The increase reflects an increased cost of health insurance for the employees of the institution.

Statement of Cash Flows

The final statement presented by the Medical College of Georgia is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($147,339,368) 174,176,046 (20,051,379) (23,304,140) (16,518,841) 52,245,414
$35,726,573

June 30, 2007
($121,104,566) 153,380,747 (17,596,765) 348,810 15,028,226 37,217,188
$52,245,414

Capital Assets
The College had capital asset additions for buildings and building improvements in fiscal year 2008. Numerous projects were completed during the fiscal year totaling $12,977,154.
Medical College of Georgia concluded additional work on the Health Sciences Building which was substantially completed in the prior fiscal year. A total of $1,819,359 of this subsequent project spend was funded by Georgia State Financing and Investment Commission (GSFIC).

Medical College of Georgia Annual Financial Report FY 2008 5

Other on-going projects funded by GSFIC included $8,773,064. Projected funding by GSFIC for fiscal year 2009 will be approximately the same.
For additional information concerning Capital Assets, see Notes 1, 6, 8, 9 and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities Medical College of Georgia had Long-Term Debt and Liabilities of $57,890,541 of which $16,931,658 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units In compliance with GASB Statement No. 39, Medical College of Georgia has included the financial statements and notes for all required component units for FY2008. The Medical College of Georgia is reporting the activity for MCG Health, Inc., Medical College of Georgia Foundation, Inc., Medical College of Georgia Physicians Practice Group Foundation, Medical College of Georgia Research Institute, Inc., and Medical College of Georgia Dental Foundation. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Economic Outlook The College is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The College's overall financial position is strong. The College anticipates the current fiscal year will be challenging with budget cuts on the horizon at the state level, but will continue to maintain a close watch over resources providing the College with the flexibility to react to internal and external situations that may develop.
Daniel W. Rahn, M.D., President Medical College of Georgia
Medical College of Georgia Annual Financial Report FY 2008 6

Statement of Net Assets

MEDICAL COLLEGE OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Component Unit

Component Unit

Medical College of Georgia

MCG Health, Inc.

Medical College of Ge orgi a
Foundation, Inc.

ASSETS Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, net (note 3) Receivables - Federal Financial Assistance Margin Allocation Funds Receivables - Other Due From Component Units Net Investment in Capital Leases Due From Primary Government Inventories (note 4) Prepaid items Notes and Mortgages Receivable Other Assets Total Current Assets

$35,726,573 25,000,000
2,051,792 7,231,443 10,797,175 16,838,532
529,093 12,954,199
111,128,807

$59,207,286 28,515,148
66,839,323 77,991
327,412 8,100,474 2,132,578
165,200,212

$14,999,787 1,107,082
4,779 190,431
19,864 16,321,943

Noncurrent Assets Noncurrent Cash Short-term Investments Investments (including Real Estate) Notes Receivable, net Net Investment in Capital Leases Capital Assets, net (note 6) Other Assets Total Noncurrent Assets TO TAL ASSETS

46,157,517 3,902,047
289,104,730
339,164,294 450,293,101

488,374 105,104,372
94,108,364
85,541,577 2,102,540
287,345,227 452,545,439

129,016,200 122,724
1,624,036 362,838
131,125,798 147,447,741

Medical College of Georgia Annual Financial Report FY 2008 7

Statement of Net Assets, Continued

MEDICAL COLLEGE OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008
Component Unit

Medical College of Georgia

MCG Health, Inc.

Component Unit
Medical College of Ge orgi a
Foundation, Inc.

LIABILITIES Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deposit s Deferred Revenue (note 7) Other Liabilities Deposits Held for Other Organizations Due to Primary Government Lease Purchase Obligations (current portion) Compensated Absences (current portion) Due to Component Units Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Lease Purchase Obligations (noncurrent) Compensated Absences (noncurrent) Revenue/Mortgage Bonds Payable (noncurrent) Liabilities under Split-Interest Agreements (noncurrent) Other Long-Term Liabilities Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TO TAL LIABILITIES
NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Capital Projects Unrest rict ed TO TAL NET ASSETS

41,289,832 2,959,733 341,445
26,209,338
975,977
876,748 16,054,910
1,343,177
90,051,160
27,787,186 13,171,697
40,958,883 131,010,043
260,440,796
1,612,466 62,446,417
5,000,000 (10,216,621) $319,283,058

29,861,946 3,955,191
167,868 2,248,015 15,841,149 11,872,637
270,108 64,216,914
135,000,000 6,744,043
141,744,043 205,960,957
55,366,882 20,000
468,374 190,729,226 $246,584,482

0
2,268,972
2,268,972 2,268,972 1,624,036 114,174,486 17,513,255 11,866,992 $145,178,769

Medical College of Georgia Annual Financial Report FY 2008 8

Statement of Net Assets, Continued

MEDICAL COLLEGE OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Component Unit

Component Unit

Component Unit

Medical College of Georgia PPG Foundation

Medical College of Georgia Research
Institute, Inc.

Medical College of Georgia Dental Foundation

ASSETS Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, net (note 3) Receivables - Federal Financial Assistance Margin Allocation Funds Receivables - Other Due From Component Units Net Investment in Capital Leases Due From Primary Government Inventories (note 4) Prepaid items Notes and Mortgages Receivable Other Assets Total Current Assets

$27,478,631 24,908,399
546,827 270,108 344,393 153,341

$6,341,506 4,358,499

53,701,699

10,700,005

$141,298
18,952 957,138 175,108 1,292,496

Noncurrent Assets Noncurrent Cash Short-term Investments Investments (including Real Estate) Notes Receivable, net Net Investment in Capital Leases Capital Assets, net (note 6) Other Assets Total Noncurrent Assets TOTAL ASSETS

452,539
17,829,823
26,597,213 5,943,517 1,253,712
52,076,804 105,778,503

10,993
10,993 10,710,998

503,569 2,965,744
3,469,313 4,761,809

Medical College of Georgia Annual Financial Report FY 2008 9

Statement of Net Assets, Continued

MEDICAL COLLEGE OF GEORGIA STATEMENT OF NET ASSETS June 30, 2008

Component Unit

Component Unit

Component Unit

Medical College of Georgia PPG Foundation

Medical College of Georgia Research
Institute, Inc.

Medical College of Georgia Dental Foundation

LIABILITIES Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deposits Deferred Revenue (note 7) Other Liabilities Deposits Held for Other Organizations Due to Primary Government Lease Purchase Obligations (current portion) Compensated Absences (current portion) Due to Component Units Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Lease Purchase Obligations (noncurrent) Compensated Absences (noncurrent) Revenue/Mortgage Bonds Payable (noncurrent) Liabilities under Split-Interest Agreements (noncurrent) Other Long-Term Liabilities Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES
NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Capital Projects Unrestricted TOTAL NETASSETS

1,999,546
1,198,900
2,731,585
77,991 685,000 6,693,022
452,539 31,320,854 31,773,393 38,466,415
5,943,517
61,368,571 $67,312,088

7,500 14,263 4,652,056
4,673,819
0 4,673,819
10,993 106,278 5,919,908 $6,037,179

8,558 458,040 3,934,182
4,400,780
0 4,400,780
88,225 272,804 $361,029

Medical College of Georgia Annual Financial Report FY 2008 10

Statement of Revenues, Expenses and Changes in Net Assets
MEDICAL COLLEGE OF GEORGIA STATEMENT of REVENUES, EXPENSES, andCHANGES in NET ASSETS
for the Year Ended June 30, 2008

REVENUES
Operating Revenues Student Tuition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Health Services Other Organizations Clinical and Patient Fees Net patient Service Revenue Realized/Unrealized Gains (Losses) Interest and Dividend income Other Operating Revenues Total Operating Revenues
EXPENSES Operating Expenses
Salaries: Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to other Component Units Payments to or on behalf of Medical College of Georgia
Total Operating Expenses Operating Income (loss)

Component Unit

Medical College of Georgia

MCG Health, Inc.

Component Unit
Medical College of Georgia
Foundation, Inc.

$26,264,325

$0

(2,113,018)

47,749,777 193,551,785 135,836,431
8,834,807 472,936
871,779 1,220,731
122,167 1,267,243 1,278,406 2,287,700
417,432 418,062,501

4,633,056 453,495
358,643,151 363,729,702

115,970,905 178,644,159
81,890,971 122,308
3,316,220 1,834,587 8,741,556 181,469,941 18,277,859
590,268,506 (172,206,005)

167,100,775
47,536,457 35,828,053
667,092
4,485,713 117,743,225
18,063,013
391,424,328 (27,694,626)

$0 4,398,340
4,527
134,773 455,540
(5,351) 692,237 140,789 5,820,855
584,799 182,934
296,938 122,706 7,679,522 8,866,899 (3,046,044)

Medical College of Georgia Annual Financial Report FY 2008 11

Statement of Revenues, Expenses and Changes in Net Assets, Continued
MEDICAL COLLEGEOF GEORGIA STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal St at e Ot her Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Combined Margin Allocation Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Ot h er Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

Component Unit

Medical College of Georgia

MCG Health, Inc.

Component Unit
Medical College of Georgia
Foundation, Inc.

161,597,858
7,231,443 3,999,416 2,346,798 (1,995,691)
(111,540) 173,068,284
862,279
8,353,317 5,557
8,358,874 9,221,153
310,061,905 0
310,061,905 $319,283,058

33,181,112
1,075,966 7,396,007
369,070 940,780 4,538,270 (1,090,714) (7,231,443) (957,230) 38,221,818 10,527,192
20,000 20,000 10,547,192
236,037,290 0
236,037,290 $246,584,482

(3,776,349)
187,154 (3,589,195) (6,635,239)
1,865,948 1,865,948 (4,769,291)
149,948,060 0
149,948,060 $145,178,769

Medical College of Georgia Annual Financial Report FY 2008 12

Statement of Revenues, Expenses and Changes in Net Assets, Continued
MEDICAL COLLEGE OF GEORGIA STATEMENT of REVENUES, EXPENSES, and CHANGES in NET ASSETS
for the Year Ended June 30, 2008

REVENUES
Operating Revenues Student Tuition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Health Services Other Organizations Clinical and Patient Fees Net patient Service Revenue Realized/Unrealized Gains (Losses) Interest and Dividend income Other Operating Revenues Total Operating Revenues
EXPENSES Operating Expenses
Salaries: Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to other Component Units Payments to or on behalf of Medical College of Georgia
Total Operating Expenses Operating Income (loss)

Component Unit
Medical College of Georgia PPG Foundation

Component Unit
Medical College of Georgia Research
Institute, Inc.

Component Unit
Medical College of Georgia Dental Foundation

$0

$0

$0

2,023,836

43,822,274
12,368,513 70,101 394,674

246,732

92,958,031 94,981,867

56,655,562

7,284,461 7,531,193

9,658,072 11,794,636
1,301,586 214,760 55,856
8,640,655 658,624
3,564,981 51,765,783 87,654,953
7,326,914

3,408,888 5,735
53,226,334 56,640,957
14,605

1,381,170 87,208 7,450 38,551
3,959,137
1,909,672 7,383,188
148,005

Medical College of Georgia Annual Financial Report FY 2008 13

Statement of Revenues, Expenses and Changes in Net Assets, Continued
MEDICAL COLLEGE OF GEORGIA STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal St at e Ot h er Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Combined Margin Allocation Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Ot h er Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

Component Unit
Medical College of Georgia PPG Foundation

Component Unit
Medical College of Georgia Research
Institute, Inc.

Component Unit
Medical College of Georgia Dental Foundation

636,822 (1,399,486)
(762,664) 6,564,250

245,384
245,384 259,989

22,645
22,645 170,650

0 6,564,250
60,747,838 0
60,747,838 $67,312,088

0 259,989
5,777,190 0
5,777,190 $6,037,179

0 170,650
190,379 0
190,379 $361,029

Medical College of Georgia Annual Financial Report FY 2008 14

Statement of Cash Flows
MEDICAL COLLEGE OF GEORGIA S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Ot her Nonoperat ing Receipts Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P roceeds from Sale of Capit al Asset s P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s P urchase of Invest ment s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$24,918,631 382,791,342
9,067,510 (275,734,007) (294,360,433)
(1,834,587) (726,485) 1,073,738
1,002,716 1,215,941
120,352 1,425,460 1,089,908 2,300,592
309,954 (147,339,368)
161,597,858 (1,231,050) 13,920,778 (111,540)
174,176,046
6,533,958 1,525,313 (24,886,180) (1,228,779) (1,995,691) (20,051,379)
1,695,860 (25,000,000) (23,304,140) (16,518,841) 52,245,414 $35,726,573

Medical College of Georgia Annual Financial Report FY 2008 15

Statement of Cash Flows, Continued
MEDICAL COLLEGE OF GEORGIA S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed asset s acquired by incurring capit al lease obligat ions Change in fair value of invest ment s recognized as a component of int erest income Gift of capit al asset s reducing proceeds of capit al grant s and gift s

June 30, 2008
($172,206,005)
18,277,859 2,699,420 (4,805) (210,588) 347,253 304,148 3,480,485 (27,135)
($147,339,368)
$149,516 $650,938 ($1,824,916)

Medical College of Georgia Annual Financial Report FY 2008 16

MEDICAL COLLEGE OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Medical College of Georgia serves the local, state, and national communities by providing educational programs for health professionals, biomedical scientists, and educators at the undergraduate, graduate, and postgraduate levels and for lifelong learning through excellence in teaching and the total development of students in response to the health needs of the State of Georgia. The College strives to be a leading center of excellence in research through the generation and application of biomedical knowledge and technology to human health and disease, and to play an expanding role in the transfer of technology to the health care delivery system.
Reporting Entity Medical College of Georgia is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Medical College of Georgia as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Medical College of Georgia does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Medical College of Georgia is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Medical College of Georgia) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the College's report. For FY2008, Medical College of Georgia is reporting the activity for MCG Health, Inc., Medical College of Georgia Foundation, Inc., Medical College of Georgia Physicians Practice Group Foundation, Medical College of Georgia Research Institute, Inc., and Medical College of Georgia Dental Foundation. See Note 16, Component Units, for Foundation notes.
Medical College of Georgia Annual Financial Report FY 2008 17

Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool.
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.
Investments The College accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a
Medical College of Georgia Annual Financial Report FY 2008 18

component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Total Return Fund is included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are recorded on the consumption method and are valued at cost using the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the first-in, first-out method.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC transferred capital additions valued at $1,819,359 to Medical College of Georgia.
Medical College of Georgia Annual Financial Report FY 2008 19

Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Medical College of Georgia had accrued liability for compensated absences in the amount of $29,253,742 as of 7-1-2007. For FY2008, $20,223,682 was earned in compensated absences and employees were paid $20,250,817, for a net decrease of ($27,135). The ending balance as of 6-30-2008 in accrued liability for compensated absences was $29,226,607.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The College's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Medical College of Georgia Annual Financial Report FY 2008 20

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans Quasi-Endowm ent s T ot al Rest rict ed Expendable

$49,836,150 5,365,889 1,793,990 5,450,388
$62,446,417

Restricted net assets expendable Capital Projects: This represents resources for which the College is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.

The Medical College of Georgia has $5,000,000 in Restricted Net Assets Capital Projects. These funds are on deposit with GSFIC and will be used for construction of the School of Dentistry.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$1,235,068 10,424,688
127,467 (22,003,844) ($10,216,621)

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Medical College of Georgia, 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.

Medical College of Georgia Annual Financial Report FY 2008 21

Classification of Revenues The College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria: Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans. Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 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 College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.
Medical College of Georgia Annual Financial Report FY 2008 22

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $60,581,580 and the bank balance was $71,949,496. Of the College's deposits, $71,849,496 were uninsured. Of these uninsured deposits, $1,358,460 were collateralized with securities held by the financial institution's trust department or agent in the College's name, and $70,491,036 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the College's name.
B. Investments Medical College of Georgia maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of
Medical College of Georgia Annual Financial Report FY 2008 23

Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable federal and state laws.

The College's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

INVESTMENTS
Investment type Debt Securities
U.S. Agencies Explicitly Guaranteed Implicitly Guaranteed
Mutual Bond Funds
Other Investments Equity Mutual Funds Real Estate Investment Fund
Investment Pools Board of Regents Total Return Fund Office of Treasury and Fiscal Services Georgia Fund 1
Total Investments

Fair Value

Investment Maturity

Less Than

1 Year

1-5 Years

$266,964 11,403,637 11,596,634 $23,267,235
12,646,555 1,822,413
7,062,854 1,495,407 $46,294,464

$102,487 4,608,522
$4,711,009

$164,477 6,795,115 11,596,634
$18,556,226

The College does not have a formal policy addressing variable-rate securities. The College relies upon the judgment of its Investment Managers and the policies of the investment vehicles related to Medical College of Georgia's investment assets.
The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.
The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1

Medical College of Georgia Annual Financial Report FY 2008 24

Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 days.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The College's Investment Policy and Guidelines manages interest rate risk by recognizing that short-term loss of principal may be necessary in order to achieve long-term safety and growth of principal; and that in order to maximize income from debt instruments with maturities longer than sixty days, market values may be exposed to shortterm price volatility.
The Weighted Average Maturity of the Total Return Fund is 7.84 years. Of the College's total investment of $ 7,062,854 in the Total Return Fund, $2,231,862 is invested in debt securities.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the College will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The College does not have a formal policy for managing custodial credit risk for investments. Investment Managers are held accountable for custodial safety. The College's Investment Policy and Guidelines require that managers be registered in good standing as investment advisors; and will be experienced with proven track records.
At June 30, 2008, $11,670,601 of the College's applicable investments were uninsured and held by the investment's counterparty's trust department or agent in the College's name.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. All debt issues must be eligible investments under Georgia Code 50-17-63. Portfolios of debt security funds must also meet the eligible investment criteria under the same code section.
The investments subject to credit quality risk are reflected below:

Related Debt Investments U. S. Agencies M utual Bond Funds

Fair Value

Unrated

$11,403,637 11,596,634
$23,000,271

$11,403,637 11,596,634
$23,000,271

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The College's Investment Policy and Guidelines for managing concentration of credit risk requires that stocks and debt issues be diversified. The College also relies upon the concentration of credit risk policy of the individual investment vehicles related to

Medical College of Georgia Annual Financial Report FY 2008 25

Medical College of Georgia's investment assets. More than 5 percent of the College's investments are in the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. These investments are 14.8% and 7.3% respectively of the College's total investments.

Note 3. Accounts Receivable

Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance M argin Allocat ion Funds Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$359,075 374,207
2,051,792 7,231,443 16,838,532 10,220,275 37,075,324
156,382
$36,918,942

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore Other
T otal

$399,103 129,990
$529,093

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the College for amounts cancelled under these provisions. As the College determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The College has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 no provision has been made for uncollectible loans.

Medical College of Georgia Annual Financial Report FY 2008 26

Note 6. Capital Assets

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

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated

Beginning B al an ce s 7/1/2007
$9,053,256 11,489,517 20,542,773

Addi ti o n s
$0 8,040,747 8,040,747

Re du cti on s
$0 10,080,374 10,080,374

Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections T otal Assets Being Depreciated

320,281,292 2,339,679
63,668,132 33,887,929 16,807,856 436,984,888

13,158,043
7,856,997 149,516
1,308,283 22,472,839

1,515,995 170,473 29,076
1,715,544

Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Capital Leases Library Collections T otal Accumulated Depreciation

111,514,359 1,605,756
41,608,617 4,309,714
11,210,102 170,248,548

7,779,713 91,538
7,216,485 2,274,970
915,153 18,277,859

1,237,764 118,969 29,075
1,385,808

T otal Capital Assets, Being Depreciated, Net

266,736,340

4,194,980

329,736

Capital Assets, net

$287,279,113

$12,235,727

$10,410,110

En di n g B al an ce 6/30/2008
$9,053,256 9,449,890
18,503,146
333,439,335 2,339,679
70,009,134 33,866,972 18,087,063 457,742,183
119,294,072 1,697,294
47,587,338 6,465,715
12,096,180 187,140,599
270,601,584
$289,104,730

Medical College of Georgia Annual Financial Report FY 2008 27

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Research Ot her Deferred Revenue
T ot als

June 30, 2008
$6,163,218 16,416,673
3,629,447
$26,209,338

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations
Other Liabilities Compensated Absences Total

Beginning Balance
July 1, 2007
$29,743,197

Additions $149,516

Reductions

Ending Balance June 30, 2008

$1,228,779

$28,663,934

Current Portion
$876,748

29,253,742 29,253,742

20,223,682 20,223,682

20,250,817 20,250,817

29,226,607 29,226,607

16,054,910 16,054,910

Total Long Term Obligations

$58,996,939

$20,373,198

$21,479,596

$57,890,541

$16,931,658

Note 9. Significant Commitments
The College had significant unearned, outstanding, construction or renovation contracts executed in the amount of $8,621,741 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.
Note 10. Lease Obligations
Medical College of Georgia is obligated under various operating leases for the use of equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of equipment and the use of several floors of the Cancer Research Center building.
CAPITAL LEASES
Capital leases are generally payable in monthly installments and have terms expiring in various years between 2009 and 2037. Expenditures for fiscal year 2008 were $3,224,470, of which $1,995,691 represented interest. Total principal paid on capital leases was $1,228,779 for the fiscal year ended June 30, 2008. Interest rates range from 1.64 percent to 34.93 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:
Medical College of Georgia Annual Financial Report FY 2008 28

Buildings Equipment Total Assets Held Under Capital Lease

$24,613,745 2,787,512
$27,401,257

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.
Medical College of Georgia had one capital lease with a related entity in the current fiscal year. In November 2004, Medical College of Georgia entered into a capital lease of $27,659,678 at 6.85 percent with the MCG-PPG Cancer Research Center, LLC, a discretely presented component unit, whereby the College leases the third, fourth, and fifth floors of the Cancer Research Center for a thirty year period that began January, 2006 and expires December, 2035. At the end of the lease, title to the building is transferred to the College. The outstanding liability at June 30, 2008, on this capital lease is $26,939,615.
Medical College of Georgia also has various capital leases for equipment with an outstanding balance at June 30, 2008 in the amount of $1,724,319.
OPERATING LEASES
Medical College of Georgia's noncancellable operating leases have remaining terms of two years or less. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small business equipment.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Medical College of Georgia Annual Financial Report FY 2008 29

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 2034 t hrough 2038 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$2,812,070 2,768,487 2,756,869 2,291,787 2,181,520
10,878,086 10,878,086 10,878,086 10,878,086
5,439,043 61,762,120 33,098,186 $28,663,934

$12,547 375
$12,922

Medical College of Georgia's FY2008 expense for rental of real property and equipment under operating leases was $25,631.

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Medical College of Georgia participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Medical College of Georgia who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Medical College of Georgia makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$14,403,080 $13,884,229 $13,331,269

Medical College of Georgia Annual Financial Report FY 2008 30

Employees' Retirement System of Georgia
Plan Description Medical College of Georgia participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.
Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The College's payroll for the year ended June 30, 2008, for employees covered by ERS was $625,917. The College's total payroll for all employees was $294,615,064.
For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the College pays the remainder on behalf of the employee.
Medical College of Georgia Annual Financial Report FY 2008 31

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the College amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$65,531 $48,203 $37,388

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Medical College of Georgia makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.

Medical College of Georgia Annual Financial Report FY 2008 32

Medical College of Georgia and the covered employees made the required contributions of $7,042,577 (8.13% or 8.15%) and $4,326,070 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Medical College of Georgia 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $408,963 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.
Early Retirement Pension Plan
Plan Description Medical College of Georgia Early Retirement Pension Plan (ERP) is a single-employer defined benefit pension plan administered by Bryan, Pendleton, Swats and McAllister. The plan was devised by MCG as a means of manpower reduction and was approved by the Board of Regents of the University System of Georgia (BOR) effective January 1, 2000.
Medical College of Georgia Annual Financial Report FY 2008 33

The manpower reduction plan was designed to allow vested employees aged 55 or employees of any age with 25 years of creditable service to retire without penalties as applied by the Teachers Retirement System of Georgia (TRS) for early retirement. The plan would allow for all participants to retire as if they were vested and aged 60 or had attained 30 years of creditable service. No other benefits will be paid by this plan.

The ERP does not issue a standalone report, however, a financial statement is maintained by the Medical College of Georgia, Controller's Division, and is available for review during normal business hours.

Funding Policy The plan is to be funded by the purchase of an annuity utilizing salary savings of departed employees. The initial funding period of the annuity was 15 years; however, effective January 1, 2004, the remaining amortization period was extended 4 years. The fund sources that provided for an employee's salary, as of December 31, 1999, would be responsible for funding the annuity to provide the retiree benefits. There is no additional funding cost to the employee/retiree, BOR, or state of Georgia for this plan.

Since this plan was not pre-funded, MCG is taking an aggressive approach to collect and deposit as much into the annuity fund in the earlier years as is possible, thereby realizing a greater return on investment. The funding policy is reasonable and in compliance with the minimum funding requirements set forth in Code Section 47-20-10 of the Public Retirement Systems Standards Law. The plan should be fully funded by June 30, 2019.

Annual Pension Cost and Net Pension Obligation The ERP's annual pension cost and net pension obligation for the current year were as follows:

Annual Required Contribution Interest on Net Pension Obligation Adjustments on Annual Required Contribution

Total $12,966,492
(710,615)
1,224,890

MCG $7,052,602 (376,626)
649,192

Other Units $5,943,890 (333,989)
575,698

Annual Pension Cost

$13,510,767

$7,325,168

$6,185,599

Contributions Made

12,996,492

7,052,602

5,943,890

Increase (Decrease) in Net Pension Obligation Net Pension Obligation Beginning of Year Adjustment

$514,275
(8,577,887) (896,976)

$272,566
(7,512,997) (475,397)

$241,709
(1,064.890) (421,579)

Net Pension Obligation End of Year

$(8,960,588) $(7,715,828) $(1,244,760)

Medical College of Georgia Annual Financial Report FY 2008 34

Three-Year Trend Information

FY 2006

Annual Pension Cost (APC) Percentage of APC Contributed Net Pension Obligation End of Year

Total $12,874,094
100.24% $(9,004,838)

MCG $7,095,216
95.78% $(7,892,336)

Other Units $5,778,878 105.72% $(1,112,502)

FY 2007

Annual Pension Cost (APC) Percentage of APC Contributed Net Pension Obligation

Total $13,363,491
96.81% $(8,577,887)

MCG $7,393,903
94.87% $(7,512,997)

Other Units $5,969,588
99.20% $(1,064,890)

FY 2008

Annual Pension Cost (APC) Percentage of APC Contributed Net Pension Obligation

Total $13,510,767
96.19% $(8,960,588)

MCG $7,325,168
96.28% $(7,715,828)

Other Units $6,185,599
96.09% $(1,244,760)

Funded Status and Funding Progress As of January 1, 2008, the most recent actuarial valuation date, the plan was 35.0 percent funded. The actuarial accrued liability for benefits was $148,797,058, and the actuarial value of assets was $52,044,359, resulting in an unfunded actuarial accrued liability (UAAL) of $96,752,699.

Schedule of Funding Progress

The schedule of funding progress which follows, presents multiyear trend information about whether the actuarial value of plan assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits:

Actuarial Valuation
Date 1/1/2006 1/1/2007 1/1/2008

Actuarial Value of Assets
(a) 43,203,598 47,722,236 52,044,359

Actuarial Accrued Liability
(b) 148,323,853 148,253,721 148,797,058

Unfunded AAL
(UAAL) (b-a)
105,120,255 100,531,485 96,752,699

Funded Ratio (a/b) 29.1% 32.2% 35.0%

Annual Covered Payroll
(c) N/A N/A N/A

UAAL as a Percentage of Covered
Payroll ((b-a)/c)
N/A N/A N/A

Medical College of Georgia Annual Financial Report FY 2008 35

Actuarial Methods and Assumptions The annual required contribution for the current year was determined as part of the January 1, 2007 actuarial valuation using the Entry Age Actuarial cost method. The remaining amortization period is 11 years utilizing the entry age, level dollar, closed method. The actuarial value of assets recognizes a portion of the difference between the market value of assets and the expected actuarial value of assets, based on the assumed interest rate of return. The amount recognized each year is 20% of the difference between market value and expected actuarial value. The actuarial assumptions included (a) 7.5% rate of return on investment, (b) annual inflation of 3.5%, and (c) annual cost of living increase of 3.0%.
Note 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Medical College of Georgia and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Medical College of Georgia, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the
Medical College of Georgia Annual Financial Report FY 2008 36

performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Medical College of Georgia expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Medical College of Georgia (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 1,399 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Medical College of Georgia recognized as incurred $7,372,215 of expenditures, which was net of $2,668,446 of participant contributions.
Medical College of Georgia Annual Financial Report FY 2008 37

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses
Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Instruction
$57,445,896 30,660,754 21,388,977
26,559 1,223,171
309,098 625,932 24,043,966 5,910,942

Research
$9,547,120 11,799,706 4,531,407
272 485,112
2,820 20,992 13,443,397 905,138

Functional Classification FY2008

Public Service

Academic Support

$42,294,394 28,977,179 13,667,144
580,355 27,310 158,661 10,719,746 249,208

$3,474,767 7,935,240 5,069,555
1,070 239,118
112,762 564,095 1,390,468

Student Services
$437,519 1,619,104
573,733 459
56,280
17,212 1,001,842
25,122

Institutional Support
$301,016 14,234,118 12,965,980
93,869 343,463
167,968 4,173,154 7,689,738

$141,635,295

$40,735,964

$96,673,997

$18,787,075

$3,731,271

$39,969,306

Plant Operations & Maintenance

Functional Classification

FY2008

MCG only

Scholarships

Auxiliary

Patient

& Fellowships

Enterprises

Care

Total Expenses

$0 8,053,377 2,633,386 (483,604)
43,206
7,248,794 5,028,202 1,659,924

$2,912 42,987 11,064
1,495,359

$210,352 2,207,442
839,298 483,683 19,638
61,812 3,075,302
447,319

$2,256,929 73,114,252 20,210,427
325,877
327,423 119,420,237

$115,970,905 178,644,159 81,890,971
122,308 3,316,220 1,834,587 8,741,556 181,469,941 18,277,859

$24,183,285

$1,552,322

$7,344,846 $215,655,145 $590,268,506

Medical College of Georgia Annual Financial Report FY 2008 38

Note 16. Component Units
MCG Health, Inc. MCG Health, Inc. (Company) is a legally, separate tax-exempt component unit of Medical College of Georgia (College). The Company is organized to further the health sciences, patient care, research, and education mission of the Medical College of Georgia Hospital and Clinics (Hospital). The Hospital, which is owned by the Board of Regents of the University System of Georgia (Regents), consists of 632 licensed bed acute care hospital and related outpatient care facilities principally located in Augusta, Georgia. Because of the special relationship with the College, the Company is considered a component unit and is discretely presented in the College's financial statements.
The Company utilized the accrual basis of accounting using the economic resources measurement focus. Pursuant to, and as permitted by GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the Company has elected to apply the provisions of all relevant pronouncements of the Financial Accounting Standards Board (FASB), including those issued after November 30, 1989, that do not conflict with or contradict GASB pronouncements. The Company's fiscal year is July 1 through June 30.
Complete financial statements for the Company can be obtained from the Administrative Office at 1120 15th Street, Augusta, Georgia 20912.
Deposits and Investments
Deposits At June 30, 2008, $63,631,153 of MCG Health, Inc.'s deposits were uninsured, uncollateralized, or collateralized by securities held by the pledging institution or by its trust department or agent in other than the Company's name.
Investments At June 30, 2008, MCG Health, Inc. maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms with Board of Regents policy. All investments are consistent with donor intent, Board of Regents policy, and applicable federal and state laws.
Medical College of Georgia Annual Financial Report FY 2008 39

A summary of investments follows:
Fair Value

Less Than 1 Year

Investment Maturity 1-5 Years 6-10 Years

More Than 10 Years

Investment type Debt Securities
U.S. Treasuries U.S. Agencies
Explicitly Guaranteed Implicitly Guaranteed Corporate Debt Mortgage Backed Securities (Commercial)
Municipal Obligation

$15,799,141

$0 $15,799,141

308,415 62,257,572 23,508,290 19,213,833 3,058,662 $124,145,913

6,481,177 3,456,527
719,589
$10,657,293

51,744,862 20,051,763 6,372,495 1,770,332 $95,738,593

$0

$0

251,084

308,415 3,780,449

1,159,759 $1,410,843

10,961,990 1,288,330 $16,339,184

Other Investments Money Market Funds Equity Securities - Domestic Equity Securities - International Joint Venture

79,659,511 22,703,501
355,464 863,495
$227,727,884

Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. MCG Health, Inc. does not have a formal policy for managing interest rate risk.

Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the Company will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The Company does not have a formal policy for managing custodial credit risk for investments.

As of June 30, 2008, $147.2 million of the Company's applicable investments are held by the investment managers in the Company's name.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Company's policy for managing credit quality risk is as follows: The Company's assets may be invested only in investment grade bonds rated AA (or equivalent) or better. The Company's assets may be invested only in commercial paper rated A1 (or equivalent) or better. Fixed income maturity restrictions are as follows: Maximum maturity for any single security is five years, and weighted average portfolio maturity may not exceed 3 years. Securities comprising money market funds must be rated investment grade by Standard and Poor's and/or Moody's.

Medical College of Georgia Annual Financial Report FY 2008 40

The investments subject to credit quality risk at June 30, 2008 are rated as follows:

Related Debt Investments U. S. Agencies - Implicitly Guaranteed Corporate Debt M ortgage Backed Securities (Commercial) M unicipal Obligation

Fair Value
$62,257,572 23,508,290 19,213,833 3,058,662

AAA
$62,257,572 2,304,173 18,165,282 631,242

AA

A

$0 9,128,334
675,346 2,427,420

$0 11,353,162
373,205

BAA
$0 722,621

$108,038,357

$83,358,269

$12,231,100 $11,726,367

$722,621

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. Except for U.S. Government and agency obligations, each fixed income investment manager's portfolio should contain no more than 5% of any single issue, at cost. Individual U.S. Treasury securities may represent up to 30% of the total investment portfolio, while the total allocation of U.S. Treasury notes and bonds may represent up to 100% of the Company's aggregate bond position.

As of June 30, 2008, the following MCG Health, Inc.'s applicable investments exceed 5% of its total investment balance: Federal Home Loan Bank 14.8%, Federal National Mortgage Association 6.2%, and Federal Home Loan Mortgage Corporation 5.5%.

Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or a deposit. The Company does not have a policy for managing exposure to foreign currency risk.

MCG Health, Inc. holds investments totaling $355,464 or 0.2% in International equity securities. Foreign currency risk is considered negligible related to this holding in comparison to total investments.

Medical College of Georgia Annual Financial Report FY 2008 41

Capital Assets for Component Units:

MCG Health, Inc.'s capital asset activity for the year ending June 30, 2008 was as follows:

Capital Assets, Not Being Depreciated: Land (and other assets) Construction Work-in-Progress
Total Capital Assets Not Being Depreciated

Beginning Balances 7/1/2007
$7,138,554 10,692,641 17,831,195

Additions
$581,676 24,415,032 24,996,708

Reductions
$0 18,579,924 18,579,924

Ending Balance 6/30/2008
$7,720,230 16,527,749 24,247,979

Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Total Assets Being Depreciated

3,936,122 21,147,609 124,090,086 17,930,364 167,104,181

279,541 6,055,847 34,409,205
40,744,593

3,917,908 17,930,364 21,848,272

4,215,663 27,203,456 154,581,383
0 186,000,502

Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Capital Leases Total Accumulated Depreciation

393,352 7,752,867 96,248,220 6,030,191 110,424,630

178,480 3,309,006 10,677,017 3,898,510 18,063,013

(6,147,962) 9,928,701 3,780,739

571,832 11,061,873 113,073,199
0 124,706,904

Total Capital Assets, Being Depreciated, Net Capital Assets, net

56,679,551 $74,510,746

22,681,580 $47,678,288

18,067,533 $36,647,457

61,293,598 $85,541,577

Long-term Liabilities for Component Units:
On April 1, 2008, the Company issued a total of $135,000,000 of Development Authority of Richmond County Revenue Bonds, Series 2008A and 2008B (the Bonds). Proceeds from the Bonds are to be used to fund certain construction and renovation projects and to purchase new and replacement equipment. The proceeds were also used to refund outstanding capital lease obligations and to pay certain costs associated with the issuance of the Bonds.
Prior to the issuance of the Bonds on April 1, 2008, the Company's long-term debt consisted primarily of capital lease obligations. Other Long-Term Liabilities represents the self-insured portion of professional liability risks. Accrued professional liability costs are determined actuarially.

Medical College of Georgia Annual Financial Report FY 2008 42

Changes in long-term liabilities for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Compensated Absences Capital Lease Obligations Revenue/Mortgage Bonds Payable Other Long Term Liabilities

$11,190,803 11,672,954
0 9,298,000

$2,775,205 3,954,764 135,000,000
68,699

$2,093,371 15,627,718
374,641

$11,872,637 0
135,000,000 8,992,058

$11,872,637 2,248,015

Total Long Term Liabilities

$32,161,757

$141,798,668

$18,095,730

$155,864,695

$14,120,652

The Bonds initially bear interest at weekly rates determined by the remarketing agent as the lowest rate of interest which, in the judgment of the remarketing agent, would cause the Bonds to have a market value as of the date of determination equal to the principal amount thereof, taking into account prevailing market conditions. In the event that the remarketing agent fails to determine an applicable interest rate, the interest rate to be used shall equal 100% of the S&P Weekly Index plus twenty-five basis points or 100% of the One Month London Interbank Offered Rate (LIBOR) plus twenty-five basis points, depending on the income tax treatment of the resulting interest in the gross income of the beneficial owner of the Bonds. In no event, the interest rate on the Bonds will exceed the lesser of 15% per annum and the maximum rate permitted by law. The Company may, under certain conditions, elect to convert all of the Bonds of a Series from a weekly rate to a daily rate or other variable rate described in the Bond indenture. For the period from April 1, 2008 to June 30, 2008, the annual effective variable interest rate incurred on the Bonds was 1.872%.

Each Bond Series is secured by irrevocable letters of credit. All principal and interest payments are drawn from the letter of credit and are reimbursed by the Company under the terms of separate reimbursement agreements with the issuers of the letters of credit. Each letter of credit is currently set to expire on March 31, 2011, unless extended.

The bond indenture and letter of credit reimbursement agreements contain certain terms and restrictive covenants typical of such agreements, including maintenance of certain debt service levels, limitations on indebtedness, maintenance of certain days' cash on hand, and maintenance of a certain ratio of debt service coverage.

With respect to the 2008 capital lease refunding, funds were deposited in an irrevocable trust to provide for the debt service of the lease payable, and, therefore, all related amounts have been removed from the Company's balance sheet. The deposits into the trust have been or will be used to pay all scheduled principal and interest payments on the leases through 2013. The refunding transaction resulted in an accounting loss totaling approximately $849,000 which is reported as a nonoperating item in the accompanying statement of revenues, expenses, and changes in net assets.

Medical College of Georgia Annual Financial Report FY 2008 43

Concurrent with the issuance of the Bonds, the Company entered into a variable-to-fixed interest rate swap (the Swap). The intention of the Swap is to effectively convert the Company's variable interest rate on the Bonds into a synthetic fixed rate of 3.302%.

The Bonds and the Swap mature on July 1, 2037. The initial notional amount of the Swap is $135,000,000. The notional value of the Swap declines in conjunction with payments of Bond principal such that the outstanding balance of the Series 2008A and 2008B Bonds and the notional amount of the Swap remain equal at all times. Under the Swap, the Company pays the counterparty interest at a fixed rate of 3.302% and receives interest payments at a variable rate computed at 68% of LIBOR.

As of June 30, 2008, the Swap had a fair value of $81,085 (favorable to the Company), as computed using the zero-coupon method.

As of June 30, 2008, the Company was exposed to credit risk in the amount of the fair value of the Swap. The Swap counterparty was rated AA by Fitch Ratings and Standard & Poor's and Aaa by Moody's Investors Service as of June 30, 2008. To mitigate the potential for credit risk, various levels of collateralization by the counterparty may be required should the counterparty's credit rating be downgraded and the fair value of the Swap be in a position due to the Company at a level above certain thresholds specified in the Swap agreement. Collateral would be posted with a third party custodian. The Swap exposes the Company to basis risk should the relationship between LIBOR and prevailing market rates change significantly, changing the synthetic rate on the Bonds from the intended synthetic rate of 3.302%. As of June 30, 2008, the prevailing market rate was an aggregate 1.706%, whereas 68% of LIBOR was 1.688%.

The Company or the counterparty may terminate the Swap if the other party fails to perform under the terms of the agreement. If the Swap is terminated, the variable rate Bonds would no longer carry a synthetic fixed interest rate. Also, if at the time of termination the Swap has a negative fair value (unfavorable to the Company), the Company would be liable to the counterparty for a payment equal to the Swap's fair value.

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal
$0 0
3,225,000 3,335,000 3,450,000 19,050,000 22,475,000 26,510,000 31,270,000 25,685,000 $135,000,000

Bonds Payable Interest
$4,481,362 4,481,400 4,401,019 4,291,266 4,177,625
19,047,976 15,580,617 11,491,328 6,666,955 1,367,146 $75,986,694

Total
$4,481,362 4,481,400 7,626,019 7,626,266 7,627,625
38,097,976 38,055,617 38,001,328 37,936,955 27,052,146 $210,986,694

Medical College of Georgia Annual Financial Report FY 2008 44

Medical College of Georgia Foundation, Inc. Medical College of Georgia Foundation, Inc. (the "Foundation") is a legally separate, tax-exempt component unit of Medical College of Georgia (College). The Foundation acts primarily as a fundraising organization to supplement the resources that are available to the College in support of its programs. The Foundation functions as an independent corporation governed by its articles of incorporation, by-laws, and its Board of Directors. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources and income that the Foundation holds and invests are restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports on a modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Under this basis, revenue and the related assets are recognized when collected rather than when earned and expenses are generally recognized when paid rather than when incurred. Consequently, contributions receivable from donors, investment income receivables, accounts payable to vendors and accrued expenses are not included in the consolidated financial statements. The modified cash basis reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $7.7 million to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 919 15th Street, FI-1036, Augusta, Georgia 30912 or from the Foundation's website at www.mcgfoundation.org.

Investments for Component Units:

Investments are comprised of the following amounts at June 30, 2008:

Cost

Fair Value

Cash held by investment organization Certificates of Deposit Fixed Income Equity Securities Real Estate Alternative Strategies

$601,027 1,107,082 21,968,337 53,006,141 6,052,808 24,881,753

$601,027 1,107,082 21,417,184 62,669,078 6,683,254 37,645,657

Total Investments

$107,617,148

$130,123,282

Medical College of Georgia Annual Financial Report FY 2008 45

Capital Assets for Component Units:

Medical College of Georgia Foundation, Inc. held the following Capital Assets as of June 30, 2008:
June 30, 2008

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$1,510,594 1,510,594
271,318 271,318 157,876 113,442 $1,624,036

Long-term Liabilities for Component Units:
At June 30, 2008, Medical College of Georgia Foundation's long-term liabilities consisted of a $2,268,972 liability due under a split-interest agreement.

The Medical College of Georgia Physicians Practice Group Foundation The Medical College of Georgia Physicians Practice Group Foundation (PPG) is a legally separate, tax-exempt component unit of Medical College of Georgia (College). PPG acts primarily as a non-profit organization for the purpose of enhancing the clinical, research, and educational missions of the College and billing and collecting for medical services provided to patients. Revenues are obtained primarily from physician fees charged to patients at Medical College of Georgia Hospital and Clinics, which is operated by Medical College of Georgia Health, Inc. PPG Properties, LLC is a limited liability company formed in 2001 by PPG to manage real estate rental properties. PPG Alternative Collections, LLC is a limited liability company formed in 2003 by PPG to bill and collect for anesthesia services provided to patients. Georgia Esoteric and Molecular Labs, LLC was formed in 2004 by PPG to operate a specialized pathology laboratory with genetic or molecular testing capabilities. MCG-PPG Cancer Research Center, LLC was formed in 2004 by PPG to construct, own, and operate a portion of a building to house a cancer research center on the campus of MCG. PPG is the sole partner and has sole voting control of each LLC. Because PPG's purpose is to support the clinical, research, and educational missions of the College, it is considered a component unit of the College and is discretely presented in the College's financial statements.
PPG is a private non-profit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations with the exceptions as noted below. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. PPG's consolidated financial statements have been prepared substantially on the basis of cash receipts and cash disbursements
Medical College of Georgia Annual Financial Report FY 2008 46

with the exception of the following: interest earned on investments, salary supplements due to the College, incentive compensation, and retirement plan contribution expense are accounted for using the accrual method of accounting. Additionally, four-year scholarships funded for College students are expensed in the year awarded, and property and equipment are capitalized and depreciated.

Other adjustments required under accounting principles generally accepted in the United States of America for the accrual basis of accounting have not been reflected in the accompanying financial statements, including the equity method of accounting for PPG's investments in a joint venture. The equity method of accounting requires that the carrying value of investments meeting certain criteria be adjusted to reflect the investor's share of the investee's income and losses with the income or losses included in the statement of activities.

The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The PPG's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, PPG distributed $51.8 million to the College for salaries and departmental support. Complete financial statements for the PPG can be obtained from the Administrative Office at 1499 Walton Way, Suite 1400, Augusta, Georgia 30901.

Investments for Component Units:

PPG invests in mutual funds, equity securities, and debt securities which are measured at fair value. For investments other than common stock and mutual funds, classification between current and non-current is determined based upon individual investment maturity dates. Investments in common stock and mutual funds are actively traded and are classified as current. Investment income or loss (including realized gains and losses, interest, and dividends) is included in the nonoperating revenue section of the accompanying Statement of Revenues, Expenses, and Changes in Net Assets.

Investments are comprised of the following amounts at June 30, 2008:

Cost

Fair Value

Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds Joint Ventures/Partnerships
Total Investments

$8,925,480 10,455,931 13,676,616
7,882,842 585,000
$41,525,869

$8,966,200 10,131,452 15,529,745
7,525,825 585,000
$42,738,222

Medical College of Georgia Annual Financial Report FY 2008 47

Capital Assets for Component Units:

PPG held the following Capital Assets as of June 30, 2008:
June 30, 2008

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$3,269,355 3,269,355
2,422,416 6,249,455 8,671,871 5,997,709 2,674,162 $5,943,517

Long-Term Liabilities for Component Units:

Changes in long-term liabilities for component units for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Notes and Loans Payable Other Long Term Liabilities
Total Long Term Liabilities

32,689,063 558,885
$33,247,948

683,209 106,346

32,005,854 452,539

685,000

$0

$789,555

$32,458,393

$685,000

Notes and Loans Payable During 2004, the MCG-PPG Cancer Research Center, LLC (CRC) entered into a loan agreement with the Development Authority of Richmond County (the Authority), whereby the Authority issued bonds in the aggregate amount of $32,870,000 plus a premium of $498,784 and lent the proceeds thereof to CRC for the purpose of providing funds to finance the cost of construction of a portion of a cancer research center building on the campus of MCG. The premium is amortized semi-annually over the term of the loan. The loan agreement provides for semi-annual interest payments at interest rates ranging from 2.5 percent to 5.0 percent. Principal payments are due annually beginning December 2006 and continuing through December 2034. The outstanding principal balance of the loan payable as of June 30, 2008 was $31,550,000. The loan is secured by certain personal property constituting a portion of the building recorded as net investment in capital lease in the Statement of Net Assets.

Medical College of Georgia Annual Financial Report FY 2008 48

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal

Notes and Loans Payable Interest

$685,000 705,000 725,000 745,000 765,000
4,240,000 5,125,000 6,465,000 8,210,000 3,885,000 31,550,000
455,854 $32,005,854

$1,384,150 1,365,798 1,344,953 1,321,829 1,296,600 6,029,418 5,064,346 3,723,904 1,969,857
190,267 23,691,122
$23,691,122

Total
$2,069,150 2,070,798 2,069,953 2,066,829 2,061,600
10,269,418 10,189,346 10,188,904 10,179,857
4,075,267 55,241,122
455,854 $55,696,976

PPG administers a deferred compensation plan for various current and former MCG faculty members. Deferred compensation is reported in Other Long Term Liabilities in the Statement of Net Assets and represents the accounts held on behalf of these members in the amount of $452,539 at June 30, 2008.

Medical College of Georgia Research Institute, Inc. Medical College of Georgia Research Institute, Inc. (Institute) is a legally separate, tax-exempt component unit of Medical College of Georgia (College). The Institute was established in 1980 to contribute to the education, research, and service functions of the College in obtaining contracts from individuals, industrial or other private organizations, government or other public agencies for the performance of sponsored research, development or other programs by the various departments or other units of the College. All research contracts awarded to the Institute are sub-contracted to the College, which is responsible for the fiscal administration of the research projects. Although the College does not control the timing or amount of activity, all grant awards are sub-contracted and managed by the College. Because of this special relationship, the Institute is considered a component unit of the College and is discretely presented in the College's financial statements.
The Institute's financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board ("GASB"), in order to be consistent with the accounting principles followed by its primary government, Medical College of Georgia. The Institute's fiscal year is July 1 through June 30.
During the year ended June 2008, the Institute sub-contracted approximately $53.2 million of research projects to the College. Complete financial statements for the Institute can be obtained

Medical College of Georgia Annual Financial Report FY 2008 49

from the Medical College of Georgia's Division of Sponsored Program Administration at Medical College of Georgia, Augusta, Georgia 30912.

Deposits and Investments

Deposits As of June 30, 2008, $7,033,741 of the Institute's bank balance was exposed to custodial credit risk. Of that amount, $200,000 was insured by Federal depository insurance and $6,833,741 was uncollateralized.

The Institute had no investments as of June 30, 2008.

Capital Assets for Component Units:

The Institute's Capital Asset activity for the year ending June 30, 2008 was as follows:

Capital Assets, Being Depreciated: Equipment Total Assets Being Depreciated
Less: Accumulated Depreciation Equipment Total Accumulated Depreciation
Total Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning Balances 7/1/2007
$28,676 28,676
11,948 11,948
16,728
$16,728

Additions
$0 0

Reductions
$0 0

Ending Balance 6/30/2008
$28,676 28,676

5,735 5,735
(5,735)
($5,735)

17,683

0

17,683

0

10,993

$0

$10,993

Medical College of Georgia Dental Foundation Medical College of Georgia Dental Foundation (Foundation) is a legally separate, tax-exempt component unit of the Medical College of Georgia (College). The objectives and purposes of the Dental Foundation are to acquire and administer funds and property which are derived from fees charged for services rendered in the practice of dentistry at the School of Dentistry at the Medical College of Georgia by members of the faculty, residents, and hygienists of the School of Dentistry. Dental Foundation funds are used to maintain and improve the high standard of instruction at the Medical College of Georgia Dental School for advanced study by members of the School's student body and faculty and for research in the dental health field. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income is used in direct support of Medical College of Georgia. Because of this, the Foundation is considered to be a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain

Medical College of Georgia Annual Financial Report FY 2008 50

revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is March 1, 2007 through February 29, 2008. Because the Foundation's fiscal year differs from that of the College, amounts due to or due from the two entities are not consistent in this report.

During the year ended February 29, 2008, the Foundation distributed $1.9 million to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office of Medical College of Georgia, School of Dentistry, AD 1104, Augusta, Georgia 30912.

Investments for Component Units:

Investments are stated at fair value and are comprised of the following amounts at February 29, 2008:

Cost

Fair Value

Certificates of Deposit Unit Investment Trust Government Bonds Preferred Stocks Domestic Equities
Total Investments

$1,069,000 130,869 57,030 24,979
2,219,826 $3,501,704

$1,081,292 128,970 53,265 23,830
2,181,956 $3,469,313

Medical College of Georgia Annual Financial Report FY 2008 51

MIDDLE GEORGIA COLLEGE
Financial Report
For the Year Ended June 30, 2008

Middle Georgia College Cochran, Georgia

Mary Ellen Wilson
Interim President

Lynn E. Hobbs
Vice President for Fiscal Affairs

MIDDLE GEORGIA COLLEGE ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 12 Note 2. Deposits and Investments................................................................................................ 17 Note 3. Accounts Receivable...................................................................................................... 20 Note 4. Inventories...................................................................................................................... 20 Note 5. Notes/Loans Receivable................................................................................................. 20 Note 6. Capital Assets................................................................................................................. 21 Note 7. Deferred Revenue........................................................................................................... 22 Note 8. Long-Term Liabilities .................................................................................................... 22 Note 9. Significant Commitments............................................................................................... 22 Note 10. Lease Obligations......................................................................................................... 22 Note 11. Retirement Plans .......................................................................................................... 24 Note 12. Risk Management......................................................................................................... 27 Note 13. Contingencies................................................................................................................ 28 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 28 Note 15. Natural Classifications with Functional Classifications .............................................. 30 Note 16. Special Item.................................................................................................................. 31 Note 17. Component Units ......................................................................................................... 31

MIDDLE GEORGIA COLLEGE
Management's Discussion and Analysis

Introduction
Middle Georgia College is one of the 35 institutions of higher education of the University System of Georgia. The College, located in Cochran, Georgia, was founded in 1884 and is dedicated to providing a caring, dynamic, learning-centered, and technologically advanced environment of excellence. As a comprehensive and residential institution, the College pursues innovative opportunities to provide services to its traditional and non-traditional students primarily from rural areas of south central Georgia and will maintain a recognized legacy of affordable higher education and community support services of the highest quality. The main campus in Cochran serves both commuting and residential students. The Dublin Center serves commuting students from the middle Georgia Area. The Georgia Aviation campus in Eastman offers several aviation technical certificates and Associate of Applied Science degrees. The College provides the best educational environment possible for the development of its students and serves the needs of its community. These facilities meet the associate-degree and targeted baccalaureate degree level program needs throughout the regional service area. The state College provides access to higher education and undergraduate degrees that will address the economic development needs of Georgia's heartland, and, in limited cases, the economic development of the state at large. Popular programs include Aviation, Business Administration, Education, Nursing, Engineering, and the Georgia Academy of Mathematics, Engineering and Science. The institution's continued growth and excellence in academic instruction are reflected in the numbers throughout this report.
Students Students Faculty (Headcount) (FTE)

FY2008

133

FY2007

96

FY2006

81

3,444 3,051 2,677

2,951 2,576 2,274

Overview of the Financial Statements and Financial Analysis
Middle Georgia College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Middle Georgia College Annual Financial Report FY 2008 1

Statement of Net Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Middle Georgia College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$9,354,363 96,286,628
1,089,320 106,730,311

June 30, 2007
$6,397,232 57,097,523
1,228,619 64,723,374

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

4,310,931 26,669,669 30,980,600

2,480,639 11,106,249 13,586,888

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

70,014,811 28,007
1,192,740 4,514,153 $75,749,711

46,320,667 2,608
1,331,253 3,481,958 $51,136,486

Middle Georgia College Annual Financial Report FY 2008 2

The total assets of the institution increased by $42,006,937. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $39,189,105 in the category of Capital Assets, net. The balance of the increase is mainly in receivable categories.

The total liabilities for the year increased by $17,393,712. The combination of the increase in total assets of $42,006,937 and the increase in total liabilities of $17,393,712 yields an increase in total net assets of $24,613,225. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $23,694,144.

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$19,369,420 38,041,563 (18,672,143) 17,267,054
(1,405,089) 26,018,314 24,613,225 51,136,486
0 51,136,486 $75,749,711

$14,865,467 25,634,682 (10,769,215) 12,098,473
1,329,258 15,044,787 16,374,045 34,762,441
0 34,762,441 $51,136,486

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:
Middle Georgia College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s and Special It em St at e Ot her Capit al Gift s and Grant s Special It em
T ot al Capit al Gift s and Grant s and Special It em
T ot al Revenues

June 30, 2008
$4,003,072 5,632,232 236,143 9,403,921 94,052
19,369,420
18,164,477 7,408
355,786 116,682 (112,666) 18,531,687
5,238,077 3,380,811 17,399,426 26,018,314 $63,919,421

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$13,249,801 2,636,681 2,867,141 3,306,306 5,824,902 2,221,533 7,935,199 0
38,041,563
1,264,633 $39,306,196

June 30, 2007
$2,809,253 4,483,709 40,162 7,416,887 115,456
14,865,467
12,067,735 44,815
117,417 352,857 (15,021) 12,567,803
15,042,307 2,480 0
15,044,787 $42,478,057
June 30, 2007
$7,445,839 1,833,350 2,361,101 2,504,497 2,539,200 1,690,240 7,265,546 (5,091)
25,634,682
469,330 $26,104,012

Middle Georgia College Annual Financial Report FY 2008 4

Operating revenues increased by $4,503,953 in fiscal 2008. Tuition & Fees included a 42% increase, revenues also increased for Grants and Contracts, Sales and Services, and Auxiliary while Other Revenues decreased ($21,404).

The Auxiliary revenue increase of $1,987,034 in consistent with the increase in the residential student population.

Nonoperating revenues increased by $5,963,884 for the year primarily due to an increase of $6,096,742 in State Appropriations. This large increase was due primarily to the merger of the Georgia Aviation & Technical College into Middle Georgia College at July 1, 2007.

The compensation and employee benefits category increased by $4,801,691 and primarily affected the Instruction, Institutional Support and Plant Operations categories. The increase reflects the addition of the faculty and staff from Georgia Aviation & Technical College, merit increases and an increased cost of health insurance for the employees of the institution.

Utilities increased by $430,286 during the past year. Some of this increase was relative to the addition of the Georgia Aviation Campus and also to the increased utility rates which affected the Plant Operations and Maintenance category.

Statement of Cash Flows

The final statement presented by Middle Georgia College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($14,905,765) 18,564,756 (1,294,718) 265,184 2,629,457 4,670,026
$7,299,483

June 30, 2007
($9,005,810) 12,520,981 (1,872,735)
233,344 1,875,780 2,794,246
$4,670,026

Middle Georgia College Annual Financial Report FY 2008 5

Capital Assets
The addition of the Georgia Aviation & Technical College provided an increase in net capital assets of $17,109,795. The College also added $14,872,104 in capital leases for two dorms which were financed through the MGC Real Estate Foundation, LLC.
Welch Hall was completed in FY2008 at a value of $1,993,700. After a fire in 2005 which resulted in a nearly complete loss, Browning Hall was reopened in FY 2008. The final building was completed at a cost of $5,525,045, including $2,380,811 of noncash additions which were covered by the contractor's insurance.
For additional information concerning Capital Assets, see Notes 1, 6, 8, 9, and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
Middle Georgia College had Long-Term Debt and Liabilities of $27,073,299 of which $403,630 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, Middle Georgia College has included the financial statements and notes for all required component units for FY2008. The Middle Georgia College Foundation, Inc. had investments of $1.2 million as of June 30, 2008. The MGC Real Estate Foundation, LLC had long-term debt of $26.85 million and MGC Real Estate Foundation II, LLC had long-term debt of $36.34 million. This debt is relative to residential facilities that are or will be leased to the College. Details are available in Note 1, Summary of Significant Accounting Policies and Note 17, Component Units.
Economic Outlook
The College is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The College's overall financial position is strong. Due to the State of Georgia's current economic conditions, the College expects flat state appropriations in FY2009 but anticipates increased tuition and fee revenues relative to increased enrollments.
Mary Ellen Wilson, Interim President Middle Georgia College
Middle Georgia College Annual Financial Report FY 2008 6

Statement of Net Assets

M ID D L E G EO R G IA C O L L EG E S T A T EM EN T O F N ET A S S ET S
June 30, 2008

C om pon e n t Un it

M iddle G e orgia C ollege

M iddle G e orgia C o lle g e Fo u n da tio n ,
In c.

A S S ETS C u rre n t Asse ts Cash an d Cash E quiv alen t s Sh o rt - t e rm I n v e st m e n t s A cco un t s Receiv able, n et (n o t e 3 ) Receiv ables - Federal Fin an cial A ssist an ce Receiv ables - O t h er D ue Fro m Co m p o n en t U n it s In v en t o ries (n o t e 4 ) P rep aid it em s O t h er A sset s T o t al Curren t A sset s

$ 7 ,28 0 ,30 3
3 37 ,6 97 7 40 ,3 85
20 ,4 20 9 08 ,0 16
12 ,9 98 54 ,5 44 9 ,35 4 ,3 63

$ 21 0 ,58 0 30 0 ,00 0 1 6 ,15 0
52 6 ,73 0

Non cu rre n t Asse ts N o n curren t Cash In v est m en t s (in cludin g Real E st at e) N o t es Receiv able, n et N et In v est m en t in Cap it al L eases Cap it al A sset s, n et (n o t e 6 ) O t h er A sset s T o t al N o n curren t A sset s TO TA L A S S ETS
L IA B IL ITIES C u rre n t Liabilitie s A cco un t s P ay able Sa la rie s P a y a ble Co n t ract s P ay able D ep o sit s D eferred Rev en ue (n o t e 7 ) O t h er L iabilit ies D ep o sit s H eld fo r O t h er O rgan izat io n s D ue t o P rim ary Go v ern m en t L ease P urch ase O bligat io n s (curren t p o rt io n ) Co m p en sat ed A bsen ces (curren t p o rt io n ) T o t al Curren t L iabilit ies Non cu rre n t Liabilitie s L ease P urch ase O bligat io n s (n o n curren t ) Co m p en sat ed A bsen ces (n o n curren t ) Rev en ue/M o rt gage Bo n ds P ay able (n o n curren t ) T o t al N o n curren t L iabilit ies TO TA L L IA B IL ITIES
N ET A S S ETS In v est ed in Cap it al A sset s, n et o f relat ed debt Rest rict ed fo r N o n ex p en dable E x p en dable U n rest rict ed TO TA L N ET A S S ETS

19 ,1 80 9 48 ,5 70 1 21 ,5 70
9 6 ,28 6 ,62 8
9 7 ,37 5 ,94 8 1 06 ,7 30 ,3 11
4 26 ,0 02 2 67 ,0 50 1 ,01 4 ,4 71 3 72 ,7 11 1 ,65 9 ,8 42
5 ,52 8 1 61 ,6 97
(6 ,2 30 ) 4 09 ,8 60 4 ,31 0 ,9 31
2 6 ,27 8 ,04 7 3 91 ,6 22
2 6 ,66 9 ,66 9 3 0 ,98 0 ,60 0
7 0 ,01 4 ,81 1
28 ,0 07 1 ,19 2 ,7 40 4 ,51 4 ,1 53 $ 75 ,7 49 ,7 11

3 2 ,33 7 ,40 8 85 7 ,51 8
2 6 ,25 8 ,63 2 9 ,54 8 ,82 9 1 ,82 9 ,31 8
7 0 ,83 1 ,70 5 7 1 ,35 8 ,43 5
3 ,38 1 ,70 0
2 0 ,42 0
3 ,40 2 ,12 0
6 3 ,19 0 ,00 0 6 3 ,19 0 ,00 0 6 6 ,59 2 ,12 0
6 ,78 4 ,18 7 79 9 ,95 5 56 9 ,04 2
(3 ,38 6 ,86 9 ) $ 4 ,76 6 ,31 5

Middle Georgia College Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
MIDDLE GEORGIA COLLEGE S TATEMENT of REVENUES, EXPENSES, and CHANGES in NET ASS ETS
for the Year Ended June 30, 2008

REVENUES
Operating Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ributions Endowment Income (per spending plan) Grants and Cont ract s Federal St at e Ot h er Sales and Services Rent s and Royalt ies Auxiliary Ent erprises Residence Halls Bookst ore Food Services Healt h Services Intercollegiat e Athletics Ot her Organizat ions Ot her Operating Revenues T ot al Operating Revenues
EXPENS ES Operating Expenses
Salaries: Facult y St aff
Employee Benefit s Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Other Services Dep reciat io n P ayment s to or on behalf of Middle Georgia College
T ot al Operating Expenses Operating Income (loss)

Middl e Ge orgi a College

C ompone nt Unit
Mi ddl e Ge orgi a C ol l e ge Fou n dati on ,
In c.

$7,621,280 (3,618,208)
5,569,629 35,587 27,016
236,143 11,294
3,775,799 2,073,160 2,764,008
58,003 450,036 282,915
82,758 19,369,420
6,593,600 7,272,710 4,260,353
606,720 225,240 2,390,021 1,870,301 12,256,635 2,565,983
38,041,563 (18,672,143)

$0 117,772
62,100
13,057 1,385,548
1,578,477
138,068 51,975 45,909
235,952 1,342,525

Middle Georgia College Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
MIDDLE GEORGIA COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts St at e Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Ot her Special Item Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET AS S ETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

Middle Ge orgia C ol l e ge

C om pone nt Unit
Middle Ge orgia C ol l e ge Fou n dati on ,
In c.

18,164,477
7,408 355,786 116,682 (1,264,633) (112,666) 17,267,054 (1,405,089)
5,238,077 3,380,811 17,399,426
26,018,314 24,613,225
51,136,486 0
51,136,486 $75,749,711

(20,430) (1,289,548) 3,357,132 2,047,154 3,389,679
1,012,369 1,907
1,014,276 4,403,955
362,360 0
362,360 $4,766,315

Middle Georgia College Annual Financial Report FY 2008 9

Statement of Cash Flows

MIDDLE GEORGIA COLLEGE S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008

C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES P roceeds from Sales and Mat urit ies of Invest m ent s Int erest on Invest m ent s P urchase of Invest ment s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$4,186,045 5,765,879 236,143
(19,101,020) (13,528,488)
(2,390,021) 8,380
3,824,328 1,805,715 3,575,334
58,462 442,116 285,002 (73,640) (14,905,765)
18,164,477 (252,546) 652,825
18,564,756
4,271,187 (4,924,129)
(1,015) (640,761) (1,294,718)
1,176,360 237,706
(1,148,882) 265,184
2,629,457 4,670,026 $7,299,483

Middle Georgia College Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
MIDDLE GEORGIA COLLEGE S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust m ent s t o Reconcile Net Incom e (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries Ot her Asset s P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed asset s acquired by incurring capit al lease obligat ions Change in fair value of invest m ent s recognized as a com ponent of int erest incom e Special It em - Georgia Aviat ion T echnical College T ransfer Change in accrued int erest payable affect ing int erest paid Gift reducing proceeds of Gift s and Grant s received for ot her t han capit al purposes Gift of capit al asset s reducing proceeds of capit al grant s and gift s

June 30, 2008
($18,672,143)
2,565,983 (27,507)
(283,002) (35,392) 649 8,380 525,851 844,716 4,483 162,217
($14,905,765)
$14,872,104 ($121,024)
$17,399,426 ($623,872) ($15,180)
($4,347,701)

Middle Georgia College Annual Financial Report FY 2008 11

MIDDLE GEORGIA COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations The mission of Middle Georgia College is to provide an accessible, comprehensive learning and cultural environment for its students and community.
Reporting Entity Middle Georgia College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Middle Georgia College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Middle Georgia College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Middle Georgia College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Middle Georgia College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the College's report. For FY2008, Middle Georgia College is reporting the activity for the Middle Georgia College Foundation, Inc., which includes the MGC Real Estate Foundation, LLC, and the MGC Real Estate Foundation II, LLC.
See Note 17, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB
Middle Georgia College Annual Financial Report FY 2008 12

Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the Board of Regents Short-Term Investment Pool.
Investments The College accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Balanced Income Fund is included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Middle Georgia College Annual Financial Report FY 2008 13

Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Middle Georgia College.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a College residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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.
Middle Georgia College Annual Financial Report FY 2008 14

Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Middle Georgia College had accrued liability for compensated absences in the amount of $639,265 as of 7-1-2007. For FY2008, $568,724 was earned in compensated absences and employees were paid $406,507, for a net increase of $162,217. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $801,482.

Noncurrent Liabilities Noncurrent liabilities include liabilities that will not be paid within the next fiscal year; and capital lease obligations with contractual maturities greater than one year.

Net Assets The College's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.

Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans T erm Endowm ent s Quasi-Endowm ent s T ot al Rest rict ed Expendable

$83,442 176,135
4,993 578,928 349,242 $1,192,740

Middle Georgia College Annual Financial Report FY 2008 15

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$1,856,645 4,684,055 5,040 (2,031,587)
$4,514,153

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Middle Georgia 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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.

Middle Georgia College Annual Financial Report FY 2008 16

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 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 College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.
Auxiliary Residential revenue of $3,775,799 is reported net of discounts and allowances of $178,725.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
Middle Georgia College Annual Financial Report FY 2008 17

The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

At June 30, 2008, the carrying value of deposits was $6,483,235 and the bank balance was $6,892,310. Of the College's deposits, $6,750,315 were uninsured. Of these uninsured deposits, $5,895,622 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the College's name and $854,693 were uncollateralized.

B. Investments Middle Georgia College maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable federal and state laws.

The College's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

INVES TMENTS
Equity M utual Funds Equity Securities - Domestic
Investment Pools Board of Regents Short-T erm Fund Balanced Income Fund
T otal Investments

$223,913 579,595
808,798 145,062 $1,757,368

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The College does not have a formal policy for managing interest rate risk.
The Weighted Average Maturity of the Short Term Fund is 1.99 years. Of the College's total investment of $808,798 in the Short Term Fund, $805,563 is invested in debt securities.
Middle Georgia College Annual Financial Report FY 2008 18

The Weighted Average Maturity of the Balanced Income Fund is 7.84 years. Of the College's total investment of $145,062 in the Balanced Income Fund, $93,275 is invested in debt securities. Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the College will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The College does not have a formal policy for managing custodial credit risk for investments. At June 30, 2008, none of the College's investments were subject to Custodial Credit Risk disclosure. Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The College does not have a formal policy for managing credit quality risk. Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The College does not have a formal policy for managing concentration of credit risk. The College has 14.2% of its investments in Coca-Cola stock with a fair market value of $249,504. This stock is part of the Harris Endowment and was donated to the College in 1966.
Middle Georgia College Annual Financial Report FY 2008 19

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Georgia St at e Financing and Invest m ent Com m ission Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$34,577 332,528 337,697
13,061 20,420 429,954 1,168,237 69,735
$1,098,502

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore P hysical P lant
T otal

$903,615 4,401
$908,016

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the College for amounts cancelled under these provisions. As the College determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The College has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was approximately $0.

Middle Georgia College Annual Financial Report FY 2008 20

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
Total Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Total Assets Being Depreciated
Less: Accumulated Depreciation Infrastructure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections Total Accumulated Depreciation
Total Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning Balances 7/1/2007

Special Item Transfer

$2,233,395 5,117,859 7,351,254

$25,994 25,994

8,281,528 46,095,906 3,565,710 2,614,556 10,349,924 2,412,773 73,320,397

279,920 17,736,331 4,507,279
22,523,530

462,780 16,917,330 2,054,998 1,788,387
283,325 2,067,308 23,574,128
49,746,269
$57,097,523

279,920 2,151,725 3,008,084
5,439,729 17,083,801 $17,109,795

Additions
$5,718 10,239,626 10,245,344

Reductions
$0 9,358,795 9,358,795

8,533,333 162,875 174,307
14,872,104 128,795
23,871,414

669,915 31,532 33,499
13,368 748,314

351,819 1,212,958
74,620 85,076 775,206 66,304 2,565,983
21,305,431
$31,550,775

564,695 24,080 33,501
13,368 635,644
112,670
$9,471,465

Ending Balance 6/30/2008
$2,265,107 5,998,690 8,263,797
8,561,448 71,695,655 3,697,053 7,262,643 25,222,028 2,528,200 118,967,027
1,094,519 19,717,318 2,105,538 4,848,046 1,058,531 2,120,244 30,944,196
88,022,831
$96,286,628

Middle Georgia College Annual Financial Report FY 2008 21

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $244,939 1,414,903
$1,659,842

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Le as e s Lease Obligations

Beginning B al an ce
July 1, 2007
$10,776,856

Addi ti on s $15,495,976

Re du cti on s

En di n g B al an ce June 30, 2008

$1,015

$26,271,817

C u rre n t Porti on
($6,230)

O ther Liabilities Compensated Absences T ot al

639,265 639,265

568,724 568,724

406,507 406,507

801,482 801,482

409,860 409,860

Total Long Term O bligations

$11,416,121

$16,064,700

$407,522

$27,073,299

$403,630

Note 9. Significant Commitments

The College had significant unearned, outstanding, construction or renovation contracts executed in the amount of $700,705 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements. The College has executed a capital operating lease with MGC Real Estate Foundation II, LLC which will begin August 2008. The College's lease obligation related to this lease is $13,660,611.

Note 10. Lease Obligations

Middle Georgia College is obligated under various operating leases for the use of equipment, and also is obligated under capital leases for the acquisition of real property.
CAPITAL LEASES

The College has capital leases for student residential facilities and office equipment which are payable in monthly installments and expire in 2036. Interest expense for fiscal year 2008 was $1,264,633 with accrued interest of $623,872 added to the lease principal and interest paid of $640,761. The interest rate is 4.856 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Middle Georgia College Annual Financial Report FY 2008 22

Buildings Facilities & Other Improvements Equipment Total Assets Held Under Capital Lease

$22,969,666 208,250 985,582
$24,163,498

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.

Middle Georgia College entered into three residential facilities thirty year capital leases at 4.856% interest with MGC Real Estate Foundation, LLC, a related entity, in November 2005. One facility was occupied in August 2006 and the remaining two facilities became operational in July 2007. The total outstanding liability, including accrued interest, was $26,258,632 at June 30, 2008.

Middle Georgia College also has capital leases for equipment with an outstanding balance at June 30, 2008 in the amount of $13,185.

OPERATING LEASES

Middle Georgia College's noncancellable operating lease has a remaining term of one year and expires in fiscal year 2009. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small business equipment.

Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 2034 t hrough 2038 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$1,274,567 1,313,456 1,351,677 1,393,336 1,426,229 7,777,515 9,026,366
10,479,285 10,997,754
6,613,678 51,653,863 25,382,046 $26,271,817

$6,864 $6,864

Middle Georgia College's FY2008 expense for rental of real property and equipment under operating leases was $6,864.

Middle Georgia College Annual Financial Report FY 2008 23

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Middle Georgia College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Middle Georgia College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Middle Georgia College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$897,742 $655,271 $631,254

Employees' Retirement System of Georgia
Plan Description Middle Georgia College participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10

Middle Georgia College Annual Financial Report FY 2008 24

years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The College's payroll for the year ended June 30, 2008, for employees covered by ERS was $63,022. The College's total payroll for all employees was $13,866,310.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the College pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the College amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$6,561 $0 $0

Middle Georgia College Annual Financial Report FY 2008 25

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible University system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Middle Georgia College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Middle Georgia College and the covered employees made the required contributions of $186,557 (8.13% or 8.15%) and $114,595 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Middle Georgia 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
Middle Georgia College Annual Financial Report FY 2008 26

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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $44,227 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Middle Georgia College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Middle Georgia College, as an organizational unit of the Board of Regents of the University System of Georgia,
Middle Georgia College Annual Financial Report FY 2008 27

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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Middle Georgia College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Middle Georgia College (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and
Middle Georgia College Annual Financial Report FY 2008 28

2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 120 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Middle Georgia College recognized as incurred $633,588 of expenditures, which was net of $179,566 of participant contributions.
Middle Georgia College Annual Financial Report FY 2008 29

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
F acult y St aff B en efit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

Inst ruct ion
$6,543,600 1,362,881 1,877,821 218,051 71,710
46,384 1,381,281 1,748,073
$13,249,801

Functional Clas s ification FY2008

Academ ic Sup p o r t

St udent Ser v ic e s

$50,000 1,054,092
340,600 100,245
30,412
19,165 748,512 293,655

$0 1,301,284
354,232 11,142 67,656 12,800 17,443
1,063,867 38,717

$2,636,681

$2,867,141

Inst it ut ional Sup p o r t
$0 1,529,665 1,049,544
75,115 31,890
82,107 515,707
22,278
$3,306,306

Natural Classification
F acult y St aff B en efit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

P lant Op erat io n s & Maint enance

Functional Clas s ification FY2008

Sc h o la r sh ip s & Fellowships

A ux ilia r y Ent erprises

$0 1,450,219
497,324 (452,323)
5,252
1,394,659 2,914,557
15,214

$0 2,221,533

$0 574,569 140,832 654,490
18,320 155,688 310,543 5,632,711 448,046

$5,824,902

$2,221,533

$7,935,199

T otal E x p en ses
$6,593,600 7,272,710 4,260,353 606,720 225,240 2,390,021 1,870,301
12,256,635 2,565,983
$38,041,563

Middle Georgia College Annual Financial Report FY 2008 30

Note 16. Special Item
As of July 1, 2007, Georgia Aviation Technical College (GAVTC) merged with Middle Georgia College. It is now the Georgia Aviation campus of Middle Georgia College. As a result of this merger, GAVTC assets and liabilities as of July 1, 2007 transferred to Middle Georgia College. The net transfer of $17,399,426 is reported as a Special Item on the Statement of Revenues, Expenses and Changes in Net Assets and the Statement of Cash Flows. See Note 6 Capital Assets for additional information.
Note 17. Component Units
Middle Georgia College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Middle Georgia College (College). The Foundation acts primarily as a fundraising organization to supplement the resources that are available to the University in support of its programs. The sixty-two member board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $ 45,909 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Middle Georgia College Foundation, Inc. at 1100 Second St., SE, Cochran, GA 31014.
Investments for Component Units:
Middle Georgia College Foundation, Inc. holds endowment and other investments in the amount of $1,157,518. The $799,955 corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Middle Georgia College Foundation, Inc. has established a spending plan whereby 100% of the realized earnings may be used for current and future expenditures except where restricted by donors.
Middle Georgia College Annual Financial Report FY 2008 31

Investments are comprised of the following amounts at June 30, 2008:

Money Market Accounts Certificates of Deposit Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds
Total Investments

Cost
$100,039 300,000 5,053 30,000 562,357 278,118
$1,275,567

Fair Value
$100,039 300,000 5,039 29,151 480,039 243,250
$1,157,518

Capital Assets for Component Units:

Middle Georgia College Foundation, Inc. holds Capital Assets as of June 30, 2008 as follows:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$79,482 8,699,823 8,779,305
820,500 820,500
50,976 769,524 $9,548,829

Long-term Liabilities for Component Units:

Changes in long-term liabilities for the Foundation for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Revenue/Mortgage Bonds Payable Total Long Term Liabilities

$26,850,000 $26,850,000

$36,340,000 $36,340,000

$0

$63,190,000

$0

$0

$63,190,000

$0

Middle Georgia College Annual Financial Report FY 2008 32

On November 1, 2005, the Bleckley-Cochran Development Authority issued certain bonds totaling $26,850,000. Proceeds of the sale of the bond were loaned to MGC Real Estate Foundation, LLC. The proceeds of the Series 2005 Bonds are being used to (i) finance or reimburse, in whole or in part, the cost of construction and equipping of three residence halls containing approximately 704 beds including related parking located on the campus of Middle Georgia College, a unit of the University System of Georgia; (ii) fund capitalized interest on the Series 2005 Bonds; (iii) fund a debt service reserve fund for the Series 2005 Bonds; and (iv) pay costs of issuance of the Series 2005 Bonds. The Series 2005 bonds have interest rates ranging from 3.5% to 5.25% and the final maturity is July 1, 2036.

On July 1, 2007, the Joint Development Authority of Bleckley County and Dodge County issued certain bonds totaling $36,340,000. Proceeds of the sale of the bonds were loaned to MGC Real Estate Foundation II, LLC. The proceeds of the Series 2008 Bonds are being used to (i) finance or refinance the costs of acquisition, construction, and equipping of student housing containing approximately 699 beds and related amenities located on two campuses of Middle Georgia College, a unit of the University System of Georgia; (ii) fund capitalized interest on the Series 2008 Bonds; (iii) fund a debt service reserve fund and (iv) pay costs of issuance of the Series 2008 Bonds. The project consists of one residence hall with approximately 143 beds and related amenities on the Eastman campus and two residences halls with approximately 278 beds each on the Cochran campus. The Series 2008 bonds have interest rates ranging from 3% to 5.25% and the final maturity is July 1, 2038.

The outstanding balance of these obligations at 6/30/08 is $63,190,000.

Debt Service Obligations

Annual debt service requirements to maturity for Student Housing bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038 2039 through 2043

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31-35

Principal
$0 40,000 80,000 175,000 275,000 2,860,000 6,215,000 10,985,000 16,650,000 20,890,000 5,020,000 $63,190,000

Bonds Payable Interest
$1,953,234 3,108,326 3,106,226 3,103,426 3,097,396
15,127,749 14,091,255 11,912,175
8,417,538 3,131,900
263,550 $67,312,775

Total
$1,953,234 3,148,326 3,186,226 3,278,426 3,372,396
17,987,749 20,306,255 22,897,175 25,067,538 24,021,900
5,283,550 $130,502,775

Middle Georgia College Annual Financial Report FY 2008 33

Special Item Transfer: Georgia Aviation and Technical College Foundation, Inc. merged with and into Middle Georgia College Foundation, Inc. with an effective date of December 19, 2007. Middle Georgia College Foundation, Inc. is the surviving Corporation of the merger. All the assets and liabilities of Georgia Aviation and Technical College Foundation became those of Middle Georgia College Foundation, Inc. and resulted in a Net Asset transfer of $1,012,369. This transfer is reported as a Special Item in the Statement of Revenues, Expenses and Changes in Net Assets.
Middle Georgia College Annual Financial Report FY 2008 34

NORTH GEORGIA COLLEGE & STATE UNIVERSITY
Financial Report
For the Year Ended June 30, 2008

North Georgia College & State University Dahlonega, Georgia

David L. Potter
President

Frank J. (Mac) McConnell
Vice President for Business & Finance

NORTH GEORGIA COLLEGE & STATE UNIVERSITY ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 12 Note 2. Deposits and Investments................................................................................................ 18 Note 3. Accounts Receivable...................................................................................................... 21 Note 4. Inventories...................................................................................................................... 21 Note 5. Notes/Loans Receivable................................................................................................. 21 Note 6. Capital Assets................................................................................................................. 22 Note 7. Deferred Revenue........................................................................................................... 23 Note 8. Long-Term Liabilities .................................................................................................... 23 Note 9. Significant Commitments............................................................................................... 23 Note 10. Lease Obligations......................................................................................................... 23 Note 11. Retirement Plans .......................................................................................................... 25 Note 12. Risk Management......................................................................................................... 29 Note 13. Contingencies................................................................................................................ 29 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 30 Note 15. Natural Classifications with Functional Classifications .............................................. 31 Note 16. Component Units .......................................................................................................... 32

NORTH GEORGIA COLLEGE & STATE UNIVERSITY
Management's Discussion and Analysis

Introduction

North Georgia College and State University is one of the 35 institutions of higher education of the University System of Georgia. The University, located in Dahlonega, Georgia, was founded in 1873 and has become known for its academic excellence and leadership development programs. The University offers baccalaureate and masters degrees in a wide variety of academic disciplines as well as the education specialist degree in teacher leadership. This range of educational opportunities attracts a highly qualified faculty and a student body of more than 5,000 students each year. The institution continues to grow as shown by the comparison numbers that follow.
Students Students Faculty (Headcount) (FTE)

FY2008

233

FY2007

227

FY2006

163

5,227 4,922 4,765

4,629 4,414 4,222

Overview of the Financial Statements and Financial Analysis
North Georgia College and State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of North Georgia College and State University. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and noncurrent assets will be discussed in the footnotes to the financial statements.

North Georgia College and State University Annual Financial Report FY 2008 1

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$14,689,148 76,230,276 3,638,481 94,557,905

June 30, 2007
$15,489,370 69,946,035 3,801,512 89,236,917

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

6,468,416 18,389,138 24,857,554

5,734,013 18,608,204 24,342,217

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

58,461,853 2,578,939 1,712,620 6,946,939
$69,700,351

51,915,569 2,762,864 1,583,753 8,632,514
$64,894,700

The total assets of the institution increased by $5,320,988. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $6,284,241 in the category of Capital Assets, net.
The total liabilities for the year increased by $515,337. The combination of the increase in total assets of $5,320,988 and the increase in total liabilities of $515,337 yields an increase in total net assets of $4,805,651. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $6,546,284.

North Georgia College and State University Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$33,585,891 61,263,447 (27,677,556) 29,685,816
2,008,260 2,797,391 4,805,651 64,894,700
0 64,894,700 $69,700,351

$30,254,735 55,472,963 (25,218,228) 26,911,207
1,692,979 834,836
2,527,815 62,366,885
0 62,366,885 $64,894,700

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

North Georgia College and State University Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$15,027,420 2,631,702 692,810
14,371,334 862,625
33,585,891
26,792,332 3,053,772 96,097 513,891 7,358
30,463,450
2,422,429 374,962
2,797,391 $66,846,732

June 30, 2007
$14,021,978 2,121,376 689,610
12,840,531 581,240
30,254,735
23,069,023 2,594,234 561,339 877,428 5,672
27,107,696
749,836 85,000
834,836 $58,197,267

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$26,361,033 4,809,218 3,698,491 7,017,692 6,160,963 924,105
12,291,945 61,263,447
777,634 $62,041,081

June 30, 2007
$23,294,076 4,464,784 3,524,556 5,904,601 5,139,743 1,254,125
11,891,078 55,472,963
196,489 $55,669,452

Operating revenues increased by $3,331,156 in fiscal 2008. Although Tuition & Fees included an average increase of 7%, and a 215 FTE gain; revenues also increased in Grants and Contracts, Auxiliary and Other categories.

North Georgia College and State University Annual Financial Report FY 2008 4

The Auxiliary revenue increase of $1,530,803 is a primary result of the increased sales of food services, retail operations and residence hall occupancy.

Nonoperating revenues increased by $3,355,754 for the year primarily due to an increase of $3,723,309 in State Appropriations.

The compensation and employee benefits category increased by $3,147,703 and primarily affected the Instruction category. The increase reflects the addition of 6 full-time faculty members, 8 part-time faculty members, 6 full-time staff members, merit increases and an increased cost of health insurance for the employees of the institution.

Utilities increased by $331,664 during the past year. The increase was primarily associated with the increased electrical and natural gas costs that were experienced in the winter of fiscal year 2008 and affected the Plant Operations and Maintenance category.

Statement of Cash Flows

The final statement presented by North Georgia College and State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($25,137,589) 29,998,303 (7,265,856) 755,421 (1,649,721) 12,584,181
$10,934,460

June 30, 2007
($21,942,583) 26,197,933 (2,280,476) 770,365 2,745,239 9,838,942
$12,584,181

North Georgia College and State University Annual Financial Report FY 2008 5

Capital Assets
North Georgia College and State University had approximately $8.7 million in capital asset additions during fiscal 2008. $7.2 million of these additions were in the Construction Work in Progress category and included $4.9 million for the Recreation Center/Parking Deck and $2.3 million for the Education Building Renovation projects.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the notes to the financial statements.
Long Term Debt and Liabilities
North Georgia College and State University had Long-Term Debt and Liabilities of $19,379,164 of which $990,026 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, North Georgia College and State University has included the financial statements and notes for all required component units for FY2008. The North Georgia College and State University Foundation, Inc. had investments of $29.2 million as of June 30, 2008 and long-term debt of $46.6 million in the form of two bond issues. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Economic Outlook
The declining trend in Georgia state revenue collections and the potential for substantial midyear budget reductions pose a significant risk to the University's financial stability. Dramatic reductions in service to our students, faculty and staff could result. Our ability to service increasing numbers of students and provide critically needed outreach in our service area could be greatly compromised. While our current financial position in strong, the University must remain diligent in protecting our assets and reacting proactively to an ever changing financial environment.
David L. Potter, President North Georgia College and State University
North Georgia College and State University Annual Financial Report FY 2008 6

Statement of Net Assets
N O R T H G EO R G IA C O L L EG E & S T A T E U N IV ER S IT Y S T A T EM EN T O F N ET A S S ET S June 30, 2008

A S S ETS C u rre n t A sse ts C ash an d C ash E quiv alen t s Sh o r t - t e r m In v e st m e n t s A cco un t s R eceiv able, n et (n o t e 3 ) R eceiv ables - F ederal F in an cial A ssist an ce R eceiv ables - O t h er D ue Fro m C o m p o n en t U n it s N et In v est m en t in C ap it al L eases D ue F ro m P rim ary Go v ern m en t In v en t o ries (n o t e 4 ) P rep aid it em s T o t al C urren t A sset s

N orth G e orgia C olle ge & S tate
U n i ve rs ity

C om pon e n t Un it
N orth G e orgia C olle ge an d S tate
U n i ve rs ity Fo u n da ti o n , In c.

$ 9 ,9 2 5 ,0 0 6 5 2 ,4 4 7
2 0 0 ,6 6 3 1 ,4 1 8 ,0 9 1
5 6 7 ,0 6 4
1 ,5 7 1 ,6 7 2 9 5 4 ,2 0 5
1 4 ,6 8 9 ,1 4 8

$ 8 0 ,3 2 8
8 3 ,0 0 4 3 1 2 ,2 6 8 1 0 3 ,7 5 5
2 8 ,2 6 9 6 0 7 ,6 2 4

N on cu rre n t A sse ts N o n curren t C ash In v est m en t s (in cludin g R eal E st at e) N o t es R eceiv able, n et N et In v est m en t in C ap it al L eases P ledges R eceiv able C ap it al A sset s, n et (n o t e 6 ) O t h er A sset s T o t al N o n curren t A sset s TO TA L A S S ETS
L IA B IL ITIES C u rre n t Liabilitie s A cco un t s P ay able Sa la r ie s P a y a ble C o n t ract s P ay able D ep o sit s D eferred Rev en ue (n o te 7 ) D ep o sit s H eld fo r O t h er O rgan izat io n s D ue t o P rim ary Go v ern m en t L ease P urch ase O bligat io n s (curren t p o rt io n ) C o m p en sat ed A bsen ces (curren t p o rt io n ) R ev en ue/M o rt gage B o n ds P ay able (curren t ) D ue t o C o m p o n en t U n it s N o t es an d L o an s P ay able (curren t p o rt io n ) T o t al C urren t L iabilit ies N on cu rre n t Liabilitie s L ease P urch ase O bligat io n s (n o n curren t ) D eferred Rev en ue (n o n curren t) C o m p en sat ed A bsen ces (n o n curren t ) R ev en ue/M o rt gage B o n ds P ay able (n o n curren t ) L ia bilit ie s un de r Sp lit -In t e re st A gre e m e n t s (n o n c urre n t ) T o t al N o n curren t L iabilit ies TO TA L L IA B IL ITIES
N ET A S S ETS In v est ed in C ap it al A sset s, n et o f relat ed debt R est rict ed fo r N o n ex p en dable E x p en dable U n rest rict ed TO TA L N ET A S S ETS

1 ,0 0 9 ,4 5 4 1 ,5 0 9 ,1 5 2 1 ,1 1 9 ,8 7 5
7 6 ,2 3 0 ,2 7 6
7 9 ,8 6 8 ,7 5 7 9 4 ,5 5 7 ,9 0 5
6 5 1 ,2 8 6 2 2 2 ,8 0 9 5 4 2 ,5 9 0 6 9 5 ,2 0 5 3 ,0 4 6 ,4 2 3 2 1 6 ,3 2 2
3 1 2 ,2 6 7 6 7 7 ,7 5 9
1 0 3 ,7 5 5
6 ,4 6 8 ,4 1 6
1 7 ,4 5 6 ,1 5 6
9 3 2 ,9 8 2
1 8 ,3 8 9 ,1 3 8 2 4 ,8 5 7 ,5 5 4
5 8 ,4 6 1 ,8 5 3
2 ,5 7 8 ,9 3 9 1 ,7 1 2 ,6 2 0 6 ,9 4 6 ,9 3 9 $ 6 9 ,7 0 0 ,3 5 1

1 6 ,4 3 0 ,3 8 9 2 9 ,1 6 8 ,6 0 0
1 7 ,4 5 6 ,3 5 6 1 5 7 ,0 3 5
2 0 ,8 9 4 ,4 9 7 9 9 7 ,8 8 2
8 5 ,1 0 4 ,7 5 9 8 5 ,7 1 2 ,3 8 3
3 ,8 0 4 ,1 3 0
7 6 5 ,9 8 6
5 6 7 ,0 6 4
5 9 0 ,0 0 0
3 3 8 ,7 6 9 6 ,0 6 5 ,9 4 9
6 ,9 7 7 ,2 1 6
4 5 ,9 9 5 ,0 0 3 2 5 ,2 1 2
5 2 ,9 9 7 ,4 3 1 5 9 ,0 6 3 ,3 8 0
9 ,4 4 5 ,9 6 9
2 3 ,5 7 0 ,3 7 0 4 ,6 2 7 ,0 0 0
(1 0 ,9 9 4 ,3 3 6 ) $ 2 6 ,6 4 9 ,0 0 3

North Georgia College and State University Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
NORTH GEORGIA COLLEGE & S TATE UNIVERS ITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Grant s and Cont ract s Federal Sales and Services Rents and Royalt ies Auxiliary Ent erprises Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Int erest and Dividend income Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion P ayment s t o or on behalf of Nort h Georgia College & St at e Universit y
T ot al Operat ing Expenses Operat ing Incom e (loss)

North Georgia C ollege & State
Un i ve rs i ty

C om pone nt Unit
North Ge orgia C ollege and State
Un i ve rs i ty Fou n dati on , In c.

$18,195,990 (3,168,570)
2,631,702 692,810
4,627,651 3,161,015 3,007,337
898,347 759,958 1,832,915
84,111
862,625 33,585,891
15,017,763 14,716,370
8,331,981 148,318 596,987
1,755,089 2,755,876 14,785,776 3,155,287
61,263,447 (27,677,556)

$0 1,269,644
30,037 2,238,172
1,376 229,452 3,768,681
65,200 103,872
76,537 1,873
914,403 27,000
1,414,745 2,603,630 1,165,051

North Georgia College and State University Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
NORTH GEORGIA COLLEGE & S TATE UNIVERS ITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal St at e Ot her Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Ot her Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET ASS ETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

North Georgia C ollege & State
Un i ve rs i ty

C om pone nt Unit
North Ge orgia C ollege and State
Un i ve rs i ty Fou n dati on , In c.

26,792,332
909,800 94,986
2,048,986 96,097
513,891 (777,634)
7,358 29,685,816
2,008,260
2,422,429 374,962
2,797,391 4,805,651
64,894,700 0
64,894,700 $69,700,351

(1,435,612) (1,593,366)
(3,028,978) (1,863,927)
1,420,570 1,420,570 (443,357)
27,092,360 0
27,092,360 $26,649,003

North Georgia College and State University Annual Financial Report FY 2008 9

Statement of Cash Flows
NORTH GEORGIA COLLEGE & S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P roceeds from Sale of Capit al Asset s P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES P roceeds from Sales and Mat urit ies of Invest m ent s Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$14,940,286 2,556,046 692,810
(26,759,998) (29,566,914)
(1,755,089) (105,298) 74,352
4,632,233 2,927,270 3,005,878
893,039 760,736 1,831,109
38,084 697,867 (25,137,589)
26,792,332 56,101
3,149,870 29,998,303
2,422,429 9,075
(8,657,683) (262,043) (777,634)
(7,265,856)
55,440 699,981 755,421 (1,649,721) 12,584,181 $10,934,460

North Georgia College and State University Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
NORTH GEORGIA COLLEGE & S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Change in fair value of invest ment s recognized as a component of int erest income Gift of capit al asset s reducing proceeds of capit al grant s and gift s

June 30, 2008
($27,677,556)
3,155,287 (649,615) (214,837)
(32,600) (30,946) 13,841 158,976 15,451 124,410 ($25,137,589)
($186,090) ($374,962)

North Georgia College and State University Annual Financial Report FY 2008 11

NORTH GEORGIA COLLEGE & STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations North Georgia College and State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity North Georgia College and State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of North Georgia College and State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. North Georgia College and State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, North Georgia College and State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus North Georgia College and State University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, North Georgia College and State University is reporting the activity for the North Georgia College and State University Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and
North Georgia College and State University Annual Financial Report FY 2008 12

Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
North Georgia College and State University Annual Financial Report FY 2008 13

Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to North Georgia College and State University.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
North Georgia College and State University Annual Financial Report FY 2008 14

Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. North Georgia College and State University had accrued liability for compensated absences in the amount of $1,486,331 as of 7-1-2007. For FY2008, $1,050,280 was earned in compensated absences and employees were paid $925,870, for a net increase of $124,410. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $1,610,741.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
North Georgia College and State University Annual Financial Report FY 2008 15

Expendable Restricted Net Assets include the following:

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans T ot al Rest rict ed Expendable

June 30, 2008
$138,792 669,382 904,446
$1,712,620

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$7,347,807 3,723,680 41,613 (4,166,161)
$6,946,939

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes North Georgia College and State University, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.

North Georgia College and State University Annual Financial Report FY 2008 16

Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 University, 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 University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
North Georgia College and State University Annual Financial Report FY 2008 17

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $10,342,038 and the bank balance was $10,914,278. Of the University's deposits, $10,861,832 were uninsured. Of these uninsured deposits, $10,861,832 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name.
B. Investments
North Georgia College and State University maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to
North Georgia College and State University Annual Financial Report FY 2008 18

Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable federal and state laws.

The University's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

INVESTMENTS
Investment type Debt Securities
General Obligation Bonds
Other Investments Equity Securities - Domestic
Investment Pools Office of Treasury and Fiscal Services Georgia Fund 1 Total Investments

Fair Value

1-5 Years

Investment Maturity 6-10 Years

More Than 10 Years

$1,053,147 $1,053,147
456,005

$149,112 $149,112

$613,059 $613,059

$290,976 $290,976

630,209 $2,139,361

The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1 per share. The Georgia Fund 1 Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 days.

Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk.

Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the university will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The University does not have a formal policy for managing custodial credit risk for investments.

At June 30, 2008, $1,509,152 of the University's applicable investments were uninsured and held by the investment's counterparty in the University's name.

North Georgia College and State University Annual Financial Report FY 2008 19

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk.

The investments subject to credit quality risk are reflected below:

Related Debt Inves tments General Obligation Bonds

Fair Value
$1,053,147 $1,053,147

AAA
$1,053,147 $1,053,147

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The University does not have a formal policy for managing concentration of credit risk.

As of June 30, 2008 North Georgia College and State University had five investments in a single issuer that exceeded 5% of the university's total investments as shown below:

Investment:

Percent of Total

General Obligation Bonds -PrimeVest (Gwinnett Cty Water & Sewer) General Obligation Bonds -PrimeVest (Dekalb Cty Bldg Auth) General Obligation Bonds -PrimeVest (Gilmer Cty Bldg Auth) General Obligation Bonds -PrimeVest (Gwinnett Cty Water & Sewer) Equity Securities AT&T

15.3% 6.9% 6.7% 6.6% 7.4%

North Georgia College and State University Annual Financial Report FY 2008 20

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$456,042 267,340 200,663 567,064 892,947
2,384,056 198,238
$2,185,818

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore Other
T otal

$1,524,310 47,362
$1,571,672

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was $0.

North Georgia College and State University Annual Financial Report FY 2008 21

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$3,804,200 1,440,717 5,244,917
3,883,833 64,301,489
2,721,293 4,789,880 17,346,542 4,691,797 97,734,834
2,285,820 22,419,682
1,638,051 3,571,925
0 3,118,238 33,033,716
64,701,118
$69,946,035

Addi ti o n s
$374,962 7,787,077 8,162,039

Re du cti on s
$0 212,973 212,973

617,078
328,724
546,379 1,492,181
50,401 1,675,010
52,617 371,599 727,132 278,528 3,155,287
(1,663,106)
$6,498,933

300,036 22,304
322,340
298,317 22,304
320,621 1,719
$214,692

En di n g B al an ce 6/30/2008
$4,179,162 9,014,821
13,193,983
3,883,833 64,918,567
2,721,293 4,818,568 17,346,542 5,215,872 98,904,675
2,336,221 24,094,692
1,690,668 3,645,207
727,132 3,374,462 35,868,382
63,036,293
$76,230,276

North Georgia College and State University Annual Financial Report FY 2008 22

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $2,243,192 803,231
$3,046,423

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Le as e s Lease Obligations

Beginning B al an ce
July 1, 2007
$18,030,466

Addi ti on s $0

Re du cti on s

En di n g B al an ce June 30, 2008

$262,043

$17,768,423

C u rre n t Porti on
$312,267

O ther Liabilities Compensated Absences T otal

1,486,331 1,486,331

1,050,280 1,050,280

925,870 925,870

1,610,741 1,610,741

677,759 677,759

Total Long Term O bligations

$19,516,797

$1,050,280

$1,187,913

$19,379,164

$990,026

Note 9. Significant Commitments

The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $1,432,116 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.

In addition, the University executed a rental agreement for a Student Recreation Center and Parking Deck with the North Georgia College and State University Foundation, Inc. The rental agreement commences in September 2008 and will expire in FY 2038. The net present value of the minimum lease payments over the life of the rental agreement is $25,700,844.

Note 10. Lease Obligations

North Georgia College and State University is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.

North Georgia College and State University Annual Financial Report FY 2008 23

CAPITAL LEASES

Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2028 and 2036. Expenditures for fiscal year 2008 were $1,039,677 of which $777,634 represented interest. Total principal paid on capital leases was $262,043 for the fiscal year ended June 30, 2008. Interest rates range from 4.25 percent to 4.70 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Land Buildings - Owen Hall Buildings - 60 Main Street West Infrastructure - Radar Ridge Total Assets Held Under Capital Lease

$815,443 10,499,002 2,394,917 3,725,491 $17,434,853

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.
North Georgia College and State University had two capital leases with the University's Foundation, a discretely presented component unit, in the current fiscal year. In March 2007, North Georgia College and State University entered into a capital lease of $3,254,259 whereby the University leased land and a building; Downtown Office Building for a 29.33 year period that began March 2007 and expires June 2036. In March 2007 the University entered into a capital lease of $14,907,726 whereby the University leased a residence hall building for a 20 year period that began March 2007 and expires 2028. The outstanding liability at June 30, 2008 on these capital leases is $17,768,423. The University at its option may terminate the lease and purchase the Foundation's interest for the unamortized principal balance and the payment of $1.
OPERATING LEASES
North Georgia College and State University's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2026. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small business equipment.
In December 2007, North Georgia College and State University entered into a real property operating lease with the City of Dahlonega, for office space for one year with an option to extend the term for five years with an annual rental payment of $38,196. In February, 2007 the University entered into a real property lease with the North Georgia College and State University Foundation for an athletic complex for one year with an option to extend the term for nineteen years with an annual rental payment of $58,000.

North Georgia College and State University Annual Financial Report FY 2008 24

Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 2034 t hrough 2038 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$1,078,258 1,105,073 1,132,706 1,188,894 1,287,775 7,308,373 7,219,840 5,931,155 1,094,089 561,301
27,907,464 10,139,041 $17,768,423

$298,095 238,281 210,533 96,196 96,196 290,000 290,000 232,000
$1,751,301

North Georgia College and State University's FY2008 expense for rental of real property and equipment under operating leases was $305,421.
Note 11. Retirement Plans
Teachers Retirement System of Georgia
Plan Description North Georgia College and State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.
Funding Policy Employees of North Georgia College and State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. North Georgia College and State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

North Georgia College and State University Annual Financial Report FY 2008 25

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$1,485,182 $1,392,527 $1,292,601

Employees' Retirement System of Georgia

Plan Description North Georgia College and State University participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age. Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

North Georgia College and State University Annual Financial Report FY 2008 26

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 University's payroll for the year ended June 30, 2008, for employees covered by ERS was $204,348. The University's total payroll for all employees was $29,734,133.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$21,388 $18,492 $16,466

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

North Georgia College and State University Annual Financial Report FY 2008 27

Funding Policy North Georgia College and State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
North Georgia College and State University and the covered employees made the required contributions of $877,008 (8.13% or 8.15%) and $472,033 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description North Georgia College and State University 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $91,422 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.
North Georgia College and State University Annual Financial Report FY 2008 28

Note 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. North Georgia College and State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. North Georgia College and State University, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although North Georgia College and State University expects such amounts, if any, to be immaterial to its overall financial position.
North Georgia College and State University Annual Financial Report FY 2008 29

Litigation, claims and assessments filed against North Georgia College and State University (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 224 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, North Georgia College and State University recognized as incurred $1,111,156 of expenditures, which was net of $348,476 of participant contributions.
North Georgia College and State University Annual Financial Report FY 2008 30

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
F acult y St aff B en efit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

Inst ruct ion
$14,469,668 2,993,939 3,889,278
287,465 353,130 157,904 4,042,819 166,830
$26,361,033

Functional Clas s ification FY2008

Academ ic Sup p o r t

St udent Ser v ic e s

$175,236 2,515,336
551,498

$46,634 2,021,852
545,529

131,093
151,476 952,790 331,789

40,956 17,466 48,813 960,805 16,436

$4,809,218

$3,698,491

Inst it ut ional Sup p o r t
$93,648 3,302,981 2,195,795
148,318 66,793 5,653 51,851
1,034,512 118,141
$7,017,692

Natural Classification
F acult y St aff B en efit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

P lant Op erat io n s & Maint enance

Functional Clas s ification FY2008

Sc h o la r sh ip s & Fellowships

A ux ilia r y Ent erprises

$0 2,066,542
722,043 (889,559)
3,701
1,966,460 63,532
2,228,244

$0
924,055 50

$232,577 1,815,720
427,838 889,559
66,979 454,785 379,372 7,731,268 293,847

$6,160,963

$924,105

$12,291,945

T otal E x p en ses
$15,017,763 14,716,370 8,331,981 148,318 596,987 1,755,089 2,755,876 14,785,776 3,155,287
$61,263,447

North Georgia College and State University Annual Financial Report FY 2008 31

Note 16. Component Units
North Georgia College & State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of North Georgia College & State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The seven member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year ends on June 30th each year.
During the year ended June 30, 2008, the Foundation distributed $1,414,745 to or for the benefit of the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation may be obtained from their Office at 70 Alumni Drive, Dahlonega, GA 30533 or from the University's website at www.ngcsu.edu and click on "Alumni & Friends" to go to the Foundation's page.
Investments for Component Units:
North Georgia College & State University Foundation, Inc. holds endowment and other investments in the amount of $29.2 million. The $23.6 million corpus of the endowment is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. North Georgia College & State University Foundation, in conjunction with the donors, has established a spending plan whereby 50% of the earnings may be used for academic scholarships. The remaining 50% of the earnings are set aside as a reserve.
Investments are comprised of the following amounts at June 30, 2008:
North Georgia College and State University Annual Financial Report FY 2008 32

Money Market Accounts Government and Agency Securities Equity Securities Mutual Funds Real Estate
Total Investments

Cost
$743,208 200,000
1,004,030 25,267,777
1,648,677
$28,863,692

Fair Value
$743,208 201,938 717,180
25,857,597 1,648,677
$29,168,600

Capital Assets for Component Units:

North Georgia College & State University Foundation, Inc. holds the following Capital Assets as of June 30, 2008:
June 30, 2008

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated

$39,005 20,280,552 20,319,557

Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated

585,065 16,875 601,940

Less Total Accumulated Depreciation

27,000

Total Capital Assets being Depreciated, Net

574,940

Capital Assets, Net

$20,894,497

Long-Term Liabilities for Component Units:

Changes in long-term liabilities for the year ended June 30, 2008 are as follows:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Liabilities under split interest agreement Notes and Loans Payable Revenue/Mortgage Bonds Payable
Total Long Term Liabilities

$22,665 300,873 46,979,761
$47,303,299

$2,547 37,896
$40,443

$0 394,758 $394,758

$25,212 338,769 46,585,003
$46,948,984

$0 338,769 590,000
$928,769

North Georgia College and State University Annual Financial Report FY 2008 33

Notes and Loans Payable: The $338,769 Notes and Loans Payable balance at June 30, 2008 represents the outstanding borrowings under a $1,200,000 line of credit with a financial institution to purchase real estate. The interest rate charge is the financial institution's prime rate less .50% (4.5% at June 30, 2008). Payments of quarterly interest only are required through January 5, 2009, at which time the line of credit matures.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30: 2009

Notes and Loans Payable

Principal

Interest

Total

1

$338,769

$8,000

$346,769

Revenue Bonds Payable: In August 2001, the Downtown Development Authority of the City of Dahlonega (the Authority) issued $10.8 million in Revenue Bonds Series 2001 (the Bonds) and entered into an agreement to loan $10.8 million to the Foundation for Student Housing construction. The bonds were secured by a letter of credit issued by a financial institution in favor of the Authority. The letter of credit must be renewed annually. Borrowings under the agreement were subject to an annual fee of .25% of the letter of credit amount. The loan was paid off in February, 2007 with proceeds of the Series 2007 Bond Issue.
In February 2007, the Student Housing financed the retirement of the Series 2001A Bonds and debt associated with the purchase of real estate held for investment with the Downtown Development Authority of the City of Dahlonega 2007 Series C Revenue Bonds (the C Bonds) totaling $16,215,000. The C Bonds carried interest ranging from 3.63% to 5.00%, payable semiannually on January 1 and July 1 of each year beginning July 1, 2007.
In February 2007,the Park & Recreation Center financed the acquisition and renovation of an existing office building and the construction of a Recreation Center and Parking Deck for the North Georgia College & State University with the Downtown Development Authority of the City of Dahlonega 2007 Series A & B Revenue Bonds (the A & B Bonds) totaling $30,270,000. The Series A & B Bonds carry interest ranging from 3.63% to 5.00%, payable semi-annually on January 1 and July 1 of each year beginning July 1, 2007.

North Georgia College and State University Annual Financial Report FY 2008 34

Annual debt service obligations to maturity for the revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium/(Discount)

Principal

Bonds Payable Interest

Total

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

$590,000 525,000 585,000 670,000 835,000
4,905,000 7,530,000 11,340,000 8,430,000 10,695,000 46,105,000
480,003 $46,585,003

$2,090,515 2,069,015 2,047,455 2,023,410 1,993,052 9,293,069 7,887,385 5,693,688 2,981,675 940,319
37,019,583
$37,019,583

$2,680,515 2,594,015 2,632,455 2,693,410 2,828,052
14,198,069 15,417,385 17,033,688 11,411,675 11,635,319 83,124,583
480,003 $83,604,586

North Georgia College and State University Annual Financial Report FY 2008 35

SAVANNAH STATE UNIVERSITY
Financial Report
For the Year Ended June 30, 2008

Savannah, Georgia

Earl G. Yarbrough, Sr., Ph.D.
President

Edward B. Jolley, Jr., CPA, MBA
Vice President for Fiscal Affairs

SAVANNAH STATE UNIVERSITY ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................1 Statement of Net Assets ..................................................................................................8 Statement of Revenues, Expenses and Changes in Net Assets.......................................9 Statement of Cash Flows ..............................................................................................11 Note 1. Summary of Significant Accounting Policies ................................................13 Note 2. Deposits and Investments...............................................................................19 Note 3. Accounts Receivable......................................................................................21 Note 4. Inventories......................................................................................................21 Note 5. Notes/Loans Receivable.................................................................................21 Note 6. Capital Assets.................................................................................................22 Note 7. Deferred Revenue...........................................................................................23 Note 8. Long-Term Liabilities ....................................................................................23 Note 9. Significant Commitments...............................................................................23 Note 10. Lease Obligations.........................................................................................23 Note 11. Retirement Plans ..........................................................................................25 Note 12. Risk Management.........................................................................................28 Note 13. Contingencies...............................................................................................29 Note 14. Post-Employment Benefits Other Than Pension Benefits ...........................30 Note 15. Natural Classifications with Functional Classifications ..............................31 Note 16. Component Units .........................................................................................32

SAVANNAH STATE UNIVERSITY
Management's Discussion and Analysis

Introduction
Savannah State University is one of the 35 institutions of higher education of the University System of Georgia. Chartered by the State of Georgia in 1890, as a department of the State University for the education and training of Negro students, Savannah State University now serves a diverse student population as a senior university of the University System of Georgia. The University serves a primarily African-American student population, enriched by a diversity of traditional and nontraditional students from other countries, cultures, and races.

Savannah State University, located in a coastal, urban, port city setting, serves residential and commuter students from diverse educational, geographical, and racial backgrounds. In a beautiful and unique setting of a live oak forest next to a salt marsh estuary, the University is well situated for the study of commercial, technological, environmental and urban issues. The University's mission is consistent with the core missions of the University System of Georgia and the senior universities in the System.

The University's mission is to graduate students prepared to perform at higher levels of economic productivity, social responsibility, and excellence in their chosen fields of endeavor in a changing global community. The educational goal is realized through program offerings in the College of Business Administration, the College of Liberal Arts and Social Sciences, and the College of Sciences and Technology, which lead to baccalaureate, and master's degrees. This wide range of educational opportunities attracts a highly qualified faculty and a student body of more than 3,000 students each year. The institution has grown over the last several fiscal years as shown by the comparison numbers that follow.
Students Students Faculty (Headcount) (FTE)

FY2008

136

FY2007

141

FY2006

118

3,169 3,241 3,091

2,950 3,065 2,853

Overview of the Financial Statements and Financial Analysis
Savannah State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Savannah State University Annual Financial Report FY 2008 1

Statement of Net Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Savannah State University. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed:
Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$9,368,193 84,241,090
3,769,899 97,379,182

June 30, 2007
$8,584,873 52,722,785
3,417,316 64,724,974

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

3,399,136 29,707,437 33,106,573

2,521,155 668,199
3,189,354

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

55,085,635 2,586,254 1,411,771 5,188,949
$64,272,609

52,722,785 2,305,790 1,261,120 5,245,925
$61,535,620

The total assets of the institution increased by $32,654,208. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $31,518,305 in the

Savannah State University Annual Financial Report FY 2008 2

category of Capital Assets, net. The increase is directly due to asset acquisitions, which included a capital lease for campus housing.

The total liabilities for the year increased by $29,917,219 due primarily to a capital lease liability incurred. The combination of the increase in total assets of $32,654,208 and the increase in total liabilities of $29,917,219 yields an increase in total net assets of $2,736,989. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $2,362,850.

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$30,793,401 51,902,854 (21,109,453) 20,169,847
(939,606) 3,676,595 2,736,989 61,535,620
0 61,535,620 $64,272,609

$28,811,878 47,275,338 (18,463,460) 18,928,239
464,779 3,527,228 3,992,007 57,543,613
0 57,543,613 $61,535,620

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a loss before other revenues and expenses, but a positive increase in net assets. Although revenues increased $1,981,523 or 6.9% and nonoperating revenues increased $1,681,711 or 8.9%, operating
Savannah State University Annual Financial Report FY 2008 3

expenses increased $4,627,516 or 9.8%. The net loss before Capital Grants and Gifts was ($939,606), a decrease in net margin of ($1,404,385) over prior year. This loss was offset by capital gifts and grants in the amount of $3,676,595, creating an increase in net assets of $2,736,989. Some highlights of the information presented on the Statement of Revenues, Expenses, and Changes in Net Assets are as follows:

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$6,365,449 13,801,927
348,107 10,199,247
78,671 30,793,401
18,892,885 1,235,059 517,761 (35,755)
20,609,950
3,676,595 3,676,595 $55,079,946

June 30, 2007
$5,744,016 14,498,032
90,243 8,323,924
155,663 28,811,878
17,906,362 493,243 530,524 (1,890)
18,928,239
3,527,228 3,527,228 $51,267,345

Savannah State University Annual Financial Report FY 2008 4

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$14,703,589 1,470,687 2,219,032 4,927,690 3,163,252 7,465,528 6,836,889 2,325,150 8,791,037 0
51,902,854
440,103 $52,342,957

June 30, 2007
$13,817,068 1,221,386 2,131,159 4,710,079 2,887,394 7,721,673 4,279,048 1,945,002 7,479,364 1,083,165
47,275,338
0 $47,275,338

Operating revenues increased by $1,981,523 in fiscal 2008. Although Tuition & Fees included a 10.8% average increase and Auxiliary revenues increased 22.5%, revenues decreased in Grants and Contracts and Other categories.
The Auxiliary revenue increase of $1,875,323 is a result of the changing environment of residential life on the University's campus. In February 2008, the University entered into a capital lease for University Village. Therefore, student housing fees are collected through the campus and a fee is paid to American Campus to continue to manage the facility until such time that a housing contract may be sent for proposal and accepted. University Village rents for fiscal year 2008, without consideration of fines and fee waivers, was $1,897,881.
Nonoperating revenues increased by $1,681,711 for the year primarily due to an increase of $986,523 in State Appropriations and an increase of $741,816 in gift revenue.
The compensation and employee benefits category increased by $2,013,568 and was primarily affected by faculty, academic and institutional support, research, and auxiliary wage increases, as well as an increase in employee benefits of $619,317 or 10.3%. The increase primarily reflects merit increases; personnel increases in academic support, institutional support, and auxiliary; and the increased cost of health insurance for the employees of the institution.
Depreciation expense increased $707,252 over the prior year due directly to the acquisition of University Village housing and various other major assets (i.e., two new buses acquired in fiscal year 2008). The increase in interest expense was a direct result of the capital lease.
Utilities increased by $285,397 during the past year. The increase was primarily due to water, which increased $274,273 over the prior year.
Savannah State University Annual Financial Report FY 2008 5

Statement of Cash Flows

The final statement presented by Savannah State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($17,595,173) 20,309,941 (2,251,593) 205,769 668,944 4,734,809
$5,403,753

June 30, 2007
($16,666,913) 18,264,497 (365,474) 324,020 1,556,130 3,178,679
$4,734,809

Capital purchases for fiscal year 2008 were $5,489,938, as compared to $3,727,005 prior year. Additionally, the University spent $440,103 in interest expense related to a capital lease purchase.
Capital Assets
The University had two significant capital asset additions for facilities in fiscal year 2008. The Hill Hall renovation was completed at a cost of $3,407,923, which was funded by GSFIC, and will reopen August, 2008. Additionally, the University entered into a capital lease for University Village Housing in the amount of $29,229,205. Other renovations funded by the GSFIC included $378,678 for the Drew Griffith Science Building.
Included in the major equipment purchases for the University were two buses at a total cost of $398,000; five vehicles (primarily for public safety); equipment for the surveying lab; computer hardware; and various other equipment items essential for on-going operations.
For additional information concerning Capital Assets, see Notes 1, 6, 8, 9 and 10 in the Notes to the Financial Statements.
Savannah State University Annual Financial Report FY 2008 6

Long Term Debt and Liabilities Savannah State University had Long-Term Debt and Liabilities of $30,466,225 of which $758,788 was reflected as current liability at June 30, 2008. For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8, and 10 in the Notes to the Financial Statements. Component Units In compliance with GASB Statement No. 39, Savannah State University has included the financial statements and notes for all required component units for FY2008. Savannah State University Foundation, Inc., a Georgia non-profit corporation (the "Foundation") adopted resolutions authorizing the organization of SSU Foundation Real Estate Ventures, LLC (the "LLC"), a Georgia limited liability company of which the Foundation is the sole member, for the purpose of acquiring, renovating, equipping and leasing to the Board of Regents for the benefit of the University. At June 30, 2008, the Foundation, which includes the LLC, had long-term debt of $49.2 million in the form of two bond issues. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units. Economic Outlook The University is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The University's overall financial position is strong. Even with a relatively flat funded year, the University was able to generate a modest increase in Net Assets. The University anticipates the current fiscal year will be challenging with budget cuts on the horizon at the state level, but will continue to maintain a close watch over resources providing the University with the flexibility to react to internal and external situations that may develop.
Earl G. Yarbrough, Sr., Ph.D., President Savannah State University
Savannah State University Annual Financial Report FY 2008 7

Statement of Net Assets

S A V A N N A H S T A T E UN IV ER S IT Y S TA T EM EN T O F N ET A S S ETS June 30, 2008

A S S ETS C u rre n t Asse ts Cash an d Cash E quiv alen t s Sh o r t - t e r m I n v e st m e n t s A cco un t s Receiv able, n et (n o t e 3 ) Receiv ables - Federal Fin an cial A ssist an ce Receiv ables - O t h er N et In v est m en t in Cap it al L eases Co n t ribut io n s Receiv able In v en t o ries (n o t e 4 ) P rep aid it em s T o t al Curren t A sset s
Non cu rre n t Asse ts N o n curren t Cash Sh o r t - t e r m I n v e st m e n t s In v est m en t s (in cludin g Real E st at e) N o t es Receiv able, n et N et In v est m en t in Cap it al L eases Co n t ribut io n s Receiv able Cap it al A sset s, n et (n o t e 6 ) O t h er A sset s T o t al N o n curren t A sset s TO TA L A S S ETS
L IA B IL ITIES C u rre n t Liabilitie s A cco un t s P ay able Sa la r ie s P a y a ble D ep o sit s D eferred Rev en ue (n o te 7 ) O t h er L iabilit ies D ep o sit s H eld fo r O t h er O rgan izat io n s L ease P urch ase O bligat io n s (curren t p o rt io n ) Co m p en sat ed A bsen ces (curren t p o rt io n ) Rev en ue/M o rt gage Bo n ds P ay able (curren t ) T o t al Curren t L iabilit ies Non cu rre n t Liabilitie s L ease P urch ase O bligat io n s (n o n curren t ) Co m p en sat ed A bsen ces (n o n curren t ) Rev en ue/M o rt gage Bo n ds P ay able (n o n curren t ) T o t al N o n curren t L iabilit ies TO TA L L IA B IL ITIES
N ET A S S ETS In v est ed in Cap it al A sset s, n et o f relat ed debt Rest rict ed fo r N o n ex p en dable E x p en dable U n rest rict ed TO TA L N ET A S S ETS

S a va n n a h S ta te U n ive rs i ty
$ 5 ,1 7 7 ,6 1 7 4 0 8 ,2 7 6
1 ,1 8 1 ,5 6 8 2 ,5 0 7 ,8 9 3
5 5 ,5 4 8 3 7 ,2 9 1 9 ,3 6 8 ,1 9 3
2 2 6 ,1 3 6 1 ,6 1 3 ,6 2 3 1 ,0 6 1 ,9 7 0
8 6 8 ,1 7 0
8 4 ,2 4 1 ,0 9 0
8 8 ,0 1 0 ,9 8 9 9 7 ,3 7 9 ,1 8 2
5 6 9 ,6 0 0 2 4 6 ,1 3 6 3 9 7 ,9 8 0 3 8 9 ,8 7 9
1 ,0 3 6 ,7 5 3 1 7 3 ,3 4 6 5 8 5 ,4 4 2
3 ,3 9 9 ,1 3 6
2 8 ,9 8 2 ,1 0 9 7 2 5 ,3 2 8
2 9 ,7 0 7 ,4 3 7 3 3 ,1 0 6 ,5 7 3
5 5 ,0 8 5 ,6 3 5
2 ,5 8 6 ,2 5 4 1 ,4 1 1 ,7 7 1 5 ,1 8 8 ,9 4 9 $ 6 4 ,2 7 2 ,6 0 9

C om pon e n t Un it S a va n n a h S ta te
U n i ve rs i ty Fo u n da ti o n , In c.
$ 3 7 5 ,6 3 4 1 5 7 ,5 6 7
1 6 4 ,0 1 2 1 ,4 7 8 ,3 7 1
4 0 ,0 0 0 1 5 2 ,4 7 3 2 ,3 6 8 ,0 5 7
8 ,1 0 3 ,8 2 3
2 7 ,6 7 7 ,0 8 4 4 0 ,0 0 0
1 6 ,6 7 2 ,4 7 2 1 ,1 8 6 ,1 5 3
5 3 ,6 7 9 ,5 3 2 5 6 ,0 4 7 ,5 8 9
1 ,6 5 8 ,4 9 4
3 ,8 5 3 ,9 7 0
1 1 0 ,0 0 0 5 ,6 2 2 ,4 6 4
4 9 ,1 1 0 ,0 0 0 4 9 ,1 1 0 ,0 0 0 5 4 ,7 3 2 ,4 6 4
5 ,8 9 7 ,9 0 3
(4 ,5 8 2 ,7 7 8 ) $ 1 ,3 1 5 ,1 2 5

Savannah State University Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets
SAVANNAH STATEUNIVERSITY STATEMENT of REVENUES, EXPENSES, and CHANGES in NET ASSETS
for the Year Ended June 30, 2008

REVENUES
Operating Revenues Student T uition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Gifts and Contributions Grants and Contracts Federal St at e Ot her Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookst ore Food Services Parking/T ransportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues T otal Operating Revenues
EXPENSES Operating Expenses
Salaries: Facult y St aff
Employee Benefits Other Personal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Other Services Depreciat ion Other Operating Expense
T otal Operating Expenses Operating Income (loss)

Savannah State Un i ve rs i ty

Component Unit
Savannah State Un i ve rs i ty
Foundation, Inc.

$11,750,281 (5,384,832)
13,315,557 107,383 378,987 348,107 5,004
4,464,020 108,770
3,332,030 5,722
413,574 1,856,592
18,539 73,667 30,793,401
8,343,305 13,486,063
6,627,341 368,040 567,919
3,826,020 2,995,775 12,563,153 3,125,238
51,902,854 (21,109,453)

$0 9,497
1,040,139
24,134 1,073,770
19,260 1,161,759
124,662 23,588
1,329,269 (255,499)

Savannah State University Annual Financial Report FY 2008 9

Statement of Revenues, Expenses and Changes in Net Assets, Continued
SAVANNAH STATE UNIVERSITY STATEMENT of REVENUES, EXPENSES, and CHANGES in NET ASS ETS
for the Year Ended June 30, 2008

NO NO PERATING REVENUES (EXPENSES) State Appropriations Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e T otal Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

Savannah State Unive rsity

C ompone nt Unit
Savannah State Unive rsity
Foundation, Inc.

18,892,885 1,235,059 517,761 (440,103) (35,755)
20,169,847 (939,606)
3,676,595 3,676,595 2,736,989
61,535,620 0
61,535,620 $64,272,609

41,940 (4,866,536) 6,112,593 1,287,997 1,032,498
0 1,032,498
282,627 0
282,627 $1,315,125

Savannah State University Annual Financial Report FY 2008 10

Statement of Cash Flows
SAVANNAH STATE UNIVERSITY STATEMENT OF CASH FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grants and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers Payments to Employees P ayment s for Scholarships and Fellowships Loans Issued to Student s and Employees Auxiliary Enterprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipts (payment s) Net Cash P rovided (used) by Operating Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capital Grant s and Gifts Received P roceeds from Sale of Capit al Assets P urchases of Capital Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES P roceeds from Sales and Mat urit ies of Invest ment s Int erest on Investment s P urchase of Investment s Net Cash P rovided (used) by Investing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$5,932,710 14,173,243
348,107 (22,949,915) (21,591,367)
(3,826,020) (49,300)
4,990,726 108,770
3,213,671 5,722
407,875 1,853,280 (152,460)
(60,215) (17,595,173)
18,892,885 181,998
1,235,058 20,309,941
3,676,595 75,603
(5,489,938) (73,750)
(440,103) (2,251,593)
420,063 625,832 (840,126) 205,769 668,944 4,734,809 $5,403,753

Savannah State University Annual Financial Report FY 2008 11

Statement of Cash Flows, Continued
SAVANNAH STATE UNIVERSITY STATEMENT OF CASH FLOWS For the Year Ended June 30, 2008
REC O NCILIATIO N O F O PERATING LO SS TO NET CASH PRO VIDED (USED) BY O PERATING AC TIVITIES:
Operating Income (loss) Adjustments to Reconcile Net Income (loss) to Net Cash Provided (used) by Operating Activities
Dep reciat ion Change in Assets and Liabilities:
Receivables, net Inv ent o ries Prepaid Items Notes Receivable, Net Accounts Payable Deferred Revenue Other Liabilities Compensated Absences
Net Cash Provided (used) by Operating Activities
** NON-CASH INVEST ING, NON-CAPIT AL FINANCING, AND CAPIT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed assets acquired by incurring capital lease obligations Change in fair value of investments recognized as a component of interest income

June 30, 2008
($21,109,453)
3,125,238 (92,653) (10,037) (17,534) (49,300) 736,612 51,643
(327,070) 97,381
($17,595,173)
$29,229,205 ($108,071)

Savannah State University Annual Financial Report FY 2008 12

SAVANNAH STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Savannah State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Savannah State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Savannah State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Savannah State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Savannah State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Savannah State University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, Savannah State University is reporting the activity for the Savannah State University Foundation, Inc. as a discretely presented component unit.
See Note 16, Component Units, for the Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and
Savannah State University Annual Financial Report FY 2008 13

Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts.
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.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Balanced Income Fund is included under Investments.
Savannah State University Annual Financial Report FY 2008 14

Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, no capital assets were transferred to the University by GSFIC.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
Savannah State University Annual Financial Report FY 2008 15

Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Savannah State University had accrued liability for compensated absences in the amount of $1,213,388 as of 7-1-2007. For FY2008, $932,347 was earned in compensated absences and employees were paid $834,965, for a net increase of $97,382. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $1,310,770.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Savannah State University Annual Financial Report FY 2008 16

Expendable Restricted Net Assets include the following:

June 30, 2008

Restricted - E&G and Other Organized Activities Federal Loans Institutional Loans T erm Endowments T otal Restricted Expendable

$199,565 875,266 21,465 315,475
$1,411,771

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted T otal Unrestricted Net Assets

June 30, 2008
$2,248,542 2,795,267 49,864 95,276
$5,188,949

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes Savannah State University, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored

Savannah State University Annual Financial Report FY 2008 17

scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans. Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 University, 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 University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Savannah State University Annual Financial Report FY 2008 18

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $7,424,275 and the bank balance was $8,696,037. Of the University's deposits, $8,368,834 were uninsured. Of these uninsured deposits, $8,368,834 were collateralized with securities held by the financial institution's trust department or agent in the University's name.
Savannah State University Annual Financial Report FY 2008 19

B. Investments At June 30, 2008, the carrying value of the University's investments was $1,061,970, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents and/or Office of Treasury and Fiscal Services investment pools as follows:

Investment Pools Board of Regents Balanced Income Fund

$1,061,970

T otal Investment Pools

$1,061,970

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.

Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk.

The Weighted Average Maturity of the Balanced Income Fund is 7.84 years. Of the University's total investment of $1,061,970 in the Balanced Income Fund, $682,846 is invested in debt securities.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk.

Savannah State University Annual Financial Report FY 2008 20

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$585,260 631,898
1,181,568 1,988,026 4,386,752
697,291
$3,689,461

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

P hysical P lant Other
T otal

June 30, 2008
$50,854 4,694
$55,548

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the Federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was approximately $0.

Savannah State University Annual Financial Report FY 2008 21

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
Total Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections Total Assets Being Depreciated
Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Capital Leases Library Collections Capitalized Collections Total Accumulated Depreciation
Total Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning Balances 7/1/2007
$575,975 444,189
1,020,164
68,976,721 2,520,259 7,740,282 0 6,818,959 55,285
86,111,505
22,424,877 1,368,843 5,248,359 0 5,358,247 8,559
34,408,884
51,702,621
$52,722,785

Additions
$0 3,671,145 3,671,145

Reductions
$0 4,115,334 4,115,334

4,868,267
812,312 29,229,205
253,548
35,163,332

75,600 7,098
82,698

1,653,601 97,634
712,735 401,776 258,110
1,382 3,125,238
32,038,094
$35,709,239

7,098 7,098 75,600 $4,190,934

Ending Balance 6/30/2008
$575,975 0
575,975
73,844,988 2,520,259 8,476,994
29,229,205 7,065,409 55,285
121,192,139
24,078,478 1,466,477 5,961,094 401,776 5,609,259 9,941
37,527,024
83,665,115
$84,241,090

Savannah State University Annual Financial Report FY 2008 22

Note 7. Deferred Revenue

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

Ot her Deferred Revenue T ot als

June 30, 2008 $389,879 $389,879

Note 8. Long-Term Liabilities Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations

Beginning Balance
July 1, 2007
$0

Additions

Reductions

Ending Balance June 30, 2008

$29,229,205

$73,750 $29,155,455

Current Portion
$173,346

Other Liabilities Compensated Absences Total

1,213,388 1,213,388

932,347 932,347

834,965 834,965

1,310,770 1,310,770

585,442 585,442

Total Long Term Obligations

$1,213,388

$30,161,552

$908,715 $30,466,225

$758,788

Note 9. Significant Commitments
In February 2008, Savannah State University entered into a capital lease of $24,586,826 at 4.655 percent with the SSU Foundation Real Estate Ventures, LLC (LLC). Under the capital lease agreement, the University will lease a 742-bed housing facility and adjacent buildings situated on existing land acquired by the LLC. The twenty-five year lease for this facility commences August 2009 and expires June 2033. The 0.275 acre of land on which these buildings are located (also known as 4750 LaRoche Avenue) is part of the capital lease agreement. This capital lease is not reflected in the accompanying basic financial statements. The University did not have any significant unearned, outstanding, construction or renovation contracts.
Note 10. Lease Obligations
Savannah State University is obligated under various operating leases for the use of equipment, but has no operating leases for real property (land, buildings, and office facilities). The University is obligated under a capital lease, but has no other installment purchase agreements for the acquisition of real property.

Savannah State University Annual Financial Report FY 2008 23

CAPITAL LEASES

Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2009 and 2033. During the year, the University paid the LLC $416,037 (principal of $73,750, interest of $276,614, and rent expense of $65,673) for the capital lease related to University Village. At year-end, the University recorded interest accrual on this same lease in the amount of $163,489, for total interest recorded of $440,103 for fiscal year 2008. The interest rate was 4.486 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Buildings

$28,827,429

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.

Savannah State University has one capital lease with SSU Foundation Real Estate Ventures, LLC, of which Savannah State University Foundation, Inc. is the sole member. In February 2008, Savannah State University entered into a capital lease of $29,229,205 at 4.486 percent with the LLC, which is included in the discrete presentation of Savannah State University Foundation, Inc. The University leases a 660-bed housing facility, University Village, for a twenty-five year period that began February 2008 and expires June 2032. The 13.768 acres of land on which these buildings are located is owned by the Board of Regents, and was leased to the LLC for $10 per year, payable in advance upon commencement of a ground lease. The outstanding liability at June 30, 2008 on capital leases is $29,155,455.

OPERATING LEASES

Savannah State University's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2010. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small business equipment.

Savannah State University has two operating leases. The Xerox lease for copy machines requires a monthly minimum lease payment in the amount of $26,182 and expires at the end of September, 2008. The University also has a lease agreement with LADCO Leasing for the use of credit card machines, which carries a minimum lease payment of $188.

Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Savannah State University Annual Financial Report FY 2008 24

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$1,478,371 1,522,723 1,568,404 1,614,914 1,663,280 9,090,869
10,535,487 12,213,518 11,157,220 50,844,786 21,689,331 $29,155,455

$80,802 2,256
$83,058

Savannah State University's FY2008 expense for rental of real property and equipment under operating leases was $289,981.

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Savannah State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Savannah State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Savannah State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$1,286,574 $1,244,360 $1,147,046

Savannah State University Annual Financial Report FY 2008 25

Employees' Retirement System of Georgia
Plan Description Savannah State University participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age. Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30, 2008, for employees covered by ERS was $101,500. The University's total payroll for all employees was $21,829,368.
For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.
Savannah State University Annual Financial Report FY 2008 26

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$10,566 $3,383 $4,164

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Savannah State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.

Savannah State University Annual Financial Report FY 2008 27

Savannah State University and the covered employees made the required contributions of $453,784 (8.13% or 8.15%) and $275,923 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Savannah State University 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $28,292 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Savannah State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans.
Savannah State University Annual Financial Report FY 2008 28

The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Savannah State University, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Savannah State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Savannah State University (an organizational unit of the Board of Regents of the University 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, 2008.
Savannah State University Annual Financial Report FY 2008 29

Note 14. Post-Employment Benefits Other Than Pension Benefits Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 191 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Savannah State University recognized as incurred $922,999 of expenditures, which was net of $384,331 of participant contributions.
Savannah State University Annual Financial Report FY 2008 30

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Instruction
$8,060,146 2,099,717 2,499,343
98,287 408,777 82,675 1,385,797 68,847
$14,703,589

Research
$144,387 272,875 75,059
26,886 305,237
8,015 622,788 15,440
$1,470,687

Functional Classification FY2008

Public Service

Academic Support

$48,501 1,009,509
219,981

$88,771 2,504,082
623,622

38,626 133,037 12,555 754,249
2,574

127,923 25,540 49,218 1,154,135 354,399

$2,219,032

$4,927,690

Student Services
$1,500 1,680,333
472,510
60,518 17,200 32,424 884,488 14,279
$3,163,252

Institutional Support
$0 3,500,767 1,984,677
368,040 109,422
61,675 1,296,316
144,631
$7,465,528

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

$0 1,093,777
387,266 (254,294)
6,177
2,542,937 1,513,936 1,547,090

$0
2,324,150 1,000

$0 1,325,003
364,883 254,294 100,080 612,079 206,276 4,950,444 977,978

$6,836,889

$2,325,150

$8,791,037

Total Expenses
$8,343,305 13,486,063 6,627,341
368,040 567,919 3,826,020 2,995,775 12,563,153 3,125,238
$51,902,854

Savannah State University Annual Financial Report FY 2008 31

Note 16. Component Units

Savannah State University Foundation, Inc., a Georgia non-profit corporation (the "Foundation") adopted resolutions authorizing the organization of SSU Foundation Real Estate Ventures, LLC (the "LLC"), a Georgia limited liability company of which the Foundation is the sole member, for the purpose of acquiring, renovating, equipping and leasing to the Board of Regents for the benefit of the University. Although the University does not control transactions of the Foundation, all activity of the Foundation is restricted for the benefit of the University. As such, the Foundation (including the LLC) is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation (including the LLC) is a private, nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $0 to the University. Complete financial statements for the Foundation can be obtained from Savannah State University, Office of Fiscal Affairs, Colston Administration Building, P. O. Box 20419, Savannah, Georgia, 31404.

Investments for Components Units:

Savannah State University Foundation, Inc. held the following investments at June 30, 2008:

M oney M arket Accounts Equity Securities M utual Funds

Fair Value
$7,549 11,296 138,722

Total Investments

$157,567

Savannah State University Annual Financial Report FY 2008 32

Capital Assets for Component Units:

Savannah State University Foundation, Inc. held the following capital assets at June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$1,712,590 5,641,394 7,353,984
9,443,150 9,443,150
124,662 9,318,488 $16,672,472

Long-term Liabilities for Component Units:
Changes in long-term debt for Savannah State University Foundation, Inc. for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within One Year

Revenue/Mortgage Bonds Payable

$0

$49,220,000

$0

$49,220,000

$110,000

Total Long Term Liabilities

$0

$49,220,000

$0

$49,220,000

$110,000

The Savannah Economic Development Authority offered Series 2008 bonds in February 2008 in the form of two issues for $26,245,000 (2008A) and $22,975,000 (2008B). The proceeds of the bond issues were used to construct and equip a dining/recreational facility, acquire and enhance an existing apartment complex and convert it to a student housing facility, fund capitalized interest on the bonds, and pay the costs of issuance of the bonds.

In order to mitigate interest rate risk associated with the Series 2008A and 2008B bonds, the Foundation entered into two interest rate swap agreements with Wachovia Bank, N.A. Pursuant to the agreements, the Foundation pays a fixed rate of 4.3862% on the Series 2008A bonds and a fixed rate of 4.5550% on the Series 2008B bonds based on the outstanding principal of the respective bond issues. At June 30, 2008, the Foundation recorded an unrealized loss on the fair value of the interest rate swap agreements of $3,853,970. This loss is reported as Other Liabilities (current) on the Statement of Net Assets and as a component of Interest Expense on the Statement of Revenues, Expenses and Changes in Net Assets.

Savannah State University Annual Financial Report FY 2008 33

Annual debt service requirements to maturity for Bonds Payable are as follows:

Bonds Payable

Princip al

Interest

Total

Year ending June 30:

2009

1

$110,000

$2,197,267

$2,307,267

2010

2

245,000

2,191,938

2,436,938

2011

3

335,000

2,180,713

2,515,713

2012

4

435,000

2,165,436

2,600,436

2013

5

545,000

2,145,660

2,690,660

2014 through 2018

6-10

4,655,000

10,246,997

14,901,997

2019 through 2023

11-15

8,785,000

8,850,311

17,635,311

2024 through 2028

16-20

14,520,000

6,389,782

20,909,782

2029 through 2033

21-25

19,590,000

2,474,963

22,064,963

$49,220,000

$38,843,067

$88,063,067

Savannah State University Annual Financial Report FY 2008 34

SKIDAWAY INSTITUTE OF OCEANOGRAPHY
Financial Report
For the Year Ended June 30, 2008

Skidaway Institute of Oceanography Savannah, Georgia

Dr. James G. Sanders
Director

Marc Mascolo
Assistant Director for Business Affairs

SKIDAWAY INSTITUTE OF OCEANOGRAPHY ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows ................................................................................................................ 9 Note 1. Summary of Significant Accounting Policies ................................................................ 10 Note 2. Deposits and Investments................................................................................................ 15 Note 3. Accounts Receivable...................................................................................................... 16 Note 4. Inventories...................................................................................................................... 16 Note 5. Notes/Loans Receivable................................................................................................. 16 Note 6. Capital Assets................................................................................................................. 17 Note 7. Deferred Revenue........................................................................................................... 18 Note 8. Long-Term Liabilities .................................................................................................... 18 Note 9. Significant Commitments............................................................................................... 18 Note 10. Lease Obligations......................................................................................................... 18 Note 11. Retirement Plans .......................................................................................................... 19 Note 12. Risk Management......................................................................................................... 21 Note 13. Contingencies................................................................................................................ 21 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 22 Note 15. Natural Classifications with Functional Classifications .............................................. 23

SKIDAWAY INSTITUTE OF OCEANOGRAPHY
Management's Discussion and Analysis
Introduction
The Skidaway Institute of Oceanography is a unique, multidisciplinary Institute, within the University System of Georgia, dedicated to furthering our understanding of marine and environmental sciences. Located sixteen miles southeast of the city of Savannah on the north end of Skidaway Island, the Institute offers easy access to the barrier islands, estuaries, and continental shelf of the southeastern U.S. as well as the open ocean. The Institute conducts leading edge research on marine and coastal systems, trains tomorrow's marine scientists, serves as a gateway to marine environments and integrates University System marine programs. It is committed to excellence in research and education and to the communication of our understanding of marine systems. The goal of the Institute is to create a more knowledgeable citizen capable of appreciating coastal natural environments and the conditions required to sustain them while capitalizing on coastal economic opportunities.
Overview of the Financial Statements and Financial Analysis
The Skidaway Institute of Oceanography is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the Institute's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.
Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the Institute as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Skidaway Institute of Oceanography. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and noncurrent), and Net Assets (Assets minus Liabilities). The difference between current and noncurrent assets will be discussed in the footnotes to the financial statements.
From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.
Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's
Skidaway Institute of Oceanography Annual Financial Report FY 2008 1

equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Total As se ts

June 30, 2008
$836,326 6,361,779 7,198,105

June 30, 2007
$1,373,065 5,909,293 7,282,358

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

618,543 349,618 968,161

1,002,761 218,682
1,221,443

Net Assets: Invest ed in Capit al Asset s, net of debt Unrest rict ed Total Ne t As s e ts

6,199,150 30,794
$6,229,944

5,827,152 233,763
$6,060,915

The total assets of the institute decreased by ($84,253). A review of the Statement of Net Assets will reveal that the change was primarily due to a decrease in Cash and Cash Equivalents of $595,603 and a corresponding increase of $452,486 in the category of Capital Assets, net. The balance of the increase is mainly in receivable categories. The consumption of assets follows the institutional philosophy to use available resources to acquire and improve all areas of the institution to better serve the instruction, research and public service missions of the institution.
The total liabilities for the year decreased by ($253,282). This was primarily comprised of decreases in Accounts Payable and Deferred Revenue. The combination of the decrease in total assets of ($84,253) and the decrease in total liabilities of ($253,282) yields an increase in total net assets of $169,029. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $371,998.

Skidaway Institute of Oceanography Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$4,853,891 7,770,715 (2,916,824) 2,778,144
(138,680) 307,709 169,029 6,060,915
0 6,060,915 $6,229,944

$5,179,869 7,793,320 (2,613,451) 2,763,073
149,622 62,621
212,243 5,848,672
0 5,848,672 $6,060,915

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Skidaway Institute of Oceanography Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$4,369,580 14,820 56,846
412,645 4,853,891
2,647,779 115,284 50,001 (27,478)
2,785,586
307,709 307,709 $7,947,186

June 30, 2007
$4,455,718 32,575 49,063
642,513 5,179,869
2,639,862 104,162 82,920 (53,096)
2,773,848
62,621 62,621 $8,016,338

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research Academ ic Support Inst it ut ional Support P lant Operations and Maint enance Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$69,994 4,286,219 1,057,200 1,014,944 1,284,312
58,046 7,770,715
7,442 $7,778,157

June 30, 2007
$81,408 4,017,610 1,270,368 1,271,478 1,154,911
(2,455) 7,793,320
10,775 $7,804,095

Operating revenues decreased by ($325,978) in fiscal 2008. The revenue decrease in the category of Rents and Royalties was the primary factor in this decrease. Operational days at sea for the Research Vessel Savannah experienced a sharp decline due to decreased federal funding and a significant downturn in the overall economy.
The Grants and Contracts revenue decrease of $86,138 is also a result of the changing environment of funding for research in this economy. Many factors have contributed to an overall decrease in available funding at the federal and state levels. This is compounded by the
Skidaway Institute of Oceanography Annual Financial Report FY 2008 4

fact that more proposals are being submitted for the limited dollars available as more institutions fight to offset revenue reductions due to the slowing economy.

Nonoperating revenues increased by $11,738 for the year due to increases in State Appropriations, Gifts and Other categories, partially offset by a decrease in Investment Income.

The compensation and employee benefits category increased by $33,802. The increase was due to the rising cost of health care insurance.

Utilities decreased by ($29,353) during the past year. The decrease was associated with the implementation of a campus-wide strategic initiative to reduce electricity consumption. This project started last fiscal year with the replacement of the electrical grid on campus. In FY 2008 the focus was on replacing inefficient equipment with more energy efficient equipment. This decrease affected the Plant Operations and Maintenance category.

Statement of Cash Flows

The final statement presented by Skidaway Institute of Oceanography is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivit ies Non-capit al Financing Activit ies Capital and Related Financing Act ivities Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($2,710,650) 2,740,988 (675,942) 50,001 (595,603) 802,499
$206,896

June 30, 2007
($1,788,179) 2,882,986 (810,596) 82,920 367,131 435,368
$802,499

Skidaway Institute of Oceanography Annual Financial Report FY 2008 5

Capital Assets
The Institute had two significant capital asset events in fiscal year 2008. The first was the purchase and installation of several leading edge pieces of research equipment, including a $400,000 Delta V Plus Mass Spectrometer. The second event was the ground breaking of the Marine and Coastal Science Research Instructional Center; 12,000 square feet of state-of-the-art scientific research labs. It is anticipated that this building will be fully operational in FY 2009.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the notes to the financial statements.
Long Term Debt and Liabilities
The Skidaway Institute of Oceanography had Long-Term Debt and Liabilities of $672,538 of which $322,920 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
The Skidaway Institute of Oceanography does not have a component unit that meets the criteria set forth in GASB Statement No. 39.
Economic Outlook
The Institute's overall financial position continues to be steady. Even with a relatively flat funded year, the Institute was able to generate a modest increase in Net Assets. The Institute anticipates the current fiscal year will be a challenging one as we continue to face a slowing economy. Governor Purdue has already warned of eminent budget reductions as state revenues decreased over $700 million in FY 2008. The Institute has been asked to project decreases of 5%. Such reductions would have a negative impact in our ability to hire new faculty and provide the necessary research support for ongoing research operations. On the other hand, the faculty are well positioned to remain competitive for federal funding. Strategic faculty hires in FY 2009 will help the Institute remain successful in its research and education mission.
We will continue to maintain a close watch over our resources to maintain the Institute's ability to react to unknown internal and external issues.
Dr. James G. Sanders, Director Skidaway Institute of Oceanography
Skidaway Institute of Oceanography Annual Financial Report FY 2008 6

Statement of Net Assets
SKIDAWAY INSTITUTE OF OCEANOGRAPHY STATEMENT OF NET ASSETS June 30, 2008
AS S ETS C urrent Assets Cash and Cash Equivalent s Account s Receivable, net (not e 3) Receivables - Federal Financial Assist ance Receivables - Ot her P repaid Items T ot al Current Asset s

June 30, 2008
$206,896
465,146 161,284
3,000 836,326

Noncurre nt Asse ts Capit al Asset s, net (not e 6) T ot al Noncurrent Asset s TO TAL AS S ETS

6,361,779 6,361,779 7,198,105

LIAB ILITIES C u rre n t Liabi li tie s Account s P ayable Deferred Revenue (not e 7) Lease P urchase Obligat ions (current port ion) Compensat ed Absences (current port ion) Not es and Loans P ayable (current port ion) T ot al Current Liabilit ies Non cu rre n t Li abil iti e s Lease P urchase Obligat ions (noncurrent ) Compensat ed Absences (noncurrent ) Not es and Loans P ayable (noncurrent ) T ot al Noncurrent Liabilit ies TO TAL LIABILITIES

42,981 252,642
35,232 276,287
11,401 618,543
127,397 99,059
123,162 349,618 968,161

NET AS S ETS Invest ed in Capit al Asset s, net of relat ed debt Unrest rict ed
TO TAL NET AS S ETS

6,199,150 30,794
$6,229,944

Skidaway Institute of Oceanography Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets

S KIDAWAY INS TITUTE OF OCEANOGRAPHY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES

June 30, 2008

Operat ing Revenues Grant s and Cont ract s Federal St at e Other Sales and Services Rents and Royalt ies Auxiliary Ent erprises Residence Halls Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits T ravel Ut ilit ies Supplies and Ot her Services Depreciat ion
T ot al Operat ing Expenses Operat ing Income (loss)
NO NO PERATING REVENUES (EXPENS ES ) St at e Appropriat ions Gift s Invest m ent Incom e (endowment s, auxiliary and ot her) Int erest Expense (capit al asset s) Ot her Nonoperat ing Revenues Net Nonoperat ing Revenues Income before ot her revenues, expenses, gains, or loss Capit al Grant s and Gift s St at e T ot al Ot her Revenues Increase in Net Asset s
NET AS S ETS Net Asset s-beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s-beginning of year, rest at ed
Net Asset s-End of Year

$3,847,548 292,191 229,841 14,820 359,107
48,329 8,517
53,538 4,853,891
1,068,860 2,626,987 1,058,066
147,836 263,943 2,016,713 588,310 7,770,715 (2,916,824)
2,647,779 115,284 50,001 (7,442) (27,478)
2,778,144 (138,680)
307,709 307,709 169,029
6,060,915 0
6,060,915 $6,229,944

Skidaway Institute of Oceanography Annual Financial Report FY 2008 8

Statement of Cash Flows
S KIDAW AY INS TITUTE O F O CEANO GRAP HY S TATEMENT O F CAS H FLO W S For the Year Ended J une 3 0 , 2 0 0 8
C A S H FLO W S FR O M O P ER A TIN G A C TIV ITIES Gran t s an d Co n t ract s (E x ch an ge) Sales an d Serv ices P ay m en t s t o Sup p liers P aym ents t o Em ployees Aux iliary E n t erp rise Ch arges: Residen ce H alls O t h er O rgan izat io n s Ot h er Receipt s (paym ent s) N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
C A S H FLO W S FR O M N O N -C A P ITA L FIN A N C IN G A C TIV ITIES St at e A p p ro p riat io n s Gift s an d Gran t s Receiv ed fo r O t h er T h an Cap it al P urp o ses P rin cip al P aid o n In st allm ent Debt In t erest P aid o n In st allm en t D ebt Ot h er No no p erat in g Receip t s N et Cash Flo ws P ro v ided by N o n -cap it al Fin an cin g A ct iv it ies
C A S H FLO W S FR O M C A P ITA L A N D R ELA TED FIN A N C IN G A C TIV ITIES Cap it al Gran t s an d Gift s Receiv ed P urch ases o f Cap it al A sset s P rin cip al P aid o n Cap it al Debt an d L eases In t erest P aid o n Cap it al D ebt an d L eases Net Cash used by Cap it al an d Relat ed Fin an cin g Act iv it ies
C A S H FLO W S FR O M IN V ES TIN G A C TIV ITIES Interest on Invest m ent s N et Cash P ro v ided (used) by In v est in g A ct iv it ies Net In crease/Decrease in Cash Cash an d Cash E quiv alen t s - Begin n in g o f y ear Cash an d Cash E quiv alen t s - E nd of Year
R EC O N C ILIA TIO N O F O P ER A TIN G LO S S TO N ET C A S H P R O V ID ED (U S ED ) B Y O P ER A TIN G A C TIV ITIES :
Operat ing Incom e (loss) Adjust m en t s t o Reco n cile Net In co m e (lo ss) t o Net Cash P ro v ided (used) by O p erat in g A ct iv it ies
Dep reciat io n Ch an ge in Asset s an d L iabilit ies:
Receiv ables, n et P repaid Item s A cco un t s P ay able D eferred Rev en ue Co m pen sat ed Absen ces
N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
* * N O N -CA SH IN VE ST IN G, N O N -CA P IT A L FIN A N CIN G, A N D CA P IT A L A N D RE L A T E D FIN A N CIN G T RA N SA CT IO N S
Fix ed asset s acquired by in currin g cap it al lease o bligat io n s

June 30, 2008
$ 4 ,1 4 6 ,5 8 5 1 4 ,8 2 0
(3 ,6 6 2 ,9 9 5 ) (3 ,6 7 5 ,4 1 7 )
4 8 ,3 2 9 8 ,5 1 8
4 0 9 ,5 1 0 (2 ,7 1 0 ,6 5 0 )
2 ,6 4 7 ,7 7 9 1 1 5 ,2 8 4 (1 0 ,5 0 2 ) (1 1 ,5 7 7 ) 4
2 ,7 4 0 ,9 8 8
3 0 7 ,7 0 9 (8 7 1 ,3 6 4 ) (1 0 4 ,8 4 5 )
(7 ,4 4 2 ) (6 7 5 ,9 4 2 )
5 0 ,0 0 1 5 0 ,0 0 1 (5 9 5 ,6 0 3 ) 8 0 2 ,4 9 9 $ 2 0 6 ,8 9 6
($ 2 ,9 1 6 ,8 2 4 )
5 8 8 ,3 1 0
(6 6 ,6 6 1 ) 7 ,7 9 6
(1 7 7 ,4 0 2 ) (1 5 9 ,4 7 1 )
1 3 ,6 0 2
($ 2 ,7 1 0 ,6 5 0 )
$ 1 8 5 ,3 3 3

Skidaway Institute of Oceanography Annual Financial Report FY 2008 9

SKIDAWAY INSTITUTE OF OCEANOGRAPHY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations The Skidaway Institute of Oceanography serves the state, national and international communities by providing research and instruction that advances fundamental knowledge and by disseminating that knowledge to the people of Georgia and throughout the country.
Reporting Entity The Skidaway Institute of Oceanography is a unique, multidisciplinary Institute within the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Skidaway Institute of Oceanography as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Skidaway Institute of Oceanography does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Skidaway Institute of Oceanography is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Skidaway Institute of Oceanography) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Unit - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. For FY2008, Skidaway Institute of Oceanography does not have any foundations or affiliated organizations that qualify as component units.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the Institute was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. The financial statements have been prepared
Skidaway Institute of Oceanography Annual Financial Report FY 2008 10

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 Institute's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Basis of Accounting For financial reporting purposes, the Institute is considered a special-purpose government engaged only in business-type activities. Accordingly, the Institute'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-Institute transactions have been eliminated.
The Institute has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The Institute has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The Institute accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the Institute's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Skidaway Institute of Oceanography Annual Financial Report FY 2008 11

Inventories The Institute maintains no inventories on hand.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the Institute's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the Institute when complete. For projects managed by the Institute, the Institute retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Skidaway Institute of Oceanography.
Deferred Revenues Deferred revenues include amounts received prior to the end of the fiscal year but related to the subsequent accounting period. Deferred revenues includes amounts received from grant and contract sponsors that have not yet been earned.
Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. The Skidaway Institute of Oceanography had accrued liability for compensated absences in the amount of $361,743 as of July 1, 2007. For FY2008, $257,656 was earned in compensated absences and employees were paid $244,053, for a net
Skidaway Institute of Oceanography Annual Financial Report FY 2008 12

increase of $13,603. The ending balance as of June 30, 2008 in accrued liability for compensated absences was $375,346.

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Assets The Institute's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the Institute'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 previously in Note 1 Capital Assets section.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the Institute, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$350,560 (319,766) $30,794

When an expense is incurred that can be paid using either restricted or unrestricted resources, the Institute's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Skidaway Institute of Oceanography, 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.

Skidaway Institute of Oceanography Annual Financial Report FY 2008 13

Classification of Revenues The Institute has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria: Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans. Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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.
Skidaway Institute of Oceanography Annual Financial Report FY 2008 14

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the Institute's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the Institute) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $204,896 and the bank balance was $529,241. Of the Institute's deposits, $529,241 were uninsured. Of these uninsured deposits, $529,241 were collateralized with securities held by the financial institution's trust department or agent in the Institute's name.
Skidaway Institute of Oceanography Annual Financial Report FY 2008 15

Note 3. Accounts Receivable

Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

Federal Financial Assist ance Other
Less Allowance for Doubt ful Account s Net Account s Receivable

$465,146 161,284 626,430 0
$626,430

Note 4. Inventories The Institute did not have any inventories at June 30, 2008.

Note 5. Notes/Loans Receivable The Institute did not have any notes or loans receivable at June 30, 2008.

Skidaway Institute of Oceanography Annual Financial Report FY 2008 16

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capit al Asset s, Not Being Depreciat ed: Land Const ruct ion W ork-in-P rogress
T ot al Capit al Asset s Not Being Depreciat ed
Capit al Asset s, Being Depreciat ed: Building and Building Improvement s Facilities and Other Improvements E quip m en t Capit al Leases Library Collect ions T ot al Asset s Being Depreciat ed
Less: Accumulat ed Depreciat ion Buildin gs Facilities and Other improvements E quip m en t Capit al Leases Library Collect ions T ot al Accumulat ed Depreciat ion
T ot al Capit al Asset s, Being Depreciat ed, Net
Capit al Asset s, net

Beginning B al an ce s 7/1/2007
$449,460 62,621
512,081
5,431,161 604,524
4,442,345 594,986 182,907
11,255,923
2,246,355 191,001
2,890,911 361,951 168,493
5,858,711
5,397,212
$5,909,293

Addition s
$0 267,153 267,153

Re ductions $0 0

600,211 185,333
4,000 789,544
163,281 29,706
325,936 66,706 2,681
588,310
201,234
$468,387

226,553 54,048
280,601
210,652 54,048
264,700 15,901
$15,901

En di n g B al an ce 6/30/2008
$449,460 329,774 779,234
5,431,161 604,524
4,816,003 780,319 132,859
11,764,866
2,409,636 220,707
3,006,195 428,657 117,126
6,182,321
5,582,545
$6,361,779

Skidaway Institute of Oceanography Annual Financial Report FY 2008 17

Note 7. Deferred Revenue

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

Research T ot als

June 30, 2008 $252,642 $252,642

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Le as e s Lease Obligations

Beginning Balance
July 1, 2007
$82,141

Additions $185,333

Re du cti on s

Ending Balance June 30, 2008

$104,845

$162,629

Other Liabilities Compensated Absences Notes and Loans T ot al

361,743 145,065 506,808

257,656 257,656

244,053 10,502
254,555

375,346 134,563 509,909

Total Long Term Obligations

$588,949

$442,989

$359,400

$672,538

C u rre n t Porti on
$35,232
276,287 11,401
287,688
$322,920

Note 9. Significant Commitments The Institute had no significant commitments at June 30, 2008.

Note 10. Lease Obligations
Skidaway Institute of Oceanography is obligated under various operating leases, capital leases, and installment purchase agreements for the acquisition of equipment.
CAPITAL LEASES
Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2009 and 2013. The Institute had two capital leases in FY2008, both for equipment. Expenditures for fiscal year 2008 were $112,287 of which $7,442 represented interest and $104,845 represented principal paid. Interest rates range from 3.79 percent to 8 percent. The outstanding principal balance of capital leases was $162,629 as of June 30, 2008. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Skidaway Institute of Oceanography Annual Financial Report FY 2008 18

Equipment Total Assets Held Under Capital Lease

$351,662 $351,662

OPERATING LEASES
Skidaway Institute of Oceanography's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2013. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly or quarterly basis. Examples of property under operating leases are copiers and other small business equipment.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$40,668 40,668 40,668 40,668 13,556
176,228 13,599
$162,629

$6,180 6,180 4,129 2,664 666
$19,819

Skidaway Institute of Oceanography's FY2008 expense for rental of real property and equipment under operating leases was $6,802.

Note 11. Retirement Plans
Teachers Retirement System of Georgia
Plan Description Skidaway Institute of Oceanography participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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

Skidaway Institute of Oceanography Annual Financial Report FY 2008 19

stand alone financial audit report and a copy can be obtained from the TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Skidaway Institute of Oceanography who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Skidaway Institute of Oceanography makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$221,003 $226,027 $228,046

Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Skidaway Institute of Oceanography makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Skidaway Institute of Oceanography and the covered employees made the required contributions of $86,548 (8.13% or 8.15%) and $53,161 (5%), respectively.

Skidaway Institute of Oceanography Annual Financial Report FY 2008 20

AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Note 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Skidaway Institute of Oceanography and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Skidaway Institute of Oceanography, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are
Skidaway Institute of Oceanography Annual Financial Report FY 2008 21

disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Skidaway Institute of Oceanography expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Skidaway Institute of Oceanography (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The Institute pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 27 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Skidaway Institute of Oceanography recognized as incurred $130,260 of expenditures, which was net of $55,605 of participant contributions.
Skidaway Institute of Oceanography Annual Financial Report FY 2008 22

Note 15. Natural Classifications with Functional Classifications The Institute's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
F acult y St aff B en efit s T ravel U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

Inst ruct ion $55,282 13,896 784 32
$69,994

Functional Clas s ification FY2008

Research

Academ ic Sup p o r t

$1,003,802 1,151,694 500,780 108,992 24,521 1,087,550 408,880

$9,776 467,080 117,266
13,336 5,109
364,749 79,884

$4,286,219

$1,057,200

Inst it ut ional Sup p o r t
$0 592,533 288,529
22,583
98,128 13,171
$1,014,944

Natural Classification
F acult y St aff B en efit s T ravel U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

Functional Clas s ification

FY2008

P lant

Op erat io n s

A ux ilia r y

& Maintenance

Ent erprises

T otal E x p en ses

$0 411,462 136,403
2,141 223,480 444,692
66,134

$0 4,218 1,192
10,833 21,562 20,241

$1,068,860 2,626,987 1,058,066 147,836 263,943 2,016,713 588,310

$1,284,312

$58,046

$7,770,715

Skidaway Institute of Oceanography Annual Financial Report FY 2008 23

SOUTH GEORGIA COLLEGE
Financial Report
For the Year Ended June 30, 2008

South Georgia College Douglas, Georgia

Dr. Virginia Carson
Interim President

Wanda E. Lloyd
Vice President for Fiscal Affairs

SOUTH GEORGIA COLLEGE ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ............................................................................ 1 Statement of Net Assets ...................................................................................................... 7 Statement of Revenues, Expenses and Changes in Net Assets........................................... 8 Statement of Cash Flows .................................................................................................. 10 Note 1. Summary of Significant Accounting Policies .................................................... 12 Note 2. Deposits and Investments................................................................................... 18 Note 3. Accounts Receivable.......................................................................................... 19 Note 4. Inventories.......................................................................................................... 19 Note 5. Notes/Loans Receivable..................................................................................... 19 Note 6. Capital Assets..................................................................................................... 20 Note 7. Deferred Revenue............................................................................................... 21 Note 8. Long-Term Liabilities ........................................................................................ 21 Note 9. Significant Commitments................................................................................... 21 Note 10. Lease Obligations............................................................................................. 21 Note 11. Retirement Plans .............................................................................................. 23 Note 12. Risk Management............................................................................................. 26 Note 13. Contingencies................................................................................................... 27 Note 14. Post-Employment Benefits Other Than Pension Benefits ............................... 27 Note 15. Natural Classifications with Functional Classifications .................................. 29 Note 16. Component Units ............................................................................................. 30

SOUTH GEORGIA COLLEGE
Management's Discussion and Analysis

Introduction
South Georgia College is one of the 35 institutions of higher education of the University System of Georgia. The College, located in Douglas, Georgia, traces its roots to 1906 when the Eleventh District Agricultural and Mechanical School was established by an Act of the Georgia General Assembly. In 1927 the institution became the first state-supported junior college in Georgia and four years later emerged as one of the original units of Georgia's system of public higher education. Today, the College offers Associate of Arts and Associate of Science degree programs that prepare students for transfer in a multitude of baccalaureate program majors. The institution also offers Associate of Applied Science degrees and certificates designed to prepare individuals for careers in several areas of business, human services, and technology. Through its Associate of Science in Nursing degree program the College prepares individuals to become registered nurses and thereby meets regional health care needs. South Georgia College enthusiastically embraces new technology, innovative methods, and collaborative efforts to advance the missions of the University System of Georgia. The institution has grown as shown by the comparison numbers that follow.
Students Students Faculty (Headcount) (FTE)

FY2008

51

1,756

1,557

FY2007

49

1,465

1,291

FY2006

35

1,504

1,319

Overview of the Financial Statements and Financial Analysis
South Georgia College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of South Georgia College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net

South Georgia College Annual Financial Report FY 2008 1

Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$1,363,339 30,010,486
203,071 31,576,896

June 30, 2007
$845,121 11,183,999
203,071 12,232,191

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

680,548 16,621,760 17,302,308

476,158 93,753
569,911

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

13,450,528 153,798 116,986 553,276
$14,274,588

11,183,999 153,798 103,892 220,591
$11,662,280

The total assets of the institution increased by $19,344,705. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $18,826,487 in the category of Capital Assets, net. The balance of the increase is mainly in Cash and Cash Equivalents.
The total liabilities for the year increased by $16,732,397. This increase in liabilities is the result of two capital leases that commenced during the fiscal year. The combination of the increase in total assets of $19,344,705 and the increase in total liabilities of $16,732,397 yields an increase

South Georgia College Annual Financial Report FY 2008 2

in total net assets of $2,612,308. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $2,266,529.

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$8,457,335 16,481,564 (8,024,229)
7,065,638
(958,591) 2,408,818 1,450,227 11,662,280 1,162,081 12,824,361 $14,274,588

$6,286,659 14,115,966 (7,829,307)
6,813,348
(1,015,959) 2,384,680 1,368,721 10,293,559
0 10,293,559 $11,662,280

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

South Georgia College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$1,492,126 3,611,622 67,906 3,191,019 94,662 8,457,335
7,716,606 86,137 21,237 (85,927)
7,738,053
2,408,818 2,408,818 $18,604,206

June 30, 2007
$1,334,621 2,641,588 225,519 1,962,922 122,009 6,286,659
6,426,140 427,501 30,496 (70,789)
6,813,348
2,384,680 2,384,680 $15,484,687

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$4,816,646 789,774
1,562,137 2,636,019 2,237,223 1,387,756 3,052,009
0 16,481,564
672,415 $17,153,979

June 30, 2007
$4,179,899 625,959
1,028,644 2,443,000 2,346,909 1,030,781 2,093,272
367,502 14,115,966
0 $14,115,966

Operating revenues increased by $2,170,676 in fiscal 2008. Tuition & Fees revenue increased 12%, while Auxiliary Enterprises and Grants and Contracts operating revenue also increased significantly. Revenues decreased in Sales and Services and Other categories.

South Georgia College Annual Financial Report FY 2008 4

The Auxiliary revenue increase of $1,228,097 is a result of the changing environment of residential life on the College's campus. The residential population of the campus increased dramatically this year with the opening of a new 250 bed residence hall, Tiger Village. The facility was constructed with the assistance of the SGC Real Estate Foundation, LLC through a public/private venture. Tiger Village and Shannon Hall, a traditional residence facility, provided students with housing options that had not been available.

Non-operating revenues increased by $924,705 for the year primarily due to an increase of $1,290,466 in State Appropriations.

The compensation and employee benefits category increased by $1,205,884 and primarily affected the Instruction, Institutional Support and Plant Operations and Maintenance categories. The increase reflects merit increases and an increased cost of health insurance for the employees of the institution.

Utilities increased by $131,415 during the past year. The increase was primarily associated with the opening of Tiger Village residence hall and affected the Auxiliary Enterprise category.

Statement of Cash Flows

The final statement presented by South Georgia College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($7,102,563) 7,728,399 (387,251) 21,237 259,822 172,317
$432,139

June 30, 2007
($6,758,451) 6,878,217 (18,760) 30,496 131,502 40,815
$172,317

South Georgia College Annual Financial Report FY 2008 5

Capital Assets
South Georgia College is completing major renovations to the College of Natural Sciences and Math Building in FY2008. The $5 million for this project was funded by the Georgia State Financing and Investment Commission (GSFIC).
In addition, two buildings totaling $16.3 million were acquired during fiscal 2008 through capital leases with SGC Real Estate Foundation, LLC: Tiger Village, which is a residence hall, and Clower Center, which is a Student Activities center.
For additional information concerning Capital Assets, see Notes 1, 6, 8, 9 and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
South Georgia College had Long-Term Debt and Liabilities of $16,931,366 of which $309,606 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, South Georgia College has included the financial statements and notes for all required component units for FY2008. The South Georgia College Foundation, Inc. had investments of $2.6 million as of June 30, 2008. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Economic Outlook
The College is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The College's overall financial position is strong. The College anticipates the current fiscal year will be much leaner that in past years. While enrollment is expected to grow, the state of the economy in Georgia will have a significant impact on the level of funding provided by the state. We will maintain a close watch over resources to maintain the College's ability to react to unknown internal and external issues.
Dr. Virginia Carson, Interim President South Georgia College
South Georgia College Annual Financial Report FY 2008 6

Statement of Net Assets

S O UTH GEO R GIA C O LLEGE S TA TEM EN T O F N ET A S S ETS
June 30, 2008

A S S ETS C u rre n t Asse ts Cash an d Cash E quiv alen t s A cco un t s Receiv able, n et (n o t e 3 ) Receiv ables - Federal Fin an cial A ssist an ce Receiv ables - O t h er N et In v est m en t in Cap it al L eases In v en t o ries (n o t e 4 ) P rep aid it em s T o t al Curren t A sset s
Non cu rre n t Asse ts N o n curren t Cash Sh o r t - t e r m I n v e st m e n t s In v est m en t s (in cludin g Real E st at e) N o t es Receiv able, n et N et In v est m en t in Cap it al L eases Cap it al A sset s, n et (n o t e 6 ) O t h er A sset s T o t al N o n curren t A sset s TO TA L A S S ETS
L IA B IL ITIES C u rre n t Liabilitie s A cco un t s P ay able Sa la r ie s P a y a ble D ep o sit s D eferred Rev en ue (n o t e 7 ) O t h er L iabilit ies D ep o sit s H eld fo r O t h er O rgan izat io n s L ease P urch ase O bligat io n s (curren t p o rt io n ) Co m p en sat ed A bsen ces (curren t p o rt io n ) Rev en ue/M o rt gage Bo n ds P ay able (curren t ) T o t al Curren t L iabilit ies Non cu rre n t Liabilitie s L ease P urch ase O bligat io n s (n o n curren t ) Co m p en sat ed A bsen ces (n o n curren t ) Rev en ue/M o rt gage Bo n ds P ay able (n o n curren t ) T o t al N o n curren t L iabilit ies TO TA L L IA B IL ITIES
N ET A S S ETS In v est ed in Cap it al A sset s, n et o f relat ed debt Rest rict ed fo r N o n ex p en dable E x p en dable U n rest rict ed TO TA L N ET A S S ETS

S ou th G e orgia C ollege
$ 4 2 8 ,3 4 1
8 4 ,2 8 2 5 8 1 ,2 7 8
2 4 9 ,6 8 0 1 9 ,7 5 8
1 ,3 6 3 ,3 3 9
3 ,7 9 8
1 5 0 ,0 0 0 4 9 ,2 7 3
3 0 ,0 1 0 ,4 8 6
3 0 ,2 1 3 ,5 5 7 3 1 ,5 7 6 ,8 9 6
1 1 3 ,7 2 5 7 6 ,1 9 5 5 0 ,6 0 0 930 209
1 2 9 ,2 8 3 7 2 ,4 9 9
2 3 7 ,1 0 7
6 8 0 ,5 4 8
1 6 ,4 8 7 ,4 5 9 1 3 4 ,3 0 1
1 6 ,6 2 1 ,7 6 0 1 7 ,3 0 2 ,3 0 8
1 3 ,4 5 0 ,5 2 8
1 5 3 ,7 9 8 1 1 6 ,9 8 6 5 5 3 ,2 7 6 $ 1 4 ,2 7 4 ,5 8 8

C om pon e n t Un it S ou th G e orgia C ollege Fo u n da ti o n , In c.
$ 7 5 ,0 7 2
1 9 5 ,0 2 0 3 2 8 ,5 7 7
5 9 8 ,6 6 9
2 ,8 0 3 ,0 7 5 3 0 ,5 0 0
2 ,5 7 7 ,0 6 8 1 2 ,2 7 6 ,9 6 6
2 2 1 ,9 4 5 1 7 ,9 0 9 ,5 5 4 1 8 ,5 0 8 ,2 2 3
1 6 9 ,2 1 5
5 0 ,0 0 0 2 1 9 ,2 1 5
1 5 ,7 3 7 ,7 0 8 1 5 ,7 3 7 ,7 0 8 1 5 ,9 5 6 ,9 2 3
2 ,2 4 0 ,8 5 2 1 5 9 ,1 5 2 1 5 1 ,2 9 6
$ 2 ,5 5 1 ,3 0 0

South Georgia College Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
S OUTH GEORGIA COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

South Georgia College

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful accou Less: Scholarship Allowances Gift s and Cont ribut ions Grant s and Cont ract s Federal Other Sales and Services Rents and Royalt ies Auxiliary Ent erprises Residence Halls Bookst ore Food Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion P ayment s t o or on behalf of Sout h Georgia College
T ot al Operat ing Expenses Operat ing Income (loss)

$3,532,229 (2,040,103)
3,594,504 17,118 67,906
1,146,335 993,746 785,348 232,171 33,419 94,662
8,457,335
2,437,435 4,263,299 2,258,026
97,969 123,944 1,491,235 860,916 3,836,572 1,112,168
16,481,564 (8,024,229)

C om pone nt Unit South Ge orgia College Fou n dati on , In c.
$0 105,430
330,746
89,182 525,358
44,222 189,067 233,289 292,069

South Georgia College Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
S OUTH GEORGIA COLLEGE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

South Georgia College

C om pone nt Unit
South Ge orgia College
Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENS ES ) St at e Appropriat ions Gift s Invest m ent Incom e (endowment s, auxiliary and ot her) Int erest Expense (capit al asset s) Ot her Nonoperat ing Revenues Net Nonoperat ing Revenues Income before ot her revenues, expenses, gains, or los Capit al Grant s and Gift s St at e Addit ions t o permanent endowment s T ot al Ot her Revenues Increase in Net Asset s
NET AS S ETS Net Asset s-beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s-beginning of year, rest at ed Net Asset s-End of Year

7,716,606 86,137 21,237
(672,415) (85,927)
7,065,638 (958,591)
2,408,818
2,408,818 1,450,227
11,662,280 1,162,081
12,824,361 $14,274,588

(87,257) (669,740)
(756,997) (464,928)
9,874 9,874 (455,054)
3,006,354 0
3,006,354 $2,551,300

South Georgia College Annual Financial Report FY 2008 9

Statement of Cash Flows

S OUTH GEORGIA COLLEGE S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008

C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$1,408,625 3,526,160 67,906 (7,225,187) (6,569,756) (1,491,236)
1,182,004 738,829 762,825 230,007 241,872 25,388
(7,102,563)
7,716,606 11,793
7,728,399
2,408,818 (2,465,322)
(330,747) (387,251)
21,237 21,237 259,822 172,317 $432,139

South Georgia College Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
S OUTH GEORGIA COLLEGE S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed asset s acquired by incurring capit al lease obligat ions Change in accrued int erest payable affect ing int erest paid Gift reducing proceeds of Gift s and Grant s received for ot her t han capit al purposes

June 30, 2008
($8,024,229)
1,112,168 (184,424)
(66,250) (7,722) 86,348 (690)
(69,050) 51,286 ($7,102,563)
$16,311,041 ($341,668) ($86,137)

South Georgia College Annual Financial Report FY 2008 11

SOUTH GEORGIA COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations South Georgia College serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity South Georgia College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of South Georgia College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. South Georgia College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, South Georgia College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus South Georgia College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Unit - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. For FY2008, South Georgia College is reporting the activity for South Georgia College Foundation, Inc.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB
South Georgia College Annual Financial Report FY 2008 12

and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The College accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and
South Georgia College Annual Financial Report FY 2008 13

local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories South Georgia College has no consumable supplies reported as inventory. Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to South Georgia College.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a College residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary activities prior to the end of the fiscal year but related to the subsequent accounting period. Deferred
South Georgia College Annual Financial Report FY 2008 14

revenues also include amounts received from grant and contract sponsors that have not yet been earned.
Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. South Georgia College had accrued liability for compensated absences in the amount of $320,121 as of 7-1-2007. For FY2008, $296,923 was earned in compensated absences and employees were paid $245,636, for a net increase of $51,287. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $371,408.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The College's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
South Georgia College Annual Financial Report FY 2008 15

Expendable Restricted Net Assets include the following:

Rest rict ed - E& G and Ot her Organized Act ivit ies Inst it ut ional Loans T ot al Rest rict ed Expendable

June 30, 2008
$64,920 52,066
$116,986

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$363,591 114,283 75,402
$553,276

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes South Georgia 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.

Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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

South Georgia College Annual Financial Report FY 2008 16

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 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 College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances. . Restatement of Prior Year Net Assets South Georgia College has a restatement of prior year net assets increasing beginning net assets by $1,162,081. This is due to an overstatement of depreciation expense in prior years.
South Georgia College Annual Financial Report FY 2008 17

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $580,581 and the bank balance was $699,913. Of the College's deposits, $599,913 were uninsured. Of these uninsured deposits, $64,126 were collateralized with securities held by the financial institution's trust department or agent in the College's name.
B. Investments South Georgia College had no investments at June 30, 2008.
South Georgia College Annual Financial Report FY 2008 18

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$98,229 77,453 84,282
443,226 703,190
37,630
$665,560

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

Bookst ore T otal

June 30, 2008 $249,680 $249,680

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the College for amounts cancelled under these provisions. As the College determines that loans are uncollectible and not eligible for reimbursement by the Federal government, the loans are written off and assigned to the U.S. Department of Education. The College does not have an allowance for uncollectible loans.

South Georgia College Annual Financial Report FY 2008 19

Note 6. Capital Assets

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

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated

(Re state d) Beginning B al an ce s
7/1/2007
$197,146 2,380,031 2,577,177

Addi ti o n s
$0 2,446,389 2,446,389

Re ductions $0 0

Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections T otal Assets Being Depreciated

1,293,392 20,973,555
1,239,613 978,999 0
1,209,742 25,695,301

16,311,041 18,933
16,329,974

2,147 2,147

Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections T otal Accumulated Depreciation

391,898 12,516,698
954,065 928,780
0 1,134,957 15,926,398

46,562 551,688
23,290 20,387 455,615 14,626 1,112,168

211
2,147 2,358

T otal Capital Assets, Being Depreciated, Net

9,768,903

15,217,806

(211)

Capital Assets, net

$12,346,080

$17,664,195

($211)

En di n g B a l a n ce 6/30/2008
$197,146 4,826,420 5,023,566
1,293,392 20,973,555
1,239,613 978,999
16,311,041 1,226,528
42,023,128
438,460 13,068,386
977,355 948,956 455,615 1,147,436 17,036,208
24,986,920
$30,010,486

South Georgia College Annual Financial Report FY 2008 20

Note 7. Deferred Revenue

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

Ot her Deferred Revenue T ot als

June 30, 2008 $930 $930

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations

Beginning Balance
July 1, 2007
$0

Additions $16,559,958

Reductions

Ending Balance June 30, 2008

$0

$16,559,958

Other Liabilities Compensated Absences

320,121

296,923

245,636

371,408

Total Long Term Obligations

$320,121

$16,856,881

$245,636

$16,931,366

Current Portion
$72,499
237,107 $309,606

Note 9. Significant Commitments The College had no significant commitments as of June 30, 2008.

Note 10. Lease Obligations
CAPITAL LEASES
Capital leases are payable in semi-annual installments and have terms expiring in fiscal 2037. Expenditures for fiscal year 2008 were $672,415 which was comprised entirely of interest. Of the $672,415 in interest expense, $248,917 was added to the principal balance. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Buildings Total Assets Held Under Capital Lease

$15,855,426 $15,855,426

South Georgia College Annual Financial Report FY 2008 21

South Georgia College had two capital leases with a related entity in the current fiscal year. In December 2006, Gordon College entered into two capital leases with SGC Real Estate Foundation, LLC, a wholly owned entity of South Georgia College Foundation, Inc. The leases commenced in August 2007 for Tiger Village, a residence hall, and Clower Center, a student activities building. The lease liability and associated capital assets were valued at $13,289,289 and $3,021,752, respectively, which are the present values of the minimum lease payments at an interest rate of 4.481%. The lease term on both leases is approximately thirty years and both expire in June 2037. The outstanding liability at June 30, 2008 on these capital leases was $16,559,958. At the end of the lease terms, South Georgia College will own Tiger Village and Clower Center.

OPERATING LEASES

South Georgia College is obligated under various operating leases for the use of equipment.

Future commitments for capital and operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 2034 t hrough 2038 T ot al m inim um lease paym ent s
Less: Int erest Less: Execut ory cost s (if paid) P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$863,902 888,408 911,959 934,557 956,202
5,146,674 5,654,532 6,130,230 6,534,609 5,465,851 33,486,924 14,657,110 2,269,856 $16,559,958

$91,395 86,591 25,867 6,198
$210,051

South Georgia College's FY2008 expense for rental of real property and equipment under operating leases was $83,919.

South Georgia College Annual Financial Report FY 2008 22

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description South Georgia College participates in the Teachers Retirement System of Georgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of South Georgia College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. South Georgia College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$415,901 $363,798 $321,012

Employees' Retirement System of Georgia

Plan Description South Georgia College participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

South Georgia College Annual Financial Report FY 2008 23

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The College's payroll for the year ended June 30, 2008, for employees covered by ERS was $24,596. The College's total payroll for all employees was $6,700,734.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the College pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The College also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the College amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$2,560 $2,430
$0

South Georgia College Annual Financial Report FY 2008 24

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy South Georgia College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
South Georgia College and the covered employees made the required contributions of $95,732 (8.13% or 8.15%) and $58,731 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description South Georgia 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.
South Georgia College Annual Financial Report FY 2008 25

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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $9,788 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. South Georgia College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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'
South Georgia College Annual Financial Report FY 2008 26

indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. South Georgia College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although South Georgia College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against South Georgia College (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
South Georgia College Annual Financial Report FY 2008 27

The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 83 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, South Georgia College recognized as incurred $404,479 of expenditures, which was net of $147,193 of participant contributions.
South Georgia College Annual Financial Report FY 2008 28

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
F acult y St aff B en efit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

Inst ruct ion
$2,369,747 691,776 785,642
44,293
27,447 248,532 649,209
$4,816,646

Functional Clas s ification FY2008

Academ ic Sup p o r t

St udent Ser v ic e s

$0 514,170 165,068

$0 824,692 233,152

3,496

22,014

4,443 87,971 14,626

15,299 381,582
85,398

$789,774

$1,562,137

Inst it ut ional Sup p o r t
$66,866 1,120,881
719,819 97,969 39,852
37,822 551,094
1,716
$2,636,019

Natural Classification
F acult y St aff B en efit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

P lant Op erat io n s & Maint enance

Functional Clas s ification FY2008

Sc h o la r sh ip s & Fellowships

A ux ilia r y Ent erprises

$0 879,421 303,995 (284,020)
4,909
650,730 675,216
6,972

$0 1,387,756

$822 232,359
50,350 284,020
9,380 103,479 125,175 1,892,177 354,247

$2,237,223

$1,387,756

$3,052,009

T otal E x p en ses
$2,437,435 4,263,299 2,258,026 97,969 123,944 1,491,235 860,916 3,836,572 1,112,168
$16,481,564

South Georgia College Annual Financial Report FY 2008 29

Note 16. Component Units

South Georgia College Foundation, Inc. is a chartered not for profit corporation. The Foundation was created for the express purpose of serving the interests of the College in carrying out its programs and activities including the solicitation, receipt and investment of gifts, donations, and grants. The Foundation is a legal entity separate from the College.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $189,067 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the office of the Vice President for Business Affairs, South Georgia College, 100 West College Park Drive, Douglas, GA 31533.

Investments for Component Units:

South Georgia College Foundation, Inc. holds investments in the amount of $2.6 million. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. South Georgia College Foundation, in conjunction with the donors, has established a spending plan whereby 100% of the earnings may be used for academic scholarships.

Investments are comprised of the following amounts at June 30, 2008:

Cost

Fair Value

Cash held by investment organization Certificates of Deposit Equity Securities M utual Funds Real Estate Investment Pools
BOR Balanced Income Fund Total Return & Holding Fund

$37,935 30,500 83,789 47,234 13,500
85,462 2,430,949

$37,935 30,500 86,473 46,611 13,500
76,183 2,316,366

Total Investments

$2,729,369

$2,607,568

South Georgia College Annual Financial Report FY 2008 30

Long-term Liabilities for Component Units:

Long-term liability activity for the year ended June 30, 2008 was as follows:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Revenue/Mortgage Bonds Payable Total Long Term Liabilities

$15,801,289 $15,801,289

$0

$13,581

$15,787,708

$50,000

$0

$13,581

$15,787,708

$50,000

On December 14, 2006, the Atkinson County - Coffee County Joint Development Authority (the "Authority") issued certain bonds totaling $15,395,000. Proceeds of the sale of the bonds were loaned to SGC Real Estate Foundation, LLC whose sole member is South Georgia College Foundation, Inc.
Proceeds of the Series 2006 Bonds are being used by SGC Real Estate Foundation, LLC to finance or reimburse, in whole or in part, the cost of construction and equipping of a new student housing complex containing approximately 252 beds including related parking and the acquisition and renovation of the property known as the "Clower Center" all located on the campus of South Georgia College, a unit of the University System of Georgia; fund capitalized interest on the Series 2006 Bonds; fund a debt service reserve fund for the Series 2006 Bonds; and pay costs of issuance of the Series 2006 Bonds. Interest rates on the bonds range from 4% to 6%.
The real property upon which the Project is located is owned by the Board of Regents of the University System of Georgia and is leased by the Board of Regents to SGC Real Estate Foundation, LLC pursuant to a Ground Lease. Pursuant to a Rental Agreement, SGC Real Estate Foundation, LLC leases the Project, on an annually-renewable basis, to the Board of Regents for use by the College. The Board of Regents makes monthly fixed rental payments for the use and occupancy of the Project, in amounts that SGC Real Estate Foundation, LLC estimates will be sufficient to pay, among other things, the debt service on the Series 2006 Bonds.

South Georgia College Annual Financial Report FY 2008 31

Annual debt service requirements to maturity for Student Housing revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal
50,000 75,000 100,000 125,000 150,000 1,215,000 2,020,000 3,025,000 4,240,000 4,395,000 15,395,000 392,708 $15,787,708

Bonds Payable Interest
$730,625 728,625 725,625 721,625 716,625
3,457,325 3,110,975 2,524,625 1,647,875
498,825 14,862,750
$14,862,750

Total
$780,625 803,625 825,625 846,625 866,625 4,672,325 5,130,975 5,549,625 5,887,875 4,893,825 30,257,750 392,708 $30,650,458

South Georgia College Annual Financial Report FY 2008 32

SOUTHERN POLYTECHNIC STATE UNIVERSITY
Financial Report
For the Year Ended June 30, 2008

Southern Polytechnic State University Marietta, Georgia

Lisa A. Rossbacher
President

Patrick B. McCord
Vice President for Business and Finance

SOUTHERN POLYTECHNIC STATE UNIVERSITY ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 12 Note 2. Deposits and Investments............................................................................................... 18 Note 3. Accounts Receivable...................................................................................................... 20 Note 4. Inventories...................................................................................................................... 20 Note 5. Notes/Loans Receivable................................................................................................. 20 Note 6. Capital Assets................................................................................................................. 21 Note 7. Deferred Revenue........................................................................................................... 22 Note 8. Long-Term Liabilities .................................................................................................... 22 Note 9. Significant Commitments............................................................................................... 22 Note 10. Lease Obligations......................................................................................................... 22 Note 11. Retirement Plans .......................................................................................................... 23 Note 12. Risk Management......................................................................................................... 25 Note 13. Contingencies............................................................................................................... 26 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 26 Note 15. Natural Classifications with Functional Classifications .............................................. 28 Note 16. Component Units .......................................................................................................... 29

SOUTHERN POLYTECHNIC STATE UNIVERSITY
Management's Discussion and Analysis

Introduction
Southern Polytechnic State University is one of the 35 institutions of higher education of the University System of Georgia. The University, located in Marietta, Georgia, was founded in 1948 as a two-year division of Georgia Institute of Technology. The University became accredited as a four-year college in 1970, and was one of the first colleges in the nation to offer the Bachelor of Engineering Technology degree. In the summer of 1980, Southern Polytechnic State University officially became the 14th senior college and the 33rd independent unit of the University System of Georgia. The campus currently encompasses approximately 193 acres and contains 46 buildings.
Southern Polytechnic State University offers baccalaureate and masters degrees that contain a balance of technical, professional, and liberal arts courses with an emphasis on relevant, application-oriented teaching. The University's unique mission attracts a highly qualified faculty and student body that has had the third highest SAT average amongst System institutions for several years. The University continues to grow as shown by the comparison numbers below.

Students Students Faculty (Headcount) (FTE)

FY2008

168

FY2007

160

FY2006

143

4,460 4,207 3,807

3,818 3,523 3,184

Overview of the Financial Statements and Financial Analysis

Southern Polytechnic State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Southern Polytechnic State University. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-

Southern Polytechnic State University Annual Financial Report FY 2008 1

current), and Net Assets (Assets minus Liabilities). The difference between current and noncurrent assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$9,894,054 80,173,161
3,146,944 93,214,159

June 30, 2007
$6,468,154 80,039,928
3,457,154 89,965,236

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

6,492,655 30,915,011 37,407,666

5,231,275 31,764,719 36,995,994

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

48,864,913 1,463,340 1,795,614 3,682,626
$55,806,493

47,860,915 1,674,222 1,984,046 1,450,059
$52,969,242

The total assets of the institution increased by $3,248,923. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $3,425,900 in the category of Current Assets.
The total liabilities for the year increased by $411,672. The combination of the increase in total assets of $3,248,923 and the increase in total liabilities of $411,672 yields an increase in total net assets of $2,837,251.

Southern Polytechnic State University Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$29,175,674 50,016,461 (20,840,787) 21,438,813
598,026 2,239,225 2,837,251 52,969,242
0 52,969,242 $55,806,493

$25,074,127 45,527,864 (20,453,737) 19,662,408
(791,329) 683,435 (107,894) 53,077,136
0 53,077,136 $52,969,242

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Southern Polytechnic State University Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$15,657,682 3,872,684 1,220,377 7,971,764 453,167
29,175,674
22,497,075 249
463,045 146,461 (78,657) 23,028,173
2,239,225 2,239,225 $54,443,072

June 30, 2007
$13,712,299 2,941,159 967,610 7,102,092 350,967
25,074,127
19,987,862 0
669,606 381,397 255,190 21,294,055
683,435 683,435 $47,051,617

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$20,148,440 597,065 1,599
3,741,031 3,453,071 7,249,736 6,416,402 2,385,149 6,023,968
0 50,016,461
1,589,360 $51,605,821

June 30, 2007
$19,365,144 228,354 (7,819)
3,441,709 3,501,590 6,417,848 4,758,754 2,065,254 5,232,099
524,931 45,527,864
1,631,647 $47,159,511

Operating revenues increased by $4,101,547 in fiscal 2008. Tuition & Fees increased by 14 percent and Grants and Contracts, Sales and Service, Auxiliary and Other revenues increased by 19 percent.

Southern Polytechnic State University Annual Financial Report FY 2008 4

The Auxiliary revenue increase of $869,672 is a result of the changing environment of residential life on the University's campus.

Nonoperating revenues increased by $1,734,118 for the year primarily due to an increase of $2,509,213 in State Appropriations.

Statement of Cash Flows

The final statement presented by Southern Polytechnic State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($16,769,820) 23,288,668 (4,942,089) 84,350 1,661,109 3,455,676
$5,116,785

June 30, 2007
($17,449,024) 20,892,153 (2,987,250) 381,397 837,276 2,618,400
$3,455,676

Capital Assets
Southern Polytechnic State University expended $2,239,225 in capital projects utilizing funding from the Georgia State Financing and Investment Commission (GSFIC).
For additional information concerning Capital Assets, see Notes 1, 6, 8, 9, and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
Southern Polytechnic State University had Long-Term Debt and Liabilities of $32,572,972 of which $1,657,961 was reflected as current liability at June 30, 2008.

Southern Polytechnic State University Annual Financial Report FY 2008 5

For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements. Component Units In compliance with GASB Statement No. 39, Southern Polytechnic State University has included the financial statements and notes for all required component units for FY2008. The Southern Polytechnic State University Foundation, Inc. had endowment and other investments of $8.1 million as of June 30, 2008. Economic Outlook The University is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The University's overall financial position is strong. The University anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the University's ability to react to unknown internal and external issues. Lisa A. Rossbacher, President Southern Polytechnic State University
Southern Polytechnic State University Annual Financial Report FY 2008 6

Statement of Net Assets
S O UT HER N P O L YT EC HN IC S T A T E UN IV ER S IT Y S T A TEM EN T O F N ET A S S ETS June 30, 2008

A S S ETS C u rre n t Asse ts Cash an d Cash E quiv alen t s A cco un t s Receiv able, n et (n o t e 3 ) Receiv ables - Federal Fin an cial A ssist an ce Receiv ables - O t h er N et In v est m en t in Cap it al L eases P ledges Receiv able D ue Fro m P rim ary Go v ern m en t P rep aid it em s T o t al Curren t A sset s

S ou th e rn Polyte ch n ic S ta te U n i ve rs i ty

C om pon e n t Un it
S ou th e rn Polyte ch n ic S tate
U n i ve rs i ty Fo u n da ti o n , In c.

$ 5 ,1 1 6 ,7 8 5 2 8 2 ,6 4 4
3 ,7 4 2 ,0 6 9
7 5 2 ,5 5 6 9 ,8 9 4 ,0 5 4

$ 6 2 8 ,7 2 5
1 ,2 5 9 ,0 0 0 9 2 ,6 3 3
9 3 4 ,8 1 8 3 ,7 0 5
2 ,9 1 8 ,8 8 1

Non cu rre n t Asse ts Sh o r t - t e r m I n v e st m e n t s In v est m en t s (in cludin g Real E st at e) N o t es Receiv able, n et N et In v est m en t in Cap it al L eases P ledges Receiv able Cap it al A sset s, n et (n o t e 6 ) O t h er A sset s T o t al N o n curren t A sset s TO TA L A S S ETS
L IA B IL ITIES C u rre n t Liabilitie s A cco un t s P ay able Sa la r ie s P a y a ble D eferred Rev en ue (n o t e 7 ) D ep o sit s H eld fo r O t h er O rgan izat io n s L ease P urch ase O bligat io n s (curren t p o rt io n ) Co m p en sat ed A bsen ces (curren t p o rt io n ) Rev en ue/M o rt gage Bo n ds P ay able (curren t ) D ue t o Co m p o n en t U n it s T o t al Curren t L iabilit ies Non cu rre n t Liabilitie s L ease P urch ase O bligat io n s (n o n curren t ) Co m p en sat ed A bsen ces (n o n curren t ) Rev en ue/M o rt gage Bo n ds P ay able (n o n curren t ) O t h er L o n g-T erm L iabilit ies T o t al N o n curren t L iabilit ies TO TA L L IA B IL ITIES
N ET A S S ETS In v est ed in Cap it al A sset s, n et o f relat ed debt Rest rict ed fo r N o n ex p en dable E x p en dable U n rest rict ed TO TA L N ET A S S ETS

2 ,8 3 7 ,3 9 2 3 0 9 ,5 5 2
8 0 ,1 7 3 ,1 6 1
8 3 ,3 2 0 ,1 0 5 9 3 ,2 1 4 ,1 5 9
1 7 8 ,6 7 1 1 7 3 ,0 1 6 2 ,9 8 1 ,6 6 7 5 6 6 ,5 2 2 9 1 5 ,3 1 5 7 4 2 ,6 4 6
9 3 4 ,8 1 8 6 ,4 9 2 ,6 5 5
3 0 ,3 9 2 ,9 3 3 5 2 2 ,0 7 8
3 0 ,9 1 5 ,0 1 1 3 7 ,4 0 7 ,6 6 6
4 8 ,8 6 4 ,9 1 3
1 ,4 6 3 ,3 4 0 1 ,7 9 5 ,6 1 4 3 ,6 8 2 ,6 2 6 $ 5 5 ,8 0 6 ,4 9 3

4 ,2 2 7 ,5 6 7 3 ,8 3 1 ,3 4 3 2 8 ,6 2 1 ,7 8 6
1 3 2 ,2 8 0 4 6 5 ,2 0 3 3 7 ,2 7 8 ,1 7 9 4 0 ,1 9 7 ,0 6 0
4 7 9 ,6 7 3
9 7 0 ,0 0 0 1 ,4 4 9 ,6 7 3
3 2 ,4 6 3 ,1 2 8 5 4 2 ,1 1 0
3 3 ,0 0 5 ,2 3 8 3 4 ,4 5 4 ,9 1 1
2 ,1 6 4 ,8 4 4 1 ,8 1 3 ,5 2 4 1 ,7 6 3 ,7 8 1 $ 5 ,7 4 2 ,1 4 9

Southern Polytechnic State University Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
SOUTHERN POLYTECHNIC STATE UNIVERSITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Endowment Income (per spending plan) Grant s and Cont ract s Federal St at e Other Sales and Services Rent s and Royalt ies Auxiliary Ent erprises Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilities Supplies and Ot her Services Depreciat ion Ot her Operat ing Expense P ayment s t o or on behalf of Sout hern P olyt echnic St at e Universit y
T ot al Operat ing Expenses Operat ing Income (loss)

S ou th e rn Polytechnic State
Un i ve rsi ty

C om pone nt Unit
Southe rn Polyte chnic State
Un i ve rsi ty Fou n dati on , In c.

$17,879,720 (2,222,038)
3,585,729 215,723 71,232
1,220,377
5,303,873 112,615 957,164 284,304 233,080
1,005,135 75,593
453,167 29,175,674
11,366,802 14,095,372
6,788,898 92,558
348,234 2,623,727 1,432,242 10,223,843 3,044,785
50,016,461 (20,840,787)

$0 2,416,028
82,176
2,837,478
5,335,682
311,850 53,645
176,754 1,690,722
210,072 1,088,250 3,531,293 1,804,389

Southern Polytechnic State University Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
SOUTHERN POLYTECHNIC STATE UNIVERSITY S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

S ou th e rn Polytechnic State
Un i ve rsi ty

C om pone nt Unit
Southe rn Polyte chnic State
Un i ve rsi ty Fou n dati on , In c.

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Ot her Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts St at e Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET AS SETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

22,497,075
249 463,045 146,461 (1,589,360) (78,657) 21,438,813 598,026
2,239,225
2,239,225 2,837,251
52,969,242
52,969,242 $55,806,493

128,742 (1,608,244)
(1,479,502) 324,887
99,294 99,294 424,181
5,317,968
5,317,968 $5,742,149

Southern Polytechnic State University Annual Financial Report FY 2008 9

Statement of Cash Flows
S OUTHERN POLYTECHNIC S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Ot her Nonoperat ing Receipts Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P roceeds from Sale of Capit al Asset s P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest m ent s P urchase of Invest ment s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$15,938,750 3,813,639 1,220,377
(18,959,157) (25,328,283)
(2,623,727) 28,658
6,274,648 114,331 994,244 355,207 47,368
1,205,377 279,660 (130,912)
(16,769,820)
22,497,075 59,179
463,294 269,120 23,288,668
700,169 (4,113)
(3,178,020) (870,765)
(1,589,360) (4,942,089)
146,461 (62,111) 84,350 1,661,109 3,455,676 $5,116,785

Southern Polytechnic State University Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
S OUTHERN POLYTECHNIC S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Sout hern P olyt echnic St at e Universit y had no non-cash t ransact ions in fiscal 2008.

June 30, 2008
($20,840,787)
3,044,785 (332,430) 106,695
28,658 (3,534) 230,726 859,545 136,522 ($16,769,820)

Southern Polytechnic State University Annual Financial Report FY 2008 11

SOUTHERN POLYTECHNIC STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Southern Polytechnic State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Southern Polytechnic State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Southern Polytechnic State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Southern Polytechnic State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Southern Polytechnic State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Southern Polytechnic State University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, Southern Polytechnic State University is reporting the activity for the Southern Polytechnic State University Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and
Southern Polytechnic State University Annual Financial Report FY 2008 12

Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Southern Polytechnic State University Annual Financial Report FY 2008 13

Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Southern Polytechnic State University.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary activities prior to the end of the fiscal year but related to the subsequent accounting period. Deferred
Southern Polytechnic State University Annual Financial Report FY 2008 14

revenues also include amounts received from grant and contract sponsors that have not yet been earned.
Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Southern Polytechnic State University had accrued liability for compensated absences in the amount of $1,128,203 as of 7-1-2007. For FY2008, $936,116 was earned in compensated absences and employees were paid $799,595, for a net increase of $136,521. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $1,264,724.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Southern Polytechnic State University Annual Financial Report FY 2008 15

Expendable Restricted Net Assets include the following:

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans T ot al Rest rict ed Expendable

June 30, 2008
$1,377,957 274,358 143,299
$1,795,614

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$2,833,026 8,908,867 (8,059,267)
$3,682,626

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Southern Polytechnic State University, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.

Southern Polytechnic State University Annual Financial Report FY 2008 16

Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 University, 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 University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Southern Polytechnic State University Annual Financial Report FY 2008 17

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $4,662,950 and the bank balance was $5,942,840. Of the University's deposits, $5,942,840 were uninsured. Of these uninsured deposits, $5,942,840 were uncollateralized.
B. Investments
Southern Polytechnic State University maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable Federal and state laws.
Southern Polytechnic State University Annual Financial Report FY 2008 18

The University's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

INVES TMENTS Equity Securities - Domestic
Investment Pools Board of Regents Short-T erm Fund Balanced Income Fund T otal Return Fund
T otal Investments

$3,404
448,235 491,374 2,342,614 $3,285,627

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.
Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk
The Weighted Average Maturity of the Short Term Fund is 1.99 years. Of the University's total investment of $448,235 in the Short Term Fund, $446,442 is invested in debt securities.
The Weighted Average Maturity of the Balanced Income Fund is 7.84 years. Of the University's total investment of $491,374 in the Balanced Income Fund, $315,953 is invested in debt securities.
The Weighted Average Maturity of the Total Return Fund is 7.84 years. Of the University's total investment of $2,342,614 in the Total Return Fund, $740,266 is invested in debt securities.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the University will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The University does not have a formal policy for managing custodial credit risk for investments.

Southern Polytechnic State University Annual Financial Report FY 2008 19

At June 30, 2008, $3,404 of the University's applicable investments were uninsured and held by the investment's counterparty in the University's name.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk.

Note 3. Accounts Receivable

Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Georgia St at e Financing and Invest m ent Com m ission Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$980,520 831,502 282,644
1,539,056 2,044,293 5,678,015 1,653,302
$4,024,713

Note 4. Inventories
Southern Polytechnic State University had no inventories at June 30, 2008.
Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education.
As of June 30, 2008 the University had no balance in the allowance for uncollectible notes receivable.

Southern Polytechnic State University Annual Financial Report FY 2008 20

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections Capitalized Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$1,700,397 2,261,213 3,961,610
1,623,504 56,644,304
575,631 9,085,479 33,792,318 6,114,634
30,500 107,866,370
843,139 16,490,766
511,043 7,486,810 1,619,215 4,822,417
14,662 31,788,052
76,078,318
$80,039,928

Addi ti o n s
$0 2,206,750 2,206,750

Re ductions $0 0

7,842 629,498
333,930
971,270
58,446 1,387,538
871 482,688 844,808 269,671
763 3,044,785
(2,073,515)
$133,235

8,700 7,542 16,242
9,074 7,166 16,240
2 $2

En di n g B a l a n ce 6/30/2008
$1,700,397 4,467,963 6,168,360
1,623,504 56,644,304
583,473 9,706,277 33,792,318 6,441,022
30,500 108,821,398
901,585 17,878,304
511,914 7,960,424 2,464,023 5,084,922
15,425 34,816,597
74,004,801
$80,173,161

Southern Polytechnic State University Annual Financial Report FY 2008 21

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $2,300,579 681,088
$2,981,667

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations
Other Liabilities Compensated Absences

Beginning Balance
July 1, 2007
$32,179,013
1,128,203

Additions $0
936,116

Reductions

Ending Balance June 30, 2008

$870,765

$31,308,248

799,595

1,264,724

Total Long Term Obligations

$33,307,216

$936,116

$1,670,360

$32,572,972

Current Portion
$915,315 742,646
$1,657,961

Note 9. Significant Commitments
The University had no significant unearned, outstanding, construction or renovation contracts as of June 30, 2008.
Note 10. Lease Obligations
Southern Polytechnic State University is obligated under capital leases and installment purchase agreements for the acquisition of real property.
CAPITAL LEASES
Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2027 and 2029. Expenditures for fiscal year 2008 were $2,460,125 of which $1,589,360 represented interest. Total principal paid on capital leases was $870,765 for the fiscal year ended June 30, 2008 with an interest rate of 5 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Buildings Total Assets Held Under Capital Lease

$31,328,295 $31,328,295

Southern Polytechnic State University Annual Financial Report FY 2008 22

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.
Southern Polytechnic State University had two capital leases with related entities in the current fiscal year. In July 2005, Southern Polytechnic State University entered into a capital lease of $11,643,862 at 5 percent with the Southern Polytechnic State University Foundation, Inc., a discretely presented component unit, whereby the University leases a building for a twenty-two year period that began July 2005 and expires June 2027. Also in July 2005, Southern Polytechnic State University entered into a capital lease of $22,148,456 at 5 percent with the Southern Polytechnic State University Foundation, Inc., whereby the University leases a building for a twenty-four year period that began July 2005 and expires June 2029. The outstanding liability at June 30, 2008 on these capital leases is $31,308,248. The University at its option may terminate the lease and purchase the Foundation's interest for the unamortized principal balance and the payment of $1.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25

Real P roperty and Equipm ent
Capit al Leases
$2,460,140 2,460,140 2,460,140 2,460,140 2,460,140
12,300,700 12,300,700 11,426,943
1,604,333 49,933,376 18,625,128 $31,308,248

Southern Polytechnic State University had no expense for rental of real property and equipment under operating leases in FY2008.

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Southern Polytechnic State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. TRS provides service retirement, disability retirement, and survivor's benefits for its members in

Southern Polytechnic State University Annual Financial Report FY 2008 23

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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Southern Polytechnic State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Southern Polytechnic State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$1,130,521 $1,072,920 $1,016,840

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Southern Polytechnic State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

Southern Polytechnic State University and the covered employees made the required contributions of $788,585 (8.13% or 8.15%) and $484,377 (5%), respectively.

Southern Polytechnic State University Annual Financial Report FY 2008 24

AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Southern Polytechnic State University 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $101,137 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Southern Polytechnic State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person.
Southern Polytechnic State University Annual Financial Report FY 2008 25

The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Southern Polytechnic State University, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Southern Polytechnic State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Southern Polytechnic State University (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and
Southern Polytechnic State University Annual Financial Report FY 2008 26

life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 183 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Southern Polytechnic State University recognized as incurred $994,437 of expenditures, which was net of $336,960 of participant contributions.
Southern Polytechnic State University Annual Financial Report FY 2008 27

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Instruction
11,289,987 3,244,363 3,280,336
152,552 6,278 41,232
1,908,287 225,405
$20,148,440

Research
40,213 368,454 24,464
12,840 15,780
16 135,298
$597,065

Functional Classification FY2008

Public Service

Academic Support

$0

35,216

2,395,960

520,337

72,664

1,599

10,146 688,340 18,368

$1,599

$3,741,031

Student Services
$0 1,971,702
465,351
46,807 200
14,231 944,849
9,931
$3,453,071

Institutional Support
1,386 3,558,646 1,769,477
48,556 39,597
(13,019) 1,711,248 133,845
$7,249,736

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

$0 1,751,584
542,021 (435,785)
4,607
1,269,787 1,486,551 1,797,637

$0
23 44,002
2,341,124

$0 804,663 186,889 435,785 19,167 260,345 109,849 3,349,270 858,000

$6,416,402

$2,385,149

$6,023,968

Total Expenses
$11,366,802 14,095,372 6,788,898
92,558 348,234 2,623,727 1,432,242 10,223,843 3,044,785
$50,016,461

Southern Polytechnic State University Annual Financial Report FY 2008 28

Note 16. Component Units

Southern Polytechnic State University Foundation, Inc. (Foundation) is a legally separate, taxexempt component unit of Southern Polytechnic State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The seven member board of the Foundation is selfperpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $1,088,250 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Advancement Office at 1100 S. Marietta Parkway, Marietta GA 30060 or from the Foundation's website at www.spsu.edu.

Investments for Component Units:

Southern Polytechnic State University Foundation, Inc. holds endowment and other investments in the amount of $8.1 million. The $1.8 million corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Southern Polytechnic State University Foundation, in conjunction with the donors, has established a spending plan whereby 5% of the average of the past 3 years earnings may be used for the endowments designated purpose.

Investments are comprised of the following amounts at June 30, 2008:

Corporate Bonds Equity Securities Mutual Funds
Total Investments

Cost
$5,268,640 2,285,126 2,029,254
$9,583,020

Fair Value
$3,687,291 2,342,465 2,029,154
$8,058,910

Southern Polytechnic State University Annual Financial Report FY 2008 29

Long-Term Liabilities for Component Units:

During the year ended June 30, 2004, SPSU Student Housing I, LLC, a subsidiary of the Foundation, arranged for the sale of $35,690,000 Development Authority of the City of Marietta Georgia (the Issuer) Tax-Exempt Adjustment Mode Revenue Bonds (Student Housing Facilities Revenue Bonds) Series 2003 (the Bonds). The proceeds were loaned to SPSU Student Housing I, LLC to finance the development, purchase and construction of dormitory and apartment facilities and to pay certain costs of issuance of the bonds. The Issuer entered into a loan agreement with the SPSU Student Housing I, LLC dated December 1, 2003. The Bonds are secured by all property of the borrower. The Bonds interest ranges from 2.5 to 5.25 percent

Changes in long-term debt for the year ended June 30, 2008 are as follows:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Revenue/Mortgage Bonds Payable Other Long Term Liabilities
Total Long Term Liabilities

$34,357,823 551,896
$34,909,719

$0

$924,695

$33,433,128

$970,000

9,786

542,110

$0

$934,481

$33,975,238

$970,000

Debt Service Obligations

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25

Principal
$970,000 1,000,000 1,030,000 1,065,000 1,100,000 6,250,000 8,010,000 10,275,000 3,430,000 33,130,000 303,128 $33,433,128

Bonds Payable Interest
1,576,020 1,546,920 1,515,920 1,481,415 1,443,075 6,478,912 4,715,988 2,451,569 259,250 21,469,069
$21,469,069

Total
$2,546,020 2,546,920 2,545,920 2,546,415 2,543,075
12,728,912 12,725,988 12,726,569
3,689,250 54,599,069
303,128 $54,902,197

Southern Polytechnic State University Annual Financial Report FY 2008 30

GEORGIA INSTITUTE OF TECHNOLOGY
Financial Report
For the Year Ended June 30, 2008

Georgia Institute of Technology Atlanta, Georgia

Dr. Gary B. Schuster
Interim President

Mr. Steven G. Swant
Executive Vice President for Administration and Finance

GEORGIA INSTITUTE OF TECHNOLOGY ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 9 Statement of Revenues, Expenses and Changes in Net Assets..................................................... 13 Statement of Cash Flows .............................................................................................................. 17 Note 1. Summary of Significant Accounting Policies ................................................................ 19 Note 2. Deposits and Investments............................................................................................... 25 Note 3. Accounts Receivable...................................................................................................... 28 Note 4. Inventories...................................................................................................................... 28 Note 5. Notes/Loans Receivable................................................................................................. 28 Note 6. Capital Assets................................................................................................................. 29 Note 7. Deferred Revenue........................................................................................................... 30 Note 8. Long-Term Liabilities .................................................................................................... 30 Note 9. Significant Commitments............................................................................................... 30 Note 10. Lease Obligations......................................................................................................... 30 Note 11. Retirement Plans .......................................................................................................... 35 Note 12. Risk Management......................................................................................................... 38 Note 13. Contingencies............................................................................................................... 39 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 40 Note 15. Natural Classifications with Functional Classifications .............................................. 41 Note 16. Special Item.................................................................................................................. 42 Note 17. Component Units ......................................................................................................... 42

GEORGIA INSTITUTE OF TECHNOLOGY
Management's Discussion and Analysis

Introduction
The Georgia Institute of Technology is one of the 35 institutions of higher education of the University System of Georgia. Georgia Tech is one of the nation's leading research universities, with over $400 million expended on sponsored research activities, and provides a focused, technology based education for nearly 19,000 undergraduate and graduate students. Georgia Tech has many nationally recognized programs and is ranked as one of the top ten public universities in the nation by U.S. News and World Report, with four schools in the College of Engineering listed among the country's top five. Georgia Tech's undergraduate engineering programs are ranked in the Top 10 and the graduate engineering program is consistently ranked in the Top 5. Georgia Tech offers degrees through the Colleges of Engineering, Architecture, Sciences, Computing, Management, and the Ivan Allen College of Liberal Arts. As a leading technological institute, Georgia Tech has over 100 interdisciplinary research centers that consistently contribute vital research and innovation to America's government, industry, and business.
Founded in 1885 to help move Georgia's economy into the industrial age, Georgia Tech exceeded the expectations of its founders by becoming a multi-faceted research institution that serves as a source of new technologies and a driver of economic development. With a clear vision of technology and leadership, the Institute provides a cutting edge education for the 21st century. The Institute continues to grow as reflected by the faculty and student numbers below and other comparisons that follow.

Students Students Faculty (Headcount) (FTE)

FY2008

970

18,747 17,836

FY2007

940

17,936 17,027

FY2006

878

17,135 16,299

Overview of the Financial Statements and Financial Analysis

The Georgia Institute of Technology is pleased to present its financial statements for fiscal year 2008, which began July 1, 2007 and ended June 30, 2008. 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. This discussion and analysis of the Institute's financial statements provides an overview of its financial activities for the year. The statements focus on the financial condition, results of operations and cash flows of the Institute as a whole, with resources classified for accounting and reporting purposes into four net asset categories: invested in capital assets, net of related debt; restricted-nonexpendable; restricted-expendable; and unrestricted. The basis of accounting is full accrual, including capitalization and
Georgia Institute of Technology Annual Financial Report FY 2008 1

depreciation of equipment and fixed assets. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets

Using the accrual basis of accounting, the Statement of Net Assets presents the assets, liabilities, and resulting net assets of the Institute as of the end of the fiscal year. Assets, by definition, represent measured economic value obtained and controlled by an entity as a result of past transactions and events. This statement identifies the assets available for current operations, debts owed and net assets available to continue operations in the future.

The Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the Institute. Net assets are divided into three major categories. The first category, Invested in Capital Assets Net of Related Debt, identifies the Institute's equity in property, plant and equipment. The next asset category, Restricted Net Assets, is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the Institute but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category, Unrestricted Net Assets, is available for any lawful purpose of the Institute.

Following is a comparative, condensed version of the Institute's Statement of Net Assets as of June 30, 2008 and June 30, 2007:

Statement of Net Assets, Condensed

As se ts : Current Asset s Capit al Asset s, net Ot her Asset s Total Asse ts

June 30, 2008
$186,023,497 1,420,414,332
72,926,737 1,679,364,566

June 30, 2007
$171,893,931 1,261,604,842
70,001,585 1,503,500,358

Liabi l itie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

112,482,457 529,865,464 642,347,921

102,305,597 417,817,152 520,122,749

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Capit al P roject s Unrest rict ed Total Ne t Asse ts

892,893,907 47,863,655 27,543,641 66,196,480 2,518,962
$1,037,016,645

851,635,161 53,098,742 30,748,494 49,599,664 (1,704,452)
$983,377,609

Georgia Institute of Technology Annual Financial Report FY 2008 2

The total assets of the institution increased by $175,864,208. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $158,809,490 in the category of Capital Assets, net. The balance of the increase is primarily in receivable categories.
The total liabilities for the year increased by $122,225,172. The combination of the increase in total assets of $175,864,208 and the increase in total liabilities of $122,225,172 yields an increase in total net assets of $53,639,036. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $41,258,746.
Statement of Revenues, Expenses and Changes in Net Assets
Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$721,356,596 980,433,038 (259,076,442) 265,273,178
6,196,736 38,889,899 45,086,635 983,377,609
8,552,401 991,930,010 $1,037,016,645

$667,930,667 919,242,200 (251,311,533) 259,899,848
8,588,315 51,825,493 60,413,808 922,963,801
0 922,963,801 $983,377,609

The Statement of Revenues, Expenses, and Changes in Net Assets reflects an increase in both Operating and Nonoperating Revenues. Overall, revenue increased by $54.9 million across the
Georgia Institute of Technology Annual Financial Report FY 2008 3

board as illustrated in the graph below. The increase includes a $7.9 million Special Item transfer that is included in the FY 2008 Capital Gifts and Grants amount.

Georgia Institute of Technology Revenue
(dollars in millions)

FY 2008 $1,051.8

FY 2007 $996.9

$460. 1

$500

$450

439.3

$400

$350

$135. 1 $38.9
$142. 6 $275. 1

$300

252.6

$250

$200

$150

120.6

$100

$50

132.6 51.8

$0

Tuition and Fees Gifts, Grants and Capital Gifts and Sales, Services,

Contracts

Grants

and Other

State Appropriations

Georgia Institute of Technology Annual Financial Report FY 2008 4

The following graph shows year-to-date expenditure changes by object of expenditure:
Total operating expenses for the year were approximately $980.4 million, an increase of $61.2 million, or 6.7% over the previous year. Significant increases in operating expenses from fiscal year 2007 to fiscal year 2008 include compensation and employee benefits, and utilities. The compensation and employee benefits category increased by $48.4 million primarily due to an increase in research expenditures. Utilities increased from $24.0 million in fiscal year 2007 to $36.4 million in fiscal year 2008. This is largely due to the reclassification of telecommunications expense from supplies to utilities. Telecommunications expense in fiscal year 2007 was $7.7 million and $9.6 million in fiscal year 2008. Thus, if the $7.7 million in telecommunications expenses had been included in utilities for fiscal year 2007, the utilities expense would have been $31.7 million and the percent increase from fiscal year 2007 to fiscal year 2008 would have only been 14.8%.
In the Expenses by Functional Class graph, depreciation expense was unallocated between functional classifications in prior fiscal years. In FY2008, the Natural Classifications with Functional Classifications schedule in Note 15 required the Institute to allocate depreciation among functional classifications. Thus, the unallocated expense for depreciation for FY2008 is $0.
Georgia Institute of Technology Operating Expenses by Object of Expenditure Class
(dollars in millions)

FY 2008 $980.4

FY 2007 $919.2

$700 $600 $500 $400 $300 $200 $100
$0

$614. 5 $566. 1

Salaries and Benefits

Travel, Supplies and Other

Depreciation

$261. 0 $253. 1 $57. 6 $61. 9 $36. 4 $24. 0 $10. 9 $14. 1

Utilities

Scholarships and Fellowships

Georgia Institute of Technology Annual Financial Report FY 2008 5

Georgia Institute of Technology Expenses by Functional Class
(dollars in millions)

FY 2008 $980.4

FY 2007 $919.2

$684.6 $598.0

$115.4 $108.4 $85. 6 $77. 7 $83. 9 $65. 4 $10. 9 $14. 1 $0 $55. 6

$800 $700 $600 $500 $400 $300 $200 $100
$0

Ins truction, Research, and Public Service

Academic, Student, and Institutional Support

Operations and Maintenance of
Plant

Auxiliary Enterprises Scholarships and Fellows hips

Unallocated Depreciation

Statement of Cash Flows
The final statement presented by the Georgia Institute of Technology is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Georgia Institute of Technology Annual Financial Report FY 2008 6

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivit ies Non-capit al Financing Activit ies Capital and Related Financing Act ivities Invest ing Act ivities
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($237,262,062) 285,398,048 (109,360,010) 12,292,080 (48,931,944) 100,953,346
$52,021,402

June 30, 2007
($180,304,402) 274,039,837 (76,013,550) 7,841,204 25,563,089 75,390,257
$100,953,346

Capital Assets
The Institute had two significant capital additions in fiscal year 2008. The Electrical Sub Station was completed this year, resulting in an addition of $39.7 million. Also, the Institute acquired a complex of buildings collectively called "North Avenue Apartments" from Georgia State University for $74.5 million, which includes an adjacent parking facility.
For additional information concerning Capital Assets, see Notes 1, 6, 8, 9, and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
Georgia Institute of Technology had Long-Term Debt and Liabilities of $561,020,762 of which $36,580,298 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, Georgia Institute of Technology has included the financial statements and notes for all required component units for FY2008. These units are: Georgia Tech Foundation, Inc., Georgia Tech Athletic Association, Georgia Tech Research Corporation, Georgia Advanced Technology Ventures, Inc., Georgia Tech Alumni Association, and Georgia Tech Facilities, Inc. Details are available in Note 1, Summary of Significant Accounting Policies and Note 17, Component Units.
Economic Outlook
The Institute is expecting significant economic challenges in the next fiscal year. Planning guidelines from the USG Chancellor have been received for a 5% budget cut from the FY09 state appropriations which is approximately $14.5 million. These cuts, coupled with rapidly rising energy costs and increased fixed debt service costs of $5.9 million in the next fiscal year will necessitate management examine all aspects of the Institute's operations, including the primary
Georgia Institute of Technology Annual Financial Report FY 2008 7

missions of instruction, research and public service. Enrollment is expected to be stable. While every effort has been made in the past to absorb the brunt of economic downturns in the support services area, this may not be possible given the magnitude of the downturn and the impact of the proposed budget cut. At the same time the Institute anticipates a bright economic future with the continued growth of the sponsored research program. Sponsored awards grew to $445.4 million in FY2008 which is a 19.0% increase over the previous fiscal year. In the current fiscal year, sponsored revenue increased by $23.8 million or 5.5%. The Institute expects growth to continue in future fiscal years but at a more normal rate than in FY08. These revenues should help to mitigate the stagnant or negative growth in other areas. Dr. Gary B. Schuster, Interim President Georgia Institute of Technology
Georgia Institute of Technology Annual Financial Report FY 2008 8

Statement of Net Assets

GEORGIA INSTITUTEOF TECHNOLOGY STATEMENT OF NET ASSETS June 30, 2008

ASSETS Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, net (note 3) Receivables - Federal Financial Assistance Receivables - Other Due From Component Units Net Investment in Capital Leases Pledges Receivable Contributions Receivable Inventories (note 4) Prepaid items Notes and Mortgages Receivable Other Assets Total Current Assets
Noncurrent Assets Noncurrent Cash Due from Component Units Investments (including Real Estate) Notes Receivable, net Net Investment in Capital Leases Contributions Receivable Pledges Receivable Capital Assets, net (note 6) Other Assets Total Noncurrent Assets TOTAL ASSETS

Ge orgi a Institute of Te ch n ol ogy

Component Unit
Georgia Tech Foundation, Inc.

Component Unit
Georgia Tech Ath l e ti c
Association

$52,021,402 143,902
4,520,709 13,752,712 72,822,042
321,856 42,440,874
186,023,497

$7,442,000
3,033,880 4,030,989 21,898,288 1,234,948 37,640,105

$6,216,725
1,993,168 5,467,185
604,767 14,281,845

63,530,650 9,396,087
1,420,414,332 1,493,341,069 1,679,364,566

1,334,683,679
163,860,101 44,368,897
37,667,491 27,559,637 1,608,139,805 1,645,779,910

80,058,950
8,074,285 95,504,970
2,111,114 185,749,319 200,031,164

Georgia Institute of Technology Annual Financial Report FY 2008 9

Statement of Net Assets, Continued
GEORGIA INSTITUTEOF TECHNOLOGY STATEMENT OF NET ASSETS June 30, 2008

Ge orgi a Institute of Te ch n ol ogy

Component Unit
Georgia Tech Foundation, Inc.

Component Unit
Georgia Tech Ath l e ti c
Association

LIABILITIES Current Liabilities Accounts Payable Salaries Payable Benefits Payable Contracts Payable Depo sit s Deferred Revenue (note 7) Other Liabilities Deposits Held for Other Organizations Due to Primary Government Lease Purchase Obligations (current portion) Compensated Absences (current portion) Revenue/Mortgage Bonds Payable (current) Liabilities under Split-Interest Agreements (current) Due to Component Units Notes and Loans Payable (current portion) T otal Current Liabilities Noncurrent Liabilities Due to Primary Government Lease Purchase Obligations (noncurrent) Deferred Revenue (noncurrent) Compensated Absences (noncurrent) Revenue/Mortgage Bonds Payable (noncurrent) Liabilities under Split-Interest Agreements (noncurrent) Other Long-T erm Liabilities Due to Component Units Notes and Loans Payable (noncurrent) T otal Noncurrent Liabilities TO TAL LIABILITIES
NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Capital Projects Unrest rict ed TO TAL NET ASSETS

19,506,400 1,179,451 307,021 1,930,375
20,557,187 15,245,362
3,503,959 13,672,404
18,143,084 18,437,214
112,482,457
509,594,341 5,425,000
14,846,123
529,865,464 642,347,921
892,893,907
47,863,655 27,543,641 66,196,480
2,518,962 $1,037,016,645

9,499,237
2,417,845 663,197
264,073 4,825,000 1,953,062
437,000 61,536,874 81,596,288
40,894,155
202,569,624 13,095,498 10,939,238 89,143,950
356,642,465 438,238,753
(245,733)
385,631,562 418,704,165
12,605,024 390,846,139 $1,207,541,157

Georgia Institute of Technology Annual Financial Report FY 2008 10

3,668,533
7,780,000 405,861
1,080,357
2,025,000
27,978 14,987,729
101,955,849 2,414,872 907,778
105,278,499 120,266,228
(6,129,775) 24,098,941 64,886,682 (3,090,912) $79,764,936

Statement of Net Assets, Continued

GEORGIA INSTITUTEOF TECHNOLOGY STATEMENT OF NET ASSETS June 30, 2008

ASSETS Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, net (note 3) Receivables - Federal Financial Assistance Receivables - Other Due From Component Units Net Investment in Capital Leases Pledges Receivable Contributions Receivable Inventories (note 4) Prepaid items Notes and Mortgages Receivable Other Assets Total Current Assets
Noncurrent Assets Noncurrent Cash Due from Component Units Investments (including Real Estate) Notes Receivable, net Net Investment in Capital Leases Contributions Receivable Pledges Receivable Capital Assets, net (note 6) Other Assets Total Noncurrent Assets TOTAL ASSETS

Component Unit
Georgia Tech Research
Corporation

Component Unit
Georgia Advanced Technology Ventures, Inc.

Component Unit
Georgia Tech Alumni
Association

Component Unit
Georgia Tech Facilities, Inc.

$57,657,833

$1,573,271

30,615,886
43,231 41,340,568 129,657,518
331,674

526,993 50,000 12,322 2,162,586 370,933 957,061

1,618,331
1,950,005 131,607,523

745,443 114,277,597
116,351,034 118,513,620

$184,643

$3,120,000 6,792,000

302,380

31,000 437,000 12,691,000

7,948 54,406

5,674,000

549,377

28,745,000

35,722,000 9,085,000

248,061,000

448,621
448,621 997,998

2,617,000 8,415,000 303,900,000 332,645,000

Georgia Institute of Technology Annual Financial Report FY 2008 11

Statement of Net Assets, Continued

GEORGIA INSTITUTEOF TECHNOLOGY STATEMENT OF NET ASSETS June 30, 2008

LIABILITIES Current Liabilities Accounts Payable Salaries Payable Benefits Payable Contracts Payable Deposits Deferred Revenue (note 7) Other Liabilities Deposits Held for Other Organizations Due to Primary Government Lease Purchase Obligations (current portion) Compensated Absences (current portion) Revenue/Mortgage Bonds Payable (current) Liabilities under Split-Interest Agreements (current) Due to Component Units Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities Due to Primary Government Lease Purchase Obligations (noncurrent) Deferred Revenue (noncurrent) Compensated Absences (noncurrent) Revenue/Mortgage Bonds Payable (noncurrent) Liabilities under Split-Interest Agreements (noncurrent) Other Long-Term Liabilities Due to Component Units Notes and Loans Payable (noncurrent) Total Noncurrent Liabilities TOTAL LIABILITIES
NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Capital Projects Unrestricted TOTAL NETASSETS

Component Unit
Georgia Tech Research
Corporation 2,302,375
36,584,010 44,567,685
83,454,070
0 83,454,070 1,618,331
46,535,122 $48,153,453

Component Unit
Georgia Advanced Technology Ventures, Inc.
649,840
641,225 3,420,567
217,773
1,678,898 6,608,303
90,371,687
8,716,241 99,087,928 105,696,231 15,110,771
2,222,998 (4,516,380) $12,817,389

Component Unit
Georgia Tech Alumni
Association
183,995
310,000 25,584 207,461
727,040
0 727,040 448,621
(177,663) $270,958

Component Unit
Georgia Tech Facilities, Inc.
4,269,000
669,000 800,000 2,422,000 28,011,000 2,179,000 5,723,000
44,073,000
5,215,000 559,000
289,084,000
294,858,000 338,931,000
5,305,000
9,522,000 (21,113,000) ($6,286,000)

Georgia Institute of Technology Annual Financial Report FY 2008 12

Statement of Revenues, Expenses and Changes in Net Assets
GEORGIA INSTITUTEOFTECHNOLOGY STATEMENT of REVENUES, EXPENSES, andCHANGES in NET ASSETS
for the Year Ended June 30, 2008

REVENUES
Operating Revenues Student Tuition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Health Services Other Organizations Interest and Dividend income Other Operating Revenues Total Operating Revenues
EXPENSES Operating Expenses
Salaries: Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to other Component Units Payments to or on behalf of Georgia Institute of Technology
Total Operating Expenses Operating Income (loss)

Component Unit

Georgia Institute of Technology

Georgia Tech Foundation, Inc.

Component Unit
Georgia Tech Athletic
Association

$161,887,461 (26,737,688)
287,998,687 17,236,932
149,509,237 23,942,293 1,253,966
49,248,564 1,902,078 16,942,378 13,200,396 5,948,091 6,647,384
12,376,817 721,356,596

$0 59,881,465
4,879,994
411,395 18,224,413
83,397,267

$0 7,764,881
32,167,614 9,266,962
49,199,457

245,468,028 263,915,877 104,557,932
548,389 16,616,963 10,919,734 36,396,206 244,423,689 57,586,220
980,433,038 (259,076,442)

2,208,712 395,506
1,306,176 80,206
32,832 1,708,169 2,070,268 7,050,366 69,285,346 84,137,581 (740,314)

12,901,921 3,004,969
3,602,578 7,008,363
8,987,612 4,732,730
12,389,256 52,627,429 (3,427,972)

Georgia Institute of Technology Annual Financial Report FY 2008 13

Statement of Revenues, Expenses and Changes in Net Assets, Continued
GEORGIA INSTITUTEOFTECHNOLOGY STATEMENT of REVENUES, EXPENSES, andCHANGES in NET ASSETS
for the Year Ended June 30, 2008

Component Unit

Georgia Institute of Technology

Georgia Tech Foundation, Inc.

Component Unit
Georgia Tech Athletic
Association

NONOPERATING REVENUES (EXPENSES) State Appropriations Gifts Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts State Other Special Item - Capital Asset Transfer Loss on Bond Retirement Additions to permanent endowments Total Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

275,144,403 5,323,093 14,551,850
(26,374,717) (3,371,451) 265,273,178 6,196,736
21,855,280 9,117,970 7,916,649
38,889,899 45,086,635
983,377,609 8,552,401
991,930,010 $1,037,016,645

(1,921,334) (14,540,537) (10,939,238) (27,401,109) (28,141,423)
34,420,595 34,420,595 6,279,172
1,201,261,985 0
1,201,261,985 $1,207,541,157

1,339,275 498,856
(5,754,551)
(3,916,420) (7,344,392)
7,632,330 7,632,330
287,938
79,476,998 0
79,476,998 $79,764,936

Georgia Institute of Technology Annual Financial Report FY 2008 14

Statement of Revenues, Expenses and Changes in Net Assets, Continued

GEORGIA INSTITUTEOF TECHNOLOGY STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

REVENUES

Component Unit
Georgia Tech Research
Corporation

Component Unit
Georgia Advanced Technology Ventures, Inc.

Component Unit
Georgia Tech Alumni
Association

Component Unit
Georgia Tech Facilities, Inc.

Operating Revenues Student Tuition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Health Services Other Organizations Interest and Dividend income Other Operating Revenues Total Operating Revenues
EXPENSES Operating Expenses
Salaries: Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to other Component Units Payments to or on behalf of Georgia Institute of Technology
Total Operating Expenses Operating Income (loss)

$0
301,812,234 16,659,334 62,748,887 7,363,605
2,215 388,586,275
138,262 5,174,733
411,744 377,569,043 383,293,782
5,292,493

$0 232,299
1,325,606 327,409
12,057,297
33,940 13,976,551
66,792 21,208
1,009,023 6,524,638 2,967,203
9,688 295,569 10,894,121 3,082,430

$0

$0

4,333,393

1,048,977 814,904

152,000 11,368,000

37,599 315,893 6,550,766

1,000 11,521,000

3,274,435 794,000
360,239 66,722
1,442,920 126,852
735,099 6,800,267 (249,501)

1,544,000 60,000
6,227,000 7,831,000 3,690,000

Georgia Institute of Technology Annual Financial Report FY 2008 15

Statement of Revenues, Expenses and Changes in Net Assets, Continued

GEORGIA INSTITUTEOF TECHNOLOGY STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

Component Unit
Georgia Tech Research
Corporation

Component Unit
Georgia Advanced Technology Ventures, Inc.

Component Unit
Georgia Tech Alumni
Association

Component Unit
Georgia Tech Facilities, Inc.

NONOPERATING REVENUES (EXPENSES) State Appropriations Gifts Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts State Other Special Item - Capital Asset Transfer Loss on Bond Retirement Additions to permanent endowments Total Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

1,723,482 (17,066)
1,706,416 6,998,909
80,000

58,774 (7,365,001)
(7,306,227) (4,223,797)

80,000 7,078,909
41,074,544 0
41,074,544 $48,153,453

0 (4,223,797)
17,041,186 0
17,041,186 $12,817,389

0 (249,501)

2,162,000 (15,323,000)
(13,161,000) (9,471,000)

0 (249,501)
520,459 0
520,459 $270,958

(3,214,000)
(3,214,000) (12,685,000)
6,399,000 0
6,399,000 ($6,286,000)

Georgia Institute of Technology Annual Financial Report FY 2008 16

Statement of Cash Flows
GEORGIA INS TITUTE OF TECHNOLOGY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments t o Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Other Nonoperating Receipts Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P roceeds from Capit al Debt P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES Int erest on Invest ment s P urchase of Invest ment s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$134,652,521 447,227,033 23,701,801 (407,770,465) (507,336,031) (10,919,734) (3,131,037) 2,456,978
49,473,232 1,913,535
16,937,074 13,230,546
5,950,468 6,650,667 (10,298,650) (237,262,062)
275,144,403 3,362,324 5,323,093 1,568,228
285,398,048
20,338,415 217,000
(91,524,603) (14,226,388) (24,164,434) (109,360,010)
19,578,480 (7,286,400) 12,292,080 (48,931,944) 100,953,346 $52,021,402

Georgia Institute of Technology Annual Financial Report FY 2008 17

Statement of Cash Flows, Continued
GEORGIA INSTITUTE OF TECHNOLOGY STATEMENT OF CASH FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) BY O PERATING AC TIVITIES :
Operat ing Income (loss) Adjustment s to Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Activities
Dep reciat io n Change in Assets and Liabilities:
Receivables, net Invent ories Prepaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Other Liabilit ies Compensat ed Absences
Net Cash P rovided (used) by Operating Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed assets acquired by incurring capit al lease obligat ions Change in fair value of invest ments recognized as a component of int erest income Special Item - Capital Asset T ransfer Change in accrued int erest payable affecting interest paid Gift of capital asset s reducing proceeds of capit al grant s and gifts

June 30, 2008
($259,076,442)
57,586,220 (32,756,992)
(29,176) (2,408,183)
(674,059) 430,212 838,623 (2,978,538) 1,806,273 ($237,262,062)
$131,777,132 ($5,026,630) $7,916,649 ($2,210,283)
($10,634,835)

Georgia Institute of Technology Annual Financial Report FY 2008 18

GEORGIA INSTITUTE OF TECHNOLOGY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Georgia Institute of Technology serves the state, national and international communities by providing its students with academic instruction that advances fundamental knowledge, conducting research to create a better world for mankind, and by disseminating knowledge to the people of Georgia, the nation, and throughout the world.
Reporting Entity Georgia Institute of Technology is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Georgia Institute of Technology as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Georgia Institute of Technology does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Georgia Institute of Technology is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Georgia Institute of Technology) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the Institute's report. For FY2008, Georgia Institute of Technology is reporting the activity for the following:
Georgia Tech Foundation, Inc. Georgia Tech Athletic Association and its subsidiary Alexander-Tharpe Fund Georgia Tech Research Corporation and its subsidiary Georgia Tech Applied Research
Corporation Georgia Advanced Technology Ventures, Inc. Georgia Tech Alumni Association Georgia Tech Facilities, Inc.
Georgia Institute of Technology Annual Financial Report FY 2008 19

See Note 17, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the Institute was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 Institute's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the Institute is considered a special-purpose government engaged only in business-type activities. Accordingly, the Institute'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- Institute transactions have been eliminated.
The Institute has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The Institute has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Georgia Institute of Technology Annual Financial Report FY 2008 20

Investments The Institute accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the Institute's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are recorded on the consumption method and are valued at cost on the Statement of Net Assets using the average-cost basis. Resale inventories are valued at cost using the average-cost basis
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the Institute's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 50 years for buildings, 20 to 75 years for infrastructure and land improvements, 10 years for library books, and 5 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the Institute when complete.
Georgia Institute of Technology Annual Financial Report FY 2008 21

For projects managed by the Institute, the Institute retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC transferred capital additions valued at $2,275,680 to Georgia Institute of Technology. The amount of this transfer that was put on deposit with GSFIC and privately funded is $772,432.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in an Institute residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Georgia Institute of Technology had accrued liability for compensated absences in the amount of $31,477,064 as of July 1, 2007. For FY2008, $19,961,337 was earned in compensated absences and employees were paid $18,155,064, for a net increase of $1,806,273. The ending balance as of June 30, 2008 in accrued liability for compensated absences was $33,283,337.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The Institute's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the Institute'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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The Institute may accumulate as much of the annual net income of an institutional
Georgia Institute of Technology Annual Financial Report FY 2008 22

fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the Institute is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans Quasi-Endowm ent s T ot al Rest rict ed Expendable

$1,566,009 6,531,565 4,992,207
14,453,860 $27,543,641

Restricted net assets expendable Capital Projects: This represents resources for which the Institute is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the Institute, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$12,095,692 12,842,413 319,012 (22,738,155) $2,518,962

When an expense is incurred that can be paid using either restricted or unrestricted resources, the Institute's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Georgia Institute of Technology, 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.

Georgia Institute of Technology Annual Financial Report FY 2008 23

Classification of Revenues The Institute has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 Institute, 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 Institute's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the Institute has recorded contra revenue for scholarship allowances.
Restatement of Prior Year Net Assets During fiscal year 2008, the Institute conducted a comprehensive review of building and infrastructure historical costs and the associated depreciation and accumulated depreciation for these assets. As a result of this review, it was determined that depreciation expense had been overstated in prior years by a net amount of $8,552,401, with buildings being overburdened by $9,540,330 and infrastructure being under burdened by $987,929. To correctly reflect carrying values:
1. The beginning balance for accumulated depreciation on buildings was restated and reduced by $9,540,330.
2. The beginning balance for accumulated depreciation on infrastructure was restated and increased by $987,929.
3. Net Assets Invested in Capital Assets, Net of Related Debt, was increased by $8,552,401.
Note 6 reflects these changes in the Beginning Balance column.
Georgia Institute of Technology Annual Financial Report FY 2008 24

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the Institute's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the Institute) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $537,594 and the bank balance was $14,963,097. Of the Institute's deposits, $14,784,821 were uninsured. Of these uninsured deposits, $11,080,139 were collateralized with securities held by the financial institution's trust department or agent in the Institute's name, and $3,704,682 were uncollateralized.
B. Investments Georgia Institute of Technology maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable Federal and state laws.
Georgia Institute of Technology Annual Financial Report FY 2008 25

The Institute's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

INVESTMENTS
Investment type Debt Securities
U.S. Treasuries U.S. Agencies
Explicitly Guaranteed Implicitly Guaranteed Corporate Debt
Other Investments Bond/Equity Mutual Funds Equity Mutual Funds Equity Securities - Domestic Real Estate Held for Investment Purposes
Investment Pools Board of Regents Short-Term Fund Diversified Fund Office of Treasury and Fiscal Services Georgia Fund 1 Georgia Extended Asset Pool
Total Investments

Fair Value

Less Than 1 Year

Investment Maturity

1-5 Years

6-10 Years

More Than 10 Years

$5,132,841
9,837 4,665,180 7,274,305 $17,082,163
483,522 373,066 1,000,122
1,458
29,966,352 44,590,319
21,466,438 143,902
$115,107,342

$100,281
280 561,356 160,394 $822,311

$3,201,916
297 2,610,561 1,279,026 $7,091,800

$1,740,222
857,393 830,210 $3,427,825

$90,422
9,260 635,870 5,004,675 $5,740,227

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.
The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1 Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 days.
The Georgia Extended Asset Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company. Net Asset
Georgia Institute of Technology Annual Financial Report FY 2008 26

Value (NAV) is calculated daily to determine current share price, which was $2.02 at June 30, 2008. The Georgia Extended Asset Pool is an AAA rated investment pool by Standard and Poor's. The Effective Duration of the Fund is .81 years.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The Institute's policy for managing interest rate risk is to comply with Regents policy and applicable Federal and state laws.
The Weighted Average Maturity of the Short Term Fund is 1.99 years. Of the Institute's total investment of $29,966,352 in the Short Term Fund, $29,846,487 is invested in debt securities.
The Weighted Average Maturity of the Diversified Fund is 7.84 years. Of the Institute's total investment of $44,590,319 in the Diversified Fund, $13,867,589 is invested in debt securities.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the institute will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The Institute's policy for managing custodial credit risk for investments is an integral part of its current investment policies dated May 16, 2005, which specifies how counterparties are selected and how investments are to be held on behalf of the Institute.
At June 30, 2008, $12,975,007 were uninsured and held by the investment's counterparty's trust department or agent, but not in the Institute's name.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Institute's policy for managing credit quality risk is for investments is an integral part of it's current investment policies dated May 16, 2005, which identifies approved investment products, and specifies the required credit quality, as applicable, for each investment based upon approved credit rating agencies.
The investments subject to credit quality risk are reflected below:

Related Debt Investments U. S. Agencies Corporate Debt

Fair Value

AAA

$4,665,180 7,274,305
$11,939,485

$4,665,180 5,367,939
$10,033,119

AA
672,645 $672,645

A

BAA

Unrated

884,552 $884,552

344,494 $344,494

4,675 $4,675

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of the Institute's investment in a single issuer. The Institute's policy for managing concentration of credit risk is an integral part of it's current investment policies dated May 16, 2005, which overviews
Georgia Institute of Technology Annual Financial Report FY 2008 27

concentration guidelines not allowing more than 20% of the total investment portfolio to be concentrated in anyone other than the US Treasury or other Federal Government agencies.

Note 3. Accounts Receivable

Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$3,594,976 1,291,088 4,520,709
72,822,042 11,197,182 93,425,997
2,330,534
$91,095,463

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

P hysical P lant Other
T otal

289,063 32,793
$321,856

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the Institute for amounts cancelled under these provisions. As the Institute determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The Institute has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was approximately $78,433.

Georgia Institute of Technology Annual Financial Report FY 2008 28

Note 6. Capital Assets

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

Capital Assets, Not Being Depreciated: Land Capitalized Collections Construction Work-in-Progress
Total Capital Assets Not Being Depreciated

(Restated) Beginning Balances 7/1/2007
$50,647,905 16,914,836 25,679,962 93,242,703

Special Item Transfer $0
0

Additions
$2,488,541 1,516,994 37,997,110 42,002,645

Reductions
$0 727,903 13,200,129 13,928,032

Ending Balance 6/30/2008
$53,136,446 17,703,927 50,476,943 121,317,316

Capital Assets, Being Depreciated: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Library Collections Total Assets Being Depreciated

55,147,216 1,214,210,280
14,815,338 323,998,406 89,878,032 1,698,049,272

72,150,026 466,803
72,616,829

45,415,184 30,157,777 3,851,359 46,369,649 4,830,137 130,624,106

5,111,690
11,439,190 14,968
16,565,848

100,562,400 1,311,406,393
19,133,500 358,928,865 94,693,201 1,884,724,359

Less: Accumulated Depreciation Infrastructure Buildings Facilities and Other improvements Equipment Library Collections Total Accumulated Depreciation

11,831,745 232,792,327
7,089,530 207,340,340 62,080,790 521,134,732

18,964,108 280,578
19,244,686

2,187,083 26,571,504
422,904 25,993,141 2,411,588 57,586,220

1,658,578
10,664,749 14,968
12,338,295

14,018,828 276,669,361
7,793,012 222,668,732 64,477,410 585,627,343

Total Capital Assets, Being Depreciated, Net 1,176,914,540

53,372,143

73,037,886

4,227,553 1,299,097,016

Capital Assets, net

$1,270,157,243

$53,372,143

$115,040,531

$18,155,585 $1,420,414,332

Georgia Institute of Technology Annual Financial Report FY 2008 29

Note 7. Deferred Revenue

Current deferred revenue consisted of the following at June 30, 2008:

P repaid T uit ion and Fees Research Ot her Deferred Revenue
T ot als

June 30, 2008
$12,398,192 1,768,242 1,078,928
$15,245,362

Long-Term deferred revenue totaled $5,425,000.

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations

Beginning Balance
July 1, 2007
$409,969,681

Additions $131,994,132

Reductions

Ending Balance June 30, 2008

$14,226,388 $527,737,425

Current Portion
$18,143,084

Other Liabilities Compensated Absences Total
Total Long Term Obligations

31,477,064 31,477,064
$441,446,745

19,961,337 19,961,337
$151,955,469

18,155,064 18,155,064
$32,381,452

33,283,337 33,283,337
$561,020,762

18,437,214 18,437,214
$36,580,298

Note 9. Significant Commitments
The Institute had significant unearned, outstanding, construction or renovation contracts executed in the amount of $15,885,993 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.
Note 10. Lease Obligations
Georgia Institute of Technology is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property and equipment.
CAPITAL LEASES
Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2008 and 2037. Expenditures for fiscal year 2008 were $40,601,105 of which $26,374,717 represented interest. Total principal paid on capital leases was $14,226,388 for the fiscal year ended June 30, 2008. Interest rates range from 3.36 percent
Georgia Institute of Technology Annual Financial Report FY 2008 30

to 11.0 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Facilities and Other Improvements Infrastructure Land Buildings Equipment Total Assets Held Under Capital Lease

$191,540 39,625,307 11,457,418 516,156,196 16,026,312 $583,456,773

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.

Georgia Institute of Technology had seven capital leases with related parties in fiscal year 2008. In November 1997, Georgia Institute of Technology entered into a capital lease of $21,560,000 for the Parker H. Petit Institute of Bioengineering and Biosciences Building with the Georgia Tech Research Corporation and Georgia Tech Facilities, Inc., both affiliated organizations. The lease term is for a 30 year period that began November 1997 and expires May 2028. At June 30, 2008 the remaining long-term debt obligation (principal) under the lease was $18,020,000 and the amount due (principal and interest) in the next fiscal year is $1,425,695.

In August 2001, Georgia Institute of Technology entered into a capital lease of $142,298,200 with the Georgia Tech Foundation, Inc. for a complex of buildings collectively named "Technology Square". Georgia Tech Foundation, Inc. is an affiliated organization of the Institute. The lease term is for a 29 year period that began August 2003 and expires July 2032. At June 30, 2008 the remaining long-term debt obligation (principal) under the lease was $128,636,400, and the amount due (principal and interest) in the next fiscal year is $9,938,499.

In February 2001, Georgia Institute of Technology entered into a capital lease of $44,980,000 with the Georgia Tech Foundation, Inc. for the Institute's Campus Recreation Center. As noted previously, Georgia Tech Foundation, Inc. is an affiliated organization of the Institute. The lease term is for a 30 year period that began February 2001 and expires February 2031. At June 30, 2008 the remaining long-term debt obligation (principal) under the lease was $40,845,000, and the amount due (principal and interest) in the next fiscal year is $3,068,765.

In May 2005 Georgia Institute of Technology entered into a capital lease of $70,320,000 with Georgia Tech Facilities, Inc., an affiliated organization, for two structures/buildings: (1) a complex of buildings collectively named "Married Family Housing", including an adjoining parking deck; and (2) the underground parking deck for the Klaus Advanced Computing Center. The lease terms are 25 years on the Housing complex and 20 years on the Klaus parking deck. The lease expires in June, 2030. At June 30, 2008 the remaining long-term debt obligation under the lease was $65,235,000 and the amount due (principal and interest) in the next fiscal year is $5,079,853.

In May 2004 Georgia Institute of Technology entered into a capital lease of $75,205,000 with Georgia Tech Facilities, Inc., an affiliated organization, for a Molecular Sciences and Engineering Building. The lease term is for 29 years and expires in June, 2036. At June 30,
Georgia Institute of Technology Annual Financial Report FY 2008 31

2008 the remaining long-term debt obligation under the lease was $73,915,000 and the amount due (principal and interest) in the next fiscal year is $4,980,850.
In July 2007, Georgia Institute of Technology entered into a capital lease of $74,455,494 with Georgia Tech Facilities, Inc., an affiliated organization, for a complex of buildings collectively named "North Avenue Apartments", including an adjoining parking deck. The lease term is for 25 years and expires in June, 2032. At June 30, 2008 the remaining long-term debt obligation under the lease was $76,720,452 and the amount due (principal and interest) in the next fiscal year is $5,280,000.
In January 2008, Georgia Institute of Technology entered into a capital lease of $39,705,000 with Georgia Tech Facilities, Inc., an affiliated organization, for an Electrical Sub Station. The lease term is for 30 years and expires in December 2037. At June 30, 2008 the remaining longterm debt obligation under the lease was $39,485,146 and the amount due (principal and interest) in the next fiscal year is $3,000,000.
Georgia Institute of Technology also has one real property capital lease with an unrelated party. In June 2003, the Institute entered into a capital lease of $64,029,360 with the University Financing Foundation for the Technology Square Research Building. The lease term is for a 23 year period that began June 2003 and expires June 2026. At June 30, 2008 the remaining longterm debt obligation (principal) under the lease was $61,338,282 and the amount due (principal and interest) in the next fiscal year is $4,410,189. The Institute may cancel the lease agreement under prescribed terms if sufficient appropriations, revenues, income, grants or other funding sources are not available. The Institute is responsible for most operating costs such as repairs, utilities and insurance for this lease.
The Institute is obligated to various parties for the lease purchase of furniture, fixtures, equipment, and plant infrastructure improvements. These leases have various end dates through June 30, 2013. At June 30, 2008, the remaining long term debt obligation under these agreements was $23,542,145. The amount due (principal and interest) in the next fiscal year is $7,965,511.
OPERATING LEASES
Georgia Institute of Technology's non-cancelable operating leases with remaining terms of more than one year expire in 2009. Certain operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancelable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases include real estate rentals, copiers and other small business equipment.
Georgia Institute of Technology Annual Financial Report FY 2008 32

Description of Related Party Leases In 1994, Georgia Institute of Technology entered into a real property operating lease with the Georgia Tech Research Corporation, (GTRC) a related party, for office space in Arlington, Virginia. The current agreement is for July 1, 2008 through June 30, 2009 for monthly fees of $18,788. The agreement does contain a renewal option. Under this agreement, Georgia Institute of Technology is obligated to pay GTRC $225,456 in the next fiscal year.
In 1995, Georgia Institute of Technology entered into a real property operating lease with GTRC for office space in Smyrna, Georgia. The current agreement is for July 1, 2008 through June 30, 2009 for monthly fees of $105,056. The agreement does contain a renewal option. Under this agreement, Georgia Institute of Technology is obligated to pay GTRC $1,260,670 in the next fiscal year.
In 1995, Georgia Institute of Technology entered into a real property operating lease with GTRC for office space in the Centennial Research Building in Atlanta, Georgia. The current agreement is for July 1, 2008 through June 30, 2009 for monthly fees of $125,870. The agreement does contain a renewal option. Under this agreement, Georgia Institute of Technology is obligated to pay GTRC $1,510,440 in the next fiscal year.
In 2000, Georgia Institute of Technology entered into a real property operating lease with GTRC for office space in Fairburn, Ohio. The current agreement is for July 1, 2008 through June 30, 2009 for monthly fees of $16,788. The agreement does contain a renewal option. Under this agreement, Georgia Institute of Technology is obligated to pay GTRC $201,457 in the next fiscal year.
In 2002, Georgia Institute of Technology entered into a real property operating lease with GTRC for office space in Orlando, Florida. The current agreement is for July 1, 2008 through June 30, 2009 for monthly fees of $4,134. The agreement does contain a renewal option. Under this agreement, Georgia Institute of Technology is obligated to pay GTRC $49,611 in the next fiscal year.
In 2003, Georgia Institute of Technology entered into a real property operating lease with Georgia Advanced Technology Ventures, Inc., a related party, for office space in the Centergy One Building located at 75 Fifth Street in Atlanta, Georgia. The current agreement is for July 1, 2008 through June 30, 2009 for monthly fees of $74,194. The agreement does contain a renewal option. Under this agreement, Georgia Institute of Technology is obligated to pay Georgia Advanced Technology Ventures, Inc. $890,322 in the next fiscal year.
In 2003, Georgia Institute of Technology entered into a real property operating lease with VLP 1, Inc., a subsidiary of Georgia Advanced Technology Ventures, Inc., a related party, for office and lab space located at 575 14th Street in Atlanta, Georgia. The current agreement is for July 1, 2008 through June 30, 2009 for monthly fees of $55,763. The agreement does contain a renewal option. Under this agreement, Georgia Institute of Technology is obligated to pay VLP 1, Inc $316,931 in the next fiscal year.
Georgia Institute of Technology Annual Financial Report FY 2008 33

In 2003, Georgia Institute of Technology entered into a real property operating lease with VLP 2, Inc., a subsidiary of Georgia Advanced Technology Ventures, Inc., a related party, for office space located at 650 Ethel Street in Atlanta, Georgia. The current agreement is for July 1, 2008 through June 30, 2009 for monthly fees of $24,384. The agreement does contain a renewal option. Under this agreement, Georgia Institute of Technology is obligated to pay VLP 2, Inc. $292,602 in the next fiscal year.
In 2004, Georgia Institute of Technology entered into a real property operating lease with GTRC for office space in Marietta, Georgia. The current agreement is for July 1, 2008 through June 30, 2009 with monthly fees of $2,352. The agreement does contain a renewal option. Under this agreement, Georgia Institute of Technology is obligated to pay GTRC $28,000 in the next fiscal year.
In 2007, Georgia Institute of Technology entered into a real property operating lease with Georgia Advanced Technology Ventures, Inc., a related party, for office space in the Centergy One Building located at 75 Fifth Street in Atlanta, Georgia. The current agreement is for July 1, 2008 through June 30, 2009 for monthly fees of $134,660. The agreement does contain a renewal option. Under this agreement, Georgia Institute of Technology is obligated to pay Georgia Advanced Technology Ventures, Inc. $1,615,925 in the next fiscal year.
In 2007, Georgia Institute of Technology entered into a real property operating lease with VLP 3, Inc. a subsidiary of Georgia Advanced Technology Ventures, Inc. a related party, for office space located at 395 North Avenue in Atlanta, Georgia. The current agreement is for July 1, 2008 through June 30, 2009 for monthly fees of $34,736. The agreement does contain a renewal option. Under this agreement, Georgia Institute of Technology is obligated to pay VLP 3, Inc. $416,828 in the next fiscal year.
In 2007, Georgia Institute of Technology entered into a real property operating lease with GTRC for office space in Quantico, Virginia. The current agreement is for July 1, 2008 through June 30, 2009 for monthly fees of $5,348. The agreement does contain a renewal option. Under this agreement, Georgia Institute of Technology is obligated to pay GTRC $64,179 in the next fiscal year.
Georgia Institute of Technology's FY2008 expense for rental of real property and equipment under operating leases was $9,810,714.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:
Georgia Institute of Technology Annual Financial Report FY 2008 34

FUTURE COMMITMENTS

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 2034 t hrough 2038 T otal minimum lease payment s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Real P ropert y and Equipment

Capit al Leases

Operat ing Leases

$45,149,362 44,296,871 42,574,478 39,323,158 39,565,696
194,181,260 194,905,753 172,078,400 109,961,814
28,443,497 910,480,289
382,742,864 $527,737,425

$9,606,316 $9,606,316

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Georgia Institute of Technology participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Georgia Institute of Technology who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Georgia Institute of Technology makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$18,963,675 $18,025,456 $17,233,661

Georgia Institute of Technology Annual Financial Report FY 2008 35

Employees' Retirement System of Georgia
Plan Description Georgia Institute of Technology participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.
Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The Institute's payroll for the year ended June 30, 2008, for employees covered by ERS was $567,198. The Institute's total payroll for all employees was $509,383,905.
For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the Institute's pays the remainder on behalf of the employee.
Georgia Institute of Technology Annual Financial Report FY 2008 36

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The Institute also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the Institute amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$59,300 $57,305 $43,713

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Georgia Institute of Technology makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

Georgia Institute of Technology Annual Financial Report FY 2008 37

Georgia Institute of Technology and the covered employees made the required contributions of $16,287,458 (8.13% or 8.15%) and $9,998,034 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Georgia Institute of Technology 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $802,054 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Georgia Institute of Technology and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of
Georgia Institute of Technology Annual Financial Report FY 2008 38

the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Georgia Institute of Technology, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Georgia Institute of Technology expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Georgia Institute of Technology (an organizational unit of the Board of Regents of the University 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, 2008.
Georgia Institute of Technology Annual Financial Report FY 2008 39

Note 14. Post-Employment Benefits Other Than Pension Benefits Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The Institute pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 1,211 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Georgia Institute of Technology recognized as incurred $6,572,585 of expenditures, which was net of $2,114,450 of participant contributions.
Georgia Institute of Technology Annual Financial Report FY 2008 40

Note 15. Natural Classifications with Functional Classifications The Institute's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Functional Classification FY2008

Instruction

Research

Public Service

Academic Support

Student Services

Institutional Support

$95,932,013 49,914,387 32,073,792
39,843 3,306,673

$134,828,067 98,722,051 44,474,493 21,131 10,663,714

$6,557,747 14,285,168 4,866,845
438,337 1,044,438

$5,735,222 18,396,302
6,000,306 7,871
640,015

$367,927 11,307,441
2,581,732 26,048
300,008

$1,710,206 31,129,907 4,491,202
10,469 416,027

2,095,842 23,198,603 7,603,706

1,883,664 108,333,041 23,541,662

321,157 19,112,633 1,359,854

518,941 9,214,672 4,449,096

214,169 10,655,725
746,992

444,692 234,590 5,794,224

$214,164,859 $422,467,823 $47,986,179 $44,962,425 $26,200,042 $44,231,317

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

Total Expenses

$295,148 23,172,196 5,905,474
2,254 95,089
20,143,243 30,048,878 5,889,789

10,919,734

$41,698 16,988,425 4,164,088
2,436 150,999
10,774,498 43,625,547 8,200,897

$245,468,028 263,915,877 104,557,932
548,389 16,616,963 10,919,734 36,396,206 244,423,689 57,586,220

$85,552,071

$10,919,734

$83,948,588 $980,433,038

Georgia Institute of Technology Annual Financial Report FY 2008 41

Note 16. Special Item
Georgia State University, a University System of Georgia institution, transferred its University Village Student Housing Complex to Georgia Institute of Technology effective July 1, 2007. The complex contains approximately 2,000 student housing beds, 790 parking spaces, and site amenities and was renamed the North Avenue Apartments by the Institute.
Georgia Institute of Technology provided consideration for the complex totaling $45,455,494. The net book value of the capital asset transfer to Georgia Institute of Technology at July 1, 2007 was $53,372,143. The difference of $7,916,649 is reported as a Special Item Capital Asset Transfer on the Statements of Revenues, Expenses and Changes in Net Assets and Cash Flows. See Note 6 for additional information.
Note 17. Component Units
Georgia Tech Foundation, Inc. Georgia Tech Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of the Georgia Institute of Technology (Institute). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the Institute in support of its programs. The Foundation board of trustees is self-perpetuating and consists of forty-five (45) elected trustees, who are alumni of the Institute and five (5) ex-officio trustees. Although the Institute does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted for support of the Institute. Because the resources held by the Foundation are used by, or for the benefit of, the Institute, the Foundation is considered a component unit of the Institute and is discretely presented in the Institute's financial statements.
The foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The foundation's fiscal year is July 1 through June 30.
During fiscal year 2008, the Foundation distributed approximately $69.3 million to the Institute for restricted and unrestricted purposes. Note 10 of this financial report provides information on related party leases between the Foundation and the Institute. Complete financial statements for the Foundation can be requested at the following address: Georgia Tech Foundation, Inc., Controller's Office, 760 Spring Street N.W., Suite 400, Atlanta, GA 30308.
Investments for Component Units:
The Georgia Tech Foundation, Inc. holds investments totaling $1.335 billion as of June 30, 2008, of which $376.96 million is the corpus of the endowment (permanently restricted). The corpus is nonexpendable, but the earnings on the investments may be spent in accordance with donor restrictions or in accordance with the Foundation's spending policy. The Foundation has
Georgia Institute of Technology Annual Financial Report FY 2008 42

established a spending policy in which up to 6% of the twelve (12) quarter average market value of the endowment funds are allocated from the earnings for expenditure. In fiscal year 2008, the Foundation allocated 5% of that average.

Investments are comprised of the following amounts at June 30, 2008:

Cost

Fair Value

Cash held by investment organization Government and Agency Securities Corporate Bonds Equity Securities M utual Funds Venture Capital Real Estate Diversify ing Strategies
Total Investments

$47,287,914 18,657,446 29,808,809
349,557,663 58,430,310
222,785,550 47,451,789
317,668,284 $1,091,647,765

$47,287,914 18,802,404 27,639,374
472,381,398 59,020,515
298,147,904 50,417,484
360,986,686 $1,334,683,679

Capital Assets for Component Units:

Georgia Tech Foundation, Inc. holds the following Capital Assets at June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements M achinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation Total Capital Assets being Depreciated, Net
Capital Assets, Net

$2,553,000 2,553,000
38,051,000 7,530,000
45,581,000 10,466,509 35,114,491 $37,667,491

Long-term Liabilities for Component Units:
Changes in long-term liabilities for Georgia Tech Foundation, Inc. for the fiscal year ended June 30, 2008 are shown below:

Georgia Institute of Technology Annual Financial Report FY 2008 43

Beginning Balance June 30, 2007

Compensated Absences Liabilities under split interest agreement Notes and Loans Payable Revenue/Mortgage Bonds Payable Other Long Term Liabilities

$245,178 10,474,837 63,725,993 211,935,000
0

Total Long Term Liabilities

$286,381,008

Additions

Reductions

$197,272 6,391,975 52,202,000
10,939,238

$178,377 1,818,252 54,391,119 4,540,376

$69,730,485

$60,928,124

Ending Balance June 30, 2008
$264,073 15,048,560 61,536,874 207,394,624 10,939,238
$295,183,369

Amounts due within
One Year
$264,073 1,953,062 61,536,874 4,825,000
$68,579,009

Notes and Loans Payable: The Foundation has two $30 million revolving lines of credit. At June 30, 2008, $45.955 million was the total aggregate outstanding on the lines of credit. Interest is calculated using the 30-day LIBOR rate plus 0.25%, which was 2.73% at June 30, 2008. Both lines of credit expire on June 30, 2009. The Foundation expects to renew both lines of credit upon expiration.

The Foundation also has a $20 million line of credit for the purpose of funding the construction of the Nanotechnology Research Center Building on the Institute's campus. As of June 30, 2008, $15.582 million was outstanding on the line of credit. Interest is calculated using the 30day LIBOR rate plus 0.25%, which was 2.73% at June 30, 2008. The line of credit expires on June 30, 2009.

The Foundation also has available one other line of credit in the amount of $20 million. As of June 30, 2008, no amounts have been drawn on this credit facility. This line of credit expires on June 30, 2009.

Annual estimated debt service requirements to maturity for Notes and Loans Payable are as follows:

Year Ending June 30: Year

2009

1

Princip al

Notes and Loans Payable Interest

$61,536,874

$1,680,000

Total $63,216,874

Revenue Bonds Payable: Series 2001 Bond Issuance During May 2001, the Foundation borrowed $44.98 million in Series 2001A Bonds. These bonds were issued to provide funds to finance the costs of construction of the CRC, a facility that has been constructed on the Institute's campus. These bonds are general unsecured obligations of the Foundation. The interest rates on the outstanding bond principal range from 4.30% to 5.75% until maturity in November 2030. The outstanding principal on the bonds was $40.845 million at June 30, 2008.

Georgia Institute of Technology Annual Financial Report FY 2008 44

Series 2002 Bond Issuance During January 2002, the Foundation borrowed $111.09 million in Series 2002A (tax exempt) Bonds and $73.19 million Series 2002B (taxable) Bonds. These bonds were issued to provide funds to finance the costs of the acquisition, construction and installation of an addition to the Institute's campus known as Technology Square. The Foundation leased the hotel and conference center portion of Technology Square to a third party in July, 2003. The other components of Technology Square were leased to the Board of Regents, on behalf of the Institute, under a capital lease effective July, 2004. The bonds are general unsecured obligations of the Foundation. The interest rates on the outstanding bond principal range from 4.0% to 6.60% through maturity in November 2031. The outstanding principal on the bonds was $168.04 million at June 30, 2008.

Annual debt service requirements to maturity for Georgia Tech Foundation's revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033
Bond Discount, net

Year 1 2 3 4 5
6-10 11-15 16-20 21-25

Princip al
$4,825,000 5,060,000 5,310,000 5,600,000 5,915,000
35,170,000 45,085,000 51,900,000 50,020,000 208,885,000 (1,490,376) $207,394,624

Bonds Payable Interest
$11,437,491 11,203,637 10,945,586 10,653,001 10,339,689 46,097,954 34,575,148 21,345,317 5,509,682
162,107,505
$162,107,505

Total
$16,262,491 16,263,637 16,255,586 16,253,001 16,254,689 81,267,954 79,660,148 73,245,317 55,529,682
370,992,505 (1,490,376)
$369,502,129

Georgia Tech Athletic Association Georgia Tech Athletic Association (the Athletic Association) is a legally separate, tax-exempt component unit of the Georgia Institute of Technology (Institute). The Athletic Association administers the Institute's intercollegiate athletics program, including fund-raising to support scholarships. The 14 member association board of trustees is appointed predominantly by the President of the Georgia Institute of Technology, and consists of faculty, alumni, students, and friends of the Institute. Although the Institute does not control the timing or amount of receipts and disbursements from the Athletic Association, all of the resources are restricted to support the intercollegiate athletic program for Georgia Tech. Because these resources are used for the benefit of the Institute, the Athletic Association is considered a component unit of the Institute and is discretely presented in the Institute's financial statements.
The Athletic Association is a private nonprofit organization that reports in accordance with the accounting principles generally accepted in the United States as prescribed by the Governmental Accounting Standards Board (GASB). The financial statements are prepared in accordance with Statements of Governmental Accounting Standards (SGAS) No. 35, Basic Financial Statements-
Georgia Institute of Technology Annual Financial Report FY 2008 45

and Management's Discussion and Analysis for Public Colleges and Universities, as amended by SGAS No. 37, Basic Financial Statements-and Management's Discussion and Analysis-State and Local Governments: Omnibus-an Amendment of GASB Statements No. 21 and No. 34, and SGAS No. 38, Certain Financial Statement Note Disclosures. The Athletic Association's fiscal year is July 1 through June 30. During the year ended June 30, 2008, the Athletic Association distributed approximately $12.4 million to the Institute for athletic scholarship support and other payments that were either expense reimbursements or support for Institute programs. Complete financial statements for the Athletic Association can be obtained from the Georgia Tech Athletic Association, Attention: Mollie Simmons Mayfield, Assistant Director of Athletics, 150 Bobby Dodd Way, NW, Atlanta, GA 30332-0455. Deposits and Investments for Component Units: Deposits The Athletic Association does not have a policy that addresses custodial credit risk. As of June 30, 2008, $6,135,596 of the Athletic Association's bank balance of $6,235,596 was uncollateralized and exposed to custodial credit risk. Investments The Athletic Association's investments are held and reported by Georgia Tech Foundation, Inc. and are represented by an $80,058,950 Due from Component Unit balance on the Statement of Net Assets. Capital Assets for Component Units: Georgia Tech Athletic Association had the following Capital Asset activity for the year ended June 30, 2008:
Georgia Institute of Technology Annual Financial Report FY 2008 46

Capital Assets, Not Being Depreciated: Land (and other assets) Construction Work-in-Progress
Total Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equip ment Total Assets Being Dep reciated
Less: Accumulated Depreciation Buildings Facilities and Other improvements Equip ment Total Accumulated Depreciation
Total Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning Balances 7/1/2007
$49,946 208,675 258,621
126,095,186 453,078
5,708,799 132,257,063
30,598,005 347,594
3,085,137 34,030,736
98,226,327
$98,484,948

Additions $0 0

Reductions
$42,946 208,675 251,621

Ending Balance 6/30/2008
$7,000 0
7,000

1,272,979 542,928 188,466
2,004,373

127,368,165

996,006

5,897,265

0

134,261,436

4,044,705 83,705 604,320
4,732,730
(2,728,357)
($2,728,357)

0 0 $251,621

34,642,710 431,299
3,689,457 38,763,466
95,497,970
$95,504,970

Long-term Liabilities for Component Units:

Changes in long-term liabilities for the Athletic Association for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Compensated Absences Notes and Loans Payable Revenue/Mortgage Bonds Payable Other Long Term Liabilities
Total Long Term Liabilities

$1,044,814 963,311
106,018,678 0

$0 3,495,229

$108,026,803 $3,495,229

$1,044,814 27,555
2,037,829
$3,110,198

$0 935,756 103,980,849 3,495,229
$108,411,834

$0 27,978 2,025,000 1,080,357
$3,133,335

Notes and Loans Payable: Notes Payable at June 30, 2008 represents the Athletic Association's obligation to Georgia Tech Foundation, Inc. with respect to the William C. Wardlaw Center. The effective interest rate at June 30, 2008 is 4.92%.

Georgia Institute of Technology Annual Financial Report FY 2008 47

Annual debt service requirements to maturity for the Athletic Association's note payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028

1 2 3 4 5 6-10 11-15 16-20

Notes and Loans Payable

Princip al

Interest

Total

$27,978 29,476 30,975 32,474 33,973
198,343 255,297 327,240 $935,756

$46,376 44,998 43,510 41,917 40,249
173,091 116,455
43,516 $550,112

$74,354 74,474 74,485 74,391 74,222
371,434 371,752 370,756 $1,485,868

Revenue Bonds Payable: In December, 2001, the Development Authority of Fulton County issued the Georgia Tech Athletic Association Revenue Bonds, Series 2001 ("Series 2001 Bonds") with a par value of $112,080,000 to finance the construction of a new baseball stadium, demolish a portion of the Georgia Tech Football stadium, the construction of certain improvements thereto, other miscellaneous capital improvements, and to refinance the outstanding principal on the Series 1995 Bonds and other borrowings. The interest rates on the bonds range from 4% to 5.5% and the bonds mature in October, 2032.
On March 16, 2004, the Athletic Association entered into a master swap agreement with UBS AG, Stamford Branch ("UBS"), an investment bank, and simultaneously sold UBS, an Interest Rate Swaption ("swaption"). The swaption represents an option to enter into an interest rate swap. The swaption premium generated by this contract was an upfront payment to the Athletic Association of $2,367,000. In exchange for the swaption premium, UBS gains the right (but not the obligation) to enter into a specified swap agreement with the Athletic Association beginning on April 1, 2012. If the swaption is exercised, the Athletic Association and UBS will swap interest rate payments. The Athletic Association will pay interest to UBS based on the stated rates in the swap agreement. UBS would then pay the Athletic Association a floating rate based on the Bond Market Association Municipal Swap Index plus 21 basis points (0.21%), which approximates the expected interest cost on the variable rate refunding bonds. At June 30, 2008, the swaption had a fair value (representing a liability) of $8,442,390, as calculated by UBS. The swaption premium is recorded as a component of bonds payable in the statement of net assets and is being amortized on a straight-line basis over the remaining life of the bonds as a component of interest expense in the statement of revenues, expenses, and changes in net assets.
Annual debt service requirements to maturity for the Athletic Association's revenue bonds payable are as follows:

Georgia Institute of Technology Annual Financial Report FY 2008 48

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033

1 2 3 4 5 6-10 11-15 16-20 21-25

Bond Discount/Swaption Premium

Princip al
$2,025,000 2,120,000 2,210,000 2,315,000 2,445,000
14,445,000 18,775,000 24,240,000 34,380,000 102,955,000
1,025,849 $103,980,849

Bonds Payable Interest
$5,233,586 5,137,911 5,045,346 4,939,956 4,814,844
21,839,294 17,503,303 12,042,725
4,639,150 81,196,115
$81,196,115

Total
$7,258,586 7,257,911 7,255,346 7,254,956 7,259,844
36,284,294 36,278,303 36,282,725 39,019,150 184,151,115
1,025,849 $185,176,964

Georgia Tech Research Corporation Georgia Tech Research Corporation and its subsidiary Georgia Tech Applied Research Corporation (referred to in the singular as GTRC in this document), are legally separate, taxexempt component units of the Georgia Institute of Technology (Institute). GTRC functions as the prime contractor for most sponsored research conducted at Georgia Tech and subcontracts with the Institute for faculty and staff services. GTRC's 12-member board of trustees is selfperpetuating and consists of senior Institute administrators, alumni, and supporters of Georgia Tech. GTRC's income and resources are restricted to support research mission objectives of the Institute. Because the resources held by GTRC are restricted for use in support of the Institute, GTRC is considered a component unit of Georgia Tech and is discretely presented in the Institute's financial statements.
The Georgia Tech Research Corporation is a private nonprofit organization that reports under GASB standards, in accordance with Statements of Governmental Accounting Standards ("SGAS") No. 35, Basic Financial Statements-and Management's Discussion and Analysis-for Public Colleges and Universities, as amended by SGAS No. 37, Basic Financial Statements-and Management's Discussion and Analysis-State and Local Governments: Omnibus-an Amendment of GASB Statements No. 21 and No. 34, and SGAS No. 38, Certain Financial Statement Note Disclosures. The financial statement presentation required by these statements provide a comprehensive, entity-wide perspective of GTRC's assets, liabilities, net assets, revenues, expenses, and changes in net assets. The Georgia Tech Research Corporation's fiscal year is July 1 through June 30.
During fiscal year 2008, GTRC distributed approximately $377.6 million to the Institute for restricted and unrestricted purposes. Complete financial statements for GTRC can be requested at the following address: Georgia Tech Research Corporation, Director of Accounting and Reports, 505 Tenth Street, Atlanta, GA 30332-0415.

Georgia Institute of Technology Annual Financial Report FY 2008 49

Deposits and Investments for Component Units:

Deposits At June 30, 2008, the carrying value of deposits was $10,057,833 and the bank balance was $10,424,177. Of Georgia Tech Research Corporation's deposits, $10,224,177 were uninsured and collateralized with securities held by the Office of Treasury and Fiscal Services, but not in GTRC's name.

Investments Georgia Tech Research Corporation's investments at June 30, 2008 were as follows:

Fair Value

Commercial Paper Equity Securities

$47,600,000 331,674

Total Investments

$47,931,674

Interest Rate Risk Interest rate risk is the risk that changes of interest rates of debt investments will adversely affect the fair value of an investment. GTRC does not have a formal policy for managing interest rate risk.
The investment in Commercial Paper matures in less than one year.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, GTRC will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. GTRC does not have a formal policy for managing custodial credit risk.
At June 30, 2008, $47,600,000 of GTRC's applicable investments were held by the investment's counterparty in GTRC's name.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. GTRC does not have a formal policy for managing credit quality risk.
The Commercial Paper investment is rated A-1+ by Standard and Poor's.
Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an entity's investment in a single issuer. GTRC does not have a formal policy for managing concentration of credit risk.

Georgia Institute of Technology Annual Financial Report FY 2008 50

Of GTRC's total investments of $47,931,674, $47,600,000, or 99%, are invested in Federal Home Loan Bank discount notes.

Capital Assets for Component Units:

Georgia Tech Research Corporation had the following Capital Asset activity for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Capitalized Collections Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated

Beginning B al an ce s 7/1/2007
$240,735 0
240,735

Addi ti o n s
$0 32,098 32,098

Re du cti on s $0 0

En di n g B al an ce 6/30/2008
$240,735 32,098
272,833

Capital Assets, Being Depreciated: Building and Building Improvements Equipment T otal Assets Being Depreciated

21,133 3,498,102 3,519,235

74,100 270,957 345,057

206,762 206,762

95,233 3,562,297 3,657,530

Less: Accumulated Depreciation Buildings Equipment T otal Accumulated Depreciation

3,056 2,086,929 2,089,985

3,348 408,396 411,744

189,697 189,697

6,404 2,305,628 2,312,032

T otal Capital Assets, Being Depreciated, Net

1,429,250

(66,687)

17,065

1,345,498

Capital Assets, net

$1,669,985

($34,589)

$17,065

$1,618,331

Georgia Advanced Technology Ventures, Inc. Georgia Advanced Technology Ventures, Inc. (GATV) is a Georgia non-profit organization formed to support Georgia Institute of Technology's technology transfer and economic development mission and its Advanced Technology Development Center (ATDC) incubator program. GATV provides capital and operating support for technology transfer and economic activities including ATDC incubator facilities and services to ATDC affiliated companies.
GATV is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. Georgia Advanced Technology Ventures fiscal year is July 1 through June 30.
During the year ended June 30, 2008, Georgia Advanced Technology Ventures, Inc. distributed $295,569 to the Institute for operating expenses. Complete financial statements for GATV can

Georgia Institute of Technology Annual Financial Report FY 2008 51

be requested at the following address: Georgia Advanced Technology Ventures, Inc., Treasurer's Office - Attention: Joel Hercik, Lyman Hall, Room 315, Atlanta, GA 30332-0257.

Investments for Component Units:

Georgia Advanced Technology Ventures, Inc. holds investments in the amount of $957,061. These funds are invested in Georgia Venture Partners, LLC.

Capital Assets for Component Units:

Georgia Advanced Technology Ventures, Inc. holds the following Capital Assets as of June 30, 2008:

Cap ital Assets not being Dep reciated: Land and other Assets
Total Cap ital Assets not being Dep reciated
Cap ital Assets being Dep reciated: Buildings and Improvements Infrastructure M achinery and Equipment
Total Cap ital Assets being Dep reciated
Less Total Accumulated Depreciation
Total Cap ital Assets being Dep reciated, Net
Capital Assets, Net

June 30, 2008
$11,428,530 11,428,530
107,659,415 3,411,274 1,047,396
112,118,085 9,269,018
102,849,067 $114,277,597

Long-term Liabilities for Component Units:

Changes in long-term liabilities for the GATV for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within One Year

Capital Lease Obligations Notes and Loans Payable

$85,145,694 8,047,352

$6,371,037 3,883,669

$1,145,044 1,535,882

$90,371,687 10,395,139

$0 1,678,898

Total Long Term Liabilities

$93,193,046

$10,254,706

$2,680,926

$100,766,826

$1,678,898

Capital Lease Obligations: Georgia Advanced Technology Ventures, Inc. has three long-term capital leases. The leases are for Centergy One Building, Floors 1-3 with an interest rate of 6.25%, Centergy One Building, Floors 4-5 with an interest rate of 7.75%, and Technology Enterprise Park with an interest rate of
Georgia Institute of Technology Annual Financial Report FY 2008 52

8.224%. The balances for these leases total $90,371,687 at June 30, 2008, which includes $1,593,351 in capitalized interest payable.

Future minimum lease payments under the capital leases, and the net present value of future minimum lease payments are as follows at June 30, 2008:

Year ending June 30:

2009

1

2010

2

2011

3

2012

4

2013

5

2014 through 2018

6-10

2019 through 2023

11-15

2024 through 2028

16-20

2029 through 2033

21-25

2034 through 2038

26-30

Total minimum lease payments

Less: Interest

Principal Outstanding

Capital Leases
$6,811,817 6,958,532 7,103,045 7,251,074 7,398,582
38,467,746 38,153,078 42,220,348 46,924,028 19,254,482 220,542,732 130,171,045 $90,371,687

Notes and Loans Payable: Georgia Advanced Technology Ventures, Inc. has four notes payable and a line of credit arrangement with The University Financing Foundation, Inc. (TUFF). Three of the notes payable are secured by Technology Enterprise Park land and the fourth is unsecured. Interest rates on the notes payable range from 6.00% to 7.53%. The notes payable balances at June 30, 2008 total $8,795,139, which includes $91,795 in capitalized interest payable. The credit arrangement with TUFF includes advances at June 30, 2008 of $1,600,000, out of a total credit limit of $1,900,000. Principal is payable within 30 days of demand by TUFF. Interest on the credit line is prime plus 2%.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Princip al

Notes and Loans Payable Interest

$1,678,898 229,092 270,110 299,086 330,531
2,009,506 1,299,453 2,001,348 2,053,070
224,045 $10,395,139

$434,381 440,374 446,538 452,894 459,465
2,416,843 2,724,484 3,084,971 2,481,836
193,469 $13,135,255

Total
$2,113,279 669,466 716,648 751,980 789,996
4,426,349 4,023,937 5,086,319 4,534,906
417,514 $23,530,394

Georgia Institute of Technology Annual Financial Report FY 2008 53

Georgia Tech Alumni Association Georgia Tech Alumni Association (Alumni Association) is a legally separate, tax-exempt component unit of the Georgia Institute of Technology (Institute). The Alumni Association acts primarily as a point of contact with the Institute's alumni, prospective students, and friends for outreach and development. The forty-three member Alumni Association board of trustees is self-perpetuating and consists of alumni and friends of the Institute. Although the Institute does not control the timing or amount of receipts from the Alumni Association, the majority of resources or income thereon that the Alumni Association holds and invests is restricted to support the Alumni Association's mission of serving and promoting the alumni of the Institute. Because resources held by the Alumni Association are used by, or for the benefit of, the Institute, the Alumni Association is considered a component unit of the Institute and is discretely presented in the Institute's financial statements.

The Alumni Association is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Alumni Association's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Alumni Association distributed $735,099 to the Institute primarily for employee salary and insurance costs. Complete financial statements for the Alumni Association can be obtained from the Georgia Tech Alumni Association, Attention: Controller, 190 North Avenue, Atlanta, GA 30313.

Capital Assets for Component Units:

Georgia Tech Alumni Association holds the following Capital Assets as of June 30, 2008:

Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
T otal Capital Assets being Depreciated

June 30, 2008
$718,980 788,253
1,507,233

Less T otal Accumulated Depreciation

1,058,612

T otal Capital Assets being Depreciated, Net

448,621

Capital Assets, Net

$448,621

Georgia Tech Facilities, Inc. Georgia Tech Facilities, Inc. (Facilities) is a legally separate, tax-exempt component unit of the Georgia Institute of Technology (Institute). Facilities constructs research and auxiliary buildings and other structures for use by the Institute and then leases the completed buildings/structures to the Institute. The eight-member Facilities board is appointed by the President of the Georgia
Georgia Institute of Technology Annual Financial Report FY 2008 54

Institute of Technology and consists of alumni and friends of Georgia Tech. Although the Institute does not control the timing or amount of receipts and disbursements for Facilities, its resources and income are restricted to support the construction activities of the Institute. Because these restricted resources held by Facilities can only be used by, or for the benefit of, the Institute, Facilities is considered a component unit of Georgia Tech and is discretely presented in the Institute's financial statements.

Georgia Tech Facilities, Inc. is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. Facilities fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $6,227,000 to the University for both restricted and unrestricted purposes. Complete financial statements for Facilities can be obtained from the following address: Georgia Tech Facilities, Inc., Treasurer's Office, Lyman Hall, Room 315, Atlanta, GA 30332-0257, Attention: Joel Hercik.

Investments for Component Units:

Georgia Tech Facilities, Inc.'s investments at June 30, 2008 were as follows:

Government and Agency Securities Corporate Bonds

Cost
$4,500,000 2,500,000

Fair Value
$4,346,880 2,445,120

Total Investments

$7,000,000

$6,792,000

Capital Assets for Component Units:

Georgia Tech Facilities, Inc. holds the following Capital Assets as of June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$598,000 1,419,000 2,017,000
1,200,000 1,200,000
600,000 600,000 $2,617,000

Georgia Institute of Technology Annual Financial Report FY 2008 55

Long-term Liabilities for Component Units:

Changes in long-term liabilities for Facilities for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Capital Lease Obligations Revenue/Mortgage Bonds Payable

$9,492,000 210,125,000

$0 199,990,000

$2,098,000 115,308,000

$7,394,000 294,807,000

$2,179,000 5,723,000

Total Long Term Liabilities

$219,617,000 $199,990,000 $117,406,000

$302,201,000

$7,902,000

Capital Lease Obligations: Effective April 15, 2007, Facilities entered into an installment sale agreement with the Institute for telecommunications equipment and installation. The agreement commences on the date the equipment was accepted and is renewable at the option of the Institute annually on July 1 for five successive one-year terms. The total extended term of the agreement will be approximately 63 months, to July 15, 2011.

To finance the equipment, Georgia Tech Facilities, Inc entered into a Master Lease and Sublease Agreement with SunTrust Leasing Corporation (as Lessor) and the Development Authority of Fulton County (as lessee) in the amount of $9,734,000. The outstanding principal balance of the obligation as of June 30, 2008 is $7,394,000.

Annual debt service requirements to maturity for capital lease obligations are as follows:

Year ending June 30:

2009

1

2010

2

2011

3

2012

4

Total minimum lease payments

Less: Interest

Principal Outstanding

Capital Leases
$2,430,000 2,430,000 2,430,000 607,000 7,897,000 503,000
$7,394,000

Revenue Bonds Payable: Georgia Tech Facilities, Inc. has nine bond issues outstanding with balances totaling $285,405,000. The proceeds from the bond issues were used to acquire or construct (for the benefit of Georgia Institute of Technology) the Habersham Building, which houses the Ivan Allen College, Bioengineering and Biosciences Building, Family Housing Complex, Klaus Parking Deck, the Molecular Science and Engineering Building, the Electrical Substation, and the North Avenue Apartments. Interest rates on the bonds range from 2.625% to 5.25%. Facilities also has some variable rate demand bonds. For 2008A and 2008C Bonds, Facilities has
Georgia Institute of Technology Annual Financial Report FY 2008 56

interest rate swap agreements. Facilities retains an independent entity to provide periodic valuations of the interest rate swaps. At June 30, 2008, the value of the swaps total is ($2,422,000) and is reported as an Other Liability (current) on the Statement of Net Assets.

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Bond/Swaption Premiums

Princip al

Bonds Payable Interest

$5,723,000 6,880,000 7,217,000 7,536,000 7,880,000
45,174,000 58,568,000 69,295,000 54,913,040 22,218,960 285,405,000
9,402,000 $294,807,000

$12,217,660 12,484,332 12,218,336 11,921,126 11,587,541 52,349,919 40,808,158 26,329,350 11,541,969 2,154,425
193,612,816
$193,612,816

Total
$17,940,660 19,364,332 19,435,336 19,457,126 19,467,541 97,523,919 99,376,158 95,624,350 66,455,009 24,373,385
479,017,816 9,402,000
$488,419,816

Georgia Institute of Technology Annual Financial Report FY 2008 57

THE UNIVERSITY OF GEORGIA
Financial Report
For the Year Ended June 30, 2008

The University of Georgia Athens, Georgia

Michael F. Adams
President

Tim Burgess
Senior Vice President for Fiscal Affairs

THE UNIVERSITY OF GEORGIA ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 8 Statement of Revenues, Expenses and Changes in Net Assets..................................................... 12 Statement of Cash Flows .............................................................................................................. 16 Note 1. Summary of Significant Accounting Policies ................................................................ 18 Note 2. Deposits and Investments............................................................................................... 23 Note 3. Accounts Receivable...................................................................................................... 27 Note 4. Inventories...................................................................................................................... 27 Note 5. Notes/Loans Receivable................................................................................................. 27 Note 6. Capital Assets................................................................................................................. 28 Note 7. Deferred Revenue........................................................................................................... 29 Note 8. Long-Term Liabilities .................................................................................................... 29 Note 9. Significant Commitments............................................................................................... 29 Note 10. Lease Obligations......................................................................................................... 29 Note 11. Retirement Plans .......................................................................................................... 31 Note 12. Risk Management......................................................................................................... 35 Note 13. Contingencies............................................................................................................... 35 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 36 Note 15. Natural Classifications with Functional Classifications .............................................. 37 Note 16. Component Units ......................................................................................................... 38

THE UNIVERSITY OF GEORGIA
Management's Discussion and Analysis

Introduction
The University of Georgia is one of the 35 institutions of higher education of the University System of Georgia. The University of Georgia was incorporated by an act of the General Assembly on January 27, 1785. Georgia became the first state to charter a state-supported university.
The University of Georgia, a land-grant and sea-grant university with state-wide commitments and responsibilities, is the state's flagship institution of higher education. It is also the state's oldest, most comprehensive, and most diversified institution of higher education. Its motto, "to teach, to serve, and to inquire into the nature of things," reflects the University's integral and unique role in the conservation and enhancement of the state's and nation's intellectual, cultural, and environmental heritage. As a comprehensive land-grant and sea-grant institution, the University of Georgia offers baccalaureate, master's, doctoral and professional degrees in the arts, humanities, social sciences, biological sciences, physical sciences, agricultural and environmental sciences, business, environmental design, family and consumer sciences, forest resources, journalism and mass communication, education, law, pharmacy, social work, and veterinary medicine. A comparison of Faculty and Student numbers follow:

Students Students Faculty (Headcount) (FTE)

FY2008 FY2007 FY2006

1,822 1,848 1,608

33,831 33,959 33,660

31,818 31,987 31,492

Overview of the Financial Statements and Financial Analysis

The University of Georgia is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The

University of Georgia Annual Financial Report FY 2008 1

purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of the University of Georgia. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$284,248,689 1,160,318,033
63,023,779 1,507,590,501

June 30, 2007
$244,942,760 1,108,970,295
73,212,196 1,427,125,251

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

120,406,694 167,155,107 287,561,801

122,049,947 178,728,038 300,777,985

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Capital P rojects Unrest rict ed Total Ne t As s e ts

1,009,701,095 50,137,516 67,356,275 756,840 92,076,974
$1,220,028,700

947,231,389 47,281,351 63,543,343 863,501 67,427,682
$1,126,347,266

The total assets of the institution increased by $80,465,250. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $51,347,738 in the category of Capital Assets, net. The balance of the increase is due to $35,336,327 higher balances in cash and cash equivalents.

University of Georgia Annual Financial Report FY 2008 2

The combination of the increase in total assets of $80,465,250 and the decrease in total liabilities of ($13,216,184) yields an increase in total net assets of $93,681,434. The increase in total net assets is primarily in the category of Invested in Capital Assets, net of debt, in the amount of $62,469,706.

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$600,026,555 1,110,921,074 (510,894,519)
525,466,438
14,571,919 79,109,515 93,681,434 1,126,347,266
0 1,126,347,266 $1,220,028,700

$571,632,022 1,044,982,474 (473,350,452)
494,708,957
21,358,505 42,170,577 63,529,082 1,062,818,184
0 1,062,818,184 $1,126,347,266

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with a $93,681,434 increase to net assets. Some highlights of the information presented on the Statement of Revenues, Expenses, and Changes in Net Assets are as follows:

University of Georgia Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Federal Appropriat ions Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$203,244,615 15,395,942
201,514,041 47,404,503
129,804,359 2,663,095
600,026,555
471,177,285 17,346,248 34,870,520 6,571,468 7,798,838
537,764,359
43,671,987 35,437,528 79,109,515 $1,216,900,429

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$230,999,493 286,889,193 153,546,888 104,828,251 32,395,645 67,946,589 98,936,420 14,398,059 120,980,536
1,110,921,074
12,297,921 $1,123,218,995

June 30, 2007
$188,304,864 12,341,315
201,050,423 43,873,579
123,636,927 2,424,914
571,632,022
437,026,757 16,769,344 35,886,836 13,286,246 2,552,756
505,521,939
40,110,232 2,060,345
42,170,577 $1,119,324,538
June 30, 2007
$216,315,911 275,723,066 144,818,743 103,393,106 30,497,714 57,950,436 91,393,260 11,503,764 113,386,474
1,044,982,474
10,812,982 $1,055,795,456

University of Georgia Annual Financial Report FY 2008 4

Operating revenues increased by $28,394,533 in fiscal 2008, which included $14,939,751 net increase in tuition and fees, $3,530,924 in sales and services, and $6,167,432 in auxiliary revenues. While Federal grants and contracts revenues have decreased, the University experienced a slight increase overall in contracts and grants revenue due to a 16.6% increase in state grants and contracts and a 5.4% increase in private and other grants and contracts revenues.
As a result of modest fee increases and additional participation in services provided by Auxiliary units, the Auxiliary revenue increased overall by $6,167,432 primarily as the result of a $1,351,403 increase in Residence Hall revenues, $925,600 increase in Food Services revenues, and $1,454,614 increase in Health Service revenues.
Nonoperating revenues increased by $32,242,420 for the year primarily due to an increase of $34,150,528 in State Appropriations resulting from salary increases provided by the Governor and State Legislature. Capital Gifts and Grants increased from fiscal year 2007 to fiscal year 2008 as a result of capital improvements and additions funded by Georgia State Financing and Investment Commission (GSFIC) and the University of Georgia Athletic Association, Inc. GSFIC project funding increased slightly and the UGA Athletic Association funded the Coliseum Practice Facility which was completed during fiscal 2008.
Total operating expenses increased overall by $65,938,600, which includes a $44,977,909 increase in employee compensation and benefits. Operating expense in the Instruction, Research, and Public Service categories increased by $34,577,854 with $17,089,227 of this increase representing the addition of faculty members and annual merit increases for faculty and staff.
Statement of Cash Flows
The final statement presented by the University of Georgia is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.
University of Georgia Annual Financial Report FY 2008 5

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($445,367,663) 524,904,812 (76,191,024) 24,878,440 28,224,565 185,192,492
$213,417,057

June 30, 2007
($396,922,373) 498,264,722 (90,257,246) 27,431,636 38,516,739 146,675,753
$185,192,492

Capital Assets
The University had a significant capital asset addition in fiscal year 2008 provided by the University of Georgia Athletic Association, Inc. The new Coliseum Practice Facility was completed and placed into service early in fiscal year 2008. This 120,000 square foot facility will provide substantial expansion of facilities for the men's and women's basketball teams and the women's gymnastics team. The Practice Facility will house separate training areas for each team including two full-length practice courts, coaches' offices, locker rooms, lounges, video assessment rooms and meeting rooms. The history of each sport is commemorated and integrated into the interior design with displays of trophies, archives, graphics and interactive kiosks.
During FY2008, the University of Georgia also had other significant capital projects that are under construction. The new Lamar Dodd School of Art facility, the Tate Student Center Expansion and integrated parking deck, a new facility for the College of Pharmacy, a new Student Learning Center in Griffin that will enable the expansion of undergraduate degree programs being delivered at that campus, a new dining facility at the Rock Eagle 4-H Center, and the University Health Center Expansion.
For additional information concerning Capital Assets, see Notes 1, 6, 8, 9 and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
The University of Georgia had Long-Term Debt and Liabilities of $193,267,749 of which $28,068,540 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, the University of Georgia has included the financial statements and notes for all required component units for FY2008. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
University of Georgia Annual Financial Report FY 2008 6

Economic Outlook
During fiscal year 2008, the University continued to use its resources wisely and emphasized energy and water conservation in terms of cost containment and environmental initiatives especially as the State of Georgia experienced drought conditions throughout the year. The University worked to balance the use of modest increases in operating revenues to provide additional support for the instruction, research, and public service missions, with the need to fund significant and oftentimes uncontrollable increases in energy and health care costs. In an effort to fiscally prepare for these needs, the University directed each of its academic and administrative units to set aside 1% of their operating budget during fiscal year 2008 budget development. Another component of the University's deliberate strategy to reduce expenditures throughout the institution was the March 2008 implementation of a hiring process that requires all faculty and state-funded staff positions to be approved by a senior vice president before the position can be posted. These actions provided the University with flexibility to address increasing energy and health care costs while also providing for increases in faculty lines and instructional support. These actions allowed the University to fund the instructional needs associated with increased access to education at the University campuses in Griffin, Georgia and the graduate center in Gwinnett County.
As fiscal year 2009 begins, the University is facing declines in State of Georgia revenues, budget reduction requirements, and rising energy and health care costs. In order to address the economic changes, the University directed each academic and administrative unit to reserve 2% of their budget during the development of the University's fiscal year 2009 budget and increased this to 6% of their current budget in August 2008. Along with continuing to control hiring for new and replacement positions through the approval process that was put in place in March 2008, all vehicle purchases now require approval at the senior vice president level and all out-ofstate travel requires approval by either a dean or a vice president. In addition, all University units have been directed to exercise great prudence in authorizing expenditures of a discretionary nature and to limit equipment procurement actions to only those items that are vital to the delivery of our core missions and services. As the 2009 fiscal year progresses, the University will take appropriate action to increase these reserves and to implement any additional expenditure control measures that are necessary to meet state mandated budget reductions and to protect the University's ability to provide core mission instruction, research, and public service activities.
Michael F. Adams, President The University of Georgia
University of Georgia Annual Financial Report FY 2008 7

Statement of Net Assets

UNIVERSITY OF GEORGIA STATEMENT OF NET ASSETS
June 30, 2008

Component Unit

University of Ge orgi a

University of Ge orgi a
Fou n dati on

ASSETS Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, net (note 3) Receivables - Federal Financial Assistance Receivables - Other Due From Component Units Net Investment in Capital Leases Pledges Receivable Contributions Receivable Due From Primary Government Inventories (note 4) Prepaid items Other Assets T otal Current Assets

$208,884,769
15,687,652 27,622,848 20,644,955
5,259,729 6,148,736 284,248,689

$1,406,499 39,664,777
2,988,077
7,206,817 78,417
51,344,587

Noncurrent Assets Noncurrent Cash Due from Component Units Due From Primary Government Investments (including Real Estate) Notes Receivable, net Net Investment in Capital Leases Contributions Receivable Pledges Receivable Capital Assets, net (note 6) Other Assets T otal Noncurrent Assets TO TAL ASSETS

4,532,288 1,649,017 45,444,641 11,397,833
1,160,318,033 1,223,341,812 1,507,590,501

566,387,353 57,115
12,970,206
13,999,293 1,688,239
595,102,206 646,446,793

Component Unit University of
Georgia Athletic Association, Inc.
$86,132,121
1,225,830 2,839,534
203,670 90,401,155
3,114,876
185,280,206 1,265,215
189,660,297 280,061,452

University of Georgia Annual Financial Report FY 2008 8

Statement of Net Assets, Continued

UNIVERSITYOF GEORGIA STATEMENT OF NET ASSETS
June 30, 2008

Component Unit

University of Ge orgi a

University of Ge orgi a
Fou n dati on

LIABILITIES Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deposit s Deferred Revenue (note 7) Other Liabilities Deposits Held for Other Organizations Due to Primary Government Lease Purchase Obligations (current portion) Compensated Absences (current portion) Revenue/Mortgage Bonds Payable (current) Due to Component Units Notes and Loans Payable (current portion) T otal Current Liabilities Noncurrent Liabilities Due to Primary Government Lease Purchase Obligations (noncurrent) Deferred Revenue (noncurrent) Compensated Absences (noncurrent) Revenue/Mortgage Bonds Payable (noncurrent) Liabilities under Split-Interest Agreements (noncurrent) Other Long-T erm Liabilities Due to Component Units Notes and Loans Payable (noncurrent) T otal Noncurrent Liabilities TO TAL LIABILITIES
NET ASSETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Capital Projects Unrest rict ed TO TAL NET ASSETS

15,572,426 6,112,476 4,983,452 1,371,273
48,587,711 820,274
14,335,848
2,255,740 25,812,800
554,694
120,406,694
148,361,198
16,838,011
1,955,898
167,155,107 287,561,801
1,009,701,095
50,137,516 67,356,275
756,840 92,076,974 $1,220,028,700

836,070
686,085 785,774 847,156
2,839,534 126,617
6,121,236
12,341,775
6,996,749 19,338,524 25,459,760
6,875,927 294,075,724 293,560,214
26,475,168 $620,987,033

Component Unit University of
Georgia Athletic Association, Inc.
6,043,391
18,513,850
1,946,359
2,140,000 500,000
29,143,600 1,649,017
93,330,000 1,265,215 470,588
96,714,820 125,858,420
90,922,049
63,280,983 $154,203,032

University of Georgia Annual Financial Report FY 2008 9

Statement of Net Assets, Continued

UNIVERS ITY OF GEORGIA S TATEMENT OF NET AS S ETS
June 30, 2008

C om pone nt Unit

Arch Fou n dati on for th e Un i ve rsi ty
of G e orgi a, In c.

AS S ETS C urrent Assets Cash and Cash Equivalent s Short -t erm Invest m ent s Account s Receivable, net (not e 3) Receivables - Federal Financial Assist ance Receivables - Ot her Due From Com ponent Unit s Net Invest ment in Capit al Leases P ledges Receivable Cont ribut ions Receivable Due From P rim ary Governm ent Invent ories (not e 4) P repaid it ems Ot her Asset s T ot al Current Asset s

$25,694,119
1,428,776 500,000
11,357,558
38,980,453

Noncurre nt Asse ts Noncurrent Cash Due from Com ponent Unit s Due From P rim ary Governm ent Invest m ent s (including Real Est at e) Not es Receivable, net Net Invest ment in Capit al Leases Cont ribut ions Receivable P ledges Receivable Capit al Asset s, net (not e 6) Ot her Asset s T ot al Noncurrent Asset s TO TAL AS S ETS

470,588 30,296,001
11,057,819
41,824,408 80,804,861

C om pone nt Unit Un i ve rsi ty of
Ge orgia Rese arch Fou n dati on , In c.
$22,371,760
19,811,476 2,239,791
554,694 518,162 12,377,600 57,873,483
46,127,862 1,955,898
52,301,523 154,377,287
52,636,173 5,995,912
313,394,655 371,268,138

University of Georgia Annual Financial Report FY 2008 10

Statement of Net Assets, Continued

UNIVERS ITY OF GEORGIA S TATEMENT OF NET AS S ETS
June 30, 2008

C om pone nt Unit

Arch Fou n dati on for th e Un i ve rsi ty
of G e orgi a, In c.

LIAB ILITIES C u rre n t Liabilitie s Account s P ayable Salaries P ayable Cont ract s P ayable Deposit s Deferred Revenue (not e 7) Ot her Liabilit ies Deposit s Held for Ot her Organizat ions Due t o P rim ary Governm ent Lease P urchase Obligat ions (current port ion) Com pensat ed Absences (current port ion) Revenue/M ort gage Bonds P ayable (current ) Due t o Com ponent Unit s Not es and Loans P ayable (current port ion) T ot al Current Liabilit ies Non cu rre n t Liabilitie s Due t o P rim ary Governm ent Lease P urchase Obligat ions (noncurrent ) Deferred Revenue (noncurrent ) Com pensat ed Absences (noncurrent ) Revenue/M ort gage Bonds P ayable (noncurrent ) Liabilit ies under Split -Int erest Agreem ent s (noncurrent ) Ot her Long-T erm Liabilit ies Due t o Com ponent Unit s Not es and Loans P ayable (noncurrent ) T ot al Noncurrent Liabilit ies TO TAL LIAB ILITIES
NET AS S ETS Invest ed in Capit al Asset s, net of relat ed debt Rest rict ed for N o n e x p e n dable E x p e n da ble Capit al P rojects Unrest rict ed TO TAL NET AS S ETS

1,086,727 345,560 333,666
1,765,953
0 1,765,953
31,108,337 46,529,570
1,401,001 $79,038,908

C om pone nt Unit Un i ve rsi ty of
Ge orgia Rese arch Fou n dati on , In c.
18,138,668 5,049,038
12,305,725 5,209,442
17,517,774 28,264
3,595,000
61,843,911
1,699,635 224,582,541
18,226,887 244,509,063 306,352,974
8,351,397
2,411,877 54,151,890 $64,915,164

University of Georgia Annual Financial Report FY 2008 11

Statement of Revenues, Expenses and Changes in Net Assets
UNIVERSITY OF GEORGIA STATEMENT of REVENUES, EXPENSES, and CHANGES in NET ASSETS
for the Year Ended June 30, 2008

REVENUES
Operating Revenues Student Tuition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Gifts and Contributions Endowment Income (per spending plan) Federal Appropriations Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues Total Operating Revenues
EXPENSES Operating Expenses
Salaries: Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Payments to other Component Units Payments to or on behalf of University of Georgia
Total Operating Expenses Operating Income (loss)

University of Georgia

Component Unit
University of Georgia
Foundation

Component Unit
University of Georgia Athletic Association, Inc.

$280,659,875 (77,415,260)
15,395,942
96,468,803 38,720,573 66,324,665 47,404,503
318,102
37,625,434 4,076,785 33,680,822 14,579,695 17,414,540 18,479,602 3,947,481 2,344,993 600,026,555

$0 11,842,554
9,945,379
3,511,796 1,326,840
26,626,569

180,270,865 402,258,012 161,214,071
725,438 14,411,709 22,067,333 30,491,931 235,885,354 63,596,361
1,110,921,074 (510,894,519)

262,890 13,850 506,617
82,233 2,661,802
371,372 1,529,051 22,252,188 27,680,003 (1,053,434)

$0
81,059,333 81,059,333
6,111,168 256,995 610,910
6,378,721 13,822,929 5,570,426
1,784,216 29,766,110 64,301,475 16,757,858

University of Georgia Annual Financial Report FY 2008 12

Statement of Revenues, Expenses and Changes in Net Assets, Continued
UNIVERSITYOF GEORGIA STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

NONOPERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal State Other Gifts Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts State Other Special Item Transfer Additions to permanent endowments Total Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

University of Georgia

Component Unit
University of Georgia
Foundation

Component Unit
University of Georgia Athletic Association, Inc.

471,177,285
4,500 916,832 16,424,916 34,870,520 6,571,468 (12,297,921) 7,798,838 525,466,438 14,571,919
43,671,987 35,437,528
79,109,515 93,681,434
1,126,347,266 0
1,126,347,266 $1,220,028,700

(37,424,044) (1,144,009)
(389,132) (38,957,185) (40,010,619)
(6,638,835) 9,329,003 2,690,168 (37,320,451)
658,307,484 0
658,307,484 $620,987,033

124,777 1,518,393 (3,581,552)
(25,614) (1,963,996) 14,793,862
0 14,793,862
139,409,170 0
139,409,170 $154,203,032

University of Georgia Annual Financial Report FY 2008 13

Statement of Revenues, Expenses and Changes in Net Assets, Continued
UNIVERS ITY OF GEORGIA S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

R EV EN U ES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful account s) Less: Scholarship Allowances Gift s and Cont ribut ions Endowm ent Incom e (per spending plan) Federal Appropriat ions Grant s and Cont ract s Federal St at e Other Sales and Services Rents and Royalt ies Auxiliary Ent erprises Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefits Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion P ayments t o ot her Com ponent Unit s P aym ent s t o or on behalf of Universit y of Georgia
T ot al Operat ing Expenses Operat ing Incom e (loss)

C om pone nt Unit
Arch Fou n dati on for th e Un i ve rs i ty
of G e orgi a, In c.

C om pone nt Unit
Un i ve rs i ty of Georgia Research Fou n dati on , In c.

$0

$0

9,313,811 1,276,531

2,306,201

115,294,840 29,853
38,357,221

12,896,543

383,240 154,065,154

223,167 52,710

1,734,004
7,353,573 9,087,577 3,808,966

17,359,927 169,481
117,799,198 135,604,483
18,460,671

University of Georgia Annual Financial Report FY 2008 14

Statement of Revenues, Expenses and Changes in Net Assets, Continued
UNIVERS ITY OF GEORGIA S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

NONOPERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal State Other Gifts Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts State Other Special Item Transfer Additions to permanent endowments Total Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

C om pone nt Unit
Arch Fou n dati on for th e Un i ve rsi ty
of G e orgi a, In c.

C om pone nt Unit
Un i ve rs i ty of Georgia Research Fou n dati on , In c.

(1,516,223)
(1,516,223) 2,292,743
5,223,429 5,223,429 7,516,172 71,522,736
0 71,522,736 $79,038,908

2,167,253 (8,344,937) (3,357,891) (9,535,575) 8,925,096
6,638,835
6,638,835 15,563,931
37,576,329 11,774,904 49,351,233 $64,915,164

University of Georgia Annual Financial Report FY 2008 15

Statement of Cash Flows

UNIVERS ITY OF GEORGIA S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008

C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Federal Appropriat ions Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Ot her Nonoperat ing Receipts Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P roceeds from Sale of Capit al Asset s P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES P roceeds from Sales and Mat urit ies of Invest m ent s Int erest on Invest m ent s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$204,750,107 14,109,473
206,058,575 47,695,506
(443,293,545) (579,490,907)
(22,067,333) (2,356,114) 1,674,129
36,170,484 4,119,130
33,712,684 14,480,954 17,603,814 18,341,826
4,020,967 (897,413) (445,367,663)
471,177,285 (4,975,932) 52,216,768 6,486,691
524,904,812
45,066,339 530,786
(97,645,570) (11,844,658) (12,297,921) (76,191,024)
16,388,056 8,490,384
24,878,440 28,224,565 185,192,492 $213,417,057

University of Georgia Annual Financial Report FY 2008 16

Statement of Cash Flows, Continued
UNIVERS ITY OF GEORGIA S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed asset s acquired by incurring capit al lease obligat ions Change in fair value of invest ment s recognized as a component of int erest income Gift of capit al asset s reducing proceeds of capit al grant s and gift s

June 30, 2008
($510,894,519)
63,596,361 2,273,255 (536,716) (520,334) (453,382) (495,017) 1,195,930 (1,868,527) 2,335,286
($445,367,663)
$722,690 ($1,918,916) ($34,043,176)

University of Georgia Annual Financial Report FY 2008 17

THE UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations The University of Georgia serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity The University of Georgia is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of the University of Georgia as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. The University of Georgia does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the University of Georgia is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus the University of Georgia) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, the University of Georgia is reporting the activity for the University of Georgia Foundation, the University of Georgia Athletic Association, Inc., the Arch Foundation for the University of Georgia, Inc. and the University of Georgia Research Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999
University of Georgia Annual Financial Report FY 2008 18

by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the University's Investment Advisory Account which is invested in short-term highly liquid U.S. Agencies.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund and the Board of Regents Diversified Fund are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable
University of Georgia Annual Financial Report FY 2008 19

expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC transferred capital additions valued at $1,980,423 to the University of Georgia.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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.
University of Georgia Annual Financial Report FY 2008 20

Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. The University of Georgia had accrued liability for compensated absences in the amount of $40,315,525 as of July 1, 2007. For FY2008, $29,138,606 was earned in compensated absences and employees were paid $26,803,320, for a net increase of $2,335,286. The ending balance as of June 30, 2008 in accrued liability for compensated absences was $42,650,811.

Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Assets The University's net assets are classified as follows:

Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.

Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.

Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans T ot al Rest rict ed Expendable

$46,546,393 10,360,828 10,449,054
$67,356,275

University of Georgia Annual Financial Report FY 2008 21

Restricted net assets expendable Capital Projects: This represents resources for which the University is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$11,223,820 63,200,586 1,487,000 16,165,568
$92,076,974

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
Income Taxes The University of Georgia, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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

University of Georgia Annual Financial Report FY 2008 22

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 University, 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 University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Auxiliary Parking/Transportation and Health Services revenues of $14,579,695 and $17,414,540, respectively, are reported net of discounts and allowances of $518,749 and $1,179,768, respectively.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association.
University of Georgia Annual Financial Report FY 2008 23

6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.

The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

At June 30, 2008, the carrying value of deposits was $25,485,322 and the bank balance was $33,803,349. Of the University's deposits, $33,597,458 were uninsured. Of these uninsured deposits, $288,083 were collateralized with securities held by the financial institution's trust department or agent in the University's name, and $33,309,375 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name.

B. Investments The University of Georgia maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable federal and state laws.

The University's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

INVESTMENTS
Investment type Debt Securities
U.S. Treasuries U.S. Agencies
Explicitly Guaranteed Implicitly Guaranteed

Fair Value

Less Than 1 Year

Investment Maturity

1-5 Years

6-10 Years

More Than 10 Years

$293,062
1,431,180 57,854,271 $59,578,513

$100,281
586,837 24,191,703 $24,878,821

$102,359
841,390 33,653,594 $34,597,343

2,953 8,974
$11,927

$90,422 $90,422

Other Investments Bond/Equity Mutual Funds Equity Mutual Funds Equity Securities - Domestic Real Estate Held for Investment Purposes
Investment Pools Board of Regents Legal Fund Diversified Fund Office of Treasury and Fiscal Services Georgia Fund 1
Total Investments

13,631,366 21,398,911
893,748 240,469
7,460,547 1,478,176
123,325,285 $228,007,015

University of Georgia Annual Financial Report FY 2008 24

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.
The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1 Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 days.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University's policy for managing interest rate risk is divided between short-term and long-term investments. Short-term investments will have a maximum maturity of three years and long-term investments will have a maximum maturity of ten years.
The Weighted Average Maturity of the Legal Fund is 3.84 years. Of the University's total investment of $7,460,547 in the Legal Fund, $7,393,402 is invested in debt securities.
The Weighted Average Maturity of the Diversified Fund is 7.84 years. Of the University's total investment of $1,478,176 in the Diversified Fund, $459,713 is invested in debt securities.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the University will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The University does not have a formal policy for managing custodial credit risk for investments.
At June 30, 2008, $59,271,165 of the University's applicable investments were uninsured and held by the investment's counterparty in the University's name and $1,186,204 were uninsured and held by the investment's counterparty's trust department or agent, but not in the University's name.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University's policy for managing credit quality risk focuses on investment of loan and endowment funds which are funded by private sources. For loan and endowment
University of Georgia Annual Financial Report FY 2008 25

funds, investments should have an average rating of "AAA". All other investments follow Board of Regents investment guidelines.

The investments subject to credit quality risk are reflected below:

Related Debt Inves tments U. S. Agencies

Fair Value
$57,854,271 $57,854,271

U nrat ed
$57,854,271 $57,854,271

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The University's policy for managing concentration of credit risk is divided between short-term and long-term investments. For short-term investments, certificates of deposit and repurchase agreements should comprise 25-50%, investment in the Office of Treasury and Fiscal Services Georgia Fund I should not exceed 50%, and investment in U.S. Treasury obligations or U.S. government agency securities can be 100%. For long-term investment of loan and endowment funds, equities comprise 50-75%, fixed income can range between 25-50%, and cash and cash equivalents will range between 10-25%.

As of June 30, 2008, applicable investments in a single issuer where those investments exceed 5% of total investments were as follows:

Federal National Mortgage Association

16%

Federal Home Loan Mortgage Corporation

8%

University of Georgia Annual Financial Report FY 2008 26

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Georgia St at e Financing and Invest m ent Com m ission Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$3,378,113 1,319,600
15,687,652 3,332,807
20,644,955 20,261,696 64,624,823
669,368
$63,955,455

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Food Services P hysical P lant Other
T otal

$1,593,325 1,794,128 1,872,276
$5,259,729

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was approximately $665,004.

University of Georgia Annual Financial Report FY 2008 27

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capit al Asset s, Not Being Depreciat ed: Land Capit alized Collect ions Const ruct ion W ork-in-P rogress
T ot al Capit al Asset s Not Being Depreciat ed

Beginning B al an ce s 7/1/2007
$25,741,440 11,624,515 41,619,023 78,984,978

Capit al Asset s, Being Depreciat ed: Infrast ruct ure Building and Building Improvement s Facilities and Other Improvements E quip m en t Capit al Leases Library Collect ions T ot al Asset s Being Depreciat ed

42,944,512 1,103,702,038
149,153,268 313,357,339
966,932 214,958,854 1,825,082,943

Less: Accumulat ed Depreciat ion Infrast ruct ure Buildin gs Facilities and Other improvements E quip m en t Capit al Leases Library Collect ions T ot al Accumulat ed Depreciat ion

15,535,036 343,336,845
34,826,651 243,249,841
462,547 157,686,706 795,097,626

T ot al Capit al Asset s, Being Depreciat ed, Net

1,029,985,317

Capit al Asset s, net

$1,108,970,295

Addition s
$740,000 1,084,100 52,801,416 54,625,516

Re ductions
$3,142
7,732,479 7,735,621

En di n g B al an ce 6/30/2008
$26,478,298 12,708,615 86,687,960
125,874,873

1,124,431 41,267,449
1,246,179 27,688,978
722,690 10,351,016 82,400,743

11,781,594
15,031,999 850,239 81,995
27,745,827

44,068,943 1,133,187,893
150,399,447 326,014,318
839,383 225,227,875 1,879,737,859

1,353,131 25,580,624
3,730,990 21,983,077
176,756 10,771,783 63,596,361
18,804,382
$73,429,898

691,709
12,373,078 252,506 81,995
13,399,288

16,888,167 368,225,760
38,557,641 252,859,840
386,797 168,376,494 845,294,699

14,346,539

1,034,443,160

$22,082,160 $1,160,318,033

University of Georgia Annual Financial Report FY 2008 28

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Research Ot her Deferred Revenue
T ot als

June 30, 2008
$20,581,117 13,328,816 14,677,778
$48,587,711

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations
Other Liabilities Compensated Absences Total

Beginning Balance
July 1, 2007
$161,738,906

Additions $722,690

Reductions

Ending Balance June 30, 2008

$11,844,658 $150,616,938

Current Portion
$2,255,740

40,315,525 40,315,525

29,138,606 29,138,606

26,803,320 26,803,320

42,650,811 42,650,811

25,812,800 25,812,800

Total Long Term Obligations

$202,054,431

$29,861,296

$38,647,978

$193,267,749

$28,068,540

Note 9. Significant Commitments
The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $21,854,926 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.
Note 10. Lease Obligations
The University of Georgia is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.
CAPITAL LEASES
The University of Georgia occupies six real properties and holds various equipment items under capital leases. The real property leases expire in fiscal years 2032, 2033, three expire in 2034, and one expires in 2036. The equipment capital leases expire between 2009 and 2012. Reductions in principal on capital leases were $11,844,658 with $12,297,921 in interest expense

University of Georgia Annual Financial Report FY 2008 29

for a total of $24,142,579 in fiscal year 2008. Interest rates range from 6.83 percent to 9.00 percent. The carrying values of assets held under capital lease at June 30, 2008 were as follows:

Buildings Equipment Total Assets Held Under Capital Lease

$143,221,259 421,493
$143,642,752

All six of the University of Georgia's current real property capital leases are with the University of Georgia Real Estate Foundation (UGAREF), a related entity. In August of 2001, the University of Georgia entered into a capital lease with the UGAREF, whereby the University leases the Carlton Street Parking Deck for a 30 year period that began September 30, 2001 and expires August 31, 2031. In November of 2002, the University of Georgia entered into the second capital lease with the UGAREF whereby the University leases the East Village Parking Deck for a 30 year period that began on November 1, 2002 and expires July 31, 2032. In September of 2003, the University of Georgia entered into the third capital lease with the UGAREF, whereby, the University leases the Complex Carbohydrate Research Center for a 30 year period that began on September 25, 2003 and expires September 30, 2033. The University of Georgia entered into the fourth and fifth capital leases with the UGAREF, whereby the University leases the East Campus Village dormitory complex and the East Village Commons dining hall for a 30 year period that began July 1, 2004, and expires June 30, 2034. The University of Georgia entered into a sixth capital lease with UGAREF whereby the University leases the Coverdell Center for a 30 year period that began December 9, 2005 and expires November 30, 2035. The outstanding liability at June 30, 2008 on these capital leases is $150,036,057.
The University of Georgia will enter into two additional real property capital leases with UGAREF during fiscal year 2009. The exact capital lease amounts and related payment amounts have not yet been established. There is no outstanding liability related to these leases at June 30, 2008.
The University also has various capital leases for equipment with an outstanding balance of $580,881 at June 30, 2008
OPERATING LEASES
The University of Georgia is Lessee under a number of one year operating leases, which generally provide for four (4) renewal option periods. All agreements are cancelable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis.
Properties are leased for a variety of functions, from farm acreage to office space to parking lots.

University of Georgia Annual Financial Report FY 2008 30

Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 2034 t hrough 2038 T ot al m inim um lease paym ent s
Less: Int erest Less: Execut ory cost s P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$13,677,918 13,631,938 13,611,786 13,555,689 13,425,271 67,126,355 67,126,355 67,126,355 64,872,272 12,030,901
346,184,840 182,480,902
13,087,000 $150,616,938

$7,019,521 $7,019,521

Noncancellable operating lease expenditures in 2008 were $6,783,013 for real property. No expenditures were made for equipment under noncancellable operating leases.
Note 11. Retirement Plans
Teachers Retirement System of Georgia
Plan Description The University of Georgia participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.
Funding Policy Employees of the University of Georgia who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The University of Georgia makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

University of Georgia Annual Financial Report FY 2008 31

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$32,103,416 $30,182,072 $29,007,246

Employees' Retirement System of Georgia

Plan Description The University of Georgia participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The

University of Georgia Annual Financial Report FY 2008 32

University's payroll for the year ended June 30, 2008, for employees covered by ERS was $1,122,242. The University's total payroll for all employees was $582,528,877.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$122,876 $98,268 $59,819

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy The University of Georgia makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in

University of Georgia Annual Financial Report FY 2008 33

accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
The University of Georgia and the covered employees made the required contributions of $11,308,338 (8.13% or 8.15%) and $6,947,655 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description The University of Georgia 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $1,799,075 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.
University of Georgia Annual Financial Report FY 2008 34

Note 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. The University of Georgia and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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 University of Georgia, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the University of Georgia expects such amounts, if any, to be immaterial to its overall financial position.
University of Georgia Annual Financial Report FY 2008 35

Litigation, claims and assessments filed against the University of Georgia (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 3,810 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, the University of Georgia recognized as incurred $21,053,488 of expenditures, which was net of $7,438,830 of participant contributions.
University of Georgia Annual Financial Report FY 2008 36

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Functional Classification FY2008

Instruction

Research

Public Service

Academic Support

$90,014,667 61,192,420 35,826,821
74,316 2,750,909 3,719,099 1,459,871 22,699,152 13,262,238

$76,217,243 87,347,302 37,809,572
23,559 5,849,041 1,154,409 1,153,782 60,541,391 16,792,894

$13,328,102 70,899,516 27,998,638
6,077 3,728,512
94,794 1,338,097 32,433,143 3,720,009

$637,231 50,368,200 14,988,685
27,324 872,802
8,589 717,164 23,055,171 14,153,085

$230,999,493 $286,889,193 $153,546,888 $104,828,251

Student Services
$71,112 14,772,670 4,412,648
7,160 275,680 1,817,843 218,816 10,152,587 667,129
$32,395,645

Institutional Support
$2,510 37,053,208 16,139,175
585,202 630,045 10,000 650,151 11,837,671 1,038,627
$67,946,589

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

Total Expenses

$0 29,008,012 11,362,957
81,289
18,825,377 36,741,112 2,917,673

$0 14,398,059

$0 51,616,684 12,675,575
1,800 223,431 864,540 6,128,673 38,425,127 11,044,706

$180,270,865 402,258,012 161,214,071
725,438 14,411,709 22,067,333 30,491,931 235,885,354 63,596,361

$98,936,420

$14,398,059 $120,980,536 $1,110,921,074

University of Georgia Annual Financial Report FY 2008 37

Note 16. Component Units
The University of Georgia Foundation The University of Georgia Foundation (Foundation) is a legally separate, tax-exempt component unit of the University of Georgia (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The thirty-six member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $22,252,188 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Foundation Office at 394 South Milledge Avenue, Athens, GA 30602 or from the Foundation's website at www.ugafoundation.org.
Special Item Transfer
In 2006, the Board of Trustees of the Foundation agreed to transfer its sole membership of the UGA Real Estate Foundation (Real Estate Foundation) to the University of Georgia Research Foundation, Inc. The transfer was contingent upon a private letter ruling from the Internal Revenue Service accepting the transfer with no negative impact on the tax-exempt status of the Real Estate Foundation's outstanding bond debt. In 2007, the private letter ruling favorable to the transfer was received, and the transfer of sole membership became effective July 1, 2007. The transfer of the Real Estate Foundation's Assets and Liabilities as of July 1, 2007 resulted in a Net Asset transfer of ($6,638,835), which is reported as a Special Item Transfer on the Statement of Revenues, Expenses and Changes in Net Assets.
Investments for Component Units:
The University of Georgia Foundation holds investments in the amount of $606 million at June 30, 2008. Investments consist of the following:
University of Georgia Annual Financial Report FY 2008 38

Cash held by investment organization Government and Agency Securities Corporate Bonds Equity Securities Mutual Funds Split Interest Investments Real Estate Diversifying Strategies Investment Pools
Total Investments

Cost
$39,793,183 231,943 304,827
2,668,042 1,920,332 15,232,070 16,155,937
599,994 392,105,046
$469,011,374

Fair Value
$39,793,183 234,316 301,002
2,693,996 1,828,504 16,727,272 16,155,937
613,950 527,703,970
$606,052,130

Capital Assets for Component Units:

The University of Georgia Foundation holds the following Capital Assets as of June 30, 2008:

June 30, 2008

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements Machinery and Equipment
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

$4,810,092 44,187
4,854,279
9,414,449 1,071,428 10,485,877
1,340,863 9,145,014 $13,999,293

Long-Term Liabilities for Component Units:

Changes in long-term liabilities for the University of Georgia Foundation for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Transfer of Real Estate Foundation

Adjusted Beginning Balance
July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Compensated Absences Liabilities under split interest agreement Notes and Loans Payable Revenue/Mortgage Bonds Payable Other Long Term Liabilities
Total Long Term Liabilities

$29,495 11,686,162 20,691,533 175,667,798
0
$208,074,988

($29,495) (10,499,210) (175,667,798)
($186,196,503)

$0 11,686,162 10,192,323
0 0
$21,878,485

$0 655,613 5,014,961

$0 8,083,918

686,085

$6,356,659 $8,083,918

$0 12,341,775 7,123,366
0 686,085
$20,151,226

$0 126,617 686,085 $812,702

University of Georgia Annual Financial Report FY 2008 39

Notes and Loans Payable During 2002, the Foundation signed an $880,000 promissory loan agreement with a bank, which was amended during 2005 to increase the borrowed amount to $1,117,865. This agreement expires on May 1, 2012. As of June 30, 2008, $974,091 was outstanding under this agreement. Interest is charged at the bank's 30-day LIBOR rate plus 45 basis points (or 0.45%), or 2.91% at June 30, 2008. Principal and interest are payable monthly.

During 2007, the Foundation signed a $6,200,000 promissory loan agreement with a bank, which expires on November 1, 2017. As of June 30, 2008, $6,149,275 was outstanding under this agreement. Interest is charged at the bank's 30-day LIBOR rate plus 32.5 basis points (or 0.325%), or 2.78% at June 30, 2008. Principal and interest are payable monthly.

Interest Rate Caps The Foundation has two outstanding interest rate cap agreements effectively limiting the interest rate exposure on the $1,117,865 note payable to a 5.75% fixed rate over the term of the note payable and limiting the interest rate exposure on the $6,200,000 note payable from variable to a 5.95% fixed rate over the term of the note payable. As of June 30, 2008, the fair value of these interest rate caps was a liability of $686,085 and is reported in the Other Liabilities (current) line on the Statement of Net Assets. The Foundation recorded a charge of $691,109 in fiscal 2008 as a result of these caps as an adjustment to interest expense.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018

Notes and Loans Payable

Principal

Interest

Total

1

$126,617

$418,741

$545,358

2

134,261

411,110

545,371

3

142,367

403,018

545,385

4

921,202

390,742

1,311,944

5

101,376

342,301

443,677

6-10

5,697,543

1,406,626

7,104,169

$7,123,366

$3,372,538

$10,495,904

The University of Georgia Athletic Association, Inc. The University of Georgia Athletic Association, Inc. (the Association) is a legally separate, taxexempt component unit of the University of Georgia (the "University"). The Association was organized in 1938 as a not-for-profit corporation to promote intercollegiate athletic sports representing the University. The twenty-member board of directors consists of faculty, staff, students, and alumni of the University. Although the University does not control the timing or amount of receipts from the Association, the majority of resources or income thereon that the Association holds and invests are restricted to the athletic activities of the University. Because these restricted resources held by the Association can only be used by or for the benefit of the University and their management role is significant to the accomplishment of the University's mission, the Association is considered a component unit of the University and is discretely presented in the University's financial statements.

University of Georgia Annual Financial Report FY 2008 40

For financial reporting purposes, the Association is considered a special purpose government agency engaged only in business type activities, as defined by GASB Statement 34. The Association's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Association made payments to the University for services such as food services, parking services, health services, tuition, gas, electricity, security, and golf course maintenance. These payments totaled $29,766,110 and were recognized as expenses of the Association.
Capital assets net of accumulated depreciation of $185 million are included in the financial statements of the Association. These capital assets, excluding moveable equipment and construction work in progress, are also included in the University's report. Complete financial statements for the Association can be obtained from the Treasurer's office at 456 East Broad Street, Athens, GA 30602.
Deposits for Component Units:
Funds belonging to the State of Georgia 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 notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia. 2. Bonds, bills, notes, certificates of indebtedness 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 Authority of the United States government, which are fully guaranteed by the United States government, both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. 6. Insurance of accounts provided by the Federal Deposit Insurance Corporation and the Federal Savings and Loan Insurance Corporation.
As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia the option of exempting demand deposits from the collateral requirements.
At June 30, 2008, the book-carrying amount of the Athletic Association's deposits, including noncurrent cash and cash equivalents, was $89,246,997 and the bank balance was $92,433,058. The Athletic Association's bank balance is classified as follows at June 30, 2008:
University of Georgia Annual Financial Report FY 2008 41

Amount insured by the FDIC and FSLIC Collateralized with securities held in
the Athletic Association's name Uncollateralized

$ 333,000
80,613,869 11,486,189 $92,433,058

Capital Assets for Component Units:

The University of Georgia Athletic Association, Inc. had the following Capital Assets activity for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Construction Work-in-Progress
Total Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Total Assets Being Depreciated
Less: Accumulated Depreciation Buildings Facilities and Other improvements Equipment Total Accumulated Depreciation
Total Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning Balances 7/1/2007
$29,493,360 29,493,360
176,834,763 19,476,061 6,879,287
203,190,111
35,018,890 6,374,570 4,264,753
45,658,213
157,531,898
$187,025,258

Additions
$466,936 466,936

Reductions
$29,354,321 29,354,321

Ending Balance 6/30/2008
$605,975 605,975

31,971,945 145,581 622,646
32,740,172

173,528 173,528

208,806,708 19,621,642 7,328,405
235,756,755

3,549,328 842,110
1,178,988 5,570,426
27,169,746
$27,636,682

146,115 146,115
27,413
$29,381,734

38,568,218 7,216,680 5,297,626
51,082,524
184,674,231
$185,280,206

Long-term Liabilities for Component Units:

Changes in long-term liabilities for the Athletic Association for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Notes and Loans Payable-Primary Government Notes and Loans Payable Revenue/Mortgage Bonds Payable Other Long Term Liabilities
Total Long Term Liabilities

$2,336,428 87,113
97,560,000 2,754,277
$102,737,818

$0

$333,395

$2,003,033

$354,016

87,113

0

2,090,000

95,470,000

2,140,000

518,474

2,235,803

500,000

$0

$3,028,982

$99,708,836

$2,994,016

University of Georgia Annual Financial Report FY 2008 42

Notes Payable-Due to Primary Government Under an agreement with the University of Georgia, the Athletic Association assumed the responsibility for a portion of the funding for the construction of the Ramsey Student Center for Physical Activities. In fiscal 1996, the Athletic Association recorded as property approximately $7,800,000, representing the Athletic Association's share of the Ramsey Center based on estimated usage as defined in the agreement. The Athletic Association paid cash of $2,858,928, and subsequently recorded a liability of $4,941,072 at June 30, 1996, representing the remaining principal balance of the obligation. The note has an outstanding principal balance at June 30, 2008 of $2,003,033. The principal balance due within one year, $354,016, is reflected within the Due to Primary Government - Current Liabilities balance on the Statement of Net Assets. The Association made payments of principal and interest of $477,917 during the year ended June 30, 2008, and will make an equal payment in each succeeding year through 2013. The interest rate associated with this liability is 6.19%.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30:

2009

1

2010

2

2011

3

2012

4

2013

5

Total

Principal

Notes and Loans Payable Interest

$354,016 375,915 399,167 423,858 450,077
$2,003,033

$123,901 102,002 78,750 54,059 27,840 $386,552

Total
$477,917 477,917 477,917 477,917 477,917
$2,389,585

Revenue Bonds Payable On September 27, 2001, the Development Authority of Athens-Clarke County, Georgia (the Authority) issued $34 million in Revenue Bonds (UGA Athletic Association, Inc. Project), Series 2001 (the Bonds) and entered into an agreement (the Loan Agreement) to loan $34 million to the Association. The Bonds are secured by a letter of credit issued by SunTrust Bank in favor of the Authority that must be renewed annually. Under the Loan Agreement, the Association is required to use the proceeds of such loan to fund improvements of certain properties as specified in the Loan Agreement. Borrowings under the Loan Agreement bear interest payable monthly at a formula rate adjusted daily (2.50% on June 30, 2008). The loan matures in 2031, subject to certain early repayment provisions. At June 30, 2008, the balance of this obligation was $33,100,000.

On August 28, 2003, the Development Authority of Athens-Clarke County, Georgia (the Authority) issued $36 million in Revenue Bonds (UGA Athletic Association, Inc. Project), Series 2003 (the Bonds) and entered into an agreement (the Loan Agreement) to loan $36 million to the Association. The Bonds are secured by a letter of credit issued by Bank of America, NA in favor of the Authority that must be renewed annually. Under the Loan Agreement, the Association is required to use the proceeds of such loan to fund improvements of certain properties as specified in the Loan Agreement. Borrowings under the Loan Agreement bear interest payable monthly at a formula rate adjusted daily (2.50% on June 30, 2008). The loan matures in 2033, subject to certain early repayment provisions. On March 7, 2005, the

University of Georgia Annual Financial Report FY 2008 43

Association redeemed $16 million of these bonds. The remaining obligation at June 30, 2008 was $18,195,000.
On January 27, 2005, the Development Authority of Athens-Clarke County, Georgia (the Authority) issued $17.47 million in Revenue Bonds (UGA Athletic Association, Inc. Project), Series 2005 (the Bonds) and entered into an agreement (the Loan Agreement) to loan $17.47 million to the Association. The Bonds are secured by a letter of credit issued by Bank of America, NA in favor of the Authority that must be renewed annually. Under the Loan Agreement, the Association is required to use the proceeds of such loan to fund improvements of certain properties as specified in the Loan Agreement. Borrowings under the Loan Agreement bear interest payable monthly at a formula rate adjusted daily (2.10% on June 30, 2008). The loan matures in 2021 and requires yearly principal reductions. At June 30, 2008, the balance of this obligation was $15,280,000.
On August 25, 2005, the Development Authority of Athens-Clarke County, Georgia (the Authority) issued $30 million in Revenue Bonds (UGA Athletic Association, Inc. Project), Series 2005B (the Bonds) and entered into an agreement (the Loan Agreement) to loan $30 million to the Association. The Bonds are secured by a letter of credit issued by Bank of America, NA in favor of the Authority that must be renewed annually. Under the Loan Agreement, the Association is required to use the proceeds of such loan to fund improvements of certain properties as specified in the Loan Agreement. Borrowings under the Loan Agreement bear interest payable monthly at a formula rate adjusted daily (2.50% on June 30, 2008). The loan matures in 2035, subject to certain early repayment provisions. The June 30, 2008 remaining obligation for these revenue bonds was $28,895,000.
Interest Rate Swap Agreements The Association is a party to interest rate swap agreements that are not recorded in the financial statements. Following are disclosure of key aspects of the agreements.
Objective and Terms - As a means of interest rate management, the Association entered into three separate interest rate swap transactions with Bank of America, N.A. (the "Counterparty") relating to its variable rate tax-exempt Series 2001 Bonds, tax-exempt Series 2003 Bonds, taxable Series 2005 Bonds and tax-exempt Series 2005B Bonds. Pursuant to an ISDA Master Agreement and Schedule to ISDA Master Agreement each dated as of January 27, 2005 between the Association and the Counterparty and three Confirmations, the Association has agreed to pay to the Counterparty a fixed rate of interest in an amount equal to: (1) 3.49% per annum multiplied by a notional amount which is equal to the principal amount of the Series 2001 Bonds until September 2021; (2) 3.38% per annum multiplied by a notional amount which is equal to the principal amount of the Series 2003 Bonds until August 2033; (3) 5.05% per annum multiplied by a notional amount which is equal to the principal amount of the Series 2005 Bonds until July 2021; and (4) 3.483% per annum multiplied by the notional amount which is equal to the principal amount of the Series 2005B Bonds until August 2033.
In return, the Counterparty has agreed to pay to the Association a floating rate of interest in an amount equal to: (1) 67% of LIBOR multiplied by a notional amount which is equal to the principal amount of the Series 2001 Bonds until September 2021; (2) 67% of LIBOR multiplied
University of Georgia Annual Financial Report FY 2008 44

by a notional amount which is equal to the principal amount of the Series 2003 Bonds until August 2033; (3) LIBOR multiplied by a notional amount which is equal to the principal amount of the Series 2005 Bonds until July 2021; and (4) 67% of LIBOR multiplied by the notional amount which is equal to the principal amount of the Series 2005B Bonds until July 2035.
Fair Value The Association will be exposed to variable rates if the counterparty to a swap defaults or if a swap is terminated. A termination of the swap agreement may also result in the Association's making or receiving a termination payment
As of June 30, 2008, the fair value of the interest rate swap agreement on the 2001 Series Bonds was ($1,224,921), indicating the amount that the Association would be required to pay the counterparty to terminate the swap agreement.
As of June 30, 2008, the fair value of the interest rate swap agreement on the 2003 Series Bonds was ($439,283), indicating the amount that the Association counterparty would be required to pay the counterparty to terminate the swap agreement.
As of June 30, 2008, the fair value of the interest rate swap agreement on the 2005A Series Bonds was ($585,624), indicating the amount that the Association would be required to pay the counterparty to terminate the swap agreement.
As of June 30, 2008, the fair value of the interest rate swap agreement on the 2005B series Bonds was ($998,313), indicating the amount that the Association would be required to pay the counterparty to terminate the swap agreement.
Swap Payments and Associated Debt As of June 30, 2008, debt service requirements of the variable-rate debt and net swap payments, assuming current interest rates remain the same, for their term were as follows. As rates vary, variable-rate bond interest payments and net swap payments will vary.

Year Ending 2009 2010 2011 2012 2013 2014-2018 2019-2023 2024-2028 2029-2033 2034-2036 Total

Variable Rate Bonds

Principal

Interest

$2,140,000 $2,275,870

2,195,000

2,224,835

2,245,000

2,172,630

2,295,000

2,119,275

2,355,000

2,064,500

12,685,000

9,451,250

13,050,000

7,888,970

9,330,000

6,626,000

43,760,000

3,844,917

5,415,000

118,865

$ 95,470,000 $ 38,787,112

Interest Rate Swaps, Net
$1,182,926 1,143,088 1,102,376 1,060,686 1,018,030 4,412,533 3,217,542 2,582,177 1,505,379 46,525
$ 17,271,262

Total $5,598,796
5,562,923 5,520,006 5,474,961 5,437,530 26,548,783 24,156,512 18,538,177 49,110,296 5,580,390 $ 151,528,374

Credit Risk As of June 30, 2008, the fair value of the swaps represents the Association's credit exposure to the Counterparty. Should the Counterparty fail to perform in accordance with the
University of Georgia Annual Financial Report FY 2008 45

terms of the swap agreements, the Association could see a possible gain equivalent of $17.3 million less the cumulative fair value of $3.2 million. As of June 30, 2008, the Counterparty was rated Aaa by Moody's and AA+ by S&P.
Basis Risk The swaps expose the Association to basis risk. The interest rate on the Series 2001 Bonds, the Series 2003 Bond and the Series 2005B Bonds is a tax-exempt interest rate while the LIBOR basis on the variable rate receipt on the interest rate swap agreements is taxable. Taxexempt interest rates can change without a corresponding change in the 30 day LIBOR rate due to factors affecting the tax-exempt market which do not have a similar effect on the taxable market. The Association will be exposed to basis risk under the swaps to the extent that the interest rates on the tax-exempt bonds trades at greater than 67% of LIBOR for extended periods of time. The Association would also be exposed to tax risk stemming from changes in the marginal income tax rates or those caused by a reduction or elimination in the benefits of tax exemption for municipal bonds.
Termination Risk The interest rate swap agreement uses the International Swap Dealers Association Master Agreement, which includes standard termination events, such as failure to pay and bankruptcy. The Association or the Counterparty may terminate the swap if the other party fails to perform under the terms of the contract. If the swap is terminated, the variable rate bonds would no longer carry a synthetically fixed interest rate. Also, if at the time of termination, the swap has a negative fair value, then the Association would be liable to the Counterparty for a payment equal to the swap's fair value.
The Arch Foundation for the University of Georgia, Inc. The Arch Foundation for the University of Georgia, Inc. (the "Foundation") is a not-for-profit foundation that was chartered in 2005 to receive and administer contributions for the support of the University of Georgia (the "University"). The University is governed by the Board of Regents of the University System of Georgia (the "Board of Regents"). The mission and purpose of the Foundation is to provide support to the teaching, research, public service and outreach programs of the University by means of volunteer leadership and assistance in development and fundraising activities; fiduciary care for the assets of the Foundation for the long-term benefit and enhancement of the University; and the provision of broad advice, consultation and support to the President of the University. The Foundation operates as a Cooperative Organization in accordance with policies of the Board of Regents.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.
During the year ended June 30, 2008, the Foundation distributed $7,353,573 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the External Affairs Office of Financial Services at 394 S. Milledge Avenue, Athens, GA 30602 or from the Foundation's website at www.uga.edu/archfoundation.
University of Georgia Annual Financial Report FY 2008 46

Investments for Component Units:

The Arch Foundation for the University of Georgia, Inc. holds investments in the amount of $30.3 million. Investments consist of marketable securities, bonds, real property, and an investment in a limited partnership as follows:

Equity Securities Split Interest Investments Joint Ventures/Partnerships Real Estate Investment Pools
Total Investments

Cost
$39,025 28,077
630,000 2,624,000 27,190,416
$30,511,518

Fair Value
$39,025 28,077
630,000 2,624,000 26,974,899
$30,296,001

University of Georgia Research Foundation, Inc. The University of Georgia Research Foundation, Inc. (the Research Foundation) is a legally separate, tax-exempt component unit of the University of Georgia (University). The Research Foundation serves to enhance the research mission of the University by securing sponsored research funding and by providing funding of special research initiatives. All University intellectual property developed through these research programs are managed by the Research Foundation. The twenty member board of the Foundation consists of designated University personnel, appointees of several University constituent groups, and individuals selected by the Research Foundation itself. Although the University does not control the timing or amount of receipts from the Research Foundation, all sponsored research awards are subcontracted to the University and other resources and related income are restricted to benefit the research mission of the University. Consequently, the Research Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Research Foundation is considered a special-purpose government entity engaged only in business-type activities and is required to follow all applicable GASB pronouncements. The Research Foundation's fiscal year is July 1 through June 30.
The Research Foundation financial statements include two blended component units: the UGA Real Estate Foundation, Inc. and UGARF Media Holdings, LLC.
During fiscal year 2008, the Research Foundation transferred approximately $118 million in sponsored research and other support funds to the University and shows a net payable to the University at June 30 related to this activity. Complete financial statements for the Research Foundation can be obtained from the Treasurer's office at 456 East Broad Street, Athens, GA 30602.

University of Georgia Annual Financial Report FY 2008 47

Special Item Transfer:
Effective July 1, 2007, the Research Foundation became the sole member of the UGA Real Estate Foundation, Inc. (Real Estate Foundation). The Real Estate Foundation had previously been the sole member of the University of Georgia Foundation. The transfer at July 1, 2007 of the assets and liabilities of the Real Estate Foundation to the Research Foundation resulted in a Net Asset addition of $6,638,835. This transfer is reported as a Special Item Transfer in the Statement of Revenues, Expenses and Changes in Net Assets.
Prior Period Adjustment:
The UGA Real Estate Foundation, as the lessor of several leases wherein the ownership of the leased property is converted to the Board of Regents at the end of the lease term, changed its method of accounting for these leases from operating leases to capital lease treatment. The amount recognized as a prior period increase to net assets as of June 30, 2007 is $11,774,904. This increase in net assets is due to the difference between the previously recorded net of rental income less depreciation and the amount that would be recorded as net income using capital lease interest amortization.
Capital Assets as of June 30, 2007 were restated as a result of the change in lease treatment, from $165,199,306 to $18,271,896 and were replaced by Net Investment in Capital Leases of $158,702,315 on the Statement of Net Assets.
Deposits and Investments for Component Units:
Deposits
The custodial credit risk for deposits is the risk that in the event of a bank failure, the Research Foundation's deposits may not be recovered. The Research Foundation does not have a deposit policy for custodial credit risk.
At June 30, 2008, the book value of the Research Foundation's deposits was $68,499,622. The bank and investment account balances at June 30, 2008 were $68,810,956 of which $67,769,750 was uninsured. Of these uninsured deposits, $11,281,000 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the Research Foundation's name and $56,488,750 were uncollateralized.
Investments
The University of Georgia Research Foundation, Inc. maintains both short-term and long-term investment policies. Both establish primary and secondary objectives, specify allowable investments, set target investment mix, and provide investment guidelines.
University of Georgia Annual Financial Report FY 2008 48

The Research Foundation's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment type Debt Securities
U.S. Treasuries U.S. Agencies
Explicitly Guaranteed Implicitly Guaranteed Corporate Debt Municipal Obligation
Other Investments Equity Mutual Funds Equity Securities - Domestic Equity Securities - International Managed Futures/Hedge Funds

Fair Value

Less Than 1 Year

Investment Maturity

1-5 Years

6-10 Years

More Than 10 Years

$3,480,885
1,557,910 10,060,298 21,147,955
50,967 $36,298,015
5,443,301 3,827,681 2,228,145 4,504,381
$52,301,523

$2,156,323
660,058 18,305,443 $21,121,824

$396,311
6,209,089 2,206,599 $8,811,999

$564,416
2,891,818 635,913
$4,092,147

$363,835
1,557,910 299,333
50,967 $2,272,045

Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The Research Foundation's policy for managing interest rate risk is divided between short-term and long-term investments. Short-term investments will have a maximum maturity of eighteen months to five years depending on type of investment. Longterm investments are managed using a planning timeline of five years or more and overall risk measurements rather than specific maturity limits.
The Real Estate Foundation's policy for managing interest rate risk is to invest only in short-term United State treasury obligations with a maximum maturity of one year.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the Research Foundation will not be able to recover the value of the investment or collateral securities that are in possession of an outside party. The Research Foundation does not have a formal policy for managing custodial credit risk for investments.
At June 30, 2008, $40,197,518 of the Research Foundation's applicable investments were uninsured and held by the investment counterparty's trust department or agent in the Research Foundation's name and $2,156,323 of the Real Estate Foundation's applicable investments were uninsured and held by the investment counterparty's trust department or agent, but not in the Research Foundation's name.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Research Foundation's investment policies specify that fixed income securities be of investment grade. The short-term investment policy specifies that corporate

University of Georgia Annual Financial Report FY 2008 49

bonds be rated BBB (Standard & Poor's) or Baa (Moody's) or higher; the long-term policy requires a BBB (Standard & Poor's) or Baa3 (Moody's) rating or higher. The investment policy also requires that securities that drop below investment grade should be sold at the manager's discretion; in the event that a rating falls below investment grade, the manager will contact the financial advisor and advise them of the proposed strategy for disposition of the security.

The Research Foundation's investments as of June 30, 2008 are presented below. All investments are presented by investment type and fixed income securities are presented by credit quality ratings.

Related Debt Investments U. S. Agencies - Implicitly Guaranteed Corporate Debt Municipal Obligation

Fair Value
$10,060,298 21,147,955 50,967
$31,259,220

Aaa
$1,033,795 81,815
$1,115,610

Aa

A

Baa

$0 2,953,906
50,967
$3,004,873

$0 4,563,349

$0 13,138,163

$4,563,349 $13,138,163

Ba
$0 410,722
$410,722

Unrated $9,026,503 $9,026,503

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an entity's investment in a single issuer. The Research Foundation's policy for managing concentration of credit risk is divided between short-term and long-term investments. For short-term investments, maximum percentages are set for cash and cash equivalents at 15%, asset backed securities at 50% and corporate bonds at 90%, while U.S. Treasuries, U.S. Agencies debt, and certificates of deposit may comprise 100% for the short-term investments. For long-term investment, equities comprise 40-80%, bonds 20-60% and alternative investments can range 0-20%.

As of June 30, 2008, investments in a single issuer where those investments exceed 5% of total investments were as follows:

Federal National Mortgage Association

10%

Federal Home Loan Mortgage Corporation

9%

Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or a deposit. The Research Foundation's investments are not exposed to foreign currency risk as securities denominated in currencies other than the U.S. dollar are not permissible by the Research Foundation's investment policy.

The Real Estate Foundation's investments increased by $64,010 due to foreign currency fluctuations between the Euro and the dollar on cash balances held in banks. Amounts held in foreign currency denominations are valued at $267,788 as of June 30, 2008.

University of Georgia Annual Financial Report FY 2008 50

Capital Assets for Component Units:

The University of Georgia Research Foundation, Inc. had Capital Assets activity as follows for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land (and other assets) Construction Work-in-Progress
Total Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Equipment Total Assets Being Depreciated
Less: Accumulated Depreciation Buildings Equipment Total Accumulated Depreciation
Total Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning Balance 7/1/2007
$110,000 0
110,000

Restated Real Estate Fdn Transfer

Adjusted Beg. Balance 7/1/2007

$15,722,163 224,900
15,947,063

$15,832,163 224,900
16,057,063

Additions

Reductions

$4,702,061 34,149,651 38,851,712

$0 5,110,857 5,110,857

Ending Balance 6/30/2008
$20,534,224 29,263,694 49,797,918

1,142,307 0
1,142,307

2,535,466 184,134
2,719,600

3,677,773 184,134
3,861,907

5,385,599 3,167
5,388,766

5,110,857 5,110,857

3,952,515 187,301
4,139,816

737,313 737,313 404,994 $514,994

260,539 134,228 394,767
2,324,833
$18,271,896

997,852 134,228 1,132,080
2,729,827
$18,786,890

143,008

26,473

169,481

0

5,219,285

5,110,857

$44,070,997 $10,221,714

1,140,860 160,701
1,301,561
2,838,255
$52,636,173

Long-term Liabilities for Component Units:

Changes in long-term liabilities for the Research Foundation for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Transfer of Real Estate Foundation

Adjusted Beginning Balance
July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Compensated Absences Notes and Loans Payable Revenue/Mortgage Bonds Payable
Total Long Term Liabilities

$0

$29,495

0

10,499,210

0

175,667,798

$0 $186,196,503

$29,495 10,499,210 175,667,798
$186,196,503

$0 20,688,117 56,359,497
$77,047,614

$1,231 12,960,440
3,849,754
$16,811,425

$28,264 18,226,887 228,177,541
$246,432,692

$28,264 3,595,000 $3,623,264

Notes and Loans Payable During 2008, the Real Estate Foundation renewed a $50 million revolving credit agreement with a bank. The agreement expires on November 30, 2010. The revolving credit agreement provides for borrowings or letters of credit at the Real Estate Foundation's option. Credit available under the revolving credit agreement is reduced by outstanding borrowings and outstanding letters of credit. At June 30, 2008, amounts outstanding or issued under this agreement included borrowings of $18,226,887 and unused letters of credit and bank reserves of $8,159,715, resulting in $23,613,398 available as borrowing capacity under this line. Borrowings under the revolving credit agreement bear interest at the bank's 30-day London InterBank Offered Rate ("LIBOR") plus 32.5 basis points (or 0.325%). At June 30, 2008, the rate applicable to the borrowings was 2.79563%.

University of Georgia Annual Financial Report FY 2008 51

All borrowings under this revolving credit agreement are subject to a guarantee requirement except for those borrowings for projects supported by a rental or license agreement with the Board of Regents or the University. As of June 30, 2008, the borrowings subject to this guarantee requirement were $7,797,561. Effective July 1, 2007, the Real Estate Foundation's $50 million revolving credit agreement was amended and a new guarantee was executed to reflect the Research Foundation as guarantor.

During 2006, the Real Estate Foundation entered into an interest rate cap agreement effectively limiting the interest rate on the revolving credit agreement to a 6% fixed rate until December 1, 2010. The Real Estate Foundation paid a premium of $122,000 in connection with this agreement. The fair value of the interest rate cap as of June 30, 2008 is $25,665 and has been recorded as an asset in accordance with SFAS No. 133. The Real Estate Foundation recorded a loss of $17,316 on the fair value of the derivative for the year ended June 30, 2008 as an adjustment to interest expense.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending June 30:

2009

1

2010

2

2011

3

Notes and Loans Payable

Principal

Interest

Total

$0 0
18,226,887 $18,226,887

$509,556 509,556 212,315
$1,231,427

$509,556 509,556
18,439,202 $19,458,314

Revenue Bonds Payable $25,620,000 Bond Issue: In 2001, the Development Authority of the Unified Government of Athens -- Clarke County, Georgia (the "Development Authority") issued Revenue Bonds (UGA Real Estate Foundation, Inc. Project), Series 2001 (the "2001 Bonds") and entered into an agreement (the "2001 Loan Agreement") to loan $25,620,000 to the Real Estate Foundation. The 2001 Bonds are secured by a letter of credit issued on behalf of the Real Estate Foundation in favor of the Development Authority under the Real Estate Foundation's $50 million credit agreement discussed above. During 2002, the Real Estate Foundation used the proceeds of this loan to fund purchases and improvements of certain properties.

Borrowings under the 2001 Loan Agreement bear interest payable monthly at a formula rate adjusted each week (1.53% at June 30, 2008). The loan matures in 2031, subject to certain early repayment provisions. During the year ended June 30, 2008, principal payments of $410,000 were made. At June 30, 2008, the balance of this obligation was $8,015,000.

During 2005, the Real Estate Foundation entered into an interest rate cap agreement effectively limiting the interest rate on the 2001 Loan Agreement to a 3.5% fixed rate until November 30, 2007. The Real Estate Foundation paid a premium of $91,000 in connection with this agreement. The Real Estate Foundation recorded a loss of $15,495 on the fair value of the derivative for the year ended June 30, 2008.

University of Georgia Annual Financial Report FY 2008 52

During 2008, the Real Estate Foundation entered into an interest rate cap agreement effectively limiting the interest rate on a portion of the 2001 Loan Agreement to a 4.0% fixed rate until December 3, 2012. The Real Estate Foundation paid a premium of $75,000 in connection with this agreement. The fair value of the interest rate cap as of June 30, 2008 was $74,033 and has been recorded as an asset in accordance with SFAS No. 133. The Real Estate Foundation recorded a loss of $967 on the fair value of this derivative for the year ended June 30, 2008.
$39,155,000 Bond Issue: In 2002, the Development Authority issued Educational Facilities Revenue Bonds (UGAREF CCRC Building, LLC Project), Series 2002 (the "CCRC Bonds") and entered into an agreement (the "CCRC Loan Agreement") to loan $39,155,000 to UGAREF CCRC Building, LLC (a single-member limited liability company owned by the Real Estate Foundation) (the "CCRC Entity"). Payment of principal and interest under the CCRC Bonds is insured by a financial guaranty insurance policy and secured by certain real property constituting the facility and by the CCRC Entity's interest in certain rents and leases derived from the facility. The CCRC Entity used the proceeds of this loan to fund construction of the facility which was completed in October 2003.
Borrowings under the CCRC Loan Agreement bear interest payable semiannually on December 15 and June 15 at fixed rates ranging from 2.5% to 5% depending on the schedule of bond maturities. Principal payments are due on December 15 starting in 2004 and continuing through 2032. During the year ended June 30, 2008, principal payments of $800,000 were made. At June 30, 2008, the balance of this obligation was $36,075,000.
$99,860,000 Bond Issue: In 2002, the Housing Authority of the City of Athens, Georgia, issued Student Housing Lease Revenue Bonds (UGAREF East Campus Housing, LLC Project), Series 2002 (the "Bonds") and entered into an agreement (the "Loan Agreement") to loan $99,860,000 to the Real Estate Foundation. Payment of principal and interest under the Bonds is insured by a financial guaranty insurance policy and secured by certain real property constituting the facilities and by the Real Estate Foundation's interest in certain rents and leases derived from the facilities. The Real Estate Foundation used the proceeds of this loan to fund construction of certain real estate projects which were completed in July 2004.
Borrowings under the Loan Agreement bear interest payable semiannually at fixed rates ranging from 3% to 5.25% depending on the schedule of bond maturities. Principal payments are due on December 1 starting in 2005 and continuing through 2033. During the year ended June 30, 2008 principal payments of $1,935,000 were made. At June 30, 2008, the balance of this obligation was $94,100,000.
$8,215,000 Bond Issue: In 2003, the Oconee County Industrial Development Authority issued Revenue Bonds (UGAREF Gainesville Campus, LLC Project), Series 2003 (the "Gainesville Campus Bonds") and entered into an agreement (the "Gainesville Campus Loan Agreement") to loan $8,215,000 to UGAREF Gainesville Campus, LLC (a single-member limited liability company owned by the Real Estate Foundation) (the "Gainesville Campus Entity"). Payment of principal and interest under the Gainesville Campus Bonds is insured by a financial guaranty insurance policy and secured by certain real property constituting the land and educational facility and by the Gainesville Campus Entity's interest in certain rents and leases derived from
University of Georgia Annual Financial Report FY 2008 53

the land and educational facility. During 2003, the Gainesville Campus Entity used the proceeds of this loan to fund the acquisition of the land and educational facility.
Borrowings under the Gainesville Campus Loan Agreement bear interest payable semiannually at fixed rates ranging from 2.2% to 4.375% depending on the schedule of bond maturities. Principal payments are due on December 15 starting in 2003 and continuing through 2027. During the year ended June 30, 2008, principal payments of $250,000 were made. At June 30, 2008, the balance of this obligation was $7,155,000.
$25,970,000 Bond Issue: In 2004, the Development Authority issued $25,545,000 of Educational Facilities Revenue Bonds (UGAREF Coverdell Building, LLC Project), Series 2004A, and $425,000 of Educational Facilities Taxable Revenue Bonds (UGAREF Coverdell Building, LLC Project), Series 2004B (collectively, the "Coverdell Bonds"). The Development Authority entered into an agreement (the "Coverdell Loan Agreement") to loan $25,970,000 to UGAREF Coverdell Building, LLC (a single member limited liability company owned by the Real Estate Foundation) (the "Coverdell Entity"). Payment of principal and interest under the Coverdell Bonds is insured by a financial guaranty insurance policy and secured by certain real property constituting a portion of the facility and by the Coverdell Entity's interest in certain rents and leases derived from a portion of the facility. The Coverdell Entity used the proceeds of this loan to fund construction of a portion of the facility, which was completed in 2007.
Borrowings under the Coverdell Loan Agreement bear interest payable semiannually at fixed rates ranging from 2.5% to 5% depending on the schedule of bond maturities. Principal payments are due on December 15 starting in 2006 and continuing through 2034. During the year ended June 30, 2008, a principal payment of $500,000 was made on the outstanding Series 2004A bonds. At June 30, 2008, the balance of this obligation was $25,010,000.
$62,475,000 Bond Issue: In 2008, the Development Authority issued $35,055,000 of Educational Facilities Current Interest Revenue Bonds (UGAREF Central Precinct, LLC Project), and $27,420,000 of Educational Facilities Convertible Revenue Bonds (UGAREF Central Precinct, LLC Project) (collectively, the "Central Precinct Bonds"). The Development Authority entered into an agreement (the "Central Precinct Loan Agreement") to loan $62,475,000 to UGAREF Central Precinct, LLC (a single-member limited liability company owned by the Real Estate Foundation) (the "Central Precinct Entity"). Payment of principal and interest under the Central Precinct Bonds is insured by a financial guaranty insurance policy and secured by certain real property constituting a parking deck and building addition, and by the Central Precinct Entity's interest in certain rents and leases derived from these facilities. The Central Precinct Entity is using the proceeds of this loan to fund construction of the facilities. The building addition is reported as construction in progress at June 30, 2008. Subsequent to the issuance of these financial statements, the parking deck was placed in service on August 6, 2008.
Borrowings under the Central Precinct Loan Agreement bear interest payable semiannually at fixed rates ranging from 2% to 5% depending on the schedule of bond maturities. Principal payments are due on June 15 starting in 2010 and continuing through 2038. The total balance of the obligation at June 30, 2008 is $62,475,000.
University of Georgia Annual Financial Report FY 2008 54

During 2007, the Real Estate Foundation entered into an interest rate hedge agreement at no cost to lock in the then current interest rate on this future borrowing. This forward swap agreement expired during the year ended June 30, 2008 and the Real Estate Foundation paid a termination fee in the amount of $1,277,320. The Real Estate Foundation recorded a loss of $3,324,113 on the fair value of the derivative for the year ended June 30, 2008.

Annual debt service requirements to maturity for Bonds Payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038
Bond Premium/(Discount)

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Principal

Bonds Payable Interest

$3,595,000 4,080,000 4,225,000 4,385,000 4,540,000
31,280,000 39,435,000 49,690,000 66,780,000 24,820,000 232,830,000 (4,652,459) $228,177,541

$9,368,150 9,248,435 9,097,922 8,937,625 8,767,050
47,025,033 38,466,504 27,572,570 13,862,117
2,467,476 174,812,882
$174,812,882

Total
$12,963,150 13,328,435 13,322,922 13,322,625 13,307,050 78,305,033 77,901,504 77,262,570 80,642,117 27,287,476
407,642,882 (4,652,459)
$402,990,423

University of Georgia Annual Financial Report FY 2008 55

UNIVERSITY SYSTEM OFFICE
Financial Report
For the Year Ended June 30, 2008

University System Office Board of Regents of the University System of Georgia
Atlanta, Georgia

Errol B. Davis, Jr.
Chancellor

Usha Ramachandran
Vice Chancellor for Fiscal Affairs/Treasurer
Vikki L. Williamson
Executive Director for Business and Financial Affairs

UNIVERSITY SYSTEM OFFICE ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ............................................................................ 1 Statement of Net Assets ...................................................................................................... 8 Statement of Revenues, Expenses and Changes in Net Assets........................................... 9 Statement of Cash Flows .................................................................................................. 10 Statement of Fiduciary Net Assets.................................................................................... 11 Statement of Changes in Fiduciary Net Assets................................................................. 12 Note 1. Summary of Significant Accounting Policies .................................................... 13 Note 2. Deposits and Investments................................................................................... 18 Note 3. Accounts Receivable.......................................................................................... 24 Note 4. Inventories.......................................................................................................... 24 Note 5. Notes Receivable................................................................................................ 24 Note 6. Capital Assets..................................................................................................... 25 Note 7. Deferred Revenue............................................................................................... 26 Note 8. Long-Term Liabilities ........................................................................................ 26 Note 9. Significant Commitments................................................................................... 26 Note 10. Lease Obligations............................................................................................. 26 Note 11. Retirement Plans .............................................................................................. 28 Note 12. Risk Management............................................................................................. 31 Note 13. Contingencies................................................................................................... 33 Note 14. Post-Employment Retiree Health Benefit Plan................................................ 33 Note 15. Natural Classifications with Functional Classifications .................................. 37 Note 16. Special Items .................................................................................................... 38 Required Supplementary Information............................................................................... 39

UNIVERSITY SYSTEM OFFICE
Management's Discussion and Analysis
Introduction
The University System Office of Georgia's Board of Regents was created in 1931 as part of a reorganization of Georgia's state government. With this act, public higher education in Georgia was unified for the first time under a single governing and management authority. The governor appoints members to the Board, who each serve seven years. Today, the Board of Regents is composed of 18 members, five of whom are appointed from the state-at-large, and one from each of the 13 congressional districts. The Board elects a chancellor who serves as its chief executive officer and the chief administrative officer of the University System.
The Board oversees 35 institutions: four research institutions, two regional universities, 13 state universities, seven state colleges, and nine two-year colleges. In addition, one marine research institute is governed by the Board. These institutions enroll more than 270,000 students and employ more than 11,000 faculty and 28,600 staff to provide teaching and related services to students and the communities in which they are located.
The University System Office also is the custodian of a newly created Fiduciary Fund for University System of Georgia retiree health and life insurance benefits.
Overview of the Financial Statements and Financial Analysis
The University System Office is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. There are three primary financial statements presented: the Statement of Net Assets; the Statement of Revenues, Expenses, and Changes in Net Assets; and, the Statement of Cash Flows. This discussion and analysis of the University System Office's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007. As custodian of the Board of Regents Retiree Health Benefit Fund, two additional statements are presented: the Statement of Fiduciary Net Assets and the Statement of Changes in Fiduciary Net Assets.
Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the University System Office as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of the University System Office. The Statement of Net Assets presents end-of-year data concerning assets (current and non-current), liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.
University System Office Annual Financial Report FY 2008 1

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the University System Office. They also are able to determine how much the University System Office owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the University System Office. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources only is available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$239,792,056 38,015,009 5,820,141
283,627,206

June 30, 2007
$163,749,761 38,074,946 3,612,043
205,436,750

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

223,071,142 24,238,938
247,310,080

149,109,263 25,022,843
174,132,106

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

8,785,101 3,612,043 16,270,567 7,649,415 $36,317,126

9,016,623 3,612,043 10,554,442 8,121,536 $31,304,644

The total assets of the University System Office increased by $78,190,456. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase in cash and cash equivalents of $64,464,722, which was partially offset by a decrease in short term investments of $6,385,802. Capital assets, net, decreased by ($59,937). Other assets increased $2,208,098, which was attributable to a Note Receivable that was payable from Georgia Southern to the Georgia Education Authority (University) that was transferred as payable to the University System Office, since the GEAU met in July 2007 and resolved to no longer conduct business as a state authority and dispose of all its assets and liabilities (see Note 5 for additional details).
The total liabilities for the year increased by $73,177,974. This was primarily due to the increase in deposits held for other organizations of $64,270,195, increase in accounts payable of
University System Office Annual Financial Report FY 2008 2

$11,433,974 and decrease in benefits payable of ($3,098,435). The combination of the increase in total assets of $78,190,456 and the increase in total liabilities of $73,177,974 yields an increase in total net assets of $5,012,482. The increase in total net assets is primarily in the category of restricted, expendable in the amount of $5,716,125, which was partially offset by the decrease in invested in capital assets, net of debt, in the amount of ($231,522) and a decrease in the unrestricted net asset balance of ($472,121).

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking, operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example, state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$266,014,185 432,031,929 (166,017,744) 166,628,304
610,560 4,401,922 5,012,482 31,304,644
0 31,304,644 $36,317,126

$323,192,952 472,882,393 (149,689,441) 152,780,956
3,091,515 3,930,389 7,021,904 24,282,740
0 24,282,740 $31,304,644

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year, as demonstrated by an increase in net assets of $5,012,482 at the end of the year. Some highlights of the information presented on the Statement of Revenues, Expenses, and Changes in Net Assets are provided in the following sections.

University System Office Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue Grant s and Cont ract s Sales and Services Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Invest ment Income Ot her Revenue/(Expense)
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s and Special It em s St at e Capit al Gift s and Grant s Special It em s
T ot al Capit al Gift s and Grant s and Special It em s
T ot al Revenues

June 30, 2008
$11,899,973 27,336,275
226,777,937 266,014,185
165,172,381 2,466,332 345,412 (44,445)
167,939,680
1,688,517 2,713,405 4,401,922 $438,355,787

June 30, 2007
$17,487,147 23,670,772
282,035,033 323,192,952
151,241,538 1,314,311 1,539,582 14,230
154,109,661
3,930,389 0
3,930,389 $481,233,002

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support Scholarships and Fellowships
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$3,071,652 229,322
99,688,676 23,839,064
281,848 304,669,679
251,688 432,031,929
1,311,376 $433,343,305

June 30, 2007
$3,970,782 385,005
99,536,846 20,697,178
280,625 347,780,221
231,736 472,882,393
1,328,705 $474,211,098

Total operating revenue decreased by ($57,178,767) in fiscal 2008. This was primarily due to a ($55,257,096) decrease in other operating revenue related to the transfer of retiree-related health insurance premiums to the Retiree Health Benefit Fund. Operating revenue increases included sales and services revenue of $3,665,503, which were primarily related to increased billings for GALILEO $1,587,131, PeopleSoft $893,382, Oracle $810,112, and Peachnet $234,256. Operating revenue increases were partially offset by decreased grants and contracts revenue of

University System Office Annual Financial Report FY 2008 4

($5,587,174), primarily due to funding decreases in the National Foundation on the Arts and Humanities and the Partnership for Reform in Science and Mathematics (PRISM) grants.

Non-operating revenues increased by $13,830,019 for the year, primarily due to an increase of $13,930,843 in State Appropriations. Non-operating grants and contracts revenue increased $1,152,021, which was related to public/private venture (PPV) funding. These increases were partially offset by decreased investment income of ($1,194,170).

The Special Items of $2,713,405 is related to the transfer of all of the assets and liabilities of the Georgia Education Authority (GEAU) to the University System Office as noted in the explanation for Other Current Assets provided above. Additional details related to this transaction may be found in Note 5.

Operating expenses decreased by ($40,850,464) in fiscal year 2008. Operating expense decreases were primarily related to the transfer of retiree-related health insurance expenses to the Retiree Health Benefit Fund. This decrease was partially offset by increased software purchases of $4,524,831, increased consulting contracts of $3,743,307 that were primarily related to the PeopleSoft upgrade, and increased information technology contracts of $1,995,614.

Statement of Cash Flows

The third statement presented by the University System Office is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivit ies Non-capit al Financing Activit ies Capital and Related Financing Act ivities Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($167,177,903) 234,393,786 (7,911,589) 5,160,478 64,464,772 66,218,624
$130,683,396

June 30, 2007
($142,474,649) 142,507,019 (6,686,361) 393,594 (6,260,397) 72,479,021
$66,218,624

University System Office Annual Financial Report FY 2008 5

Capital Assets
In fiscal year 2006 and 2007, the Georgia Public Telecommunications Commission ("the Commission") transferred to the University System Office other property and equipment located at its tower sites throughout the State through an intergovernmental agreement to the University System Office. In fiscal year 2008, additional equipment was transferred to the University System Office under this arrangement. The value of the equipment transferred in fiscal year 2008 was $1,688,517; in addition, $17,925 in equipment disposals also was recorded. The total value of the land and equipment transferred was $26,698,347, and the accumulated depreciation was $21,374,872, for a net value of $5,323,475.
The transfer was required for the Commission to obtain the use of five-year, general obligation bonds sold in the University System Office's name on behalf of the Commission. The Commission, an authority created after 1967, cannot have bonds sold on its behalf. An intergovernmental agreement has been executed between the Commission and the University System Office that allows the Commission to utilize these funds for the digital conversion of the towers and antennae. The bonds were sold September 7, 2005, and the agreement with the University System Office expires at the end of the five-year period when the bonds are paid in full. All equipment will be transferred back to the ownership of the Commission at the expiration of the intergovernmental agreement.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 10 in the notes to the financial statements.
Long Term Debt and Liabilities
The University System Office had Long-Term Debt and Liabilities of $32,299,552, of which $8,060,614 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
The University System Office does not have any units that qualify as component units for the purposes of GASB 39 reporting.
Health and Dental Insurance
The University System Office is the fiscal agent for health and dental insurance for all of the institutions in the University System of Georgia. The financial information for all related health and dental insurance transactions is included on the face of the statement in the Annual Financial Report, including the liability for claims incurred but not reported. The summary information regarding revenues, expenditures and the related liability for fiscal year 2008 is provided below:
University System Office Annual Financial Report FY 2008 6

Emp loy ees: Unp aid Claims and Claim Adjustments (Prior Year IBNR)
Incurred Claims and Claim Adjustments Exp enses Provisions for Insured Events of the Current Year
Pay ments - Claims and Claim Adjustments Attributable T o Insured Events of the Current Year and Prior Years
Unp aid Claims and Claim Adjustments (Current Year IBNR)
R et irees : Unp aid Claims and Claim Adjustments (Prior Year IBNR)
Incurred Claims and Claim Adjustments Exp enses Provisions for Insured Events of the Current Year
Pay ments - Claims and Claim Adjustments Attributable T o Insured Events of the Current Year and Prior Years
Unp aid Claims and Claim Adjustments (Current Year IBNR)

June 30, 2008

$

27,147,291

June 30, 2007

$

27,983,473

204,892,976

264,356,511

207,991,411

$

24,048,856 $

265,192,693 27,147,291

$

0$

0

90,144,273

0

83,441,613

0

$

6,702,660 $

0

Retiree Health Benefit Fund

As a result of creating the Board of Regents Retiree Health Benefit Fund, the Board of Regents implemented the provisions of GASB Statement Nos. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans and 45, Accounting and Financial Reporting by Employers for Post-employment Benefits Other than Pensions in fiscal 2008. This fund was authorized pursuant to Official Code of Georgia Annotated Section 47-21-21 for the purpose of accumulating funds necessary to meet employer costs of retiree post-employment health insurance benefits. Please see Note 14 for additional information.

Economic Outlook

Although the State of Georgia is experiencing a less positive year from a budgetary standpoint, the University System Office is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The University System Office's overall financial position is strong, and the State of Georgia is committed to providing educational opportunities for its citizenry. Even with a relatively flat funded year, the University System Office was able to generate a modest increase in Net Assets. Due to the current state budget constraints, the University System Office will maintain an even closer watch over resources to ensure the University System Office's ability to react to unknown internal and external issues.

Usha Ramachandran, Vice Chancellor for Fiscal Affairs/Treasurer The Board of Regents University System Office

University System Office Annual Financial Report FY 2008 7

Statement of Net Assets
UNIVERS ITY S YS TEM OFFICE S TATEMENT OF NET ASSETS
June 30, 2008
AS S ETS C urrent Assets Cash and Cash Equivalent s Short -t erm Invest ment s Account s Receivable, net (not e 3) Receivables - Federal Financial Assist ance Receivables - Ot her P repaid Items T ot al Current Asset s
Noncurre nt Asse ts Invest ment s Not es Receivable, net Capit al Asset s, net (not e 6) T ot al Noncurrent Asset s TO TAL AS S ETS
LIAB ILITIES C u rre n t Liabi li tie s Account s P ayable Benefit s P ayable Deposit s Held for Ot her Organizat ions Lease P urchase Obligat ions (current port ion) Compensat ed Absences (current port ion) T ot al Current Liabilit ies Non cu rre n t Li abil iti e s Lease P urchase Obligat ions (noncurrent ) Compensat ed Absences (noncurrent ) T ot al Noncurrent Liabilit ies TO TAL LIAB ILITIES
NET AS S ETS Invest ed in Capit al Asset s, net of relat ed debt Rest rict ed for N o n ex p e n da ble E x p e n dable Unrest rict ed TO TAL NET AS S ETS

June 30, 2008
$130,683,396 89,831,625
1,172,624 18,099,975
4,436 239,792,056
3,612,043 2,208,098 38,015,009 43,835,150 283,627,206
11,453,273 24,048,856 179,508,399
6,232,259 1,828,355 223,071,142
22,997,649 1,241,289
24,238,938 247,310,080
8,785,101
3,612,043 16,270,567
7,649,415 $36,317,126

University System Office Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets

UNIVERS ITY S YS TEM OFFICE S TATEMENT of REVENUES , EXPENS ES , and CHANGES in NET AS S ETS
for the Year Ended June 30, 2008

REVENUES

June 30, 2008

Operat ing Revenues Grant s and Cont ract s Federal Other Sales and Services Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: St aff
Employee Benefits T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion
T ot al Operat ing Expenses Operat ing Income (loss)
NO NO PERATING REVENUES (EXPENS ES ) St at e Appropriat ions Grant s and Cont ract s Federal Other Invest m ent Incom e (endowment s, auxiliary and ot her) Int erest Expense (capit al asset s) Ot her Nonoperat ing Revenues/(Expenses) Net Nonoperat ing Revenues Income before ot her revenues, expenses, gains, or loss Capit al Grant s and Gift s St at e Special It em - Not e Receivable T ransfer Special It em - Aut horit y Dissolut ion T ot al Ot her Revenues Increase in Net Asset s
NET AS S ETS Net Asset s-beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s-beginning of year, rest at ed
Net Asset s-End of Year

$11,587,848 312,125
27,336,275 226,777,937 266,014,185
26,387,280 6,700,976 759,614 251,688
23,587,137 365,890,276
8,454,958 432,031,929 (166,017,744)
165,172,381
213,612 2,252,720
345,412 (1,311,376)
(44,445) 166,628,304
610,560
1,688,517 2,288,636
424,769 4,401,922 5,012,482
31,304,644 0
31,304,644 $36,317,126

University System Office Annual Financial Report FY 2008 9

Statement of Cash Flows

UN IV ER S ITY S YS TEM O FFIC E S TA TEM EN T O F C A S H FLO W S For th e Ye ar En de d J u n e 3 0 , 2 0 0 8

C A S H FL O W S FR O M O P ER A TIN G A C TIV ITIES Gran t s an d Co n t ract s (E x ch an ge) Sa le s a n d Se r v ic e s P a y m e n t s t o Sup p lie r s P ay m en t s t o E m p lo y ees P a y m e n t s f o r Sc h o la r sh ip s a n d F e llo wsh ip s O t h er Receip t s (p ay m en t s) N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
C A S H FL O W S FR O M N O N - C A P ITA L FIN A N C IN G A C TIV ITIES St a t e A p p r o p r ia t io n s A gen cy Fun ds T ran sact io n s Gift s an d Gran t s Receiv ed fo r O t h er T h an Cap it al P urp o ses O t h er N o n o p erat in g Receip t s Sp e c ia l I t e m - A ut h o r it y D isso lut io n N et Cash Flo ws P ro v ided by N o n -cap it al Fin an cin g A ct iv it ies
C A S H FL O W S FR O M C A P ITA L A N D R EL A TED FIN A N C IN G A C TIV ITIES P r o c e e ds f r o m Sa le o f C a p it a l A sse t s P urch ases o f Cap it al A sset s P rin cip al P aid o n Cap it al D ebt an d L eases In t erest P aid o n Cap it al D ebt an d L eases N et Cash used by Cap it al an d Relat ed Fin an cin g A ct iv it ies
C A S H FL O W S FR O M IN V ES TIN G A C TIV ITIES P r o c e e ds f r o m Sa le s a n d M a t ur it ie s o f I n v e st m e n t s In t erest o n In v est m en t s N et Cash P ro v ided (used) by In v est in g A ct iv it ies N et In crease/D ecrease in Cash Cash an d Cash E quiv alen t s - Begin n in g o f y ear Cash an d Cash E quiv alen t s - E n d o f Y ear
R EC O N C IL IA TIO N O F O P ER A TIN G L O S S TO N ET C A S H P R O V ID ED ( U S ED ) B Y O P ER A TIN G A C TIV ITIES :
O p erat in g In co m e (lo ss) A djust m en t s t o Reco n cile N et In co m e (lo ss) t o N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
D ep reciat io n Ch an ge in A sset s an d L iabilit ies:
Receiv ables, n et P rep aid It em s A cco un t s P ay able O t h er L iabilit ies - Ben efit s P ay able Co m p en sat ed A bsen ces
N et Cash P ro v ided (used) by O p erat in g A ct iv it ies
* * N O N - C A SH I N VE ST I N G, N O N - C A P I T A L F I N A N C I N G, A N D C A P I T A L A N D R E L A T E D F I N A N C I N G T R A N SA C T I O N S
Fix ed asset s acquired by in currin g cap it al lease o bligat io n s Ch an ge in fair v alue o f in v est m en t s reco gn ized as a co m p o n en t o f in t erest in co m e Sp e c ia l I t e m - N o t e R e c e iv a ble T r a n sf e r Gift o f cap it al asset s reducin g p ro ceeds o f cap it al gran t s an d gift s

June 30, 2008
1 1 ,0 7 4 ,1 2 2 2 7 ,2 5 1 ,8 9 4 (3 8 9 ,0 1 1 ,3 2 2 ) (2 6 ,0 0 0 ,2 2 7 )
(2 5 1 ,6 8 8 ) 2 0 9 ,7 5 9 ,3 1 8 (1 6 7 ,1 7 7 ,9 0 3 )
1 6 5 ,1 7 2 ,3 8 1 6 6 ,2 2 8 ,9 1 7 2 ,4 6 6 ,3 3 2 1 0 1 ,3 8 7 4 2 4 ,7 6 9
2 3 4 ,3 9 3 ,7 8 6
6 6 ,2 3 2 (1 ,1 0 0 ,7 9 9 ) (5 ,5 6 5 ,6 4 6 ) (1 ,3 1 1 ,3 7 6 ) (7 ,9 1 1 ,5 8 9 )
4 ,6 6 8 ,8 5 0 4 9 1 ,6 2 8
5 ,1 6 0 ,4 7 8 6 4 ,4 6 4 ,7 7 2 6 6 ,2 1 8 ,6 2 4 $ 1 3 0 ,6 8 3 ,3 9 6
($ 1 6 6 ,0 1 7 ,7 4 4 )
8 ,4 5 4 ,9 5 8
(1 7 ,9 2 8 ,8 5 1 ) (4 ,4 3 6 )
1 1 ,0 1 5 ,9 5 0 (3 ,0 9 8 ,4 3 5 )
4 0 0 ,6 5 5
($ 1 6 7 ,1 7 7 ,9 0 3 )
$ 5 ,7 3 7 ,2 3 1 ($ 1 4 6 ,2 1 6 )
$ 2 ,2 8 8 ,6 3 6 ($ 1 ,6 8 8 ,5 1 7 )

University System Office Annual Financial Report FY 2008 10

Statement of Fiduciary Net Assets

S TATEMENT OF FIDUCIARY NET AS S ETS BOARD OF REGENTS RETIREE HEALTH B ENEFIT FUND
June 30, 2008

AS S ETS

June 30, 2008

Cas h and Cas h Equivalents Re c e iv a b le s
Emp lo y e r Total Receivables

$4,374,041
2,618,873 2,618,873

Inves tments , at fair value TOTAL AS S ETS

0 6,992,914

LIAB ILITIES

Benefits payable TOTAL LIABILITIES

6,702,660 6,702,660

NET AS S ETS

Net as s ets held in trus t for other pos temployment benefits
TOTAL NET AS S ETS

290,254 $290,254

University System Office Annual Financial Report FY 2008 11

Statement of Changes in Fiduciary Net Assets

S TATEMENT OF CHANGES IN FIDUCIARY NET AS S ETS BOARD OF REGENTS RETIREE HEALTH B ENEFIT FUND
for the Year Ended June 30, 2008

ADDITIONS
Co n t rib u t io n s Emp lo y e r Plan member Total Contributions
Inves tment Income Interes t/dividends
Les s : Inves tment expens e Net Inves tment Income
DEDUCTIONS
Be n e fit s Life Ins urance Premium Expens e A dminis trative expens e
Total Deductions
NET INCREAS E/(DECREAS E)
NET AS S ETS HELD IN TRUS T FOR OTHER POS TEMPLOYMENT BENEFITS
Beginning of year End of year

June 30, 2008
$66,717,298 21,091,336 87,808,634
19,245 19,245
0 19,245
79,995,991 4,096,012 3,445,622 87,537,625
290,254
0 $290,254

University System Office Annual Financial Report FY 2008 12

UNIVERSITY SYSTEM OFFICE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations The Board of Regents of the University System of Georgia, an organizational unit of the State of Georgia, was created by the "Reorganization Act of 1931." With this act, public higher education in Georgia was unified for the first time under a single governing and management authority. The governor appoints members to the Board, who each serve seven years. The Board of Regents currently is composed of 18 members, five of whom are appointed from the state-at-large, and one from each of the 13 congressional districts. The Chancellor is appointed by the Board of Regents as chief executive officer and serves at the pleasure of the Board. The Board oversees 35 institutions (four research institutions, two regional universities, 13 state universities, seven state colleges, and nine two-year colleges), Skidaway Institute of Oceanography and an administrative central office (the University System Office). These institutions enroll 270,000 students and employ more than 11,000 faculty and 28,600 staff to provide teaching and related services to students and the communities in which they are located.
Reporting Entity The University System Office is the administrative central office for the thirty-five (35) Statesupported, member institutions of higher education in Georgia and one marine research institute, which comprise the University System of Georgia, an organizational unit of the State of Georgia. The University System Office also is the custodian of a newly created Fiduciary Fund for retiree health and life insurance benefits. The accompanying financial statements reflect the operations of the University System Office as a separate reporting entity and as custodian of the Board of Regents Retiree Health Benefit Fund.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. The University System Office does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the University System Office is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus the University System Office) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Unit - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that
University System Office Annual Financial Report FY 2008 13

qualify as component units in the Annual Financial Report for the institution. For FY2008, the University System Office does not have any foundations or affiliated organizations that qualify as component units.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University System Office was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 University System Office's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
As a result of creating the Board of Regents Retiree Health Benefit Fund, the Board of Regents implemented the provisions of GASB Statement Nos. 43 Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans and 45 Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions in fiscal 2008. The financial statements for the plan are presented directly after the University System Office Enterprise Fund financial statements and include a Statement of Fiduciary Net Assets and a Statement of Changes in Fiduciary Net Assets. See Note 14 - Post-Employment Retiree Health Benefit Plan for additional information regarding this fund.
Basis of Accounting For financial reporting purposes, the University System Office is considered a special-purpose government engaged in business-type and fiduciary activities. Accordingly, the University System Office'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-system transactions have been eliminated.
The University System Office has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University System Office has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
University System Office Annual Financial Report FY 2008 14

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.
Investments The University System Office accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University System Office's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University System Office's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University System Office when complete. For projects managed by the University System Office, the University
University System Office Annual Financial Report FY 2008 15

System Office retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC transferred equipment for the Georgia Public Telecommunications Commission to the University System Office valued at $1,688,517.
Deposits Held for Other Organizations The University System Office had $179,508,399 in Deposits Held for Other Organizations as of June 30, 2008. Deposits held for others consist of the external portion of the University System of Georgia's Pooled Investment Fund program and other funds held by the University System Office as an agent for various governments or individuals.
Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. The University System Office had accrued liability for compensated absences in the amount of $2,668,989 as of July 1, 2007. For fiscal year 2008, $2,145,896 was earned in compensated absences and employees were paid $1,745,241, for a net increase of $400,655. The ending balance as of June 30, 2008 in accrued liability for compensated absences was $3,069,644.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The University System Office's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University System Office'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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University System Office may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
University System Office Annual Financial Report FY 2008 16

Restricted net assets - expendable: Restricted expendable net assets include resources in which the University System Office is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E&G and Ot her Organized Act ivit ies T ot al Rest rict ed Expendable

$16,270,567 $16,270,567

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University System Office, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

Reserve for Encumbrances Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$4,996,555 2,652,860
$7,649,415

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University System Office's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes The University System Office, 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 University System Office has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) sales and services of educational departments, (2) most Federal, state and local grants and contracts, and (3) University System of Georgia's self insurance receipts.

University System Office Annual Financial Report FY 2008 17

Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University System Office's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University System Office) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $27,733,269 and the bank balance was $29,908,718. Of the University System Office's deposits, $29,908,718 were uninsured. Of these uninsured deposits, $29,908,718 were collateralized with securities held by the financial institution's trust department or agent in the University System Office's name.
University System Office Annual Financial Report FY 2008 18

B. Investments The University System Office serves as fiscal agent for various units of the University System of Georgia and cooperative organizations. The University System Office pools the monies of these organizations with the University System Office's monies for investment purposes. The University System Office cannot allocate pool investments between the internal (University System) and external (cooperative organizations) investment pool portions. The investment pool is not registered with the SEC as an investment company. The fair value of the investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns.
The University System Office maintains investment policy guidelines for each pooled investment fund that is offered to qualified University System participants. These policies are intended to foster sound and prudent responsibility each institution has to the citizens of Georgia and which conforms to the Board of Regents investment policy. All investments must be consistent with donor intent, Board of Regents policy, and applicable Federal and state laws.
Units of the University System of Georgia and their affiliated organizations may participate in the Pooled Investment Fund program. The overall character of the pooled fund portfolio should be one of above average quality, possessing at most an average degree of investment risk.
Short Term Fund The Short Term fund provides a current return and stability of principal while affording a means of overnight liquidity for projected cash needs. The investment maturities of the fund will range between daily and two years.
Legal Fund The Legal fund provides an opportunity for greater income and modest principal growth to the extent possible with the securities allowed under Georgia Code 50-17-59 and 50-17-63. The average maturity of this fund will typically range between five and ten years, with a maximum of thirty years for any individual investment. The overall character of the portfolio should be one of treasury and agency quality, possessing virtually no degree of financial risk.
Balanced Income Fund The Balanced Income fund is designed to be a vehicle to invest funds that are not subject to the state regulations concerning investing in equities. This fund is comprised of fixed income, equity and cash equivalent instruments.
The equity allocation range shall be between 30% and 40%, with a target of 35% of the total portfolio. The fixed income (bond) portion of the portfolio shall be between 60% and 70%, with a target of 65% of the total portfolio. Reserves for contingencies and stock and bond purchases are expected to comprise the balance of the fund. Reserves and excess income should be invested at all times in practical amounts. Reserves can be invested in high quality institutional money market mutual funds or other high quality, short term instruments.
University System Office Annual Financial Report FY 2008 19

Total Return Fund The Total Return fund is another pool designed to be a vehicle to invest funds that are not subject to state regulations concerning investing in equities. This pool offers the greatest percentage of overall equity exposure, with well over half of the funds typically invested in equities.
The equity allocation range shall be between 60% and 70%, with a target of 65% of the total portfolio. The fixed income (bond) portion of the portfolio shall be between 30% and 40%, with a target of 35% of the total portfolio. Reserves for contingencies and stock and bond purchases are expected to comprise the balance of the fund. Reserves and excess income should be invested at all times in practical amounts. Reserves can be invested in high quality institutional money market mutual funds or other high quality, short term instruments.
Diversified Fund The Diversified fund is designed to gain further diversification and increase exposures to assets that have lower correlation to equity and bond markets by utilizing alternative asset classes. In addition, this fund is constructed to build an optimal portfolio where return is increased and risk is reduced.
The equity allocation range shall be between 50% and 75% of the portfolio. The fixed income (bond) portion of the portfolio shall be between 20% and 40%. The portfolio may also consist of Hedge Funds, Real Estate and Venture Capital/Private Equity/Post Venture Capital.
Hedge Funds The investment approach to this asset class is to use a multi-strategy, multimanager fund of hedge funds. The Board of Regents believes that a fund of fund strategy will provide the best access to a highly diversified pool of hedge fund strategies and managers.
Real Estate The Board of Regents' approach to investing in this asset class is to use real estate investment trusts (REITs). REITs are more liquid than owning commercial real estate and diversification can be achieved by purchasing a mutual fund.
Venture Capital/Private Equity/Post Venture Capital This asset class is the riskiest and most volatile permitted investment opportunity. This asset should be considered as an additional diversification investment strategy due to the low correlation with stock and bonds.
Reserves for contingencies and stock and bond purchases are expected to comprise the balance of the fund. Reserves and excess income should be invested at all times in practical amounts. Reserves can be invested in high quality, institutional money market mutual funds or other high quality, short term instruments.
The University System Office's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.
University System Office Annual Financial Report FY 2008 20

INVESTMENTS
Investment type Debt Securities
U.S. Treasuries U.S. Agencies
Explicitly Guaranteed Implicitly Guaranteed Mutual Bond Fund
Other Investments Bond/Equity Mutual Funds Equity Mutual Funds Equity Securities - Domestic Real Estate Investment Fund
Total Investments

Fair Value

Less Than 1 Year

Investment Maturity 1-5 Years

6-10 Years

$6,399,792
1,425,021 112,194,514 26,940,853 $146,960,180
1,662,106 36,944,466 12,604,226 2,596,858
$200,767,836

569,480 45,702,687
$46,272,167

$4,051,090
855,541 66,491,827 24,830,683 $96,229,141

$2,348,702
2,110,170 $4,458,872

Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The Board of Regents policy for managing interest rate risk is contained in the investment policy guidelines for the various pooled funds:
1. In the Short Term fund, the average maturity of the fixed income portfolio shall not exceed three years.
2. In all the other pooled funds, the average maturity of the fixed income portfolio shall not exceed ten years.
3. Fixed income investments, except in the Diversified Fund, shall be limited to US government agency and corporate debt instruments that meet investment eligibility under Georgia Code 50-17-63.
4. The fixed income target allocation is defined in the investment policy guidelines for each pooled investment fund. These targets may be modified upon recommendation of the fund's investment manager and approval by the Board of Regents.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the University System Office will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The University System Office's policy for managing custodial credit risk for investments is:
1. The University System Office has appointed a Federally regulated banking institution as custodian. The custodian performs its duties to the standards of a

University System Office Annual Financial Report FY 2008 21

professional custodian and is liable to the University System Office for claims, losses, liabilities and expenses arising from its failure to exercise ordinary care, its willful misconduct, or its failure to otherwise act in accordance with the contract.

2. All securities transactions are to be settled on a delivery vs. payment basis through an approved depository institution such as the Depository Trust Company or the Federal Reserve.

3. Repurchase agreements are to be collateralized by United States Treasury securities at 102% of the market value of the investment at all times.

At June 30, 2008, $132,623,553 of the University System Office's applicable investments were uninsured and held by the investment's counterparty in the University System Office's name.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University System Office's policy for managing credit quality risk is contained in the investment policy guidelines for the various pooled investment funds:

1. In all pooled funds except the Diversified Fund, all debt issues must be eligible investments under Georgia Code 50-17-63. Portfolios of debt security funds also must meet the eligible investment criteria under the same code section.

2. The Diversified Fund is permitted to invest in non-investment grade debt issues up to a limit of 15% of the entire portfolio.

3. The portfolio shall be well diversified as to issuer and maturity.

The investments subject to credit quality risk are reflected below:

Related Debt Inves tments U. S. Agencies M utual Bond Fund

Fair Value
$112,194,514 26,940,853
$139,135,367

U nrat ed
$112,194,514 26,940,853
$139,135,367

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The University System Office's policy for managing concentration of credit risk is to diversify investments to the extent that any single issuer shall be limited to 5% of the market value in a particular investment fund. The following U.S. Agency investments exceeded 5% of the total reported investment amount as of June 30, 2008:

University System Office Annual Financial Report FY 2008 22

Investment:

Amount:

Federal National Mortgage Association Federal Home Loan Mortgage Corporation

$81,864,105 $22,142,409

Condensed financial information for the investment pool is as follows:

% of Total:
41% 11%

Statement of Net A s s ets - June 30, 2008

Assets Inves tments A ccrued Interes t and Other Receivables

$

198,521,222

399,525

$

198,920,747

Net A s s ets Held in Trus t for Pool Participants Internal Portion External Portion

$

19,772,415

179,148,332

$

198,920,747

Statement of Changes in Net A s s ets - June 30, 2008

Re v e n u e s

Interes t Income

$

Net Increas e (Decreas e) in Fair Value of Inves tments

Total Revenues

Expens es Operating Expens es
A dminis trative Expens es Net Increas e (Decreas e) in A s s ets Res ulting from Operations

Dis tribution to Participants

Capital Trans actions

Total Increas e (Decreas e) in A s s ets Res ulting from Operations

Net A s s ets July 1, 2007

Net A s s ets June 30, 2008

$

5,749,548 (8,396,833) (2,647,285)
(377,394) (3,024,679)
(17,191,992) 89,029,662 68,812,991 130,107,756 198,920,747

University System Office Annual Financial Report FY 2008 23

Note 3. Accounts Receivable

Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

Federal Financial Assist ance Other
Less Allowance for Doubt ful Account s Net Account s Receivable

$1,172,624 18,139,692 19,312,316
39,717
$19,272,599

Note 4. Inventories
The University System Office had no inventories at June 30, 2008.
Note 5. Notes Receivable
The Georgia Education Authority (University), (GEA (U)), was authorized to acquire, construct and operate housing accommodations for students of any institution under the control of the Board of Regents of the University System of Georgia. The GEA (U) constructed a dormitory on the campus of Georgia Southern University (GSOU) and financed the construction by obtaining a loan in 1994 from the U.S. Department of Education in the amount of $3,000,000 at an interest rate of 5.5% for a term of thirty years. In July 2007, GEA (U) met and resolved to no longer conduct business as a state authority and dispose of all its assets and liabilities. As a result of that decision, a Note Receivable that is payable from GSOU was transferred by Resolution from GEA (U) to the University System Office (USO) in the amount of $2,288,636. GSOU has an obligation to send the USO annual payments of $205,321 through the year 2025. In fiscal year 2008, the USO collected $205,321, $124,783 of which represented interest. Total principal collected on the Note Receivables was $80,538. At June 30, 2008, the Notes Receivable balance was $2,208,098.

University System Office Annual Financial Report FY 2008 24

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Capitalized Collections
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: Equipment Capital Leases T otal Assets Being Depreciated
Less: Accumulated Depreciation Equipment Capital Leases T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$2,476,877 10,000
2,486,877
52,494,274 43,478,191 95,972,465
45,596,093 14,788,303 60,384,396
35,588,069
$38,074,946

Addi ti o n s $0 0

Re du cti on s $0 0

2,789,316 5,737,231 8,526,547

11,576,466 11,576,466

2,273,083 6,181,875 8,454,958
71,589
$71,589

11,444,940 11,444,940
131,526 $131,526

En di n g B al an ce 6/30/2008
$2,476,877 10,000
2,486,877
43,707,124 49,215,422 92,922,546
36,424,236 20,970,178 57,394,414
35,528,132
$38,015,009

In fiscal year 2006, the Georgia Public Telecommunications Commission ("the Commission") transferred to the University System Office other property and equipment located at its tower sites throughout the State through an intergovernmental agreement to the University System Office. In fiscal year 2007 and 2008, additional land and equipment was transferred to the University System Office under this arrangement. The value of the equipment transferred in fiscal year 2008 was $1,688,517; in addition, $17,925 in equipment disposals also were recorded. The total value of the land and equipment transferred is $26,698,347 and the accumulated depreciation is $21,374,872, for a net value of $5,323,475. The transfer of assets is included on the Statement of Revenues, Expenses and Changes in Net Assets as Capital Grants and Gifts, State and on the Statement of Cash Flows as Non-Cash Investing, Non-Capital Financing, and Capital and Related Financing Transactions as Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts of $1,688,517.

University System Office Annual Financial Report FY 2008 25

Note 7. Deferred Revenue

The University System Office had no deferred revenue at June 30, 2008.

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations

Beginning Balance
July 1, 2007
$29,058,323

Additions $5,737,231

Reductions

Ending Balance June 30, 2008

$5,565,646

$29,229,908

Other Liabilities Compensated Absences Total

2,668,989 2,668,989

2,145,896 2,145,896

1,745,241 1,745,241

3,069,644 3,069,644

Total Long Term Obligations

$31,727,312

$7,883,127

$7,310,887

$32,299,552

Current Portion $6,232,259
1,828,355 1,828,355 $8,060,614

Note 9. Significant Commitments

The University System Office had no significant unearned, outstanding construction or renovation contracts executed as of June 30, 2008.

Note 10. Lease Obligations

The University System Office is obligated under various capital leases and installment purchase agreements for the acquisition of real property and equipment.
CAPITAL LEASES

The University System Office has 21 capital leases payable in monthly installments with terms expiring in various years between 2010 and 2025. Expenditures for fiscal year 2008 were $6,877,022, of which $1,311,376 represented interest. Total principal paid on capital leases was $5,565,646 for the fiscal year ended June 30, 2008. Interest rates range from 2.62 percent to 4.88 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Buildings Equipment Total Assets Held Under Capital Lease

$11,378,997 16,866,248 $28,245,245

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.
University System Office Annual Financial Report FY 2008 26

The University System Office entered into five new capital lease obligations in the current year. In September 2007, the University System Office entered into a capital lease of $1,221,041 at 3.772 percent for optical equipment, and capital leases of $1,203,028 and $1,064,237 at 3.73 percent for equipment, software, support and installation. The outstanding liability at June 30, 2008 on these capital leases is $2,986,656. In February 2008, the University System Office entered into a capital lease of $650,000 at 2.99 percent for equipment, software, support and installation. The outstanding liability at June 30, 2008 on this capital lease is $599,463. In March 2008, the University System Office entered into a capital lease of $1,598,925 at 2.62 percent for video conference equipment and support. The outstanding liability at June 30, 2008 on this capital lease is $1,498,716.
The University System Office also has various capital leases for equipment and a capital lease for one building with outstanding balances at June 30, 2008 in the amount of $11,799,437 and $12,345,636, respectively.
OPERATING LEASES
The University System Office has one operating lease for office space used by the Georgia Public Library System. The lease is annually renewable through fiscal 2010.
Future commitments for capital and operating leases, including other installment purchase agreements, are as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$7,371,343 6,665,234 4,717,147 2,778,463 1,536,527 5,532,533 5,960,111 1,562,413
36,123,771
6,893,863 $29,229,908

$177,777 187,155
$364,932

The University System Office's expense for rental of real property and/or equipment under operating leases in FY2008 was $177,777.

University System Office Annual Financial Report FY 2008 27

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description The University System Office participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing, multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of the University System Office who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The University System Office makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$1,952,167 $1,787,733 $1,657,223

Employees' Retirement System of Georgia

Plan Description The University System Office participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing, multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

University System Office Annual Financial Report FY 2008 28

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits also are available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University System Office's payroll for the year ended June 30, 2008, for employees covered by ERS was $593,025. The University System Office's total payroll for all employees was $26,387,280.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University System Office pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University System Office also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University System Office amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions also are made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$61,924 $40,840 $45,379

University System Office Annual Financial Report FY 2008 29

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy The University System Office makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
The University System Office and the covered employees made the required contributions of $260,768 (8.13% or 8.15%) and $158,389 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports, which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description The University System Office 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.
University System Office Annual Financial Report FY 2008 30

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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $17,788 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. The University System Office and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person.
The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different, self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
Express Scripts is the administrator of the Board of Regents' prescription drug plan. Pharmacy drug claims will be processed in accordance with guidelines established for the Board of Regents' Prescription Drug Benefit Program. Generally, claims are submitted by participating pharmacies directly to Express Scripts for verification, processing and payment. Express Scripts
University System Office Annual Financial Report FY 2008 31

maintains an eligibility file based on information furnished by Blue Cross Blue Shield on behalf of the various organizational units of the University System of Georgia.

A reconciliation of total estimated claims liabilities for employees and retirees for the fiscal years ended June 30, 2008 and June 30, 2007 is shown below:

Emp loy ees: Unp aid Claims and Claim Adjustments (Prior Year IBNR)
Incurred Claims and Claim Adjustments Exp enses Provisions for Insured Events of the Current Year
Pay ments - Claims and Claim Adjustments Attributable T o Insured Events of the Current Year and Prior Years
Unp aid Claims and Claim Adjustments (Current Year IBNR)
R et irees : Unp aid Claims and Claim Adjustments (Prior Year IBNR)
Incurred Claims and Claim Adjustments Exp enses Provisions for Insured Events of the Current Year
Pay ments - Claims and Claim Adjustments Attributable T o Insured Events of the Current Year and Prior Years
Unp aid Claims and Claim Adjustments (Current Year IBNR)

June 30, 2008

$

27,147,291

June 30, 2007

$

27,983,473

204,892,976

264,356,511

207,991,411

$

24,048,856 $

265,192,693 27,147,291

$

0$

0

90,144,273

0

83,441,613

0

$

6,702,660 $

0

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 University System Office, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.

University System Office Annual Financial Report FY 2008 32

Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures that may be disallowed by the grantor cannot be determined at this time, although the University System Office expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the University System Office (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Retiree Health Benefit Plan
Plan Description The Board of Regents Retiree Health Benefit Fund (the "Plan") is a single-employer, defined benefit, healthcare plan administered by the University System Office. The plan was authorized pursuant to Official Code of Georgia Annotated Section 47-21-21 for the purpose of accumulating funds necessary to meet employer costs of retiree post-employment health insurance benefits.
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or who become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits.
The Board of Regents of the University System of Georgia issues a publicly available financial report that includes financial statements and required supplementary information for the Plan within its Consolidated Annual Financial Report. This report may be obtained at the following website address:
http://www.usg.edu/usg_stats/annual_fin_rep/
University System Office Annual Financial Report FY 2008 33

Membership of the plan consisted of the following at June 30, 2008:

June 30, 2008

Retirees and beneficiaries receiving benefits Terminated plan members entitled to but not yet receiving benefits Active plan members

18,909
0 33,794

Total

52,703

Summary of Significant Accounting Policies The financial statements of the Plan are prepared using the accrual basis of accounting. Employer contributions are recognized in the period in which they are due. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan.
Funding Policy The contribution requirements of plan members and the University System of Georgia, as employer, are established and may be amended by the Board of Regents. The Plan is substantially funded on a "pay-as-you-go" basis; however, amounts above the pay-as-you-go basis may be contributed annually, either by specific appropriation or by Board designation.
Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for eligible retirees. The employer portion of health insurance for its eligible retirees is based on rates that are established annually by the Board of Regents for the upcoming plan year. For the 2008 plan year, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the retiree.
For fiscal year 2008, the University System of Georgia contributed $66,717,298 to the plan, including $66,446,289 for current premiums or claims and an additional $271,009 to pre-fund benefits. Plan members receiving benefits contributed $21,091,336 for current premiums or claims.
The University System Office had 71 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits as of June 30, 2008. For the year ended June 30, 2008, the University System Office recognized as incurred $382,751 of expenditures, which was net of $120,420 of participant contributions.
Annual OPEB Cost and Net OPEB Obligation The University System of Georgia's annual other post-employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal

University System Office Annual Financial Report FY 2008 34

cost each year and amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The following table shows the components of the University System's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the University System's net OPEB obligation to the Retiree Health Benefit Fund (dollar amounts in millions):

Annual required contribution Interest on net OP EB obligation Adjustment to annual required contribution
Annual OPEB cost (expense) Less: Contributions made
Increase in net OP EB obligation Net OP EB obligation - beginning of year Net OP EB obligation - end of year

$224.9 0.0 0.0
224.9 (66.7) 158.2
0.0 $158.2

Since the net OPEB obligation to the Retiree Health Benefit Fund is a liability of the entire University System and not only the University System Office, the annual OPEB cost and net OPEB obligation are reported in the Consolidated Annual Financial Report of the University System of Georgia.
The University System's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2008, which is the transition year for the Retiree Health Benefit Plan, were as follows (dollar amounts in millions):

Fiscal Year Ended

Annual OPEB Cost

Percentage of Annual OPEB
Cost Contributed

Net OPEB O bliga tion

2008

$224.9

29.7%

$158.2

Funded Status and Funding Progress

Actuarial Valuation
Date 7/1/2007

Actuarial Value of Assets
(a) $0

Actuarial Accrued Liability (AAL) Projected Unit
Credit (b)
$1,985,200,000

Unfunded AAL (UAAL) (b-a)
$1,985,200,000

Funded Ratio (a/b)
0.0%

Covered Payroll
$2,201,804,465

UAAL as a Percentage of Covered Payroll
((b-a)/c) 90.2%

Note: The allocation and transfer of assets to the plan took place subsequent to the actuarial valuation date.

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the

University System Office Annual Financial Report FY 2008 35

employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. Additional information as of the latest actuarial valuation follows:

Valuation date Actuarial cost method Amortization method Asset Valuation method Remaining amortization period Actuarial assumptions: Investment rate of return* Healthcare cost trend rate* Ultimate trend rate Year of Ultimate trend rate *Includes an inflation assumption of 2.5%

July 1, 2007 Projected Unit Credit Level Dollar, Closed, 30-year Market Value of Assets 30 years
6.00% 8.50% 5.50% 2012

University System Office Annual Financial Report FY 2008 36

Note 15. Natural Classifications with Functional Classifications
The University System Office's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
St aff B en efit s T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

Inst ruct ion
$1,361,899 252,037 39,735
3,040 1,414,061
880
$3,071,652

Functional Clas s ification FY2008

Research

P ublic Se r v ice

$27,517 6,515

$2,065,502 491,311 77,689

195,290

19,350,787 77,475,746
227,641

$229,322

$99,688,676

Academ ic Sup p o r t
$1,874,236 472,738 79,366
45,939 20,613,869
752,916
$23,839,064

Natural Classification
St aff B enefit s T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

St udent Ser v ic es
$226,108 44,250 8,638
1,465 1,387
$281,848

Functional Clas s ification FY2008

Inst it ut ional Sup p o r t

Sc h o la r sh ip s & Fellowships

$20,832,018 5,434,125 554,186
4,185,906 266,189,923
7,473,521

$0 251,688

$304,669,679

$251,688

T otal E x p e n se s
26,387,280 6,700,976 759,614 251,688
23,587,137 365,890,276
8,454,958
$432,031,929

University System Office Annual Financial Report FY 2008 37

Note 16. Special Items Georgia Education Authority (University), (GEA(U)), an entity outside of the Board of Regents of the University System of Georgia reporting entity, is authorized to acquire, construct and operate housing accommodations for students of any institution under the control of the Board of Regents. In July 2007, GEA(U) met and resolved to no longer conduct business as a state authority and dispose of all its assets and liabilities. As a result of that decision, a Note Receivable that is payable from Georgia Southern University was transferred by Resolution from GEA(U) to the University System Office (USO) in the amount of $2,288,636. This amount is reported as a Note Receivable in the Statement of Net Assets and as a Special Item Note Receivable Transfer on the Statements of Revenues, Expenses and Changes in Net Assets and Cash Flows. Payments on the note receivable will be made by Georgia Southern University to the USO according to the original amortization schedule, which matures in 2025. After funding a start-up amount to the Georgia Higher Education Facilities Authority, the balance of GEA(U)'s remaining assets were transferred to the USO in the form of a payment of $424,769. This amount is reported as Cash and Cash Equivalents in the Statement of Net Assets and as a Special Item Authority Dissolution on the Statements of Revenues, Expenses and Changes in Net Assets and Cash Flows.
University System Office Annual Financial Report FY 2008 38

Required Supplementary Information

BOARDOFREGENTS RETIREEHEALTHBENEFITFUND SCHEDULE OF FUNDING PROGRESS

Actuarial Valuation
Date 7/1/2007

Actuarial Value of Assets
(a) $0

Actuarial Accrued Liability (AAL) Projected Unit
Credit (b)
$1,985,200,000

Unfunded AAL (UAAL) (b-a)
$1,985,200,000

Funded Ratio (a/b)
0.0%

Covered Payroll
$2,201,804,465

Note: The allocation and transfer of assets to the plan took place subsequent to the actuarial valuation date.

UAAL as a Percentage of Covered Payroll
((b-a)/c) 90.2%

B OARD OF REGENTS RETIREE HEALTH B ENEFIT FUND S CHEDULE OF EMPLOYER CONTRIBUTIONS

Year Ended June 30
2008

Annual Required Contribution
$224,900,000

P e r c e ntag e Contributed
29.7%

University System Office Annual Financial Report FY 2008 39

VALDOSTA STATE UNIVERSITY
Financial Report
For the Year Ended June 30, 2008

Valdosta State University Valdosta, Georgia

Dr. Ronald M. Zaccari
President

James Black
Vice President for Finance and Administration

VALDOSTA STATE UNIVERSITY ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 12 Note 2. Deposits and Investments............................................................................................... 17 Note 3. Accounts Receivable...................................................................................................... 20 Note 4. Inventories...................................................................................................................... 20 Note 5. Notes/Loans Receivable................................................................................................. 20 Note 6. Capital Assets................................................................................................................. 21 Note 7. Deferred Revenue........................................................................................................... 22 Note 8. Long-Term Liabilities .................................................................................................... 22 Note 9. Significant Commitments............................................................................................... 22 Note 10. Lease Obligations......................................................................................................... 22 Note 11. Retirement Plans .......................................................................................................... 24 Note 12. Risk Management......................................................................................................... 27 Note 13. Contingencies............................................................................................................... 28 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 29 Note 15. Natural Classifications with Functional Classifications .............................................. 30 Note 16. Component Units ......................................................................................................... 31

VALDOSTA STATE UNIVERSITY
Management's Discussion and Analysis

Introduction
Valdosta State University is one of the 35 institutions of higher education of the University System of Georgia. The University, located in Valdosta, Georgia, was founded in 1906 and has become known for its state-of-the-art technology and technology related programs. The University offers nationally accredited programs in Art, Business, Music, Nursing, Speech Language Pathology, School Psychology and Teacher Education as well as baccalaureate and masters degrees in a wide variety of other subjects. This wide range of educational opportunities attracts a highly qualified faculty and a student body of more than 11,000 students. The institution continues to grow as shown by the comparison numbers that follow.
Students Students Faculty (Headcount) (FTE)

FY2008

528

11,280 10,287

FY2007

521

10,888

9,842

FY2006

480

10,503

9,431

Overview of the Financial Statements and Financial Analysis
Valdosta State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Valdosta State University. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.
From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Valdosta State University Annual Financial Report FY 2008 1

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$18,107,780 135,639,052
12,290,906 166,037,738

June 30, 2007
$11,993,719 139,805,559
12,654,301 164,453,579

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

9,575,601 37,911,884 47,487,485

8,891,409 40,594,613 49,486,022

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

97,829,878 2,460,134 3,638,487
14,621,754 $118,550,253

99,992,255 2,902,355 3,923,829 8,149,118
$114,967,557

The total assets of the institution increased by $1,584,159. The increase is primarily due to increases in Cash and Cash Equivalents and Accounts Receivable of $5,509,099 which were partially offset by a decrease in Capital Assets, net of ($4,166,507).
The total liabilities for the year decreased by ($1,998,537). The combination of the increase in total assets of $1,584,159 and the decrease in total liabilities of ($1,998,537) yields an increase in total net assets of $3,582,696. The increase in total net assets is primarily in the category of Unrestricted Net Assets, mainly as a result of Auxiliary profits for the year.

Valdosta State University Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$80,086,547 131,539,697 (51,453,150)
53,106,976
1,653,826 1,928,870 3,582,696 114,967,557
0 114,967,557 $118,550,253

$71,924,349 121,417,516 (49,493,167)
51,507,641
2,014,474 198,534
2,213,008 112,754,549
0 112,754,549 $114,967,557

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Valdosta State University Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$34,697,606 14,248,999 895,367 29,645,806 598,769 80,086,547
53,079,000 729,523
2,825,057 427,508
(1,596,875) 55,464,213
0 1,928,870 1,928,870 $137,479,630

June 30, 2007
$30,705,224 12,379,035 711,261 27,616,273 512,556 71,924,349
49,500,769 1,326,181 1,269,225 1,913,839 21,886
54,031,900
130,874 67,660
198,534 $126,154,783

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$47,504,525 339,391
1,526,183 10,663,157 10,201,146 16,914,560 11,549,091
6,675,989 26,165,655 131,539,697
2,357,237 $133,896,934

June 30, 2007
$44,916,158 263,092
1,348,642 7,839,785 7,115,207 16,884,737 12,049,770 5,800,639 25,199,486 121,417,516
2,524,259 $123,941,775

Operating revenues increased by $8,162,198 in fiscal 2008. Tuition & Fees included significant increases for students on non-guaranteed tuition plans. All other operating revenue categories also increased compared to prior year.

Valdosta State University Annual Financial Report FY 2008 4

The Auxiliary revenue increase of $2,029,533 is a result of the changing environment of residential life and food services on the University's campus. During the year, Housing reopened 287 beds of renovated housing on campus in a construction and leasing relationship with VSU Foundation Real Estate II, LLC. The net effect to the campus is that the students actually have more on-campus housing availability. The University also continued with privatized food service operations during the year. The Contractor increased food choices for students and as a result, participation as well as costs increased.
Non-operating revenues increased by $1,432,313 for the year primarily due to an increase of $3,578,231 in State Appropriations, which was offset by decreases in non-operating Grants and Contracts and Investment Income categories.
The compensation and employee benefits category increased by $5,349,615 and primarily affected the Instruction and Academic Support categories. The increase reflects the addition of faculty members, merit increases and an increased cost of health insurance for the employees of the institution.
Utilities increased by $70,951 during the past year. The increase was primarily associated with the increased natural gas costs that were experienced in the winter of fiscal year 2008 and affected the Institutional Support and Plant Operations and Maintenance categories.

Statement of Cash Flows

The final statement presented by Valdosta State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.
Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($45,559,737) 56,098,123 (7,494,223) 795,740 3,839,903 6,371,655
$10,211,558

June 30, 2007
($40,002,618) 52,707,244 (13,159,600) 924,147 469,173 5,902,482
$6,371,655

Valdosta State University Annual Financial Report FY 2008 5

Capital Assets
The University had one significant capital asset addition for facilities in fiscal year 2008. The Palms Dining Center and other Food Service location renovations were completed, 80% of which were a 15 year gift from the Food Services contractor which will be amortized according to the contract.
For additional information concerning Capital Assets, see Notes 1, 6, 8, 9 and 10 in the Notes to the Financial Statements.
Long Term Debt and Liabilities
Valdosta State University had Long-Term Debt and Liabilities of $38,659,941 of which $2,114,127 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, Valdosta State University has included the financial statements and notes for all required component units for FY2008. Valdosta State University Foundation, Inc. had investments of $21.1 million as of December 31, 2007. VSU Auxiliary Services Real Estate Foundation, Inc. was established in July 2007 for significant future campus construction that is to be funded through bond issues as well as student fees.
Further details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Economic Outlook
The University is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The University's overall financial position is strong. The University continues to move toward its strategic goals incorporating planning and realizing efficiencies in operations whenever possible. Although we anticipate a significant reduction in State allocations in the current fiscal year, the University will maintain a close watch over resources to maintain the University's ability to react to unknown internal and external issues.
Dr. Ronald M. Zaccari, President Valdosta State University
Valdosta State University Annual Financial Report FY 2008 6

Statement of Net Assets

VALDOSTA STATE UNIVERSITY STATEMENT OF NET ASSETS June 30, 2008

C ompon e n t Uni t

Val dosta S tate Uni ve rsi ty

Val dosta S tate Uni ve rsi ty
Fou ndati on, Inc.

AS SETS C urre nt Asse ts Cash and Cash Equivalent s Short -t erm Invest ment s Account s Receivable, net (not e 3) Receivables - Federal Financial Assist ance Receivables - Ot her Due From Component Unit s Pledges Receivable Due From P rimary Government Invent ories (not e 4) Prepaid it ems T ot al Current Asset s

$10,182,585
2,987,986 2,832,972
30,299
1,993,941 79,997
18,107,780

$2,493,437 12,438
366
95,328 9,216
24,859 2,635,644

Noncu rre n t Asse ts Noncurrent Cash Invest ment s (including Real Est at e) Not es Receivable, net Capit al Asset s, net (not e 6) Ot her Asset s T ot al Noncurrent Asset s TO TAL ASS ETS
LIABILITIES C urre nt Li abi l i ti e s Account s Payable Salaries Payable Cont ract s P ayable Deposit s Deferred Revenue (not e 7) Ot her Liabilit ies Deposit s Held for Ot her Organizat ions Due t o P rimary Government Lease P urchase Obligat ions (current port ion) Compensat ed Absences (current port ion) Revenue/Mort gage Bonds Payable (current ) Not es and Loans P ayable (current port ion) T ot al Current Liabilit ies Noncu rre n t Li abi l i ti e s Lease P urchase Obligat ions (noncurrent ) Deferred Revenue (noncurrent ) Compensat ed Absences (noncurrent ) Revenue/Mort gage Bonds Payable (noncurrent ) Liabilit ies under Split -Int erest Agreement s (noncurrent ) Ot her Long-T erm Liabilit ies Not es and Loans P ayable (noncurrent ) T ot al Noncurrent Liabilit ies TO TAL LIABILITIES
NET AS SETS Invest ed in Capit al Asset s, net of relat ed debt Rest rict ed for Nonexpendable Expendable Capit al P roject s Unrest rict ed TO TAL NET ASS ETS

28,973 12,223,823
38,110 135,639,052
147,929,958 166,037,738
2,642,312 1,383,049
351,678 738,000 1,313,545
10,306 1,022,584
368,596 1,703,565
41,966 9,575,601
35,139,935 1,366,070 1,344,002
61,877 37,911,884 47,487,485
97,829,878
2,460,134 3,638,487
14,621,754 $118,550,253

14,000,186 21,132,309
124,923 34,084,765
1,185,332 70,527,515 73,163,159
649,866
220,776 111,565 104,848
5,472
1,049,705 787,816
2,930,048
8,008
42,485,736 389,011 6,891 82,485
42,972,131 45,902,179
5,531,367
19,171,160 662,857
1,842,993 52,603
$27,260,980

C ompone n t Un i t VSU Au xi l i ary Se rvi ce s Re al
Estate Foun dati on , In c. $0
166,286
166,286 74,894,200
9,607,301 1,848,556 86,350,057 86,516,343 2,086,627
2,086,627
84,429,716
84,429,716 86,516,343
1,920,341
(1,920,341) $0

Valdosta State University Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
VALDOSTA STATEUNIVERSITY STATEMENT of REVENUES, EXPENSES, and CHANGES in NET ASSETS
for the Year Ended June 30, 2008

REVENUES

Valdosta State Un i ve rs i ty

Component Unit
Valdosta State Un i ve rs i ty
Foundation, Inc.

Component Unit
VSU Auxiliary Services Real Estate Foundation,
In c.

Operating Revenues

Student T uition and Fees (net of allowance for doubtful accou

$43,163,685

$0

$0

Less: Scholarship Allowances

(8,466,079)

Gifts and Contributions

1,386,487

Grants and Contracts

Federal

12,190,737

St at e

1,375,695

Ot h er

682,567

Sales and Services

895,367

460,696

Rents and Royalties

3,443,243

Auxiliary Enterprises

Residence Halls

7,733,861

Boo k st o re

6,491,569

Food Services

7,054,443

Parking/T ransportation

2,406,282

Health Services

1,929,579

Intercollegiate Athletics

3,379,999

Other Organizations

650,073

Other Operating Revenues

598,769

410,055

T otal Operating Revenues

80,086,547

5,700,481

0

EXPENS ES

Operating Expenses

Salaries:

Facult y

32,240,107

St aff

29,282,682

Employee Benefits

18,826,113

Other Personal Services

385,116

T ravel

1,081,238

7,818

Scholarships and Fellowships

7,962,631

110,875

Ut ilit ies

4,630,514

141

Supplies and Other Services

30,205,232

1,112,144

Dep reciat io n

6,926,064

1,064,941

Other Operating Expense

9,042

Payments to or on behalf of Valdosta State University

1,575,933

T otal Operating Expenses

131,539,697

3,880,894

0

Operating Income (loss)

(51,453,150)

1,819,587

0

Valdosta State University Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
VALDOSTA STATEUNIVERSITY STATEMENT of REVENUES, EXPENSES, and CHANGES in NET ASSETS
for the Year Ended June 30, 2008

Valdosta State Un i ve rs i ty

NO NO PERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal St at e Ot her Gift s Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or los Capital Grants and Gifts Ot her Additions to permanent endowments T otal Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

53,079,000
430,761 116,852 181,910 2,825,057 427,508 (2,357,237) (1,596,875) 53,106,976 1,653,826
1,928,870
1,928,870 3,582,696
114,967,557 0
114,967,557 $118,550,253

Component Unit
Valdosta State Un i ve rs i ty
Foundation, Inc.

Component Unit
VSU Auxiliary Services Real Estate Foundation,
In c.

1,715,709

(2,180,010)

(57,994)

(522,295)

0

1,297,292

0

137,882

137,882

0

1,435,174

0

25,825,806

0

0

0

25,825,806

0

$27,260,980

$0

Valdosta State University Annual Financial Report FY 2008 9

Statement of Cash Flows
VALDOS TA S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES P roceeds from Sales and Mat urit ies of Invest m ent s Int erest on Invest m ent s P urchase of Invest ment s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$34,926,582 14,005,050 895,367 (55,468,938) (61,157,510) (8,312,561) (334,669) 343,162
7,913,447 6,679,408 7,488,458 2,413,808 1,932,107 3,711,179
490,804 (1,085,431) (45,559,737)
53,079,000 (552,641) 3,571,764
56,098,123
(4,194,350) (942,636)
(2,357,237) (7,494,223)
236,334 1,282,755 (723,349)
795,740 3,839,903 6,371,655 $10,211,558

Valdosta State University Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
VALDOS TA S TATE UNIVERS ITY S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Fixed asset s acquired by incurring capit al lease obligat ions Change in fair value of invest ment s recognized as a component of int erest income Gift of capit al asset s reducing proceeds of capit al grant s and gift s

June 30, 2008
($51,453,150)
6,926,064 (1,684,770)
(616,119) 34,604 10,267
156,164 944,703 (10,589) 133,089 ($45,559,737)
$15,061 ($855,247) ($1,928,870)

Valdosta State University Annual Financial Report FY 2008 11

VALDOSTA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Valdosta State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity Valdosta State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Valdosta State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Valdosta State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Valdosta State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Valdosta State University) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, Valdosta State University is reporting the activity for VSU Auxiliary Services Real Estate Foundation, Inc., as well as Valdosta State University Foundation, Inc. Consolidated, which includes the activities of the Valdosta State University Foundation, the Valdosta State University Real Estate I, LLC, and the Valdosta State University Real Estate II, LLC.
See Note 16, Component Units, for Foundation notes.
Valdosta State University Annual Financial Report FY 2008 12

Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts.
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.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and
Valdosta State University Annual Financial Report FY 2008 13

Changes in Net Assets. The Board of Regents Diversified Fund and the Georgia Extended Asset Pool are included under Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average-cost basis.
Non-current Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as non-current assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Valdosta State University.
Valdosta State University Annual Financial Report FY 2008 14

Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Valdosta State University had accrued liability for compensated absences in the amount of $2,914,477 as of 7-1-2007. For FY2008, $2,309,219 was earned in compensated absences and employees were paid $2,176,129, for a net increase of $133,090. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $3,047,567.
Non-current Liabilities Non-current liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Valdosta State University Annual Financial Report FY 2008 15

Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

Expendable Restricted Net Assets include the following:

June 30, 2008

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans T erm Endowm ent s Quasi-Endowm ent s T ot al Rest rict ed Expendable

$2,500,827 1,948
338,432 692,407 104,873 $3,638,487

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted Total Unrestricted Net Assets

June 30, 2008
$3,664,549 7,695,894 338,131 2,923,180
$14,621,754

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Valdosta State University, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Valdosta State University Annual Financial Report FY 2008 16

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Non-operating revenues: Non-operating revenues include activities that have the characteristics of non-exchange transactions, such as gifts and contributions, and other revenue sources that are defined as non-operating 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 University, 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 non-operating revenues in the University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Auxiliary Intercollegiate Athletics revenue of $3,379,999 is reported net of discounts and allowances of $445,232.
Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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.
Valdosta State University Annual Financial Report FY 2008 17

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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.

The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

At June 30, 2008, the carrying value of deposits was $10,174,422 and the bank balance was $12,954,140. Of the University's deposits, $12,954,140 were uninsured. Of these uninsured deposits, $12,954,140 were uncollateralized.

B. Investments At June 30, 2008, the carrying value of the University's investments was $12,223,823, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents and Office of Treasury and Fiscal Services investment pools as follows:

Investment Pools Board of Regents Diversified Fund Sub T otal

$5,985,062 5,985,062

Office of T reasury and Fiscal Services Georgia Extended Asset Pool
Sub T otal

6,238,761 6,238,761

T otal Investment Pools

$12,223,823

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.

Valdosta State University Annual Financial Report FY 2008 18

The Georgia Extended Asset Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company. Net Asset Value (NAV) is calculated daily to determine current share price, which was $2.02 at June 30, 2008. The Georgia Extended Asset Pool is an AAAf rated investment pool by Standard and Poor's. The Effective Duration of the fund for the month of June is .81 years. Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk. The Weighted Average Maturity of the Diversified Fund is 7.84 years. Of the University's total investment of $5,985,062 in the Diversified Fund, $1,861,354 is invested in debt securities. Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk.
Valdosta State University Annual Financial Report FY 2008 19

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Georgia St at e Financing and Invest m ent Com m ission Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$319,159 439,158
2,987,986 475,763 30,299
1,666,504 5,918,869
67,612
$5,851,257

Note 4. Inventories Inventories consisted of the following at June 30, 2008:

Bookst ore P hysical P lant Other
T otal

June 30, 2008
$1,620,182 265,703 108,056
$1,993,941

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises approximately 5% of the loans receivable at June 30, 2008 (the remainder are institutional loans.) The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and/or assigned to the U.S. Department of Education. At June 30, 2008, no provision has been made for uncollectible loans as the institution is in the final stages of closing this loan fund.

Valdosta State University Annual Financial Report FY 2008 20

Note 6. Capital Assets

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

Capit al Asset s, Not Being Depreciat ed: Land Capit alized Collect ions Const ruct ion W ork-in-P rogress
T ot al Capit al Asset s Not Being Depreciat ed

Beginning B al an ce s 7/1/2007
$2,686,656 26,817
6,785,099 9,498,572

Addition s
$255,703
3,137,558 3,393,261

Re ductions
$0
6,405,880 6,405,880

Capit al Asset s, Being Depreciat ed: Building and Building Improvement s Facilities and Other Improvements E quip m en t Capit al Leases Library Collect ions T ot al Asset s Being Depreciat ed

119,939,869 9,087,639
15,487,551 38,072,882 20,676,401 203,264,342

6,643,603 175,453 734,510 15,061
1,255,440 8,824,067

5,892,208 306,119 242,565
1,154,207 16,681
7,611,780

Less: Accumulat ed Depreciat ion Buildin gs Facilities and Other improvements E quip m en t Capit al Leases Library Collect ions T ot al Accumulat ed Depreciat ion

38,957,325 3,152,387
11,597,998 3,255,533
15,994,112 72,957,355

3,309,132 418,771
1,219,225 960,123
1,018,813 6,926,064

4,128,423 181,885 221,575 11,325 16,681
4,559,889

T ot al Capit al Asset s, Being Depreciat ed, Net

130,306,987

1,898,003

3,051,891

Capit al Asset s, net

$139,805,559

$5,291,264

$9,457,771

En di n g B a l a n ce 6/30/2008
$2,942,359 26,817
3,516,777 6,485,953
120,691,264 8,956,973
15,979,496 36,933,736 21,915,160 204,476,629
38,138,034 3,389,273
12,595,648 4,204,331
16,996,244 75,323,530
129,153,099
$135,639,052

Valdosta State University Annual Financial Report FY 2008 21

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $66,300
1,247,245
$1,313,545

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Le as e s Lease Obligations

Beginning B al an ce
July 1, 2007
$36,394,616

Addi ti on s $15,061

Re du cti on s

En di n g B al an ce June 30, 2008

$901,146

$35,508,531

O ther Liabilities Compensated Absences Notes and Loans T ot al
Total Long Term O bligations

2,914,477 145,333
3,059,810
$39,454,426

2,309,219 2,309,219 $2,324,280

2,176,129 41,490
2,217,619
$3,118,765

3,047,567 103,843
3,151,410
$38,659,941

C u rre n t Portion
$368,596
1,703,565 41,966
1,745,531
$2,114,127

Note 9. Significant Commitments
The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $3,791,917 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.
Note 10. Lease Obligations
Valdosta State University is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.
CAPITAL LEASES
Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2009 and 2031. Expenditures for fiscal year 2008 were $3,258,383 of which $2,357,237 represented interest and $901,146 represented principal. Interest rates range from 4.25 percent to 10 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Valdosta State University Annual Financial Report FY 2008 22

Buildings Equipment Total Assets Held Under Capital Lease

$32,674,717 54,689
$32,729,406

Certain capital leases provide for renewal and/or purchase options.
Valdosta State University had three capital leases with related entities in the current fiscal year. In fiscal year 2007, the University entered into a capital lease of $10,399,786 at a variable interest rate with Valdosta State University Foundation Real Estate I, LLC for Patterson Hall, a 300 bed housing unit located on main campus. This lease spans a twenty-five year period. In 2006, Valdosta State University leased Lowndes Hall for $7,116,694 at a variable interest rate with the Valdosta State University Foundation Real Estate I, LLC, for a 25 year period. In 2005, the University entered into a capital lease for a twenty-five year period at an amount of $19,285,471 at a variable interest rate with the Valdosta State University Foundation Real Estate I, LLC, for Centennial Hall, a housing unit located on Sustella Avenue. The outstanding liability at June 30, 2008 on these capital leases is $10,298,737, $7,128,838, and $18,033,477 respectively.
Valdosta State University entered into two new equipment capital leases during fiscal 2008 in the amount of $15,061 and also has various other capital leases for equipment with an outstanding balance at June 30, 2008 in the amount of $47,479. All equipment leases are with third parties.
OPERATING LEASES
Valdosta State University's non-cancelable operating leases having remaining terms of more than one year expire in various fiscal years from 2009 through 2016. Certain operating leases provide for renewal options. All agreements are cancelable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small business equipment.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for non-cancelable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Valdosta State University Annual Financial Report FY 2008 23

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 T ot al m inim um lease paym ent s
Less: Int erest P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$2,873,485 2,939,928 3,021,316 3,094,448 3,152,508
15,956,448 16,335,144 16,815,012
8,163,140 72,351,429 36,842,898 $35,508,531

$378,647 147,697 147,697 141,194 139,440 278,880
$1,233,555

Valdosta State University's FY2008 expense for rental of real property and equipment under operating leases was $600,480.00.

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Valdosta State University participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Valdosta State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Valdosta State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$3,087,054 $2,947,248 $2,878,308

Valdosta State University Annual Financial Report FY 2008 24

Employees' Retirement System of Georgia
Plan Description Valdosta State University participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.
Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30, 2008, for employees covered by ERS was $30,907. The University's total payroll for all employees was $61,522,789.
For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.
Valdosta State University Annual Financial Report FY 2008 25

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$3,218 $2,920 $3,047

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Valdosta State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.

Valdosta State University Annual Financial Report FY 2008 26

Valdosta State University and the covered employees made the required contributions of $1,761,722 (8.13% or 8.15%) and $1,082,087 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Valdosta State University 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $100,135 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 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Valdosta State University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans.
Valdosta State University Annual Financial Report FY 2008 27

The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Valdosta State University, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Valdosta State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Valdosta State University (an organizational unit of the Board of Regents of the University 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, 2008.
Valdosta State University Annual Financial Report FY 2008 28

Note 14. Post-Employment Benefits Other Than Pension Benefits Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%. As of June 30, 2008, there were 395 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Valdosta State University recognized as incurred $1,992,129 of expenditures, which was net of $742,131 of participant contributions.
Valdosta State University Annual Financial Report FY 2008 29

Note 15. Natural Classifications with Functional Classifications

The University's operating expenses by functional classification for FY2008 are shown below:

Functional Classification FY2008

Natural Classification

Instruction

Research

Public Service

Academic Support

Student Services

Institutional Support

Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities
Supplies and Others Services Depreciation

$32,063,306 2,860,653 8,782,952
293,769 336,304 189,961 2,506,407 471,173

$68,135 88,404 20,898
10,360 1,860
105,701 44,033

$77,050 726,070 188,876
25,148 18,914 14,954 1,035,275 (560,104)

$9,674 5,973,362 1,395,332
397,492
54,846 1,464,862 1,367,589

$0 3,726,456 1,051,934
75,055 101,052
122,564 4,967,700
156,385

$4,521 6,907,952 4,434,235
385,116 125,902
191,425 4,522,725
342,684

Total Expenses

$47,504,525

$339,391

$1,526,183

$10,663,157

$10,201,146

$16,914,560

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

$0 3,761,126 1,305,659 (1,040,520)
5,413
3,663,655 849,887
3,003,871

$0 6,675,989

$17,421 5,238,659 1,646,227
965,465 122,102 929,564 393,109 14,752,675 2,100,433

$11,549,091

$6,675,989

$26,165,655

Total Expenses
$32,240,107 29,282,682 18,826,113
385,116 1,081,238 7,962,631 4,630,514 30,205,232 6,926,064
$131,539,697

Valdosta State University Annual Financial Report FY 2008 30

Note 16. Component Units

Valdosta State University Foundation, Inc. Valdosta State University Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Valdosta State University (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The thirty-one member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 through December 31. Because the University's fiscal year end is June 30, the amounts reported as due to or due from the related entities do not agree.

During the year ended December 31, 2007, the Foundation distributed $1,575,933 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Administrative Office at 102 Georgia Avenue, Valdosta, GA 31698.

Investments for Component Units:

Valdosta State University Foundation, Inc. holds endowment and other investments in the amount of $21.1 million. The $19.2 million corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Valdosta State University Foundation, Inc., in conjunction with the donors, has established a spending plan whereby 3% of the earnings may be used per the donor's stipulation. The remainder of the earnings are set aside as a reserve. Investments are comprised of the following amounts at December 31, 2007:

M oney M arket Accounts Equity Securities M utual Funds Split Interest Investments

Cost
$188,254 3,184,589 12,996,017
765,801

Fair Value
$188,254 3,271,607 16,892,840
792,046

Total Investments

$17,134,661

$21,144,747

Valdosta State University Annual Financial Report FY 2008 31

Capital Assets for Component Units:

Valdosta State University Foundation, Inc. had the following capital assets as of December 31, 2007:

December 31, 2007

Cap ital Assets not being Dep reciated: Land and other Assets Construction in Progress
Total Cap ital Assets not being Dep reciated
Cap ital Assets being Dep reciated: Buildings and Improvements M achinery and Equipment
Total Cap ital Assets being Dep reciated
Less Total Accumulated Depreciation
Total Cap ital Assets being Dep reciated, Net
Capital Assets, Net

$2,928,106 516,913
3,445,019
34,342,521 52,966
34,395,487 3,755,741
30,639,746 $34,084,765

Long-term Liabilities for Component Units:

Changes in long-term debt for Valdosta State Foundation, Inc. for the fiscal year ended December 31, 2007 are shown below:

Liabilities under split interest agreement Capital Lease Obligations Notes and Loans Payable Revenue/M ortgage Bonds Payable Other Long Term Liabilities
Total Long Term Liabilities

Beginning Balance January 1, 2007
$394,948 21,175
1,343,920 38,120,736
596
$39,881,375

Additions $0
5,800,000 227,667
$6,027,667

Reductions
$5,937 7,695 473,619 385,295
596
$873,142

Ending Balance December 31, 2007
$389,011 13,480 870,301
43,535,441 227,667
$45,035,900

Amounts due within One Year
$0 5,472 787,816 1,049,705 220,776
$2,063,769

Capital Lease Obligations The Foundation leased a vehicle from Ford Credit under a capital lease through April 11, 2010. The balance of this obligation as of December 31, 2007 is $13,480.

Annual debt service requirements to maturity for capital lease obligations are as follows:

Valdosta State University Annual Financial Report FY 2008 32

Year ending December 31:

2008

1

2009

2

2010

3

Total minimum lease payments

Less: Interest

Principal Outstanding

Capital Leases
$5,472 6,597 2,753
14,822 1,342
$13,480

Notes and Loans Payable: The Foundation incurred a note payable to a local financial institution to assist with updating University Athletic facilities. The Foundation has reported this transaction as a receivable from the University and as a liability. Since the University retains ownership of the facility, the University has recorded a capital asset and liability. The balance of this obligation was $124,922 as of December 31, 2007.

The Foundation has two lines of credit and a short-term note payable with a total outstanding principal balance of $745,379 as of December 31, 2007.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending December 31:

2008

1

2009

2

2010

3

Princip al

Notes and Loans Payable Interest

$787,816 44,276 38,209
$870,301

$39,300 2,650 746
$42,696

Total
$827,116 46,926 38,955
$912,997

Revenue Bonds Payable: Valdosta State University Foundation, Inc. issued Bonds to finance the acquisition of facilities for Valdosta State University. The bonds mature serially and are collateralized by real estate. The interest rates for the bonds are a floating tax-exempt rate, currently 4.89%, and an associated collar with a floor of 3.25% and a ceiling of 5.75%. These Bonds are represented as Property and Equipment and a Bond Payable on the Foundation's financial statement. Since the University leases the property from the Foundation, the University has accounted for this transaction as a capital lease and related Lease Obligation. The balance of this obligation was $1,879,550 as of December 31, 2007.
In June 2004, The Valdosta Housing Authority issued Series 2004 Student Housing Revenue Bonds and loaned the proceeds to VSU Foundation Real Estate I, LLC (a subsidiary). The bonds, serial and term, are secured by pledges of gross receipts from student housing at Valdosta State University. The bonds bear interest at rates ranging from 3.25% to 5.25%. Interest is due semiannually and principal is due annually. The balance of the obligation at December 31, 2007 is $35,855,891.

Valdosta State University Annual Financial Report FY 2008 33

In November 2007, The Development Authority of Lowndes County issued $5,800,000 of Series 2007 First Mortgage Revenue Bond. The Authority then loaned the proceeds to VSU Foundation, Inc. The bonds are secured by a lien upon certain leasehold deeds to secure debt and certain pledged revenues and assignment of rents and leases. The bonds bear interest at a variable rate equal to the sum of (i) 61.1% of LIBOR plus (ii) 115 basis points. Interest is due monthly on December 31, 2007, and principal is due monthly beginning November 1, 2008. The balance of the obligation at December 31, 2007 is $5,800,000.

Annual debt service requirements to maturity for bonds payable are as follows:

Year ending December 31: 2008 2009 2010 2011 2012 2013 through 2017 2018 through 2022 2023 through 2027 2028 through 2030

1 2 3 4 5 6-11 12-15 16-20 21-25

Bond Premium

Princip al
$1,049,705 1,278,009 1,351,556 1,315,093 1,448,733 7,740,827 9,446,230
11,986,281 7,653,116
43,269,550 265,891
$43,535,441

Bonds Payable Interest
$2,055,495 2,011,264 1,958,675 1,909,321 1,852,630 8,299,349 6,395,659 3,746,063 765,563
28,994,019
$28,994,019

Total
$3,105,200 3,289,273 3,310,231 3,224,414 3,301,363
16,040,176 15,841,889 15,732,344
8,418,679 72,263,569
265,891 $72,529,460

VSU Auxiliary Services Real Estate Foundation, Inc. VSU Auxiliary Services Real Estate Foundation (Real Estate Foundation) is a legally separate, tax-exempt component unit of Valdosta State University (University). The Real Estate Foundation constructs auxiliary buildings and facilities for use by the University and then leases the completed buildings to the institution. The seven-member board of the Foundation is selfperpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Real Estate Foundation, the majority of resources or income thereon that the Real Estate Foundation holds and invests is restricted to the real estate activities of the University. Because these restricted resources held by the Real Estate Foundation can only be used by, or for the benefit of, the University, the Real Estate Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1 through December 31. Because the University's fiscal year end is June 30, the amounts reported as due to or due from the related entities do not agree.

Valdosta State University Annual Financial Report FY 2008 34

Complete financial statements for the Foundation can be obtained from the Administrative Office at 102 Georgia Avenue, Valdosta, GA 31698.
Capital Assets for Component Units:
VSU Auxiliary Services Real Estate Foundation, Inc. had $9,607,301 in Construction Work in Progress as of December 31, 2007.
Long-term Liabilities for Component Units:
Changes in long-term debt for VSU Auxiliary Services Real Estate Foundation, Inc. for the fiscal year ended December 31, 2007 are shown below:

Beginning Balance January 1, 2007

Additions

Reductions

Ending Balance December 31, 2007

Amounts due within
One Year

Revenue/M ortgage Bonds Payable

$0 $84,429,716

$0

$84,429,716

$0

Revenue Bonds were issued on October 18, 2007 by the Valdosta Housing Authority. The Authority loaned the proceeds to the VSU Auxiliary Services Real Estate Foundation to finance the construction of student housing on university property. The bonds are secured by 1) the trust estate, 2) the Debt Service Reserve Fund, 3) the loan agreement, 4) project real estate and personal property set forth in the deeds and documents relating to construction and management of the project and 5) any and all rents and leases for use of the project property. The interest rate ranges from 4% to 5%.

Annual debt service requirements to maturity for Student Housing revenue bonds payable are as follows:

Year ending December 31:

2008

1

2009

2

2010

3

2011

4

2012

5

2013 through 2017

6-10

2018 through 2022

11-15

2023 through 2027

16-20

2028 through 2032

21-25

2033 through 2037

26-30

2038 through 2042

31-35

Bond Discount

Princip al

Bonds Payable Interest

$0 0 0
645,000 750,000 5,275,000 8,790,000 13,325,000 18,480,000 25,615,000 12,680,000 85,560,000 (1,130,284) $84,429,716

$660,659 3,906,839 3,906,840 3,893,940 3,866,041 18,793,990 17,308,240 14,748,716 11,189,950 6,145,165
600,628 85,021,008
$85,021,008

Total
$660,659 3,906,839 3,906,840 4,538,940 4,616,041 24,068,990 26,098,240 28,073,716 29,669,950 31,760,165 13,280,628 170,581,008 (1,130,284) $169,450,724

Valdosta State University Annual Financial Report FY 2008 35

WAYCROSS COLLEGE
Financial Report
For the Year Ended June 30, 2008

David A. Palmer
President

Waycross College Waycross, Georgia
William E. Deason
Vice President for Fiscal Affairs

WAYCROSS COLLEGE ANNUAL FINANCIAL REPORT
FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows ................................................................................................................ 9 Note 1. Summary of Significant Accounting Policies ................................................................ 10 Note 2. Deposits and Investments................................................................................................ 16 Note 3. Accounts Receivable...................................................................................................... 18 Note 4. Inventories...................................................................................................................... 18 Note 5. Notes/Loans Receivable................................................................................................. 18 Note 6. Capital Assets................................................................................................................. 19 Note 7. Deferred Revenue........................................................................................................... 20 Note 8. Long-Term Liabilities .................................................................................................... 20 Note 9. Significant Commitments............................................................................................... 20 Note 10. Lease Obligations......................................................................................................... 20 Note 11. Retirement Plans .......................................................................................................... 21 Note 12. Risk Management......................................................................................................... 23 Note 13. Contingencies................................................................................................................ 23 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 24 Note 15. Natural Classifications with Functional Classifications .............................................. 25 Note 16. Component Units .......................................................................................................... 26

WAYCROSS COLLEGE
Management's Discussion and Analysis

Introduction
Waycross College is one of the 35 institutions of higher education of the University System of Georgia. The College, located in Waycross, Georgia, was founded in 1976 and has become known for its high academic standards in its liberal arts transfer programs. The College offers associate degrees in a wide variety of subjects and a limited number of certificate programs. This wide range of educational opportunities attracts a highly qualified faculty and a student body of around 1,000 students each year. The institution has a fairly stable student base as shown by the comparison numbers that follow.
Students Students Faculty (Headcount) (FTE)

FY2008

21

989

691

FY2007

21

1,018

714

FY2006

19

882

622

Overview of the Financial Statements and Financial Analysis
Waycross College is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the College's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the College as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of Waycross College. The Statement of Net Assets presents end-of-year data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.
From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Waycross College Annual Financial Report FY 2008 1

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$1,615,153 8,132,055 273,389
10,020,597

June 30, 2007
$1,333,042 8,428,970 289,453
10,051,465

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

437,920 85,007
522,927

622,027 48,766
670,793

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - nonexpendable Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

8,132,055 135,240 79,419
1,150,956 $9,497,670

8,428,970 133,240 109,015 709,447
$9,380,672

The total assets of the institution decreased by ($30,868). A review of the Statement of Net Assets will reveal that the decrease was primarily due to a decrease of ($296,915) in the category of Capital Assets, net. This was offset primarily by an increase in Cash and Cash Equivalents of $253,880. The consumption of assets follows the institutional philosophy to use available resources to acquire and improve all areas of the institution to better serve the instruction, research and public service missions of the institution.
The total liabilities for the year decreased by ($147,866). The combination of the decrease in total assets of ($30,868) and the decrease in total liabilities of ($147,866) yields an increase in total net assets of $116,998. The increase in total net assets is primarily due to an increase in the category of Unrestricted Net Assets totaling $441,509 and decreases in Restricted Net Assets in the amount of ($27,596) and in Invested in Capital Assets, net of debt, in the amount of ($296,915).

Waycross College Annual Financial Report FY 2008 2

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$2,727,131 7,098,813 (4,371,682) 4,208,205
(163,477) 280,475 116,998 9,380,672
0 9,380,672 $9,497,670

$2,616,501 6,683,183 (4,066,682) 3,846,065
(220,617) 0
(220,617) 9,601,289
0 9,601,289 $9,380,672

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

Waycross College Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Grant s and Cont ract s Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$1,002,145 1,186,407 10,026 524,417 4,136 2,727,131
4,083,250 68,335 22,942 34,188 (510)
4,208,205
280,475 280,475 $7,215,811

June 30, 2007
$950,570 1,124,786
12,692 519,760
8,693 2,616,501
3,447,203 84,491
242,016 75,217 (2,862)
3,846,065
0 0 $6,462,566

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$1,710,766 858,541 695,926
1,393,635 1,259,217
693,313 487,415 7,098,813
0 $7,098,813

June 30, 2007
$1,531,135 805,659 543,576
1,209,631 1,464,928
642,811 485,443 6,683,183
0 $6,683,183

Operating revenues increased by $110,630 in fiscal 2008. Although Tuition & Fees included a 5.4% increase, revenues also increased in Grants and Contracts and Auxiliary Enterprises categories.

Waycross College Annual Financial Report FY 2008 4

The Auxiliary revenue increase of $4,657 is a result of increases in food services and vending sales offset by a small decrease in bookstore sales.

Non-operating revenues increased by $362,140 for the year primarily due to an increase of $636,047 in State Appropriations.

The compensation and employee benefits category increased by $312,119 and affected the Instruction, Student Services, Institutional Support and Plant Operations categories. The increase reflects the filling of vacant faculty, professional staff, and maintenance positions, merit increases and an increased cost of health insurance for the employees of the institution.

Utilities increased by $130,490 during the past year. The increase was primarily associated with the increases in the cost of electricity even though our consumption dropped, and the installation of a new telecommunication system.

Statement of Cash Flows

The final statement presented by Waycross College is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($3,905,146) 4,192,246 (85,472) 52,252 253,880 1,135,680
$1,389,560

June 30, 2007
($3,529,879) 3,774,080 (37,803) 55,438 261,836 873,844
$1,135,680

Capital Assets

The College began and completed several renovation projects in fiscal 2008 and began the design phase of a major renovation project. The Upgrade and Repair to HVAC Systems, Administrative Building was completed and the Upgrade and Repair to HVAC Systems,

Waycross College Annual Financial Report FY 2008 5

Education Building was designed and contracts awarded. A completion date of October 2008 is anticipated for this project. Renovations to two bathrooms got underway during the year as well.
Waycross College received funding and hired an architect to design an addition to the Administrative Building that will enlarge our library and add classroom space. This project is funded by the Georgia State Financing and Investment Commission (GSFIC) and is in the design phase.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the notes to the financial statements.
Long Term Debt and Liabilities
Waycross College had Long-Term Debt and Liabilities of $224,065 of which $139,058 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, Waycross College has included the financial statements and notes for all required component units for FY2008. The Waycross College Foundation, Inc. had investments of $1.4 million and no long-term debt as of June 30, 2008. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Economic Outlook
The College is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations having a global effect on virtually all types of business operations. The College's overall financial position is strong. The College experienced excellent increases in revenue from state appropriations and tuition and fees. These increases allowed staff positions to be filled and other improvements for instruction and student recruitment were made possible. The College anticipates revenue reductions in state appropriations during the next fiscal year due to the State's slowing economy. We also anticipate growth in student enrollment to help mediate this anticipated reduction in funding. We will maintain a close watch over resources to maintain the College's ability to react to these and other unknown internal and external issues.
David A. Palmer, President Waycross College
Waycross College Annual Financial Report FY 2008 6

Statement of Net Assets

WAYCROSS COLLEGE STATEMENT OF NET ASSETS
June 30, 2008

C ompone nt Unit

W a y cro s s College

Waycross College Foundation, Inc.

AS S ETS Curre nt Asse ts Cash and Cash Equivalents Accounts Receivable, net (note 3) Receivables - Federal Financial Assistance Receivables - Other Due From Component Units Pledges Receivable Inventories (note 4) Prepaid items T otal Current Assets
Noncurrent Asse ts Short-term Investments Investments (including Real Estate) Capital Assets, net (note 6) T otal Noncurrent Assets TO TAL ASSETS
LIABILITIES Curre nt Liabilitie s Accounts Payable Deferred Revenue (note 7) Other Liabilities Deposits Held for Other Organizations Due to Primary Government Compensated Absences (current portion) T otal Current Liabilities Noncurrent Liabilitie s Compensated Absences (noncurrent) T otal Noncurrent Liabilities TO TAL LIABILITIES
NET AS S ETS Invested in Capital Assets, net of related debt Restricted for Nonexpendable Expendable Un rest rict ed TO TAL NET ASSETS

$1,389,560
1,154 84,165
210
138,129 1,935
1,615,153
273,389 8,132,055 8,405,444 10,020,597
46,118 187,782
1,374 63,588
139,058 437,920
85,007 85,007 522,927
8,132,055
135,240 79,419
1,150,956 $9,497,670

$118,587
480 498 210 119,775
14,000 1,389,047 1,403,047 1,522,822
2,100
210 2,310
0 2,310
1,273,635 122,736 124,141
$1,520,512

Waycross College Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
WAYCROSS COLLEGE STATEMENT of REVENUES, EXPENSES, and CHANGES in NET ASSETS
for the Year Ended June 30, 2008

C ompon e n t Un i t

W aycross C ol l e ge

W aycross C ol l e ge Fou n dati on , In c.

REVENUES
Operat ing Revenues St udent T uit ion and Fees (net of allowance for doubt ful accou Less: Scholarship Allowances Gift s and Cont ribut ions Grant s and Cont ract s Federal Sales and Services Rent s and Royalt ies Auxiliary Ent erprises Bookst ore Food Services Parking/T ransport at ion Ot her Organizat ions Int erest and Dividend income Ot her Operat ing Revenues T ot al Operat ing Revenues
EXPENS ES Operat ing Expenses
Salaries: Facult y St aff
Employee Benefit s Ot her P ersonal Services T ravel Scholarships and Fellowships Ut ilit ies Supplies and Ot her Services Depreciat ion P ayment s t o or on behalf of Waycross College
T ot al Operat ing Expenses Operat ing Income (loss)
NO NO PERATING REVENUES (EXPENSES ) St at e Appropriat ions Grant s and Cont ract s St at e Ot her Gift s Invest ment Income (endowment s, auxiliary and ot her) Ot her Nonoperat ing Revenues Net Nonoperat ing Revenues Income before ot her revenues, expenses, gains, or los Capit al Grant s and Gift s St at e Addit ions t o permanent endowment s T ot al Ot her Revenues Increase in Net Asset s
NET AS SETS Net Asset s-beginning of year, as originally report ed P rior Year Adjust ment s Net Asset s-beginning of year, rest at ed Net Asset s-End of Year

$1,546,022 (543,877)
1,186,407 10,026 750
450,679 43,756 7,429 22,553
3,386 2,727,131
1,067,880 2,035,975
987,620 40,002 54,740
695,163 336,243 1,448,008 433,182
7,098,813 (4,371,682)
4,083,250
20,436 47,899 22,942 34,188
(510) 4,208,205
(163,477)
280,475
280,475 116,998
9,380,672 0
9,380,672 $9,497,670

$0 34,924
30,320 65,244
41,630 6,144
18,629 66,403 (1,159)
(132,689) (132,689) (133,848)
10,529 10,529 (123,319) 1,643,831
0 1,643,831 $1,520,512

Waycross College Annual Financial Report FY 2008 8

Statement of Cash Flows

WAYCROSS COLLEGE STATEMENT OF CASH FLOWS For the Year Ended June 30, 2008

C ASH FLO W S FRO M O PERATING AC TIVITIES T uition and Fees Grants and Cont ract s (Exchange) Sales and Services Payments t o Suppliers Payments t o Employees Payments for Scholarships and Fellowships Auxiliary Ent erprise Charges: Bookst ore Food Services Parking/T ransport at ion Ot her Organizations Other Receipts (payments) Net Cash Provided (used) by Operat ing Activities
C ASH FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Other T han Capit al Purposes Net Cash Flows Provided by Non-capit al Financing Act ivit ies
C ASH FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received Purchases of Capit al Asset s Net Cash used by Capital and Related Financing Act ivit ies
C ASH FLO W S FRO M INVESTING AC TIVITIES Interest on Invest ment s Purchase of Invest ments Net Cash Provided (used) by Invest ing Activities Net Increase/Decrease in Cash Cash and Cash Equivalents - Beginning of year Cash and Cash Equivalents - End of Year
REC O NC ILIATIO N O F O PERATING LO SS TO NET C ASH PRO VIDED (USED) BY O PERATING AC TIVITIES:
Operat ing Income (loss) Adjustments t o Reconcile Net Income (loss) to Net Cash Provided (used) by Operating Act ivit ies
Dep reciat ion Change in Assets and Liabilit ies:
Receivables, net Invent ories Prepaid It ems Account s Payable Deferred Revenue Ot her Liabilit ies Compensated Absences
Net Cash Provided (used) by Operat ing Activit ies

** NON-CASH INVEST ING, NON-CAPIT AL FINANCING, AND CAPIT AL AND RELAT ED FINANCING T RANSACT IONS
Change in fair value of invest ment s recognized as a component of interest income

Waycross College Annual Financial Report FY 2008 9

June 30, 2008
$1,025,439 1,171,151 10,026 (2,869,421) (3,057,731) (695,163)
425,134 47,188 7,429 22,493 8,309
(3,905,146)
4,083,250 19,719 89,277
4,192,246
280,475 (365,947)
(85,472)
61,620 (9,368) 52,252 253,880 1,135,680 $1,389,560
($4,371,682)
433,182
2,019 (28,824)
(1,935) (6,659) 18,303 4,383 46,067
($3,905,146)
($27,432)

WAYCROSS COLLEGE NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations Waycross College serves the southeastern region of Georgia by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of southeast Georgia.
Reporting Entity Waycross College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Waycross College as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Waycross College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Waycross College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus Waycross College) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the College's report. For FY2008, Waycross College is reporting the activity for the Waycross College Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB
Waycross College Annual Financial Report FY 2008 10

Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the College was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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 College's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the 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.
The College has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The College has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The College accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
Waycross College Annual Financial Report FY 2008 11

Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average-cost basis.
Non-current Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as non-current assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the College when complete. For projects managed by the College, the College retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Waycross College.
Deposits Deposits represent good faith deposits from students. Waycross College does not require student deposits.
Waycross College Annual Financial Report FY 2008 12

Deferred Revenues Deferred revenues include amounts received for tuition and fees 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. Waycross College had accrued liability for compensated absences in the amount of $177,998 as of 7-1-2007. For FY2008, $156,853 was earned in compensated absences and employees were paid $110,786, for a net increase of $46,067. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $224,065.
Non-current Liabilities Non-current liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The College's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the 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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Waycross College Annual Financial Report FY 2008 13

Expendable Restricted Net Assets include the following:

Rest rict ed - E& G and Ot her Organized Act ivit ies T ot al Rest rict ed Expendable

June 30, 2008
$79,419 $79,419

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management:

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$201,762 626,058 12,790 310,346
$1,150,956

When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes Waycross 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 College has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.

Non-operating revenues: Non-operating revenues include activities that have the characteristics of non-exchange transactions, such as gifts and contributions, and other revenue sources that are

Waycross College Annual Financial Report FY 2008 14

defined as non-operating 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 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 non-operating revenues in the College's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded contra revenue for scholarship allowances.
Waycross College Annual Financial Report FY 2008 15

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $1,346,613 and the bank balance was $1,605,603. Of the College's deposits, $1,605,603 were uninsured. Of these uninsured deposits, $1,605,603 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the College's name.
Waycross College Annual Financial Report FY 2008 16

B. Investments

At June 30, 2008, the carrying value of the College's investments was $314,734, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows:

Investment Pools Board of Regents Short-T erm Fund Legal Fund Diversified Fund

$41,345 84,798
188,591

T otal Investment Pools

$314,734

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.
Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The College does not have a formal policy for managing interest rate risk.
The Weighted Average Maturity of the Short Term Fund is 1.99 years. Of the College's total investment of $41,345 in the Short Term Fund, $41,179 is invested in debt securities.
The Weighted Average Maturity of the Legal Fund is 3.84 years. Of the College's total investment of $84,798 in the Legal Fund, $84,035 is invested in debt securities.
The Weighted Average Maturity of the Diversified Fund is 7.84 years. Of the College's total investment of $188,591 in the Diversified Fund, $58,652 is invested in debt securities.
Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The College does not have a formal policy for managing credit quality risk.

Waycross College Annual Financial Report FY 2008 17

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Due from Com ponent Unit s Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$2,347 6,641 1,154 210
77,209 87,561
2,032
$85,529

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

Bookst ore Food Services P hysical P lant Other
T otal

June 30, 2008
$118,063 5,925
13,958 183
$138,129

Note 5. Notes/Loans Receivable The College did not have Notes/Loans Receivable as of June 30, 2008.

Waycross College Annual Financial Report FY 2008 18

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Capitalized Collections Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections Capitalized Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$358,790 0
236,255 595,045
1,343,722 11,276,571
1,193,893 1,071,552
0 1,172,543
0 16,058,281
867,078 4,616,737
800,244 906,303
0 1,033,994
0 8,224,356
7,833,925
$8,428,970

Addi ti o n s
$0
21,900 21,900

Re ductions
$0
236,255 236,255

292,304 35,472 22,846
350,622
23,270 331,489
21,981 23,042 33,400 433,182 (82,560) ($60,660)

19,325 19,325
19,325 19,325
0 $236,255

En di n g B a l a n ce 6/30/2008
$358,790 0
21,900 380,690
1,343,722 11,568,875
1,193,893 1,107,024
0 1,176,064
0 16,389,578
890,348 4,948,226
822,225 929,345
0 1,048,069
0 8,638,213
7,751,365
$8,132,055

Waycross College Annual Financial Report FY 2008 19

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Ot her Deferred Revenue
T ot als

June 30, 2008 $182,739 5,043
$187,782

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

O th e r Liabi li tie s Compensat ed Absences
Total Lon g Te rm O bl i gati on s

Beginning B al an ce
July 1, 2007

Addi ti o n s

Re ductions

En di n g Balance June 30, 2008

$177,998 $177,998

$156,853 $156,853

$110,786 $110,786

$224,065 $224,065

C urrent Portion
$139,058 $139,058

Note 9. Significant Commitments
The College had significant unearned, outstanding, construction or renovation contracts executed in the amount of $383,500 as of June 30, 2008. This amount is reflected in the Reserve for Encumbrances in the Note for Unrestricted Net Assets in the accompanying basic financial statements.
Note 10. Lease Obligations
Waycross College is not obligated under any operating leases for the use of real property (land, buildings, and office facilities) and equipment, nor is the College obligated under capital leases and installment purchase agreements for the acquisition of real property. The College had no expense for rental of real property and equipment under operating leases in FY 2008.

Waycross College Annual Financial Report FY 2008 20

Note 11. Retirement Plans

Teachers Retirement System of Georgia

Plan Description Waycross College participates in the Teachers Retirement System of Georgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

Funding Policy Employees of Waycross College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Waycross College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$178,543 $169,460 $173,165

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Waycross College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance

Waycross College Annual Financial Report FY 2008 21

with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Waycross College and the covered employees made the required contributions of $72,284 (8.13% or 8.15%) and $44,400 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Waycross 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $5,351 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.
Waycross College Annual Financial Report FY 2008 22

Note 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Waycross College and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. Waycross College, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Waycross College expects such amounts, if any, to be immaterial to its overall financial position.
Waycross College Annual Financial Report FY 2008 23

Litigation, claims and assessments filed against Waycross College (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 24 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Waycross College recognized as incurred $125,049 of expenditures, which was net of $40,696 of participant contributions.
Waycross College Annual Financial Report FY 2008 24

Note 15. Natural Classifications with Functional Classifications The College's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
F acult y St aff B enefit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

Inst ruct ion
$1,067,880 69,923
291,336
7,834
36,573 234,788
2,432
$1,710,766

Functional Clas s ification FY2008

Academ ic Sup p o r t

St udent Se r v ice s

$0 441,792 117,906

$0 413,596 102,406

12,689
22,649 228,130
35,375

9,334 1,850 21,550 146,036 1,154

$858,541

$695,926

Inst it ut ional Sup p o r t
$0 732,632 346,647
40,002 23,382
36,116 210,296
4,560
$1,393,635

Natural Classification
F acult y St aff B enefit s Personal Services T ravel Scholarship s and Fellowship s U t ilit ies Sup p lies and Others Services Dep reciation
T otal Exp enses

P lant Operat ions & Maint enance

Functional Clas s ification FY2008

Sc h o la r sh ip s & Fellowships

A ux ilia r y Ent erprises

$0 311,455 109,350
(3,434) 1,501
212,518 243,734 384,093

$0 693,313

$0 66,577 19,975
3,434
6,837 385,024
5,568

$1,259,217

$693,313

$487,415

T otal E x p e n ses
$1,067,880 2,035,975 987,620 40,002 54,740 695,163 336,243 1,448,008 433,182
$7,098,813

Waycross College Annual Financial Report FY 2008 25

Note 16. Component Units

Waycross College Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of Waycross College (College). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs. The twenty-one member board of the Foundation is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the College by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College and is discretely presented in the College's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

During the year ended June 30, 2008, the Foundation distributed $18,629 to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Foundation Office at 2001 South Georgia Parkway, Waycross, GA 31503.

Investments for Component Units:

Waycross College Foundation holds endowment and other investments in the amount of $1.4 million. The $1.3 million corpus of the endowment is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. Waycross College Foundation, Inc., in conjunction with the donors, has established a spending plan whereby dividends and cash earnings may be used for academic scholarships. The realized gains on investments are set aside as a reserve.

Investments are comprised of the following amounts at June 30, 2008:

Certificates of Deposit BOR Short Term Fund SunTrust Diversified Fund
Total Investments

Cost
$14,000 30,087 1,427,474
$1,471,561

Fair Value
$14,000 29,789
1,359,258
$1,403,047

Waycross College Annual Financial Report FY 2008 26

UNIVERSITY OF WEST GEORGIA
Financial Report
For the Year Ended June 30, 2008

University of West Georgia Carrollton, Georgia

Dr. Beheruz N. Sethna
President

James R. Sutherland
Vice President for Business and Finance

UNIVERSITY OF WEST GEORGIA ANNUAL FINANCIAL REPORT FY 2008
Table of Contents
Management's Discussion and Analysis ........................................................................................ 1 Statement of Net Assets .................................................................................................................. 7 Statement of Revenues, Expenses and Changes in Net Assets....................................................... 8 Statement of Cash Flows .............................................................................................................. 10 Note 1. Summary of Significant Accounting Policies ................................................................ 12 Note 2. Deposits and Investments................................................................................................ 18 Note 3. Accounts Receivable...................................................................................................... 20 Note 4. Inventories...................................................................................................................... 20 Note 5. Notes/Loans Receivable................................................................................................. 20 Note 6. Capital Assets................................................................................................................. 21 Note 7. Deferred Revenue........................................................................................................... 22 Note 8. Long-Term Liabilities .................................................................................................... 22 Note 9. Significant Commitments............................................................................................... 22 Note 10. Lease Obligations......................................................................................................... 22 Note 11. Retirement Plans .......................................................................................................... 24 Note 12. Risk Management......................................................................................................... 28 Note 13. Contingencies................................................................................................................ 28 Note 14. Post-Employment Benefits Other Than Pension Benefits ........................................... 29 Note 15. Natural Classifications with Functional Classifications .............................................. 30 Note 16. Component Units .......................................................................................................... 31

UNIVERSITY OF WEST GEORGIA
Management's Discussion and Analysis

Introduction
University of West Georgia is one of the 35 institutions of higher education of the University System of Georgia. The University, located in Carrollton, Georgia, was founded in 1906, and remains second to none in relation to our theme of Educational Excellence in a Personal Environment. The wide range of educational opportunities offered by the University attracts a highly qualified faculty and a student body of more than 10,000 students each year. In general we continue to grow, as shown by the year to year comparison numbers that follow.
West Georgia (UWG) offers a range of disciplinary, interdisciplinary and professional programs at the baccalaureate level. There are 109 programs of study, including 56 at the Bachelors level, 40 at the Masters and Specialists level, 11 Certificates, and two Doctoral program. During the 2004 fiscal year, the Southern Association of Colleges and Schools (SACS) reaffirmed UWG's accreditation for 10 years based on the February 2003 accreditation visit. In addition, the University has achieved national recognition in several areas including academic debate, facultydirected student research, and athletic competition.

Students Students Faculty (Headcount) (FTE)

FY2008

424

10,677

9,461

FY2007

430

10,163

8,941

FY2006

287

10,154

8,907

Overview of the Financial Statements and Financial Analysis

University of West Georgia is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. 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. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for FY 2008 and FY 2007.

Statement of Net Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement of Net Assets is to present to the readers of the financial statements a fiscal snapshot of University of West Georgia. The Statement of Net Assets presents end-of-year

University of West Georgia Annual Financial Report FY 2008 1

data concerning Assets (current and non-current), Liabilities (current and non-current), and Net Assets (Assets minus Liabilities). The difference between current and non-current assets will be discussed in the footnotes to the financial statements.

From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose of the institution.

Statement of Net Assets, Condensed

Asse ts: Current Asset s Capit al Asset s, net Ot her Asset s Total As se ts

June 30, 2008
$28,830,154 123,561,136
2,511,135 154,902,425

June 30, 2007
$22,542,662 124,826,968
1,632,081 149,001,711

Liabilitie s: Current Liabilit ies Noncurrent Liabilit ies Total Li abi l i ti e s

16,446,781 63,098,889 79,545,670

12,927,518 64,786,405 77,713,923

Net Assets: Invest ed in Capit al Asset s, net of debt Rest rict ed - expendable Unrest rict ed Total Ne t As s e ts

61,245,873 3,088,157
11,022,725 $75,356,755

61,113,208 2,133,422 8,041,158
$71,287,788

The total assets of the institution increased by $5,900,714. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $5,397,495 in Cash and Cash Equivalents and the balance was in Prepaids and Non-current Cash. The Capital Asset, net category decreased by $ ($1,265,832), of which $455,000 was from a razed residence hall and the remainder in equipment.
The total liabilities for the year increased by $1,831,747. The combination of the increase in total assets of $5,900,714 and the increase in total liabilities of $1,831,747 yields an increase in

University of West Georgia Annual Financial Report FY 2008 2

total net assets of $4,068,967. The increase in total net assets is primarily in the category of Unrestricted Net Assets of $2,981,567 and Restricted Expendable Net Assets of $954,735.

Statement of Revenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Non-operating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operat ing Revenues Operat ing Expenses Operat ing Loss Nonoperat ing Revenues and Expenses Incom e (Loss) Before ot her revenues, expenses, gains or losses Ot her revenues, expenses, gains or losses Increase in Net Asset s Net Asset s at beginning of year, as originally report ed P rior Year Adjust m ent s Net Asset s at beginning of year, rest at ed Net Asset s at End of Year

$68,279,187 115,308,363 (47,029,176)
47,989,235
960,059 3,108,908 4,068,967 71,287,788
0 71,287,788 $75,356,755

$60,330,978 106,795,775 (46,464,797)
44,326,501
(2,138,296) 2,320,122
181,826 71,105,962
0 71,105,962 $71,287,788

The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with an increase 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:

University of West Georgia Annual Financial Report FY 2008 3

Revenue by Source For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Revenue T uit ion and Fees Grant s and Cont ract s Sales and Services A ux ilia r y Other
T ot al Operat ing Revenue
Nonoperat ing Revenue St at e Appropriat ions Gift s Invest ment Income Other
T ot al Nonoperat ing Revenue
Capit al Gift s and Grant s St at e Ot her Capit al Gift s and Grant s
T ot al Capit al Gift s and Grant s
T ot al Revenues

June 30, 2008
$29,764,091 11,854,837 394,268 25,023,703 1,242,288 68,279,187
48,576,377 1,531,698 1,142,250 (327,062)
50,923,263
3,108,908 0
3,108,908 $122,311,358

June 30, 2007
$26,712,385 9,880,241 482,595
22,658,313 597,444
60,330,978
44,646,940 841,643
1,281,941 303,113
47,073,637
1,896,068 424,054
2,320,122 $109,724,737

Expenses (By Functional Classification) For the Years Ended June 30, 2008 and June 30, 2007

Operat ing Expenses Inst ruct ion Research P ublic Service Academ ic Support St udent Services Inst it ut ional Support P lant Operations and Maint enance Scholarships and Fellowships Auxiliary Ent erprises Unallocat ed Expenses
T ot al Operat ing Expenses
Nonoperat ing Expenses Int erest Expense (Capit al Asset s)
T ot al Expenses

June 30, 2008
$41,902,840 1,001,673 187,015
14,099,789 7,701,243
11,120,730 10,303,180
4,916,218 24,075,675
0 115,308,363
2,934,028 $118,242,391

June 30, 2007
$38,219,089 939,055 171,503
13,437,438 6,789,898
11,064,473 7,257,647 4,239,086
22,658,245 2,019,341
106,795,775
2,747,136 $109,542,911

Operating revenues increased by $7,948,209 in fiscal 2008. Tuition & Fees included an 11.4% increase, and revenues increased in Grants and Contracts, Auxiliary and Other categories.

University of West Georgia Annual Financial Report FY 2008 4

The Auxiliary revenue increase of $2,365,390 is a result of an overall 5% increase in student population and additional increases in student fees.

Non-operating revenues increased by $3,849,626 for the year primarily due to an increase of $3,929,437 in State Appropriations.

The compensation and employee benefits category increased by $4,331,454 and primarily affected the Instruction, Academic Support and Institutional Support categories. The increase reflects the addition of staff, merit increases and an increased cost of health insurance for the employees of the institution.

Utilities increased by $185,793 during the past year. The increase was primarily associated with increased energy prices that were experienced throughout fiscal year 2008 and affected the Plant Operations and Maintenance category.

Statement of Cash Flows

The final statement presented by the University of West Georgia is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses, and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and 2007, Condensed

Cash P rovided (used) By: Operat ing Act ivities Non-capital Financing Activit ies Capit al and Relat ed Financing Act ivit ies Invest ing Act ivit ies
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2008
($38,324,627) 50,271,002 (6,754,601) 873,688 6,065,462 19,212,577
$25,278,039

June 30, 2007
($36,213,975) 45,866,787 (6,148,225) 1,246,728 4,751,315 14,461,262
$19,212,577

University of West Georgia Annual Financial Report FY 2008 5

Capital Assets
During fiscal year 2008, the University recorded $4,355,738 in capital asset additions. These additions included $2,083,059 in building improvements (library renovations $831,636, education center roof replacement $581,060, Boyd Building improvements $253,308, and other$417,055), $1,520,307 in equipment purchases, and $752,372 in library collections.
Additionally, $1,930,366 in net additions was recorded to the construction work in progress account. These additions consisted primarily of projects funded through Georgia State Financing and Investment Commission (GSFIC), and the majority was for the construction and renovation on the Callaway Building.
Overall, the Capital Asset, net category decreased by ($1,265,832), primarily due to the excess of the current year depreciation expense charge over capital asset additions.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 9 in the notes to the financial statements.
Long Term Debt and Liabilities
University of West Georgia had Long-Term Debt and Liabilities of $65,013,064 of which $2,789,175 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Debt and Liabilities, see notes 1 and 8 in the Notes to the Financial Statements.
Component Units
In compliance with GASB Statement No. 39, University of West Georgia has included the financial statements and notes for all required component units for FY2008. The University of West Georgia Foundation, Inc. had investments of $22.9 million as of December 31, 2007, and longterm debt of $38.8 million. The UWG Real Estate Foundation, Inc. had long-term debt of $30.6 million in the form of one bond issue. Details are available in Note 1, Summary of Significant Accounting Policies and Note 16, Component Units.
Economic Outlook
The University is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year beyond those unknown variations which have a global effect on virtually all types of business operations.
Dr. Beheruz N. Sethna, President University of West Georgia
University of West Georgia Annual Financial Report FY 2008 6

Statement of Net Assets

UN IV ER S IT Y O F W ES T G EO R G IA S TA T EM EN T O F N ET A S S ET S June 30, 2008

C om pon e n t Un it

A S S ETS C u rre n t A sse ts C ash an d C ash E quiv alen t s Sh o r t - t e r m I n v e st m e n t s A cco un t s R eceiv able, n et (n o t e 3 ) R eceiv ables - Federal F in an cial A ssist an ce R eceiv ables - O t h er N et In v est m en t in C ap it al L eases P ledges R eceiv able D ue Fro m P rim ary Go v ern m en t In v en t o ries (n o t e 4 ) P rep aid it em s T o t al Curren t A sset s

U n ive rs ity o f W e st G e orgia

U n i ve rs i ty o f W e st G e orgia Fo u n da ti o n , In c.

$ 2 4 ,6 1 0 ,0 7 2 8 7 3 ,4 3 7
1 8 7 ,3 8 9 1 ,1 9 9 ,0 5 0
9 7 7 ,3 5 5 9 8 2 ,8 5 1 2 8 ,8 3 0 ,1 5 4

$ 2 ,9 9 0 ,1 9 9 5 ,7 4 0 ,4 5 7
7 5 ,3 4 0 8 2 7 ,9 9 1 1 ,3 7 0 ,9 3 0
1 4 ,0 7 8
1 1 ,0 1 8 ,9 9 5

N on cu rre n t A sse ts N o n curren t Cash Sh o r t - t e r m I n v e st m e n t s In v est m en t s (in cludin g R eal E st at e) N o t es Receiv able, n et N et In v est m en t in C ap it al L eases P ledges R eceiv able Cap it al A sset s, n et (n o t e 6 ) O t h er A sset s T o t al N o n curren t A sset s TO TA L A S S ETS
L IA B IL ITIES C u rre n t Liabilitie s A cco un t s P ay able Sa la r ie s P a y a ble Co n t ract s P ay able D ep o sit s D eferred Rev en ue (n o te 7 ) O t h er L iabilit ies D ep o sit s H eld fo r O t h er O rgan izat io n s L ease P urch ase O bligat io n s (curren t p o rt io n ) Co m p en sat ed A bsen ces (curren t p o rt io n ) Rev en ue/M o rt gage B o n ds P ay able (curren t ) N o t es an d L o an s P ay able (curren t p o rt io n ) T o t al C urren t L iabilit ies N on cu rre n t Liabilitie s D ue t o P rim ary Go v ern m en t L ease P urch ase O bligat io n s (n o n curren t ) D eferred Rev en ue (n o n curren t ) Co m p en sat ed A bsen ces (n o n curren t ) Rev en ue/M o rt gage B o n ds P ay able (n o n curren t ) L ia bilit ie s un de r Sp lit -In t e re st A gre e m e n t s (n o n c urre n t ) N o t es an d L o an s P ay able (n o n curren t ) T o t al N o n curren t L iabilit ies TO TA L L IA B IL ITIES
N ET A S S ETS In v est ed in C ap it al A sset s, n et o f relat ed debt Rest rict ed fo r N o n ex p en dable E x p en dable U n rest rict ed TO TA L N ET A S S ETS

6 6 7 ,9 6 7 7 0 ,5 7 0
1 ,7 7 2 ,5 9 8
1 2 3 ,5 6 1 ,1 3 6 1 2 6 ,0 7 2 ,2 7 1 1 5 4 ,9 0 2 ,4 2 5
3 ,0 6 2 ,1 3 1 4 6 5 ,0 3 5 8 3 7 ,4 4 4 8 4 7 ,3 9 0
7 ,2 1 5 ,9 4 1 2 1 1 ,6 3 6
1 ,0 1 8 ,0 2 9 1 ,4 9 9 ,1 6 6 1 ,2 9 0 ,0 0 9
1 6 ,4 4 6 ,7 8 1
6 0 ,8 1 6 ,0 9 7 8 7 5 ,0 0 0
1 ,4 0 7 ,7 9 2
6 3 ,0 9 8 ,8 8 9 7 9 ,5 4 5 ,6 7 0
6 1 ,2 4 5 ,8 7 3
3 ,0 8 8 ,1 5 7 1 1 ,0 2 2 ,7 2 5 $ 7 5 ,3 5 6 ,7 5 5

1 7 ,1 1 0 ,4 9 6 3 1 ,4 0 6 ,6 8 7
1 ,3 3 3 ,8 3 6 6 ,4 1 1 ,0 7 4 1 ,0 5 2 ,9 8 6 5 7 ,3 1 5 ,0 7 9 6 8 ,3 3 4 ,0 7 4
5 0 9 ,5 4 9 2 2 0 ,9 0 8
8 7 0 ,0 0 0 5 ,3 0 3 ,5 5 2 6 ,9 0 4 ,0 0 9
3 1 ,4 7 9 ,4 3 8 6 4 ,4 1 9
1 ,1 8 0 ,0 3 1 3 2 ,7 2 3 ,8 8 8 3 9 ,6 2 7 ,8 9 7
7 0 9 ,6 5 6 1 0 ,3 5 0 ,0 6 1 1 7 ,8 4 7 ,5 4 4
(2 0 1 ,0 8 4 ) $ 2 8 ,7 0 6 ,1 7 7

C om pon e n t Un it U W G R e a l Es ta te Fo u n da ti o n , In c.
$ 4 ,0 9 3 ,7 5 6
1 2 ,8 1 9 3 2 0 ,5 1 3
4 ,4 2 7 ,0 8 8
2 9 ,7 8 5 ,5 7 5 1 7 ,7 0 0
7 3 1 ,6 5 3 3 0 ,5 3 4 ,9 2 8 3 4 ,9 6 2 ,0 1 6
5 8 4 ,4 3 2
3 9 0 ,0 0 0 9 7 4 ,4 3 2
2 ,1 1 9 ,1 3 4 3 0 ,1 6 5 ,4 2 4 3 2 ,2 8 4 ,5 5 8 3 3 ,2 5 8 ,9 9 0
3 0 0 ,0 1 7
1 ,4 0 3 ,0 0 9 $ 1 ,7 0 3 ,0 2 6

University of West Georgia Annual Financial Report FY 2008 7

Statement of Revenues, Expenses and Changes in Net Assets
UNIVERSITYOFWEST GEORGIA STATEMENT of REVENUES, EXPENSES, andCHANGES in NET ASSETS
for the Year Ended June 30, 2008

Component Unit

University of West Georgia

University of West Georgia
Foundation, Inc.

REVENUES

Operating Revenues Student Tuition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Gifts and Contributions Endowment Income (per spending plan) Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Interest and Dividend income Other Operating Revenues Total Operating Revenues
EXPENSES Operating Expenses
Salaries: Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Other Operating Expense Payments to or on behalf of University of West Georgia
Total Operating Expenses Operating Income (loss)

$37,360,171 (7,596,080)
9,986,155 560,552
1,308,130 394,268 22,644
9,301,004 3,951,557 5,351,913 1,299,267 1,741,445 2,831,354
547,163
1,219,644 68,279,187
26,557,060 28,523,370 16,185,043
317,413 1,037,847 6,138,899 3,439,610 26,037,631 7,071,490
115,308,363 (47,029,176)

$0 3,554,729
810,951
523,522
1,702,410 475,091
7,066,703
508,572 131,396
5,129 844,755 94,653 1,727,291 3,311,796 3,754,907

Component Unit UWG Real Estate Foundation, Inc.
$0
90,000
1,536,510 1,626,510
133,328 71,000 204,328 1,422,182

University of West Georgia Annual Financial Report FY 2008 8

Statement of Revenues, Expenses and Changes in Net Assets, Continued
UNIVERSITYOF WEST GEORGIA STATEMENTof REVENUES, EXPENSES, andCHANGES in NETASSETS
for the Year Ended June 30, 2008

Component Unit

Component Unit

University of West Georgia

University of West Georgia
Foundation, Inc.

UWG Real Estate Foundation, Inc.

NONOPERATING REVENUES (EXPENSES) State Appropriations Gifts Investment Income (endowments, auxiliary and other) Interest Expense (capital assets) Other Nonoperating Revenues Net Nonoperating Revenues Income before other revenues, expenses, gains, or loss Capital Grants and Gifts State Additions to permanent endowments Total Other Revenues Increase in Net Assets
NET ASSETS Net Assets-beginning of year, as originally reported Prior Year Adjustments Net Assets-beginning of year, restated Net Assets-End of Year

48,576,377 1,531,698 1,142,250 (2,934,028) (327,062) 47,989,235
960,059
3,108,908
3,108,908 4,068,967
71,287,788 0
71,287,788 $75,356,755

457,931 (1,791,389)
(1,333,458) 2,421,449
198,726 198,726 2,620,175
26,086,002 0
26,086,002 $28,706,177

30,963 (1,416,336)
(1,385,373) 36,809
0 36,809
1,666,217 0
1,666,217 $1,703,026

University of West Georgia Annual Financial Report FY 2008 9

Statement of Cash Flows
UNIVERS ITY OF WES T GEORGIA S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
C AS H FLO W S FRO M O PERATING AC TIVITIES T uit ion and Fees Grant s and Cont ract s (Exchange) Sales and Services P ayment s t o Suppliers P ayments to Employees P ayment s for Scholarships and Fellowships Loans Issued t o St udent s and Employees Collect ion of Loans t o St udent s and Employees Auxiliary Ent erprise Charges: Residence Halls Bookst ore Food Services P arking/T ransport at ion Healt h Services Int ercollegiat e At hlet ics Ot her Organizat ions Ot her Receipt s (payment s) Net Cash P rovided (used) by Operat ing Act ivit ies
C AS H FLO W S FRO M NO N-C APITAL FINANC ING AC TIVITIES St at e Appropriat ions Agency Funds T ransact ions Gift s and Grant s Received for Ot her T han Capit al P urposes Net Cash Flows P rovided by Non-capit al Financing Act ivit ies
C AS H FLO W S FRO M C APITAL AND RELATED FINANC ING AC TIVITIES Capit al Grant s and Gift s Received P urchases of Capit al Asset s P rincipal P aid on Capit al Debt and Leases Int erest P aid on Capit al Debt and Leases Net Cash used by Capit al and Relat ed Financing Act ivit ies
C AS H FLO W S FRO M INVES TING AC TIVITIES P roceeds from Sales and Mat urit ies of Invest m ent s Int erest on Invest m ent s P urchase of Invest ment s Net Cash P rovided (used) by Invest ing Act ivit ies Net Increase/Decrease in Cash Cash and Cash Equivalent s - Beginning of year Cash and Cash Equivalent s - End of Year

June 30, 2008
$30,976,062 12,134,364 394,268 (46,861,584) (54,954,486) (6,138,899) (626,808) 486,292
9,356,305 4,050,965 5,156,436 1,403,028 1,767,440 2,956,329
533,488 1,042,173 (38,324,627)
48,576,377 9,542
1,685,083 50,271,002
3,108,908 (5,530,984) (1,398,497) (2,934,028) (6,754,601)
675,445 1,142,250 (944,007)
873,688 6,065,462 19,212,577 $25,278,039

University of West Georgia Annual Financial Report FY 2008 10

Statement of Cash Flows, Continued
UNIVERS ITY OF WES T GEORGIA S TATEMENT OF CAS H FLOWS For the Year Ended June 30, 2008
REC O NC ILIATIO N O F O PERATING LO S S TO NET C AS H PRO VIDED (US ED) B Y O PERATING AC TIVITIES :
Operat ing Income (loss) Adjust ment s t o Reconcile Net Income (loss) t o Net Cash P rovided (used) by Operat ing Act ivit ies
Dep reciat io n Change in Asset s and Liabilit ies:
Receivables, net In v en t o ries P repaid Items Not es Receivable, Net Account s P ayable Deferred Revenue Ot her Liabilit ies Com pensat ed Absences
Net Cash P rovided (used) by Operat ing Act ivit ies
** NON-CASH INVEST ING, NON-CAP IT AL FINANCING, AND CAP IT AL AND RELAT ED FINANCING T RANSACT IONS
Univers ity of W es t Georgia had no non-cas h trans actions during fis cal 2008.

June 30, 2008
($47,029,176)
7,071,490
(97,552) (58,657) (535,796) (140,516) 1,220,475 1,160,585
7,077 77,443 ($38,324,627)

University of West Georgia Annual Financial Report FY 2008 11

UNIVERSITY OF WEST GEORGIA NOTES TO THE FINANCIAL STATEMENTS
June 30, 2008
Note 1. Summary of Significant Accounting Policies
Nature of Operations University of West Georgia serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity University of West Georgia is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of University of West Georgia as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. University of West Georgia does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, University of West Georgia is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The Board of Regents of the University System of Georgia (and thus University of West Georgia) implemented GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, in fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units in the Annual Financial Report for the institution. These statements (Statement of Net Assets and Statement of Revenues, Expenses and Changes in Net Assets) are reported discretely in the University's report. For FY2008, University of West Georgia is reporting the activity for the University of West Georgia Foundation, Inc. and the UWG Real Estate Foundation, Inc.
See Note 16, Component Units, for Foundation notes.
Financial Statement Presentation In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and
University of West Georgia Annual Financial Report FY 2008 12

Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. 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, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund-group perspective previously required.
Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
Basis of Accounting For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the Board of Regents Short-Term Investment Pool.
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.
Investments The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets. The Board of Regents Legal Fund, the Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Board of Regents Diversified Fund, and the Georgia Extended Asset Pool are included under Investments.
University of West Georgia Annual Financial Report FY 2008 13

Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies and Resale Inventories are valued at cost using the average-cost basis.
Noncurrent Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Assets.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. 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 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the System. 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 so issued constitute 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 projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to University of West Georgia.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall.
University of West Georgia Annual Financial Report FY 2008 14

Deferred Revenues Deferred revenues include amounts received for tuition and fees and certain auxiliary 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 at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Assets. University of West Georgia had accrued liability for compensated absences in the amount of $2,620,358 as of 7-1-2007. For FY2008, $1,964,465 was earned in compensated absences and employees were paid $1,887,022, for a net increase of $77,443. The ending balance as of 6-30-2008 in accrued liability for compensated absences was $2,697,801.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Net Assets The University's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University'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 previously in Note 1 Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
University of West Georgia Annual Financial Report FY 2008 15

Expendable Restricted Net Assets include the following:

Rest rict ed - E& G and Ot her Organized Act ivit ies Federal Loans Inst it ut ional Loans T ot al Rest rict ed Expendable

June 30, 2008
$869,671 1,939,992
278,494 $3,088,157

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the office of Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially selfsupporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Invent ory Ot her Unrest rict ed T ot al Unrest rict ed Net Asset s

June 30, 2008
$9,381,066 6,686,515 129,803 (5,174,659)
$11,022,725

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

Income Taxes University of West Georgia, 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 University has classified its revenues as either operating or non-operating revenues in the Statement of Revenues, Expenses, and Changes in Net Assets according to the following criteria:

Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of sponsored and unsponsored scholarships, (2) sales and services of auxiliary enterprises, net of sponsored and unsponsored scholarships, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.

University of West Georgia Annual Financial Report FY 2008 16

Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of non-exchange 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 University, 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 University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
University of West Georgia Annual Financial Report FY 2008 17

Note 2. Deposits and Investments
A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) 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, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness 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 and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit 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.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $11,587,173 and the bank balance was $14,492,615. Of the University's deposits, $14,191,530 were uninsured. Of these uninsured deposits, $14,191,440 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name and $90 were uncollateralized.
B. Investments
At June 30, 2008, the carrying value of the University's investments was $14,615,748, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents and/or Office of Treasury and Fiscal Services investment pools as follows:
University of West Georgia Annual Financial Report FY 2008 18

Investment Pools Board of Regents Short-T erm Fund Sub T otal

$8,075,521 8,075,521

Office of T reasury and Fiscal Services Georgia Fund 1
Sub T otal

6,540,227 6,540,227

T otal Investment Pools

$14,615,748

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia Administrative Central Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.state.ga.us/internet/searchRpts.html.

The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1 Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 days.

Interest rate risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk.

The Weighted Average Maturity of the Short Term Fund is 1.99 years. Of the University's total investment of $8,075,521 in the Short Term Fund, $8,043,218 is invested in debt securities.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk.

University of West Georgia Annual Financial Report FY 2008 19

Note 3. Accounts Receivable Accounts receivable consisted of the following at June 30, 2008:

June 30, 2008

St udent T uit ion and Fees Auxiliary Ent erprises and Ot her Operat ing Act ivit ies Federal Financial Assist ance Other
Less Allowance for Doubt ful Account s
Net Account s Receivable

$598,031 629,705 187,389 611,384
2,026,509 640,070
$1,386,439

Note 4. Inventories

Inventories consisted of the following at June 30, 2008:

June 30, 2008

Bookst ore P hysical P lant
T otal

$842,553 134,802
$977,355

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was approximately $0.

University of West Georgia Annual Financial Report FY 2008 20

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2008:

Capital Assets, Not Being Depreciated: Land Construction Work-in-Progress
T otal Capital Assets Not Being Depreciated
Capital Assets, Being Depreciated: In frast ruct ure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections T otal Assets Being Depreciated
Less: Accumulated Depreciation In frast ruct ure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections Capitalized Collections T otal Accumulated Depreciation
T otal Capital Assets, Being Depreciated, Net
Capital Assets, net

Beginning B al an ce s 7/1/2007
$554,184 4,106,135 4,660,319
3,144,580 88,505,752
2,353,312 17,008,531 65,795,927 14,859,551
13,516 191,681,169
323,891 42,471,710
896,269 12,135,020
4,451,395 11,227,862
8,373 71,514,520
120,166,649
$124,826,968

Addi ti o n s
$0 4,676,866 4,676,866

Re ductions
$0 2,746,500 2,746,500

En di n g B al an ce 6/30/2008
$554,184 6,036,501 6,590,685

2,083,059 1,520,307
752,372 4,355,738

2,254,000 2,216,164
26,903 4,497,067

3,144,580 88,334,811
2,353,312 16,312,674 65,795,927 15,585,020
13,516 191,539,840

100,627 2,840,096
115,038 1,259,190 2,056,558
699,643 338
7,071,490
(2,715,752)
$1,961,114

1,798,504 2,191,214
26,903 4,016,621
480,446 $3,226,946

424,518 43,513,302
1,011,307 11,202,996
6,507,953 11,900,602
8,711 74,569,389
116,970,451
$123,561,136

University of West Georgia Annual Financial Report FY 2008 21

Note 7. Deferred Revenue

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

P repaid T uit ion and Fees Research Ot her Deferred Revenue
T ot als

June 30, 2008
$4,568,345 698,911
1,948,685
$7,215,941

Note 8. Long-Term Liabilities

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations

Beginning Balance
July 1, 2007
$63,713,760

Additions $0

Reductions

Ending Balance June 30, 2008

$1,398,497

$62,315,263

Other Liabilities Compensated Absences Total

2,620,358 2,620,358

1,964,465 1,964,465

1,887,022 1,887,022

2,697,801 2,697,801

Total Long Term Obligations

$66,334,118

$1,964,465

$3,285,519

$65,013,064

Current Portion $1,499,166
1,290,009 1,290,009 $2,789,175

Note 9. Significant Commitments
The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $3,993,595 as of June 30, 2008. Of this amount, institution projects account for $1,879,021 and GSFIC projects are $2,114,574. This amount is not reflected in the accompanying basic financial statements. The major institutional projects are: Row Hall elevators of $754,200, chiller for Z6 of $169,000 and Callaway building of $116,034. The major GSFIC project is the Callaway addition and renovation of $1,550,931.
Note 10. Lease Obligations
University of West Georgia is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases for the acquisition of real property.

University of West Georgia Annual Financial Report FY 2008 22

CAPITAL LEASES

Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2009 and 2035. Expenditures for fiscal year 2008 were $4,821,751 of which $2,934,028 represented interest and $489,226 represented executory costs. Total principal paid on capital leases was $1,398,497 for the fiscal year ended June 30, 2008. Interest rates range from 3.5 percent to 5 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Buildings Equipment Total Assets Held Under Capital Lease

$56,328,623 2,959,351
$59,287,974

Certain capital leases provide for renewal and/or purchase options.
Two separate capital leases for student residence halls are with the University of West Georgia Foundation, Inc. The University Suites lease has $12,028,822 principal outstanding and the Arbor View Apartments lease has $19,800,481 principal outstanding as of June 30, 2008.
The University Center is being leased from the UWG Real Estate Foundation, Inc, UWG Campus Center, LLC. The remaining principal balance on this lease is $30,106,087 as of June 30, 2008.
University of West Georgia also has a capital lease for PBX equipment with an outstanding principal balance at June 30, 2008 in the amount of $379,873.
Refer to Note 16 Component units for additional information.
OPERATING LEASES
University of West Georgia's operating leases having remaining terms of more than one year expire in various fiscal years from 20092013. Certain operating leases provide for renewal options for periods from one to five years. All agreements are cancelable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and other small equipment. The University has two real property operating leases. The leases are with third-party lessors and include the lease for our bookstore and a rental agreement for use of a stadium.
Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

University of West Georgia Annual Financial Report FY 2008 23

Year Ending June 30: 2009 2010 2011 2012 2013 2014 t hrough 2018 2019 t hrough 2023 2024 t hrough 2028 2029 t hrough 2033 2034 t hrough 2038 T ot al m inim um lease paym ent s
Less: Int erest Less: Execut ory cost s (if paid) P rincipal Out st anding

Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Real P ropert y and Equipm ent

Capit al Leases

Operat ing Leases

$4,904,921 4,762,307 4,739,579 4,787,435 4,842,693
25,070,387 26,594,701 28,281,531 16,723,828
4,190,000 124,897,382
42,577,601 20,004,518 $62,315,263

$323,902 245,653 108,816 46,238 11,304
$735,913

University of West Georgia's FY2008 expense for rental of real property and equipment under operating leases was $293,330.
Note 11. Retirement Plans
Teachers Retirement System of Georgia
Plan Description University of West Georgia participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.
Funding Policy Employees of University of West Georgia who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. University of West Georgia makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

University of West Georgia Annual Financial Report FY 2008 24

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$2,534,743 $2,372,082 $2,242,017

Employees' Retirement System of Georgia

Plan Description University of West Georgia participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-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 benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion 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 ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in

University of West Georgia Annual Financial Report FY 2008 25

the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30, 2008, for employees covered by ERS was $74,151. The University's total payroll for all employees was $55,080,430.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$7,856 $8,230 $8,229

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

University of West Georgia Annual Financial Report FY 2008 26

Funding Policy University of West Georgia makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
University of West Georgia and the covered employees made the required contributions of $1,776,144 (8.13% or 8.15%) and $1,091,061 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description University of West Georgia 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 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.
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.
Total contributions made by employees during fiscal year 2008 amounted to $68,086 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.
University of West Georgia Annual Financial Report FY 2008 27

Note 12. Risk Management
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. University of West Georgia and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
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. University of West Georgia, as an organizational unit of the Board of Regents of the University 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.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
Note 13. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although University of West Georgia expects such amounts, if any, to be immaterial to its overall financial position.
University of West Georgia Annual Financial Report FY 2008 28

Litigation, claims and assessments filed against University of West Georgia (an organizational unit of the Board of Regents of the University 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, 2008.
Note 14. Post-Employment Benefits Other Than Pension Benefits
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 399 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, University of West Georgia recognized as incurred $1,725,419 of expenditures, which was net of $563,376 of participant contributions.
University of West Georgia Annual Financial Report FY 2008 29

Note 15. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2008 are shown below:

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Instruction
$25,910,858 4,176,681 7,304,883
494,744 96,156 119,481 2,780,957 1,019,080
$41,902,840

Research
$261,698 272,653 80,164
27,338 44,800
381 203,570 111,069
$1,001,673

Functional Classification FY2008

Public Service

Academic Support

$0 137,460 37,521

$319,453 6,663,884 1,792,730

4,147

212,311

94 7,793

56,055 3,729,485 1,325,871

$187,015

$14,099,789

Student Services
$18,390 3,831,925
898,668
110,803 9,545 28,727
1,902,242 900,943
$7,701,243

Institutional Support
$31,001 5,307,927 3,591,473
316,100 76,005
34,980 1,588,451
174,793
$11,120,730

Natural Classification
Faculty Staff Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Others Services Depreciation
Total Expenses

Plant Operations & Maintenance

Functional Classification FY2008

Scholarships & Fellowships

Auxiliary Enterprises

Total Expenses

$0 4,431,388 1,489,856 (2,427,710)
12,200
3,296,193 2,655,293
845,960

$0 4,916,218

$15,660 3,701,452
989,748 2,429,023
100,299 1,072,180
(96,301) 13,169,840 2,693,774

$26,557,060 28,523,370 16,185,043
317,413 1,037,847 6,138,899 3,439,610 26,037,631 7,071,490

$10,303,180

$4,916,218

$24,075,675 $115,308,363

University of West Georgia Annual Financial Report FY 2008 30

Note 16. Component Units
University of West Georgia Foundation, Inc. University of West Georgia Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of University of West Georgia (University). The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the University in support of its programs. The Foundation board consists of approximately forty members and is made up of alumni and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.
The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is January 1, 2007 through December 31, 2007. The due from amount on the Foundation's Statement of Net Assets does not agree with the University's statement due to the difference in fiscal year ends.
Investments carried as Net Investment in Capital Leases and valued at $32.2 million and the associated bond debt of $32.3 million are included in the financial statements of the Foundation. The corresponding buildings and associated capital leases are included in the University's report. Note 10 of this financial report provides information on related party leases.
During the year ended December 31, 2007, the Foundation distributed $1,727,291 to the University for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained from the Office of Development and Alumni Services at 1901 Maple Street, Carrollton Georgia 30118.
Investments for Component Units:
University of West Georgia Foundation, Inc. holds endowment investments in the amount of $22.9 million. The corpus of the endowment portion is nonexpendable, but the earnings on the investment may be expended as restricted by the donors. University of West Georgia Foundation, Inc. in conjunction with the donors, has established a spending plan whereby up to 5% of the adjusted corpus balance at year end may be used for academic scholarships. The remaining amount is retained in each endowment accounts.
University of West Georgia Annual Financial Report FY 2008 31

The University of West Georgia Foundation, Inc. investments was comprised of the following amounts at December 31, 2007:

Cash held by investment organization Certificates of Deposit Government and Agency Securities Equity Securities and Options M utual Funds
Total Investments

Cost
$4,828,077 1,325,581 4,489,325
10,597,237 286,490
$21,526,710

Fair Value
$4,828,077 1,325,581 4,590,574
11,818,517 288,204
$22,850,953

Capital Assets for Component Units:

The University of West Georgia Foundation, Inc. holds the following Capital Assets as of December 31, 2007:

Capital Assets not being Depreciated: Land and other Assets Construction in Progress
Total Capital Assets not being Depreciated
Capital Assets being Depreciated: Buildings and Improvements
Total Capital Assets being Depreciated
Less Total Accumulated Depreciation
Total Capital Assets being Depreciated, Net
Capital Assets, Net

Dec. 31, 2007
$2,320,036 604,639
2,924,675
3,786,134 3,786,134
299,735 3,486,399 $6,411,074

Long-term Liabilities for Component Units:

Long-term liability activity for the Foundation for the year ended December 31, 2007 was as follows:

Beginning Balance Jan. 1, 2007

Additions

Reductions

Ending Balance Dec. 31, 2007

Amounts due within
One Year

Liabilities under split interest agreement Notes and Loans Payable Revenue/M ortgage Bonds Payable
Total Long Term Liabilities

$56,377 6,095,000 33,189,181
$39,340,558

$17,976 1,488,583
$1,506,559

$9,934 1,100,000
839,743
$1,949,677

$64,419 6,483,583 32,349,438
$38,897,440

$0 5,303,552
870,000
$6,173,552

University of West Georgia Annual Financial Report FY 2008 32

Notes and Loans Payable:

During 2007, the Foundation renewed its mortgage collateralized by an apartment complex purchased by the Foundation after making a principal payment of $1,100,000. The principal amount of the loan was $4,600,000.

The mortgage note payable is payable in monthly installments of interest computed at the London Interbank Rate (LIBOR) plus 1.20% per annum adjusted monthly as of the first business day of each month. At December 31, 2007 the rate was 6.42%. Principal is due at September 29, 2008.

In October 2007, The Foundation obtained a mortgage collateralized by real estate in order to construct a parking lot. The principal balance at December 31, 2007 was $1,488,583.

The mortgage note payable is payable in six monthly installments of interest and fifty four payments of principal and interest based upon a twenty year amortization schedule. The final payment shall include all principal and interest due. Interest is computed at the rate of London Interbank rate (LIBOR) plus 1.00% per annum adjusted monthly as of the first business day of each month. At December 31, 2007 the rate was 6.22%. Principal is due October 19, 2012. The debt payment schedule below reflects an accelerated payment schedule by the Foundation.

Annual debt service requirements to maturity for Notes and Loans payable are as follows:

Year ending December 31:

2008

1

2009

2

2010

3

2011

4

Principal

Notes and Loans Payable Interest

$5,303,552 482,975 509,833 187,223
$6,483,583

$288,816 52,115 25,258 2,245
$368,434

Total
$5,592,368 535,090 535,091 189,468
$6,852,017

Revenue Bonds Payable:

Student Housing Bonds are issued by the University of West Georgia Foundation, Inc. to finance student housing on university property. The bonds, serial and term, are secured by pledges of gross receipts from student housing at University of West Georgia.

Series 2004A bonds were issued on October 1, 2004 in the amount of $19,175,000 to fund the Construction of Phase II. The bonds bear interest rates ranging from 3.0% to 5.0%. The balance of the obligation as of 12/31/2007 is $18,900,000.

Series 2004B bonds were issued on October 1, 2004 in the amount of $180,000 to fund the Construction of Phase II. The bonds bear interest rate of 3.4%. The balance of the obligation as of 12/31/2007 is $0.

University of West Georgia Annual Financial Report FY 2008 33

Series 2005 bonds were issued on March 1, 2005 in the amount of $13,860,000 as a result of refunding the Series 2003 bonds. These bonds funded the construction of Phase I, University Suites. The bonds bear interest rates ranging from 3.375 to 5.0%. The balance of the obligation as of 12/31/2007 is $13,130,000.

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending December 31: 2008 2009 2010 2011 2012 2013 through 2017 2018 through 2022 2023 through 2027 2028 through 2032

1 2 3 4 5 6-10 11-15 16-20 21-25

Bond Premium/(Discount)

Princip al
$870,000 910,000
1,000,000 1,040,000 1,075,000 6,025,000 7,430,000 9,320,000 4,360,000 32,030,000
319,438 $32,349,438

Bonds Payable Interest
$1,391,369 1,363,344 1,328,819 1,294,569 1,253,494 5,598,937 4,232,731 2,342,683 303,107
19,109,050
$19,109,050

Total
$2,261,369 2,273,344 2,328,819 2,334,569 2,328,494
11,623,937 11,662,731 11,662,683
4,663,107 51,139,050
319,438 $51,458,488

UWG Real Estate Foundation, Inc. UWG Real Estate Foundation, Inc. (Foundation) is a legally separate, tax-exempt component unit of University of West Georgia (University). The Foundation constructs research and auxiliary buildings and facilities for use by the University and then leases the completed buildings to the institution. The seven-member board of the Foundation is self-perpetuating and consists of graduates and friends of the University. Although the University does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests is restricted to the real estate activities of the University by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the University, the Foundation is considered a component unit of the University and is discretely presented in the University's financial statements.

The Foundation is a private nonprofit organization that reports under FASB standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified to the GASB presentation for external financial reporting purposes in these financial statements. The Foundation's fiscal year is July 1 through June 30.

Investments carried as Net Investment in Capital Leases and valued at $30.1 million and the associated long-term bond debt of $30.6 million are included in the financial statements of the Foundation. The corresponding buildings and associated capital leases are included in the University's report. Note 10 of this financial report provides information on related party leases. Complete financial statements for the Foundation can be obtained from the Treasurer, Office of Business and Finance, 1601 Maple Street, Carrollton, Georgia 30118.

University of West Georgia Annual Financial Report FY 2008 34

Capital Assets for Component Units:

The UWG Real Estate Foundation, Inc. holds $17,700 in Construction in Progress as of June 30, 2008.

Long-term Liabilities for Component Units:

Resident Instruction Bonds are issued by the UWG Real Estate Foundation, Inc. to finance Student Center facilities at University of West Georgia. The bonds mature serially and are serviced by a pledge of a portion of student fee and appropriations formerly used for square footage support.

Series 2004 bonds were issued on December 20, 2004 in the amount of $30,720,000 to fund the construction of Campus Center. The bonds bear interest rates ranging from 3.0% to 5.25%. The balance of the obligation as of 06/30/2008 is $30,360,000.

Changes in long-term liabilities for UWG Real Estate Foundation, Inc. for the fiscal year ended June 30, 2008 are shown below:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Amounts due within
One Year

Revenue/Mortgage Bonds Payable Total Long Term Liabilities

$30,922,900 $30,922,900

$0

$367,476

$0

$367,476

$30,555,424 $30,555,424

Debt Service Obligations

Annual debt service requirements to maturity for revenue bonds payable are as follows:

Year ending June 30: 2009 2010 2011 2012 2013 2014 through 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038

1 2 3 4 5 6-10 11-15 16-20 21-25 26-30

Bond Premium/(Discount)

Principal

Bonds Payable Interest

$390,000 425,000 465,000 505,000 545,000
3,425,000 4,955,000 7,210,000 8,765,000 3,675,000 30,360,000
195,424 $30,555,424

$1,410,383 1,395,545 1,378,326 1,360,770 1,342,395 6,360,389 5,493,388 3,954,888 1,928,620 174,207
24,798,911
$24,798,911

Total
$1,800,383 1,820,545 1,843,326 1,865,770 1,887,395 9,785,389
10,448,388 11,164,888 10,693,620
3,849,207 55,158,911
195,424 $55,354,335

$390,000 $390,000

University of West Georgia Annual Financial Report FY 2008 35

UNIVERSITY SYSTEM OF GEORGIA
Consolidated Statutory Reporting (Non-GAAP Basis)
For the Year Ended June 30, 2008

UNIVERSITY SYSTEM OF GEORGIA CONSOLIDATED BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Margin Allocation Prepaid Expenditures Inventories Other Assets
Total Assets

$371,725,029.47 56,626,714.11
75,573,639.97 204,888,180.62
7,247,639.00 41,170,614.76
4,733,542.00 5,543,577.60
$767,508,937.53

LIABILITIES AND FUND EQUITY
Liabilities Cash Overdraft Contracts Payable Accrued Payroll Encumbrance Payable Accounts Payable Benefits Payable Deferred Revenue Funds Held for Others Other Liabilities
Total Liabilities
Fund Balances Reserved Capital Outlay Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry-Forward Carry-Over "Per State Accounting Office" Early Retirement Program Unreserved Surplus Tobacco Settlement Funds
Total Fund Balances
Total Liabilities and Fund Balances

$22,748,782.74 2,906,076.67
14,689,046.68 147,608,441.54 105,694,003.82
96,015.58 209,459,209.56
15,295,037.90 12,234,773.67 $530,731,388.16
$6,694,149.08 21,979,729.29 51,154,871.97 12,539,684.95 105,792,974.28 11,287,655.86
3,173,177.35 10,664,996.97
3,549,074.23 7,365,016.53
2,575,910.43 308.43
$236,777,549.37 $767,508,937.53

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.

UNIVERSITY SYSTEM OF GEORGIA CONSOLIDATED BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds Tobacco Funds
Non-State Funds Research Funds Agency Funds
Total Revenue Prior Year Reserves Available for Expenditure Total Funds Available

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

$2,115,477,060.00 20,337,799.00
1,417,322,782.00 1,514,587,141.00
$5,067,724,782.00
$5,067,724,782.00

$2,121,723,333.00 20,337,799.00
1,525,579,153.00 1,776,169,789.00
$5,443,810,074.00
$5,443,810,074.00

$2,121,723,333.00 20,337,799.00
1,368,958,572.97 1,677,654,977.10
$5,188,674,682.07 209,946,250.18
$5,398,620,932.25

VARIANCE
$0.00 0.00
(156,620,580.03) (98,514,811.90)
($255,135,391.93) 209,946,250.18
($45,189,141.75)

EXPENDITURES
Advanced Technology Development Center/EDI Agricultural Experiment Station Athens Tifton Vet Labs Cooperative Extension Service Forestry Cooperative Extension Forestry Research Georgia Eminent Scholar Endowment Trust Fund Georgia Military College Georgia Public Telecommunications Georgia Radiation Therapy Center Georgia Tech Research Institute MCG Hospitals and Clinics Marine Institute Marine Resources Extension Center Office of Minority Business Payments to Georgia Cancer Coalition Public Libraries Regents Central Office Research Consortium Skidaway Institute of Oceanography Special Funding Initiative Student Education Enrichment Program Teaching Veterinary Medicine Experiment Station Veterinary Medicine Teaching Hospital
Total Expenditures
Excess of Funds Available over Expenditures

$27,974,712.00 75,377,483.00 4,882,330.00 58,486,061.00 987,793.00 5,826,331.00 500,000.00 3,062,152.00 18,069,614.00 3,625,810.00
130,786,385.00 33,181,112.00 1,731,994.00 2,761,521.00 884,273.00 14,587,799.00 45,537,501.00 7,683,800.00 36,745,015.00 7,370,710.00 46,081,344.00 314,737.00
4,530,679,466.00 3,384,254.00 7,202,585.00
$5,067,724,782.00
$0.00

$29,574,712.00 86,015,877.00 6,268,386.00 68,438,718.00 1,170,484.00 7,706,916.00 500,000.00 3,062,152.00 18,069,614.00 3,625,810.00
154,736,385.00 33,181,112.00 1,786,536.00 4,316,521.00 884,273.00 14,587,799.00 44,851,896.00 7,762,975.00 36,745,015.00 6,470,710.00 45,856,344.00 314,737.00
4,852,246,263.00 3,384,254.00
12,252,585.00 $5,443,810,074.00
$0.00

$27,175,514.08 80,354,212.99 5,908,662.02 65,093,392.11 1,008,149.45 7,645,793.68 500,000.00 3,062,152.00 18,069,614.00 3,625,810.00
149,869,704.44 33,181,112.00 1,420,923.86 3,684,272.67 883,081.61 14,587,490.57 44,657,879.92 8,442,787.75 36,735,472.49 6,443,433.25 45,762,009.90 314,737.00
4,629,055,370.60 3,384,254.00
10,068,145.59 $5,200,933,975.98
$197,686,956.27

$2,399,197.92 5,661,664.01 359,723.98 3,345,325.89 162,334.55 61,122.32 0.00 0.00 0.00 0.00 4,866,680.56 0.00 365,612.14 632,248.33 1,191.39 308.43 194,016.08 (679,812.75) 9,542.51 27,276.75 94,334.10 0.00
223,190,892.40 0.00
2,184,439.41 $242,876,098.02
$197,686,956.27

UNIVERSITY SYSTEM OF GEORGIA CONSOLIDATED BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

FUND BALANCE JULY 1
Reserved Unreserved ADJUSTMENTS
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Increase (Decrease) in Inventories Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services Mandatory Transfers Mandatory Transfers - Restricted Non-Mandatory Transfers Other Additions (Deletions) Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30
SUMMARY OF FUND BALANCE
Reserved Capital Outlay Department Sales & Services Early Retirement Program Indirect Cost Recovery Inventories Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Forward Property Reserves
Total Reserved
Unreserved Surplus Total Fund Balance

230,386,955.87 1,968,440.84
4,680,279.06 (3,344,349.25)
13,617.57 (1,968,440.84)
1,066,226.00 (3,838.16)
16,037,024.72 200,927.47
(209,946,250.18)
$236,777,549.37
$6,694,149.08 21,979,729.29
7,365,016.53 51,154,871.97
3,173,177.35 12,539,684.95 105,792,974.28 11,287,655.86 10,664,996.97
3,549,074.23
$234,201,330.51
2,576,218.86 $236,777,549.37

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.

Advanced Technology Development Center State Appropriation State General Funds Other Funds
Total Advanced Technology Development Center
Agricultural Experiment Station State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Agricultural Experiment Station
Athens and Tifton Veterinary Laboratories State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Athens and Tifton Veterinary Lab
Cooperative Extension Service State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Cooperative Extension Service
Forestry Cooperative Extension State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Forestry Cooperative Extension

Original Appropriation

$

15,099,712.00

12,875,000.00

$

27,974,712.00 $

Original Appropriation

$

42,936,221.00 $

22,000,000.00 10,441,262.00

$

75,377,483.00 $

Original Appropriation

$

62,192.00 $

4,820,138.00

$

4,882,330.00 $

Original Appropriation

$

35,391,924.00

13,000,000.00 10,094,137.00

$

58,486,061.00 $

Original Appropriation

$

687,388.00 $

200,000.00 100,405.00

$

987,793.00 $

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

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

15,099,712.00 14,475,000.00
29,574,712.00 $

15,099,712.00 $ 12,042,668.25
27,142,380.25 $

0.00 $ 0.00
0.00 $

15,099,712.00 $ 12,042,668.25
27,142,380.25 $

0.00 $ (2,432,331.75)
(2,432,331.75) $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

15,099,712.26 $ 12,075,801.82

(0.26) $ 2,399,198.18

(0.26) $ (33,133.57)

16,806.44 8,410.50

27,175,514.08 $

2,399,197.92 $

(33,133.83) $

25,216.94

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.26 $ 46,268.01 46,268.27 $
Other Adjustments

16,806.44 21,544.94
38,351.38
Total Program
Fund Balances

42,936,221.00 $
25,000,000.00 18,079,656.00
86,015,877.00 $

42,936,221.00 $
23,791,106.14 14,305,679.24
81,033,006.38 $

$
7,974,091.98 709,197.47
8,683,289.45 $

42,936,221.00 $
31,765,198.12 15,014,876.71
89,716,295.83 $

0.00 $
6,765,198.12 (3,064,779.29)
3,700,418.83 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

42,936,221.00 $

0.00 $

0.00 $

72,724.38

23,249,351.41 14,168,640.58

1,750,648.59 3,911,015.42

8,515,846.71 846,236.13

0.00 6,830.63

80,354,212.99 $

5,661,664.01 $

9,362,082.84 $

79,555.01

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $
0.00 363.40
363.40 $

72,724.38
8,515,846.71 853,430.16
9,442,001.25

Other Adjustments

Program Fund
Balances

62,192.00 $
6,120,138.00 86,056.00
6,268,386.00 $

62,192.00 $
5,771,956.96 73,161.01
5,907,309.97 $

0.00 $
2,293,261.29 35,099.40
2,328,360.69 $

62,192.00 $
8,065,218.25 108,260.41
8,235,670.66 $

0.00 $
1,945,080.25 22,204.41
1,967,284.66 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

61,862.00 $

330.00 $

330.00 $

(330.00)

5,776,490.08 70,309.94

343,647.92 15,746.06

2,288,728.17 37,950.47

0.00 330.00

5,908,662.02 $

359,723.98 $

2,327,008.64 $

0.00

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $
0.00 (330.00)
(330.00) $

0.00
2,288,728.17 37,950.47
2,326,678.64

Other Adjustments

Program Fund
Balances

35,391,924.00
19,000,000.00 14,046,794.00
68,438,718.00 $

35,391,924.00 $
18,567,741.73 11,571,359.19
65,531,024.92 $

0.00 $
1,914,732.87 240,190.33
2,154,923.20 $

35,391,924.00 $
20,482,474.60 11,811,549.52
67,685,948.12 $

0.00 $
1,482,474.60 (2,235,244.48)
(752,769.88) $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

35,391,924.00 $

0.00 $

0.00 $

26,629.73

18,014,357.14 11,687,110.97

985,642.86 2,359,683.03

2,468,117.46 124,438.55

0.00 8,349.92

65,093,392.11 $

3,345,325.89 $

2,592,556.01 $

34,979.65

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $ 0.00 (828.00) (828.00) $
Other Adjustments

26,629.73
2,468,117.46 131,960.47
2,626,707.66
Total Program
Fund Balances

687,388.00 $
350,000.00 133,096.00
1,170,484.00 $

687,388.00 $
317,731.81 16,477.69
1,021,597.50 $

0.00 $
29,896.06 38,801.37
68,697.43 $

687,388.00 $
347,627.87 55,279.06
1,090,294.93 $

0.00 $
(2,372.13) (77,816.94)
(80,189.07) $

687,388.00 $
287,675.19 33,086.26
1,008,149.45 $

0.00 $
62,324.81 100,009.74
162,334.55 $

0.00 $
59,952.68 22,192.80
82,145.48 $

145.68
0.00 300.00
445.68

0.00 $
0.00 0.00
0.00 $

145.68
59,952.68 22,492.80
82,591.16

Transfers 0.00 0.00 0.00
Transfers 0.00 0.00 0.00 0.00
Transfers 0.00 0.00 0.00 0.00
Transfers 0.00 0.00 0.00 0.00
Transfers
0.00

Reserve

Program Fund Balances Surplus

0.00 $ 13,134.44
13,134.44 $

16,806.44 $ 8,410.50
25,216.94 $

Total
16,806.44 21,544.94 38,351.38

Reserve

Program Fund Balances Surplus

Total

0.00 $
8,515,846.71 853,430.16
9,369,276.87 $

72,724.38 $
0.00 0.00
72,724.38 $

72,724.38
8,515,846.71 853,430.16
9,442,001.25

Reserve

Program Fund Balances Surplus

Total

0.00 $
2,288,728.17 37,950.47
2,326,678.64 $

0.00 $
0.00 0.00
0.00 $

0.00
2,288,728.17 37,950.47
2,326,678.64

Reserve

Program Fund Balances Surplus

Total

0.00 $
2,468,117.46 131,960.47
2,600,077.93 $

26,629.73 $
0.00 0.00
26,629.73 $

26,629.73
2,468,117.46 131,960.47
2,626,707.66

Reserve

Program Fund Balances Surplus

0.00 $
59,952.68 22,492.80
82,445.48 $

145.68 $
0.00 0.00
145.68 $

Total
145.68 59,952.68 22,492.80 82,591.16

Forestry Research State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Forestry Research
Georgia Radiation Therapy Center State Appropriation State General Funds Other Funds
Total Georgia Radiation Therapy Center
Georgia Tech Research Institute State Appropriation State General Funds Other Funds
Total Georgia Tech Research Institute
Marine Institute State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Marine Institute
Marine Resources Extension Service State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Marine Resources Extension Service
Medical College of Georgia Hospital and Clinics State Appropriation State General Funds Other Funds
Total Medical College of Georgia Hospital and Clinics

Original Appropriation

$

3,276,331.00 $

2,000,000.00 550,000.00

$

5,826,331.00 $

Original Appropriation

$ 3,625,810.00

$

3,625,810.00 $

Original Appropriation

$

7,868,427.00

122,917,958.00

$

130,786,385.00 $

Original Appropriation

$

964,361.00 $

700,000.00 67,633.00

$

1,731,994.00 $

Original Appropriation

$

1,576,721.00 $

600,000.00 584,800.00

$

2,761,521.00 $

Original Appropriation

$

33,181,112.00 $

$

33,181,112.00 $

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

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Program Fund
Balances

3,276,331.00 $
3,500,000.00 930,585.00
7,706,916.00 $

3,276,331.00 $
3,553,178.63 1,070,782.29
7,900,291.92 $

0.00 $
673,544.71 358,490.09
1,032,034.80 $

3,276,331.00 $
4,226,723.34 1,429,272.38
8,932,326.72 $

0.00 $
726,723.34 498,687.38
1,225,410.72 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

3,276,331.00 $

0.00 $

0.00 $

8,848.57

3,438,216.89 931,245.79

61,783.11 (660.79)

788,506.45 498,026.59

0.00 2,163.69

7,645,793.68 $

61,122.32 $

1,286,533.04 $

11,012.26

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $
0.00 0.00
0.00 $

8,848.57
788,506.45 500,190.28
1,297,545.30

Other Adjustments

Program Fund
Balances

3,625,810.00 3,625,810.00 $

$ 3,625,810.00
3,625,810.00 $

0.00 $ 0.00
0.00 $

0.00 $ 3,625,810.00
3,625,810.00 $

0.00 $ 0.00
0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

$ 3,625,810.00

0.00 $

0.00 $

0.00

0.00

0.00

3,625,810.00 $

0.00 $

0.00 $

0.00

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$

0.00

0.00

0.00

0.00 $

0.00

Other Adjustments

Program Fund
Balances

7,868,427.00 146,867,958.00
154,736,385.00 $

7,868,427.00 $ 142,001,279.33
149,869,706.33 $

0.00 $ 0.00
0.00 $

7,868,427.00 $ 142,001,279.33
149,869,706.33 $

0.00 $ (4,866,678.67)
(4,866,678.67) $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

7,868,427.00 $ 142,001,277.44

0.00 $ 4,866,680.56

0.00 $ 1.89

1,294.50 73,237.59

149,869,704.44 $

4,866,680.56 $

1.89 $

74,532.09

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $ 115,397.67 115,397.67 $
Other Adjustments

1,294.50 188,637.15
189,931.65
Total Program
Fund Balances

964,361.00 $
700,000.00 122,175.00
1,786,536.00 $

964,361.00 $
372,941.32 48,194.24
1,385,496.56 $

0.00 $
11,273.94 54,542.13
65,816.07 $

964,361.00 $
384,215.26 102,736.37
1,451,312.63 $

0.00 $
(315,784.74) (19,438.63)
(335,223.37) $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

964,361.00 $

0.00 $

0.00 $

800.00

369,274.87

330,725.13

14,940.39

0.00

87,287.99

34,887.01

15,448.38

0.00

1,420,923.86 $

365,612.14 $

30,388.77 $

800.00

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $
0.00 0.00
0.00 $

800.00
14,940.39 15,448.38
31,188.77

Other Adjustments

Program Fund
Balances

1,576,721.00 $
2,000,000.00 739,800.00
4,316,521.00 $

1,576,721.00 $
1,400,996.35 702,918.25
3,680,635.60 $

0.00 $
185,949.68 0.00
185,949.68 $

1,576,721.00 $
1,586,946.03 702,918.25
3,866,585.28 $

0.00 $
(413,053.97) (36,881.75)
(449,935.72) $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

1,576,721.00 $

0.00 $

0.00 $

814.45

1,404,633.42 702,918.25

595,366.58 36,881.75

182,312.61 0.00

0.00 65.82

3,684,272.67 $

632,248.33 $

182,312.61 $

880.27

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $
0.00 0.00
0.00 $

814.45
182,312.61 65.82
183,192.88

Other Adjustments

Program Fund
Balances

33,181,112.00 $ 33,181,112.00 $

33,181,112.00 $ 33,181,112.00 $

0.00 $ 0.00 $

33,181,112.00 $ 0.00
33,181,112.00 $

0.00 $ 0.00
0.00 $

33,181,112.00 $ 33,181,112.00 $

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

Transfers
0.00
Transfers 0.00 0.00 0.00
Transfers 0.00 0.00 0.00
Transfers 0.00 0.00 0.00 0.00
Transfers 0.00 0.00 0.00 0.00
Transfers 0.00 0.00

Reserve

Program Fund Balances Surplus

Total

0.00 $
788,506.45 500,190.28
1,288,696.73 $

8,848.57 $
0.00 0.00
8,848.57 $

8,848.57
788,506.45 500,190.28
1,297,545.30

Reserve

Program Fund Balances Surplus

0.00 $ 0.00
0.00 $

0.00 $ 0.00
0.00 $

Total
0.00 0.00 0.00

Reserve

Program Fund Balances Surplus

0.00 $ 115,399.56
115,399.56 $

1,294.50 $ 73,237.59
74,532.09 $

Total
1,294.50 188,637.15 189,931.65

Reserve

Program Fund Balances Surplus

0.00 $
14,940.39 15,448.38
30,388.77 $

800.00 $
0.00 0.00
800.00 $

Total
800.00 14,940.39 15,448.38 31,188.77

Reserve

Program Fund Balances Surplus

0.00 $
182,312.61 65.82
182,378.43 $

814.45 $
0.00 0.00
814.45 $

Total
814.45 182,312.61
65.82 183,192.88

Reserve

Program Fund Balances Surplus

0.00 $ 0.00
0.00 $

0.00 $ 0.00
0.00 $

Total
0.00 0.00 0.00

Office of Minority Business Enterprise State Appropriation State General Funds Other Funds
Total Office of Minority Business Enterprise
Georgia Cancer Coalition State Appropriation State General Funds Tobacco Funds
Total Georgia Cancer Coalition
Public Libraries State Appropriation State General Funds Other Funds
Total Public Libraries
Special Funding Initiative State Appropriation State General Funds Tobacco Funds
Total Special Funding Initiative
Regents Central Office State Appropriation State General Funds Other Funds
Total Regents Central Office
Research Consortium State Appropriation State General Funds Tobacco Funds
Total Research Consortium

Original Appropriation

$

884,273.00 $

$

884,273.00 $

Original Appropriation

$

0.00 $

14,587,799.00

$

14,587,799.00 $

Original Appropriation

$

41,015,101.00 $

4,522,400.00

$

45,537,501.00 $

Original Appropriation

$

41,081,344.00 $

5,000,000.00

$

46,081,344.00 $

Original Appropriation

$

7,683,800.00 $

0.00

$

7,683,800.00 $

Original Appropriation

$

35,995,015.00 $

750,000.00

$

36,745,015.00 $

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

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Program Fund
Balances

884,273.00 $ 884,273.00 $

884,273.00 $ 884,273.00 $

0.00 $ 0.00 $

884,273.00 $ 0.00
884,273.00 $

0.00 $ 0.00
0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

883,081.61 $

1,191.39 $ 0.00

1,191.39 $ 0.00

0.00 $

0.00 $

883,081.61 $

1,191.39 $

1,191.39 $

0.00

0.00 $

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

1,191.39 0.00
1,191.39
Total Program
Fund Balances

$ 14,587,799.00
14,587,799.00 $

$ 14,587,799.00
14,587,799.00 $

$ 0.00
0.00 $

0.00 $ 14,587,799.00
14,587,799.00 $

0.00 $ 0.00
0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

$

0.00 $

0.00 $

14,587,490.57

308.43

308.43

0.00

14,587,490.57 $

308.43 $

308.43 $

0.00

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $ 0.00
0.00 $

0.00 308.43
308.43

Other Adjustments

Program Fund
Balances

40,329,496.00 $ 4,522,400.00
44,851,896.00 $

40,329,496.00 $ 4,395,430.71
44,724,926.71 $

0.00 $ 22,773.34
22,773.34 $

40,329,496.00 $ 4,418,204.05
44,747,700.05 $

0.00 $ (104,195.95)
(104,195.95) $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

40,298,425.87 $ 4,359,454.05

31,070.13 $ 162,945.95

31,070.13 $ 58,750.00

133,382.40 $ 0.00

0.00 $ 0.00

44,657,879.92 $

194,016.08 $

89,820.13 $

133,382.40

0.00 $

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

164,452.53 58,750.00
223,202.53
Program Fund
Balances

40,856,344.00 $ 5,000,000.00
45,856,344.00 $

40,856,344.00 $ 5,000,000.00
45,856,344.00 $

0.00 $ 0.00
0.00 $

40,856,344.00 $ 5,000,000.00
45,856,344.00 $

0.00 $ 0.00
0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

40,762,009.90 $ 5,000,000.00

94,334.10 $ 0.00

94,334.10 $ 0.00

88,274.86 0.00

45,762,009.90 $

94,334.10 $

94,334.10 $

88,274.86

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $ 0.00 0.00 $
Other Adjustments

182,608.96 0.00
182,608.96
Total Program
Fund Balances

7,683,800.00 $ 79,175.00
7,762,975.00 $

7,683,800.00 $ 73,319.24
7,757,119.24 $

0.00 $ 5,696,782.64
5,696,782.64 $

7,683,800.00 $ 5,770,101.88
13,453,901.88 $

0.00 $ 5,690,926.88
5,690,926.88 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

7,641,783.99 $

42,016.01 $

42,016.01 $

0.00

801,003.76

(721,828.76)

4,969,098.12

0.00

8,442,787.75 $

(679,812.75) $

5,011,114.13 $

0.00

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $ 0.00
0.00 $

42,016.01 4,969,098.12
5,011,114.13

Other Adjustments

Program Fund
Balances

35,995,015.00 $ 750,000.00
36,745,015.00 $

35,995,015.00 $ 750,000.00
36,745,015.00 $

0.00 $ 0.00
0.00 $

35,995,015.00 $ 750,000.00
36,745,015.00 $

0.00 $ 0.00
0.00 $

35,985,472.49 $ 750,000.00
36,735,472.49 $

9,542.51 $ 0.00
9,542.51 $

9,542.51 $ 0.00
9,542.51 $

(959,064.72) 0.00
(959,064.72)

0.00 $ 0.00
0.00 $

(949,522.21) 0.00
(949,522.21)

Transfers 0.00 0.00
Transfers
0.00 0.00
Transfers 0.00 0.00 0.00
Transfers (53,380.24) 0.00 (53,380.24)
Transfers 0.00 0.00 0.00
Transfers 820,085.30 0.00 820,085.30

Reserve

Program Fund Balances Surplus

0.00 $ 0.00
0.00 $

1,191.39 $ 1,191.39 $

Total
1,191.39 0.00
1,191.39

Reserve

Program Fund Balances Surplus

$ 0.00
0.00 $

0.00 $ 308.43
308.43 $

Total
0.00 308.43 308.43

Reserve

Program Fund Balances Surplus

0.00 $ 58,750.00
58,750.00 $

164,452.53 $ 0.00
164,452.53 $

Total
164,452.53 58,750.00
223,202.53

Reserve

Program Fund Balances Surplus

0.00 $ 0.00
0.00 $

129,228.72 $ 0.00
129,228.72 $

Total
129,228.72 0.00
129,228.72

Reserve

Program Fund Balances Surplus

Total

0.00 $ 4,969,098.12
4,969,098.12 $

42,016.01 $ 0.00
42,016.01 $

42,016.01 4,969,098.12
5,011,114.13

Reserve

Program Fund Balances Surplus

0.00 $ 0.00
0.00 $

(129,436.91) $ 0.00
(129,436.91) $

Total
(129,436.91) 0.00
(129,436.91)

Skidaway Institute of Oceanography State Appropriation State General Funds Other Funds
Total Skidaway Institute of Oceanography
Student Education Enrichment Program State Appropriation State General Funds Other Funds
Total Student Education Enrichment Program
Teaching State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Teaching
Veterinary Medicine Experiment Station State Appropriation State General Funds Other Funds
Total Veterinary Medicine Experiment Station
Veterinary Medicine Teaching Hospital State Appropriation State General Funds Other Funds
Total Veterinary Medicine Teaching Hospital
Payments to Georgia Military College State Appropriation State General Funds Other Funds
Total Payments to Georgia Military College

Original Appropriation

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

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Program Fund
Balances

$

1,712,710.00

5,658,000.00

$

7,370,710.00 $

Original Appropriation

1,712,710.00 4,758,000.00
6,470,710.00 $

1,712,710.00 $ 4,847,044.74
6,559,754.74 $

0.00 $ 0.00
0.00 $

1,712,710.00 $ 4,847,044.74
6,559,754.74 $

0.00 $ 89,044.74
89,044.74 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

1,712,710.00 $

0.00 $

0.00 $

0.00

4,730,723.25

27,276.75

116,321.49

0.00

6,443,433.25 $

27,276.75 $

116,321.49 $

0.00

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $ 0.00 0.00 $
Other Adjustments

0.00 116,321.49
116,321.49
Total Program
Fund Balances

$

314,737.00 $

$

314,737.00 $

Original Appropriation

314,737.00 $ 314,737.00 $

314,737.00 $ 314,737.00 $

0.00 $ 0.00 $

314,737.00 $ 0.00
314,737.00 $

0.00 $ 0.00
0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

314,737.00 $

0.00 $

0.00 $

0.00

0.00

0.00

314,737.00 $

0.00 $

0.00 $

0.00

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $

0.00

0.00

0.00 $

0.00

Other Adjustments

Program Fund
Balances

$ 1,820,227,086.00 $ 275,402,955.00
2,435,049,425.00 $ 4,530,679,466.00 $
Original Appropriation

1,827,383,964.00 $
278,829,892.00 2,746,032,407.00
4,852,246,263.00 $

1,826,638,102.00 $
205,197,233.86 2,583,569,411.19
4,615,404,747.05 $

0.00 $
30,853,721.75 157,750,624.92
188,604,346.67 $

1,826,638,102.00 $
236,050,955.61 2,741,320,036.11
4,804,009,093.72 $

(745,862.00) $
(42,778,936.39) (4,712,370.89)
(48,237,169.28) $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

1,827,089,987.00 $

293,977.00 $

(451,885.00) $

997,748.12

202,958,089.41 2,599,007,294.19

75,871,802.59 147,025,112.81

33,092,866.20 142,312,741.92

0.00 833,126.80

4,629,055,370.60 $

223,190,892.40 $ 174,953,723.12 $

1,830,874.92

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

357,161.70 $

903,024.82

0.00 15,428,773.87

33,092,866.20 158,574,642.59

15,785,935.57 $ 192,570,533.61

Other Adjustments

Program Fund
Balances

$

3,384,254.00

$

3,384,254.00 $

Original Appropriation

3,384,254.00 3,384,254.00 $

3,384,254.00 $ 3,384,254.00 $

0.00 $ 0.00 $

3,384,254.00 $ 0.00
3,384,254.00 $

0.00 $ 0.00
0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

3,384,254.00 $

0.00 $ 0.00

0.00 $ 0.00

1,575.25

3,384,254.00 $

0.00 $

0.00 $

1,575.25

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $ 0.00 $
Other Adjustments

1,575.25 0.00
1,575.25
Total Program
Fund Balances

$

502,585.00 $

6,700,000.00

$

7,202,585.00 $

Original Appropriation

502,585.00 $ 11,750,000.00
12,252,585.00 $

502,585.00 $ 10,042,989.90
10,545,574.90 $

0.00 $ 1,103,276.21
1,103,276.21 $

502,585.00 $ 11,146,266.11
11,648,851.11 $

0.00 $ (603,733.89)
(603,733.89) $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

502,585.00 $ 9,565,560.59

0.00 $ 2,184,439.41

0.00 $ 1,580,705.52

0.00 13,465.19

10,068,145.59 $

2,184,439.41 $

1,580,705.52 $

13,465.19

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $ (17,993.35)
(17,993.35) $

0.00 1,576,177.36
1,576,177.36

Other Adjustments

Program Fund
Balances

$

3,062,152.00 $

$

3,062,152.00 $

3,062,152.00 $ 3,062,152.00 $

3,062,152.00 $ 3,062,152.00 $

0.00 $ 0.00 $

3,062,152.00 $ 0.00
3,062,152.00 $

0.00 $ 0.00
0.00 $

3,062,152.00 $ 3,062,152.00 $

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

Transfers
0.00 0.00 0.00

Reserve

Program Fund Balances Surplus

0.00 $ 116,321.49
116,321.49 $

0.00 $ 0.00
0.00 $

Total
0.00 116,321.49 116,321.49

Transfers 0.00 0.00

Reserve

Program Fund Balances Surplus

0.00 $

0.00 $

0.00 $

0.00 $

Total
0.00 0.00 0.00

Transfers

Reserve

Program Fund Balances Surplus

Total

748,718.58
0.00 (1,515,423.64)
(766,705.06)

0.00 $
33,092,866.20 156,553,790.75
189,646,656.95 $

1,651,743.41 $
0.00 505,428.19
2,157,171.60 $

1,651,743.41
33,092,866.20 157,059,218.94
191,803,828.55

Transfers 0.00 0.00

Reserve

Program Fund Balances Surplus

0.00 $ 0.00
0.00 $

1,575.25 $ 0.00
1,575.25 $

Total
1,575.25 0.00
1,575.25

Transfers
0.00 0.00 0.00

Reserve

Program Fund Balances Surplus

Total

0.00 $ 1,576,177.36
1,576,177.36 $

0.00 $ 0.00
0.00 $

0.00 1,576,177.36
1,576,177.36

Transfers 0.00 0.00

Reserve

Program Fund Balances Surplus

0.00 $ 0.00
0.00 $

0.00 $ 0.00
0.00 $

Total
0.00 0.00 0.00

Payments to Georgia Public Telecommunications Commission State Appropriation State General Funds Other Funds
Total Payments to Georgia Public Telecommunications Commission
Georgia Eminent Scholars Endowment Trust Fund State Appropriation State General Funds Other Funds
Total Georgia Eminent Scholars Endowment Trust Fund

Original Appropriation

$

18,069,614.00 $

$

18,069,614.00 $

Original Appropriation

$

500,000.00 $

$

500,000.00 $

5,067,724,782.00

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

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

18,069,614.00 $ 18,069,614.00 $

18,069,614.00 $ 18,069,614.00 $

0.00 $ 0.00 $

18,069,614.00 $ 0.00
18,069,614.00 $

0.00 $ 0.00
0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

500,000.00 $ 500,000.00 $ 5,443,810,074.00

500,000.00 $

$

500,000.00 $

0.00 $

5,188,674,682.07

209,946,250.18

500,000.00 $ 0.00
500,000.00 $
5,398,620,932.25

0.00 $ 0.00
0.00 $
(45,189,141.75)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

18,069,614.00 $

0.00 $

0.00 $

0.00

0.00

0.00

18,069,614.00 $

0.00 $

0.00 $

0.00

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

500,000.00 $ 500,000.00 $ 5,200,933,975.98

0.00 $ 0.00

0.00 $ 0.00

0.00 $

0.00 $

242,876,098.02

197,686,956.27

0.00 1,335,929.80

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.

Other Adjustments

Program Fund
Balances

Transfers

0.00 $

0.00

0.00

0.00

0.00 $

0.00

0.00

Other Adjustments

Program Fund
Balances

Transfers

$

0.00

0.00

0.00 $

0.00

0.00

15,928,813.56 $ 214,951,699.63

0.00

Unexpendable Reserves

Uncollectible Accounts Receivable Inventories Early Retirement Program

Reserve

Program Fund Balances Surplus

0.00 $ 0.00
0.00 $

0.00 $ 0.00
0.00 $

Total
0.00 0.00 0.00

Reserve

Program Fund Balances Surplus

Total

$ 0.00
0.00 $
212,375,480.77 $

0.00 $

0.00

0.00

0.00

0.00 $

0.00

2,576,218.86 $ 214,951,699.63

11,287,655.86 3,173,177.35 7,365,016.53
$ 236,777,549.37

ABRAHAM BALDWIN AGRICULTURAL COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

ABRAHAM BALDWIN AGRICULTURAL COLLEGE BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures

$ 946,056.30
932,605.23 234,955.50 16,164.19

Total Assets

$ 2,129,781.22

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward Unreserved Surplus
Total Fund Balances Total Liabilities and Fund
Balances

$ 345,631.38 590,289.28 615,032.90 163,436.25
$ 1,714,389.81
$ 68,529.16 229,822.09 24,249.79 3,586.10 20,031.50 68,843.11
329.66
$ 415,391.41
$ 2,129,781.22

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.

ABRAHAM BALDWIN AGRICULTURAL COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

15,705,922.00 $

15,805,424.00 $

15,805,424.00 $

6,000,000.00 6,153,551.00

7,231,729.00 7,261,930.00

6,641,970.99 7,210,112.38

$

27,859,473.00 $

30,299,083.00 $

29,657,507.37 $

$

$

$

293,806.97 $

$

27,859,473.00 $

30,299,083.00 $

29,951,314.34 $

0
-589,758.01 -51,817.62
-641,575.63 293,806.97 -347,768.66

$

169,995.00

27,689,478.00

169,995.00 30,129,088.00

169,995.00 29,374,467.15

$

27,859,473.00 $

30,299,083.00 $

29,544,462.15 $

$

406,852.19

0 754,620.85
754,620.85

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Indirect Cost Recovery

Technology Fees

Restricted/Sponsored Funds

Uncollectible Accounts Receivable

Tuition Carry - Forward

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

0 8,210.01 3,821.45 -3,821.45
329.21
415,391.41
68,529.16 229,822.09
24,249.79 3,586.10
20,031.50 68,843.11 415,061.75
329.66 415,391.41

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

Original Appropriation

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

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Reserve

Program Fund Balances Surplus

$

169,995.00 $

Original Appropriation

169,995.00 $

169,995.00 $

$

169,995.00 $

0.00 $

169,995.00 $

0.00 $

0.00 $

0.00

Actual

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

0.00 $
Other Adjustments

0.00 $
Total
Program Fund
Balances

0.00 $ Transfers

0.00 $

0.00 $

Reserve

Program Fund Balances Surplus

$ 15,535,927.00 $ 15,635,429.00 $ 15,635,429.00 $

12,153,551.00

14,493,659.00

13,852,083.37

$ 27,689,478.00 $ 30,129,088.00 $ 29,487,512.37 $

$ 293,806.97
293,806.97 $

15,635,429.00 $ 14,145,890.34
29,781,319.34 $

0.00 $ (347,768.66)
(347,768.66) $

15,635,428.55 $ 13,739,038.60
29,374,467.15 $

0.45 $ 754,620.40
754,620.85 $

0.45 406,851.74 $
406,852.19 $

329.21 $ 329.21

$ (11,821.49)
(11,821.49) $

0.45 $ 395,359.46
395,359.91 $

0.00 $
0.00 $

$ 395,030.25
395,030.25 $

0.45 329.21 $
329.66 $

Total 0.00
Total 0.45
395,359.46 395,359.91

27,859,473.00

30,299,083.00

29,657,507.37

293,806.97

29,951,314.34

(347,768.66)

29,544,462.15

754,620.85

406,852.19

Actual amounts were prepared on a prescribed basis of accounting that demonstrate compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.

329.21

(11,821.49) $

395,359.91 $

0.00 $

395,030.25 $

329.66 $

Unexpendable Reserves Uncollectible Accounts Receivable
$

395,359.91
20,031.50 415,391.41

ALBANY STATE UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

ALBANY STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures

$ 4,294,377.45
1,889,628.69 946,385.17 7,818.61

Total Assets

$ 7,138,209.92

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Uncollectible Accounts Receivable Tuition Carry - Forward Unreserved Surplus
Total Fund Balances Total Liabilities and Fund
Balances

$ 183,276.99 3,926,932.61 30,729.62 677,580.42 -572,929.65
$ 4,245,589.99
$ 309,428.21 1,290,703.96 439,587.17 781,649.54 42,668.75
28,582.30
$ 2,892,619.93
$ 7,138,209.92

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.

ALBANY STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

23,119,156.00 $

23,105,463.00 $

23,105,463.00 $

18,000,000.00 14,005,764.00

19,260,114.00 14,304,255.00

18,807,537.52 16,049,652.39

0
-452,576.48 1,745,397.39

Total Revenue

$

55,124,920.00 $

56,669,832.00 $

57,962,652.91 $

Prior Year Reserves Available for Expenditure

$

$

$

1,436,618.39 $

Total Funds Available

$

55,124,920.00 $

56,669,832.00 $

59,399,271.30 $

EXPENDITURES

Office of Minority Business Special Funding Initiative Teaching Total Expenditures

$

91,931.00

91,931.00

91,931.00

631,255.00

451,255.00

432,368.56

54,401,734.00

56,126,646.00

56,185,273.62

$

55,124,920.00 $

56,669,832.00 $

56,709,573.18 $

Excess of Funds Available over Expenditures

$

2,689,698.12

1,292,820.91 1,436,618.39 2,729,439.30
0 18,886.44 -58,627.62 -39,741.18

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

0 177,874.76
0
0
124,911.50 -99,864.45

Ending Fund Balance - June 30

$

2,892,619.93

Analysis of Fund Balance
Reserved Department Sales & Services Indirect Cost Recovery Technology Fees Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus Total Fund Balance

$

309,428.21

1,290,703.96

439,587.17

781,649.54

42,668.75

$

2,864,037.63

28,582.30

$

2,892,619.93

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.

ALBANY STATE UNIVERSITY STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008

Office of Minority Business State Appropriation State General Funds

Original Appropriation

$

91,931.00

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

91,931.00

91,931.00 $

0.00 $

91,931.00 $

0.00 $

91,931.00 $

0.00 $

0.00 $

Other Adjustments

Total Program
Fund Balances

0.00 $

0.00

Special Funding Initiative State Appropriation State General Funds

Original Appropriation

$

631,255.00

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

451,255.00

451,255.00 $

0.00 $

451,255.00 $

0.00 $

432,368.56 $

18,886.44 $

18,886.44 $

Other Adjustments

Total Program
Fund Balances

0.00 $

18,886.44

Teaching State Appropriation State General Funds Other Funds
Total Teaching

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

$ 22,395,970.00 $ 22,562,277.00 $ 22,562,277.00 $

32,005,764.00

33,564,369.00

34,857,189.91

$ 54,401,734.00 $ 56,126,646.00 $ 57,419,466.91 $

$ 1,436,618.39
1,436,618.39 $

22,562,277.00 $ 36,293,808.30
58,856,085.30 $

0.00 $ 2,729,439.30
2,729,439.30 $

22,577,435.69 $ 33,607,837.93
56,185,273.62 $

(15,158.69) $ (43,468.93)
(58,627.62) $

(15,158.69) $ 2,685,970.37
2,670,811.68 $

18,424.74 6,622.31
25,047.05

$ (603,774.78)
(603,774.78) $

3,266.05 2,088,817.90
2,092,083.95

55,124,920.00

56,669,832.00

57,962,652.91

1,436,618.39

59,399,271.30

2,729,439.30

56,709,573.18

(39,741.18)

2,689,698.12

25,047.05

(603,774.78) $

2,110,970.39

Transfers
Transfers (15,158.69)
Transfers 15,158.69 15,158.69 0.00

Reserve

Program Fund Balances Surplus

Total

0.00 $

0.00 $

0.00

Reserve

Program Fund Balances Surplus

0.00 $

3,727.75 $

Total 3,727.75

Reserve

Program Fund Balances Surplus

Total

$ 2,082,388.09
2,082,388.09 $

18,424.74 $ 6,429.81
24,854.55 $

18,424.74 2,088,817.90
2,107,242.64

2,082,388.09 $

28,582.30 $

2,110,970.39

Actual amounts were prepared on a prescribed basis of accounting that demonstrate compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.

Unexpendable Reserves Uncollectible Accounts Receivable

781,649.54

$

2,892,619.93

ARMSTRONG ATLANTIC STATE UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

ARMSTRONG ATLANTIC STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 1,418,330.86 13,534.62
1,681,454.09 2,836,364.40
5,830.91 68,154.38

Total Assets

$ 6,023,669.26

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Funds Held for Others Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved
Total Fund Balances
Total Liabilities and Fund Balances

$ 243,384.15 304,412.83 203,350.67
3,868,614.39 -264.42
368,868.12
$ 4,988,365.74
$ 103,454.67 210,875.95 305,211.55 292,599.93 76,054.29 47,107.13
$ 1,035,303.52
$ 6,023,669.26

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.

ARMSTRONG ATLANTIC STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Research Consortium Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

33,817,794.00 $

34,538,171.00 $

34,538,171.00 $

8,310,186.00 20,760,008.00

9,877,586.00 24,654,917.00

10,949,572.77 24,519,428.52

$

62,887,988.00 $

69,070,674.00 $

70,007,172.29 $

$

$

$

275,897.12 $

$

62,887,988.00 $

69,070,674.00 $

70,283,069.41 $

0 1,071,986.77 -135,488.48
936,498.29 275,897.12 1,212,395.41

$

582,665.00

305,884.00

61,999,439.00

582,665.00 375,884.00 68,112,125.00

582,665.00 375,884.00 68,449,706.36

$

62,887,988.00 $

69,070,674.00 $

69,408,255.36 $

$

874,814.05

0 0 -337,581.36
-337,581.36

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

73,765.93 175,129.62
4,731.11
-4,731.11
21,482.21 -109,888.29

Ending Fund Balance - June 30

$

1,035,303.52

Analysis of Fund Balance
Reserved Department Sales & Services Indirect Cost Recovery Inventories Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus
Total Fund Balance

$

103,454.67

210,875.95

76,054.29

305,211.55

292,599.93

47,107.13

$

1,035,303.52

0

$

1,035,303.52

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.

Special Funding Initiative State Appropriation State General Funds
Research Consortium State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

ARMSTRONG ATLANTIC STATE UNIVERSITY STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET (NON-GAAP BASIS) BUDGET FUND
YEAR ENDED JUNE 30, 2008

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Expenditures Compared to Budget

Prior Year

Total

Variance

Variance

Carry-Over Funds Available Positive (Negative)

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

Program Fund Balances

Reserve

Surplus

Total

$ 305,884.00 $
Original Appropriation

375,884.00 $ 375,884.00 $

$ 375,884.00 $

0.00 $ 375,884.00 $

0.00 $

0.00 $

$

0.00 $

0.00 $

0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Expenditures Compared to Budget

Prior Year

Total

Variance

Variance

Carry-Over Funds Available Positive (Negative)

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

0.00 $

0.00 $

0.00

Program Fund Balances

Reserve

Surplus

Total

$ 582,665.00 $
Original Appropriation

582,665.00 $ 582,665.00 $

$ 582,665.00 $

0.00 $ 582,665.00 $

0.00 $

0.00 $

$

0.00 $

0.00 $

0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Expenditures Compared to Budget

Prior Year

Total

Variance

Variance

Carry-Over Funds Available Positive (Negative)

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

0.00 $

0.00 $

0.00

Program Fund Balances

Reserve

Surplus

Total

$ 32,929,245.00 $ 33,579,622.00 $ 33,579,622.00 $

$ 33,579,622.00 $

0.00 $ 33,626,722.12 $ (47,100.12) $

29,070,194.00 34,532,503.00

35,469,001.29

275,897.12

35,744,898.41

1,212,395.41

34,822,984.24

(290,481.24)

$ 61,999,439.00 $ 68,112,125.00 $ 69,048,623.29 $ 275,897.12 $ 69,324,520.41 $ 1,212,395.41 $ 68,449,706.36 $ (337,581.36) $

(47,100.12) 921,914.17 $
874,814.05 $

$ (119,758.67) $ (166,858.79) $

(88,406.08)

833,508.09

(88,406.08) $ (119,758.67) $ 666,649.30 $

$ 0.00 $

0.00 $ (166,858.79) $ (166,858.79)

666,649.30

166,858.79

833,508.09

666,649.30 $

(0.00) $ 666,649.30

62,887,988.00 69,070,674.00

70,007,172.29

275,897.12

70,283,069.41

1,212,395.41

69,408,255.36

(337,581.36)

874,814.05

(88,406.08) $ (119,758.67) $ 666,649.30 $

0.00 $ 666,649.30 $

(0.00) $ 666,649.30

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.

Unexpended Reserve Uncollectible Accounts Receivable Inventories

292,599.93 76,054.29

$ 1,035,303.52

ATLANTA METROPOLITAN COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

ATLANTA METROPOLITAN COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 2,751,219.23
315,655.38 742,834.65 84,501.96 50,997.25

Total Assets

$ 3,945,208.47

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 335,927.98 3,037,772.06 103,551.62 1,814.08
$ 3,479,065.74
$ 6,604.27 227,603.48 5,383.93 24,238.50 53,474.10 107,475.42
41,363.03
$ 466,142.73
$ 3,945,208.47

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.

ATLANTA METROPOLITAN COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Office of Minority Business Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

8,703,067.00 $

8,902,049.00 $

8,902,049.00 $

4,200,000.00 3,780,979.00

5,611,314.00 4,526,157.00

5,081,963.83 4,743,818.02

$

16,684,046.00 $

19,039,520.00 $

18,727,830.85 $

$

$

$

183,220.62 $

$

16,684,046.00 $

19,039,520.00 $

18,911,051.47 $

0 -529,350.17 217,661.02
-311,689.15 183,220.62 -128,468.53

$

158,955.00

6,485.00

16,518,606.00

158,955.00 6,485.00
18,874,080.00

157,763.61 0
18,398,994.06

$

16,684,046.00 $

19,039,520.00 $

18,556,757.67 $

$

354,293.80

1,191.39 6,485.00 475,085.94
482,762.33

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Indirect Cost Recovery

Inventories

Technology Fees

Uncollectible Accounts Receivable

Tuition Carry - Forward

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

53,923.79 17,283.50 72,701.80 -72,701.80
40,641.64
466,142.73
6,604.27 227,603.48
53,474.10 5,383.93
24,238.50 107,475.42 424,779.70
41,363.03 466,142.73

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.

Office of Minority Business State Appropriation State General Funds
Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

$

158,955.00

Original Appropriation

158,955.00
Final Budget

158,955.00 $

$

158,955.00 $

0.00 $

157,763.61 $

1,191.39 $

1,191.39 $

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$
Other Adjustments

1,191.39
Total Program
Fund Balances

$

6,485.00 $

Original Appropriation

6,485.00 $

6,485.00 $

$

6,485.00 $

0.00 $

0.00 $

6,485.00 $

6,485.00 $

1,708.95

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

0.00 $
Other Adjustments

8,193.95
Program Fund
Balances

$

8,537,627.00 $

8,736,609.00 $

8,736,609.00 $

7,980,979.00

10,137,471.00

9,825,781.85

$ 16,518,606.00 $ 18,874,080.00 $ 18,562,390.85 $

$ 183,220.62
183,220.62 $

8,736,609.00 $ 10,009,002.47
18,745,611.47 $

0.00 $ (128,468.53)
(128,468.53) $

8,743,488.24 $ 9,655,505.82
18,398,994.06 $

(6,879.24) $ 481,965.18
475,085.94 $

(6,879.24) $ 353,496.65
346,617.41 $

35,097.99 3,834.70
38,932.69

$ (6,505.31)
(6,505.31) $

28,218.75 350,826.04
379,044.79

16,684,046.00

19,039,520.00

18,727,830.85

183,220.62

18,911,051.47

(128,468.53)

18,556,757.67

482,762.33

354,293.80

40,641.64

(6,505.31) $

388,430.13

Transfers
Transfers
Transfers 6,879.24 (6,879.24) 0.00 0.00

Reserve

Program Fund Balances Surplus

0.00 $

1,191.39 $

Total 1,191.39

Reserve

Program Fund Balances Surplus

$

8,193.95 $

Reserve

Program Fund Balances Surplus

$ 347,067.10
347,067.10 $

35,097.99 $ (3,120.30)
31,977.69 $

347,067.10 $

41,363.03 $

Total 8,193.95
Total 35,097.99
343,946.80 379,044.79 388,430.13

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.

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

24,238.50 53,474.10

$

466,142.73

AUGUSTA STATE UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

AUGUSTA STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Other Prepaid Expenditures Inventories

$ 2,962,724.87 102,248.81
3,847,892.97 1,504,642.88
44,803.38

Total Assets

$ 8,462,312.91

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 20,133.38 4,270,624.98 784.4 3,130,552.88 43.67
$ 7,422,139.31
$ 105,836.00 25,589.59 389,349.27 279,933.43 40,532.29 198,911.15
21.87
$ 1,040,173.60
$ 8,462,312.91

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.

AUGUSTA STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Office of Minority Business Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

29,649,588.00 $

28,847,864.00 $

28,847,864.00 $

6,890,928.00 18,301,423.00

7,959,457.00 23,271,907.00

8,088,736.63 23,031,229.71

$

54,841,939.00 $

60,079,228.00 $

59,967,830.34 $

$

$

$

336,752.95 $

$

54,841,939.00 $

60,079,228.00 $

60,304,583.29 $

0
129,279.63 -240,677.29
-111,397.66 336,752.95 225,355.29

$

153,218.00

14,480.00

54,674,241.00

153,218.00 114,480.00 59,811,530.00

153,218.00 114,458.13 59,255,481.80

$

54,841,939.00 $

60,079,228.00 $

59,523,157.93 $

$

781,425.36

0 21.87 556,048.20
556,070.07

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

38,526.03 220,207.22
1,260.41
-1,260.41
45,466.41 -45,451.42

Ending Fund Balance - June 30
Analysis of Fund Balance
Reserved Indirect Cost Recovery Inventories Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus
Total Fund Balance

$

1,040,173.60

$

105,836.00

40,532.29

25,589.59

389,349.27

279,933.43

198,911.15

$

1,040,151.73

21.87

$

1,040,173.60

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.

Special Funding Initiative State Appropriation State General Funds
Office of Minority Business State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

AUGUSTA STATE UNIVERSITY STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET (NON-GAAP BASIS) BUDGET FUND
YEAR ENDED JUNE 30, 2008

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

$

14,480.00

Original Appropriation

114,480.00
Final Budget

114,480.00 $

$

114,480.00 $

0.00 $

114,458.13 $

21.87 $

21.87 $

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$
Other Adjustments

21.87
Total Program
Fund Balances

$

153,218.00 $

Original Appropriation

153,218.00 $

153,218.00 $

$

153,218.00 $

0.00 $

153,218.00 $

0.00 $

0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

0.00 $
Other Adjustments

0.00
Program Fund
Balances

$ 29,481,890.00 $ 28,580,166.00 $ 28,580,166.00 $

25,192,351.00

31,231,364.00

31,119,966.34

$ 54,674,241.00 $ 59,811,530.00 $ 59,700,132.34 $

$ 336,752.95
336,752.95 $

28,580,166.00 $ 31,456,719.29
60,036,885.29 $

0.00 $ 225,355.29
225,355.29 $

28,578,174.73 $ 30,677,307.07
59,255,481.80 $

1,991.27 $ 554,056.93
556,048.20 $

1,991.27 $ 779,412.22
781,403.49 $

14.99 14.99

(2,006.26) $ (59,726.21)
(61,732.47) $

(0.00) 719,686.01
719,686.01

54,841,939.00

60,079,228.00

59,967,830.34

336,752.95

60,304,583.29

225,355.29

59,523,157.93

556,070.07

781,425.36

14.99

(61,732.47) $

719,707.88

Transfers
Transfers Transfers
0.00 0.00

Reserve

Program Fund Balances Surplus

0.00 $

21.87 $

Total 21.87

Reserve

Program Fund Balances Surplus

$

0.00 $

Reserve

Program Fund Balances Surplus

$ 719,686.01
719,686.01 $

(0.00) $ 0.00
(0.00) $

719,686.01 $

21.87 $

Total 0.00
Total (0.00)
719,686.01 719,686.01 719,707.88

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.

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

279,933.43 40,532.29

$

1,040,173.60

BAINBRIDGE COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

BAINBRIDGE COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Margin Allocation

$ 2,294,753.49
773,625.04 399,985.98 16,196.00

Total Assets

$ 3,484,560.51

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 72,167.90 1,790,178.20 -81,032.90 945,872.38 16.25
$ 2,727,201.83
$ 73,512.90 46,456.85 353,058.16 -9,858.89 35,412.46 124,372.99
134,404.21
$ 757,358.68
$ 3,484,560.51

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.

BAINBRIDGE COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching
Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

9,470,207.00 $

9,469,105.00 $

9,469,105.00 $

6,100,000.00 4,602,519.00

8,200,129.00 4,945,009.00

8,111,633.20 5,134,323.05

$

20,172,726.00 $

22,614,243.00 $

22,715,061.25 $

$

$

$

322,628.17 $

$

20,172,726.00 $

22,614,243.00 $

23,037,689.42 $

$

3,650.00

20,169,076.00

3,650.00 22,610,593.00

0 22,313,041.51

$

20,172,726.00 $

22,614,243.00 $

22,313,041.51 $

$

724,647.91

0 -88,495.80 189,314.05
100,818.25 322,628.17 423,446.42
3,650.00 297,551.49 301,201.49

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Indirect Cost Recovery

Technology Fees

Restricted/Sponsored Funds

Uncollectible Accounts Receivable

Tuition Carry - Forward

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

21,099.30 41,046.85 58,957.43
-58,957.43
72,515.55 -101,950.93
757,358.68
73,512.90 46,456.85 353,058.16 -9,858.89 35,412.46 124,372.99
622,954.47
134,404.21 757,358.68

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

$

3,650.00

Original Appropriation

3,650.00
Final Budget

3,650.00 $

0.00 $

3,650.00 $

0.00 $

0.00 $

3,650.00 $

3,650.00 $

589.99

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$
Other Adjustments

4,239.99
Total Program
Fund Balances

$

9,466,557.00 $

9,465,455.00 $

9,465,455.00 $

10,702,519.00

13,145,138.00

13,245,956.25

$ 20,169,076.00 $ 22,610,593.00 $ 22,711,411.25 $

0.00 $ 322,628.18
322,628.18 $

9,465,455.00 $ 13,568,584.43
23,034,039.43 $

0.00 $ 423,446.43
423,446.43 $

9,467,897.05 $ 12,845,144.46
22,313,041.51 $

(2,442.05) $ 299,993.54
297,551.49 $

(2,442.05) $ 723,439.97
720,997.92 $

71,925.56 (101,950.93)
(30,025.37)

$ 26,733.68
26,733.68 $

69,483.51 648,222.72
717,706.23

20,172,726.00

22,614,243.00

22,715,061.25

322,628.18

23,037,689.43

423,446.43

22,313,041.51

301,201.49

724,647.92

(29,435.38)

26,733.68 $

721,946.22

Transfers (2,442.05)
Transfers 2,442.05 2,442.05 0.00

Reserve

Program Fund Balances Surplus

Total

0.00 $

1,797.94 $

1,797.94

Reserve

Program Fund Balances Surplus

Total

$ 587,542.01
587,542.01 $

71,925.56 $ 60,680.71
132,606.27 $

71,925.56 648,222.72
720,148.28

587,542.01 $

134,404.21 $

721,946.22

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.

Unexpendable Reserves Uncollectible Accounts Receivable

35,412.46

$

757,358.68

CLAYTON STATE UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

CLAYTON STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures

$ 2,376,106.90
396,561.85 1,029,666.57
40,978.43

Total Assets

$ 3,843,313.75

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 152,044.46 1,504,836.63 302,445.09 1,414,182.43 27,843.08
$ 3,401,351.69
$ 54,476.48 227,813.63 499.56 -3,804.00 123,832.90 35,242.63
3,900.86
$ 441,962.06
$ 3,843,313.75

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.

CLAYTON STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

25,922,459.00 $

25,931,266.00 $

25,931,266.00 $

9,429,815.00 20,201,848.00

12,199,551.00 24,875,413.00

11,734,327.64 23,920,423.76

$

55,554,122.00 $

63,006,230.00 $

61,586,017.40 $

$

$

$

268,084.39 $

$

55,554,122.00 $

63,006,230.00 $

61,854,101.79 $

0
-465,223.36 -954,989.24
-1,420,212.60 268,084.39
-1,152,128.21

$

368,979.00

55,185,143.00

368,979.00 62,637,251.00

368,979.00 61,170,894.49

$

55,554,122.00 $

63,006,230.00 $

61,539,873.49 $

$

314,228.30

0 1,466,356.51
1,466,356.51

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Indirect Cost Recovery

Technology Fees

Restricted/Sponsored Funds

Uncollectible Accounts Receivable

Tuition Carry - Forward

Total Reserved

$

Unreserved

Surplus

Total Fund Balance

$

0 156,803.57
22,471.79
-22,471.79
9,797.53 -38,867.34
441,962.06
54,476.48 227,813.63
499.56 -3,804.00 123,832.90 35,242.63
438,061.20
3,900.86 441,962.06

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

CLAYTON STATE UNIVERSITY STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET (NON-GAAP BASIS) BUDGET FUND
YEAR ENDED JUNE 30, 2008

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

$

368,979.00

Original Appropriation

368,979.00
Final Budget

368,979.00 $

0.00 $

368,979.00 $

0.00 $

368,979.00 $

0.00 $

0.00 $

0.00

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

0.00 $
Other Adjustments

0.00
Total Program
Fund Balances

$ 25,553,480.00 $ 25,562,287.00 $ 25,562,287.00 $

29,631,663.00

37,074,964.00

35,654,751.40

$ 55,185,143.00 $ 62,637,251.00 $ 61,217,038.40 $

0.00 $ 268,084.39
268,084.39 $

25,562,287.00 $ 35,922,835.79
61,485,122.79 $

0.00 $ (1,152,128.21)
(1,152,128.21) $

25,562,287.00 $ 35,608,607.49
61,170,894.49 $

0.00 $ 1,466,356.51
1,466,356.51 $

0.00 $ 314,228.30
314,228.30 $

3,900.86 (32,970.67)
(29,069.81)

0.00 $ 32,970.67
32,970.67 $

3,900.86 314,228.30
318,129.16

55,554,122.00

63,006,230.00

61,586,017.40

268,084.39

61,854,101.79

(1,152,128.21)

61,539,873.49

1,466,356.51

314,228.30

(29,069.81)

32,970.67 $

318,129.16

Transfers 0.00
Transfers 0.00 0.00 0.00 0.00

Reserve

Program Fund Balances Surplus

Total

0.00 $

0.00 $

0.00

Reserve

Program Fund Balances Surplus

Total

0.00 $ 314,228.30
314,228.30 $

3,900.86 $ 0.00
3,900.86 $

3,900.86 314,228.30
318,129.16

314,228.30 $

3,900.86 $

318,129.16

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.

Unexpendable Reserves Uncollectible Accounts Receivable

123,832.90

$

441,962.06

COASTAL GEORGIA COMMUNITY COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

COLLEGE OF COASTAL GEORGIA BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 423,977.43 31,943.34
94,837.67 741,649.36 11,004.00 24,298.16

Total Assets

$ 1,327,709.96

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved Surplus
Total Fund Balances Total Liabilities and Fund
Balances

$ 273,792.39 643,457.32 58,393.66 15,497.50 13,785.99
$ 1,004,926.86
$ 75,063.24 83,031.97 44,645.94 32,336.70 21,000.00 64,822.93
1,882.32
$ 322,783.10
$ 1,327,709.96

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.

COLLEGE OF COASTAL GEORGIA BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

$

11,120,049.00 $

11,658,941.00 $

6,300,000.00 9,105,000.00

6,600,000.00 7,865,000.00

$

26,525,049.00 $

26,123,941.00 $

$

$

$

$

26,525,049.00 $

26,123,941.00 $

$

15,895.00

26,509,154.00

15,895.00 26,108,046.00

$

26,525,049.00 $

26,123,941.00 $

$

ACTUAL

VARIANCE

11,658,941.00 $ 5,947,756.12 7,614,804.10
25,221,501.22 $ 125,727.55 $
25,347,228.77 $

0 -652,243.88 -250,195.90
-902,439.78 125,727.55 -776,712.23

15,895.00 25,043,122.84 25,059,017.84 $
288,210.93

0 1,064,923.16
1,064,923.16

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures
Prior Year Receivables/Revenues

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Indirect Cost Recovery

$

Inventories

Technology Fees

Restricted/Sponsored Funds

Uncollectible Accounts Receivable

Tuition Carry - Forward

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

21,000.00 32,671.65
3,003.00 -3,003.00
1,547.37 -20,646.85
322,783.10
75,063.24 21,000.00 83,031.97 44,645.94 32,336.70 64,822.93
320,900.78
1,882.32 322,783.10

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.

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

Special Funding Initiative State Appropriation State General Funds

Original Appropriation

$

15,895.00 $

Original

Appropriation

Teaching

State Appropriation

State General Funds

$

11,104,154.00 $

Federal Funds

Federal Funds Not Specifically Identified

6,300,000.00

Other Funds

9,105,000.00

Total Teaching

$

26,509,154.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

15,895.00 $

15,895.00 $

0.00 $

15,895.00 $

0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

15,895.00 $

0.00 $

0.00 $

0.00 $

0.00 $

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

11,643,046.00 $
6,600,000.00 7,865,000.00
26,108,046.00 $

11,643,046.00 $
4,033,004.00 9,529,556.22
25,205,606.22 $

0.00 $
0.00 125,727.55
125,727.55 $

11,643,046.00 $
4,033,004.00 9,655,283.77
25,331,333.77 $

0.00 $
(2,566,996.00) 1,790,283.77
(776,712.23) $

11,643,046.00 $
4,033,004.00 9,367,072.84
25,043,122.84 $

0.00 $
2,566,996.00 (1,502,072.84)
1,064,923.16 $

0.00 $
0.00 288,210.93
288,210.93 $

1,882.32 $
0.00 (20,981.80)
(19,099.48)

0.00 $
0.00 334.95
334.95 $

Total Program
Fund Balances
0.00
Total Program
Fund Balances
1,882.32
0.00 267,564.08
269,446.40

26,525,049.00

26,123,941.00

25,221,501.22

125,727.55

25,347,228.77

(776,712.23)

25,059,017.84

1,064,923.16

288,210.93

(19,099.48)

334.95 $

269,446.40

Transfers 0.00
Transfers
0.00 0.00

Reserve

Program Fund Balances Surplus

0.00 $

0.00 $

Total 0.00

Reserve

Program Fund Balances Surplus

$

1,882.32 $

267,564.08 267,564.08 $

0.00 1,882.32 $

267,564.08 $

1,882.32 $

Total 1,882.32
267,564.08 269,446.40 269,446.40

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 principle

Unexpendable Reserves Inventories Uncollectible Accounts Receivable

21,000.00 32,336.70

$

322,783.10

COLUMBUS STATE UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

COLUMBUS STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures

$ 6,830,191.33 916,482.24
311,085.91 1,832,838.49
317,904.06

Total Assets

$ 10,208,502.03

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 235,102.79 2,840,144.07 89,733.11 4,425,567.17 -2,181.75
$ 7,588,365.39
$ 787,874.23 217,216.96 21,231.31
1,083,295.82 89,496.71 400,204.78
20,816.83
$ 2,620,136.64
$ 10,208,502.03

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.

COLUMBUS STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

37,802,023.00 $

38,247,603.00 $

38,247,603.00 $

11,762,942.00 24,308,326.00

14,753,463.00 26,597,343.00

12,592,942.52 26,065,298.19

$

73,873,291.00 $

79,598,409.00 $

76,905,843.71 $

$

$

$

1,795,776.17 $

$

73,873,291.00 $

79,598,409.00 $

78,701,619.88 $

0 -2,160,520.48
-532,044.81
-2,692,565.29 1,795,776.17 -896,789.12

$

26,227.00

73,847,064.00

123,479.00 79,474,930.00

123,479.00 75,994,026.41

$

73,873,291.00 $

79,598,409.00 $

76,117,505.41 $

$

2,584,114.47

0 3,480,903.59
3,480,903.59

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

0 34,509.09
0
0
8,663.49 -7,150.41

Ending Fund Balance - June 30

$

2,620,136.64

Analysis of Fund Balance
Reserved Department Sales & Services Indirect Cost Recovery Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus
Total Fund Balance

$

787,874.23

217,216.96

21,231.31

1,083,295.82

89,496.71

400,204.78

$

2,599,319.81

20,816.83

$

2,620,136.64

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

COLUMBUS STATE UNIVERSITY STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET (NON-GAAP BASIS) BUDGET FUND
YEAR ENDED JUNE 30, 2008

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

$

26,227.00 $

Original Appropriation

123,479.00 $

123,479.00 $

$

123,479.00 $

0.00 $

123,479.00 $

0.00 $

0.00 $

470.27

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

$
Other Adjustments

470.27
Program Fund
Balances

$ 37,775,796.00 $ 38,124,124.00 $ 38,124,124.00 $

36,071,268.00

41,350,806.00

38,658,240.71

$ 73,847,064.00 $ 79,474,930.00 $ 76,782,364.71 $

$ 1,795,776.17
1,795,776.17 $

38,124,124.00 $ 40,454,016.88
78,578,140.88 $

0.00 $ (896,789.12)
(896,789.12) $

38,124,124.00 $ 37,869,902.41
75,994,026.41 $

0.00 $ 3,480,903.59
3,480,903.59 $

0.00 $ 2,584,114.47
2,584,114.47 $

(455.23) 1,498.04
1,042.81

$ (54,987.62)
(54,987.62) $

(455.23) 2,530,624.89
2,530,169.66

73,873,291.00

79,598,409.00

76,905,843.71

1,795,776.17

78,701,619.88

(896,789.12)

76,117,505.41

3,480,903.59

2,584,114.47

1,513.08

(54,987.62) $

2,530,639.93

Transfers
Transfers 455.23 (455.23) 0.00 0.00

Reserve

Program Fund Balances Surplus

Total

0.00 $

470.27 $

470.27

Reserve

Program Fund Balances Surplus

Total

$ 2,509,823.10
2,509,823.10 $

0.00 $ 20,346.56
20,346.56 $

0.00 2,530,169.66
2,530,169.66

2,509,823.10 $

20,816.83 $

2,530,639.93

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.

Unexpendable Reserves Uncollectible Accounts Receivable

89,496.71

$

2,620,136.64

DALTON STATE COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

DALTON STATE COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 735,421.48
632,574.88 550,578.33
5,142.00 13,812.45

Total Assets

$ 1,937,529.14

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Benefits Payable Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 413,068.36 1,117,805.68 69,821.18 96,015.58 870.06
$ 1,697,580.86

$

88

8,480.00

1,437.39

2,336.94

60,305.42

14,758.72

133,612.26

18,929.55

$ 239,948.28

$ 1,937,529.14

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.

DALTON STATE COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching
Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

14,431,929.00 $

14,440,736.00 $

14,440,736.00 $

7,250,000.00 11,659,718.00

8,481,487.00 8,742,218.00

8,442,268.14 8,459,413.48

$

33,341,647.00 $

31,664,441.00 $

31,342,417.62 $

$

$

$

11,945.90 $

$

33,341,647.00 $

31,664,441.00 $

31,354,363.52 $

0
-39,218.86 -282,804.52
-322,023.38 11,945.90
-310,077.48

$

5,369.00

33,336,278.00

5,369.00 31,659,072.00

5,369.00 31,190,523.16

$

33,341,647.00 $

31,664,441.00 $

31,195,892.16 $

$

158,471.36

0 468,548.84
468,548.84

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

10,585.27 107,888.02 102,864.89
-102,864.89
19,687.31 -56,683.68

Ending Fund Balance - June 30
Analysis of Fund Balance
Reserved Department Sales & Services Indirect Cost Recovery Inventories Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus
Total Fund Balance

$

239,948.28

$

88

8,480.00

14,758.72

1,437.39

2,336.94

60,305.42

133,612.26

$

221,018.73

18,929.55

$

239,948.28

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Reserve

Program Fund Balances Surplus

$

5,369.00 $

Original Appropriation

5,369.00 $

5,369.00 $

$

5,369.00 $

0.00 $

5,369.00 $

0.00 $

0.00 $

0.00

Actual

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

0.00 $
Other Adjustments

0.00 $
Total
Program Fund
Balances

0.00 $ Transfers

0.00 $

0.00 $

Reserve

Program Fund Balances Surplus

$ 14,426,560.00 $ 14,435,367.00 $ 14,435,367.00 $

18,909,718.00

17,223,705.00

16,901,681.62

$ 33,336,278.00 $ 31,659,072.00 $ 31,337,048.62 $

$ 11,945.90
11,945.90 $

14,435,367.00 $ 16,913,627.52
31,348,994.52 $

0.00 $ (310,077.48)
(310,077.48) $

14,434,740.14 $ 16,755,783.02
31,190,523.16 $

626.86 $ 467,921.98
468,548.84 $

626.86 157,844.50 $
158,471.36 $

(36,996.37) $ (36,996.37)

$ 43,409.15
43,409.15 $

626.86 $ 164,257.28
164,884.14 $

0.00 $
0.00 $

$ 145,954.59
145,954.59 $

626.86 $ 18,302.69
18,929.55 $

Total 0.00
Total 626.86
164,257.28 164,884.14

33,341,647.00

31,664,441.00

31,342,417.62

11,945.90

31,354,363.52

(310,077.48)

31,195,892.16

468,548.84

158,471.36

(36,996.37)

43,409.15 $

164,884.14 $

0.00 $

145,954.59 $

18,929.55 $

164,884.14

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 principle

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

60,305.42 14,758.72

$

239,948.28

DARTON COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

DARTON COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Inventories

$ 2,647,988.95
371,687.73 534,067.41 42,065.75

Total Assets

$ 3,595,809.84

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved
Total Fund Balances
Total Liabilities and Fund Balances

$ 756,041.88 1,116,834.15 220,401.94 767,696.14 -105,709.36
$ 2,755,264.75
$ 14,808.36 163,964.45 88,855.20 -3,940.38 323,151.47 44,412.21 209,293.78
$ 840,545.09
$ 3,595,809.84

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.

DARTON COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

16,649,881.00 $

17,024,183.00 $

17,024,183.00 $

8,644,025.00 9,870,168.00

8,644,025.00 11,253,395.00

8,408,174.37 10,282,452.49

$

35,164,074.00 $

36,921,603.00 $

35,714,809.86 $

$

$

$

397,765.78 $

$

35,164,074.00 $

36,921,603.00 $

36,112,575.64 $

0
-235,850.63 -970,942.51
-1,206,793.14 397,765.78 -809,027.36

$

27,343.00

35,136,731.00

27,343.00 36,894,260.00

27,343.00 35,528,993.13

$

35,164,074.00 $

36,921,603.00 $

35,556,336.13 $

$

556,239.51

0 1,365,266.87
1,365,266.87

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Indirect Cost Recovery

Inventories

Technology Fees

Restricted/Sponsored Funds

Uncollectible Accounts Receivable

Tuition Carry - Forward

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

46,140.00 312,898.36
7,311.20
-7,311.20
7,396.16 -82,128.94
840,545.09
14,808.36 163,964.45
44,412.21 88,855.20 -3,940.38 323,151.47 209,293.78
840,545.09
0 840,545.09

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

$

27,343.00

Original Appropriation

27,343.00
Final Budget

27,343.00 $

0.00 $

27,343.00 $

0.00 $

27,343.00 $

0.00 $

0.00 $

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

$
Other Adjustments

0.00
Program Fund
Balances

$ 16,622,538.00 $ 16,996,840.00 $ 16,996,840.00 $

18,514,193.00

19,897,420.00

18,690,626.86

$ 35,136,731.00 $ 36,894,260.00 $ 35,687,466.86 $

0.00 $ 397,765.78
397,765.78 $

16,996,840.00 $ 19,088,392.64
36,085,232.64 $

0.00 $ (809,027.36)
(809,027.36) $

16,962,978.88 $ 18,566,014.25
35,528,993.13 $

33,861.12 $ 1,331,405.75
1,365,266.87 $

33,861.12 $ 522,378.39
556,239.51 $

(141,113.38) 66,380.60
(74,732.78)

$ (8,525.32)
(8,525.32) $

(107,252.26) 580,233.67
472,981.41

35,164,074.00

36,921,603.00

35,714,809.86

397,765.78

36,112,575.64

(809,027.36)

35,556,336.13

1,365,266.87

556,239.51

(74,732.78)

(8,525.32) $

472,981.41

Transfers
Transfers 107,252.26 (107,252.26) 0.00 0.00

Reserve

Program Fund Balances Surplus

Total

0.00 $

0.00 $

0.00

Reserve

Program Fund Balances Surplus

Total

$ 472,981.41
472,981.41 $

0.00 $ 0.00
0.00 $

0.00 472,981.41
472,981.41

472,981.41 $

0.00 $

472,981.41

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.

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

323,151.47 44,412.21

$

840,545.09

EAST GEORGIA COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

EAST GEORGIA COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 746,910.76 81,053.08
51,085.01 159,582.70 193,873.26
1,402.50

Total Assets

$ 1,233,907.31

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 43,618.84 388,455.24 4,708.95 481,420.03 111,653.99
$ 1,029,857.05
$ 41,449.34 7,467.68 27,676.30
102,419.06 879.34
1,475.00 4,697.37
17,986.17
$ 204,050.26
$ 1,233,907.31

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.

EAST GEORGIA COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

6,549,013.00 $

6,609,834.00 $

6,609,834.00 $

2,793,191.00 5,340,338.00

4,138,652.00 6,153,173.00

3,825,348.61 5,652,840.74

$

14,682,542.00 $

16,901,659.00 $

16,088,023.35 $

$

$

$

63,647.74 $

$

14,682,542.00 $

16,901,659.00 $

16,151,671.09 $

0 -313,303.39 -500,332.26
-813,635.65 63,647.74
-749,987.91

$

742,191.00

13,940,351.00

742,191.00 16,159,468.00

739,440.33 15,222,299.54

$

14,682,542.00 $

16,901,659.00 $

15,961,739.87 $

$

189,931.22

2,750.67 937,168.46
939,919.13

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Indirect Cost Recovery

Inventories

Technology Fees

Restricted/Sponsored Funds

Uncollectible Accounts Receivable

Tuition Carry - Forward

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

720 2,484.73 10,088.19
-10,088.19
15,732.20 -4,817.89
204,050.26
41,449.34 7,467.68 1,475.00
27,676.30 102,419.06
879.34 4,697.37
186,064.09
17,986.17 204,050.26

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.

Special Funding Initiative State Appropriation State General Funds

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$

742,191.00

742,191.00

742,191.00 $

$

742,191.00 $

0.00 $

739,440.33 $

2,750.67 $

2,750.67 $

Other Adjustments

Total Program
Fund Balances

$

2,750.67

Teaching State Appropriation State General Funds Other Funds
Total Teaching

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Program Fund
Balances

$

5,806,822.00 $

5,867,643.00 $

5,867,643.00 $

8,133,529.00

10,291,825.00

9,478,189.35

$ 13,940,351.00 $ 16,159,468.00 $ 15,345,832.35 $

$ 63,647.74
63,647.74 $

5,867,643.00 $ 9,541,837.09
15,409,480.09 $

0.00 $ (749,987.91)
(749,987.91) $

5,866,576.24 $ 9,355,723.30
15,222,299.54 $

1,066.76 $ 936,101.70
937,168.46 $

1,066.76 $ 186,113.79
187,180.55 $

13,478.76 (2,564.45)
10,914.31

$ 850.39
850.39 $

14,545.52 184,399.73
198,945.25

14,682,542.00

16,901,659.00

16,088,023.35

63,647.74

16,151,671.09

(749,987.91)

15,961,739.87

939,919.13

189,931.22

10,914.31

850.39 $

201,695.92

Transfers
Transfers 0.00 0.00

Reserve

Program Fund Balances Surplus

Total

0.00 $

2,750.67 $

2,750.67

Reserve

Program Fund Balances Surplus

Total

$ 183,709.75
183,709.75 $

14,545.52 $ 689.98
15,235.50 $

14,545.52 184,399.73
198,945.25

183,709.75 $

17,986.17 $

201,695.92

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.

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

879.34 1,475.00

$

204,050.26

FORT VALLEY STATE UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

FORT VALLEY STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures

$

0

2,340.25

1,760,914.00 1,792,849.25
3,060.00

Total Assets

$ 3,559,163.50

LIABILITIES AND FUND EQUITY
Liabilities Cash Overdraft Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 708,585.81 186,063.54 927,100.52
1,173,650.01 409,426.48
$ 3,404,826.36
$ 46,381.00 103,736.79 142,218.97 -380,287.22 231,515.53
10,772.07
$ 154,337.14
$ 3,559,163.50

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.

FORT VALLEY STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

23,920,429.00 $

22,799,393.00 $

22,799,393.00 $

0

26,090,695.00 8,971,434.00

33,451,418.00 11,643,892.00

21,590,147.81 10,262,389.94

-11,861,270.19 -1,381,502.06

$

58,982,558.00 $

67,894,703.00 $

54,651,930.75 $ -13,242,772.25

$

$

$

-610,431.01 $

-610,431.01

$

58,982,558.00 $

67,894,703.00 $

54,041,499.74 $ -13,853,203.26

$

1,866,111.00

57,116,447.00

1,866,111.00 66,028,592.00

1,821,399.48 51,974,718.29

44,711.52 14,053,873.71

$

58,982,558.00 $

67,894,703.00 $

53,796,117.77 $

14,098,585.23

$

245,381.97

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Indirect Cost Recovery

Technology Fees

Restricted/Sponsored Funds

Tuition Carry - Forward

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

0 86,180.00
0 0
-177,224.83
154,337.14
46,381.00 103,736.79 142,218.97 -380,287.22 231,515.53 143,565.07
10,772.07 154,337.14

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

FORT VALLEY STATE UNIVERSITY STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET (NON-GAAP BASIS) BUDGET FUND
YEAR ENDED JUNE 30, 2008

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

$

1,866,111.00

Original Appropriation

1,866,111.00
Final Budget

1,866,111.00 $

$

1,866,111.00 $

0.00 $

1,821,399.48 $

44,711.52 $

44,711.52 $

0.00

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$
Other Adjustments

44,711.52
Total Program
Fund Balances

$ 22,054,318.00 $ 20,933,282.00 $ 20,933,282.00 $

35,062,129.00

45,095,310.00

31,852,537.75

$ 57,116,447.00 $ 66,028,592.00 $ 52,785,819.75 $

$ (610,431.00)
(610,431.00) $

20,933,282.00 $ 31,242,106.75
52,175,388.75 $

0.00 $ (13,853,203.25)
(13,853,203.25) $

21,044,145.12 $ 30,930,573.17
51,974,718.29 $

(110,863.12) $ 14,164,736.83
14,053,873.71 $

(110,863.12) $ 311,533.58
200,670.46 $

76,923.67 (254,148.51)
(177,224.84)

$ 86,180.00
86,180.00 $

(33,939.45) 143,565.07
109,625.62

58,982,558.00

67,894,703.00

54,651,930.75

(610,431.00)

54,041,499.75

(13,853,203.25)

53,796,117.77

14,098,585.23

245,381.98

(177,224.84)

86,180.00 $

154,337.14

Transfers (33,939.45)
Transfers 33,939.45 33,939.45 0.00

Reserve

Program Fund Balances Surplus

0.00 $

10,772.07 $

Total 10,772.07

Reserve

Program Fund Balances Surplus

Total

$ 143,565.07
143,565.07 $

(0.00) $ 0.00
(0.00) $

(0.00) 143,565.07
143,565.07

143,565.07 $

10,772.07 $

154,337.14

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.

GEORGIA COLLEGE AND STATE UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

GEORGIA COLLEGE & STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures

$ 8,261,925.39 625,281.72
-50,338.83 3,289,187.28
186,844.65

Total Assets

$ 12,312,900.21

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Capital Outlay Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 305,883.79 5,567,383.40 338,787.66 3,308,498.91 448,554.52
$ 9,969,108.28
$ 42,453.57 678,838.31 132,977.48 27,774.30 862,795.82 33,515.86 555,422.42
10,014.17
$ 2,343,791.93
$ 12,312,900.21

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.

GEORGIA COLLEGE & STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

$

33,926,531.00 $

33,164,322.00 $

5,169,409.00 27,164,445.00

6,019,436.00 34,818,632.00

$

66,260,385.00 $

74,002,390.00 $

$

$

$

$

66,260,385.00 $

74,002,390.00 $

$

1,410,987.00

64,849,398.00

1,410,987.00 72,591,403.00

$

66,260,385.00 $

74,002,390.00 $

$

ACTUAL

VARIANCE

33,164,322.00 $
6,409,665.42 34,969,655.95
74,543,643.37 $ 1,175,456.20 $ 75,719,099.57 $

0
390,229.42 151,023.95
541,253.37 1,175,456.20 1,716,709.57

1,410,987.00 71,995,230.41 73,406,217.41 $
2,312,882.16

0 596,172.59
596,172.59

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

0 61,875.58 10,130.82
-10,130.82
9,929.23 -40,895.04

Ending Fund Balance - June 30
Analysis of Fund Balance
Reserved Capital Outlay Department Sales & Services Indirect Cost Recovery Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus
Total Fund Balance

$

2,343,791.93

$

42,453.57

678,838.31

132,977.48

27,774.30

862,795.82

33,515.86

555,422.42

$

2,333,777.76

10,014.17

$

2,343,791.93

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

$

1,410,987.00

Original Appropriation

1,410,987.00
Final Budget

1,410,987.00 $

$

1,410,987.00 $

0.00 $

1,410,987.00 $

0.00 $

0.00 $

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$
Other Adjustments

0.00
Total Program
Fund Balances

$ 32,515,544.00 $ 31,753,335.00 $ 31,536,735.00 $

32,333,854.00

40,838,068.00

41,595,921.37

$ 64,849,398.00 $ 72,591,403.00 $ 73,132,656.37 $

$ 1,175,456.20
1,175,456.20 $

31,536,735.00 $ 42,771,377.57
74,308,112.57 $

(216,600.00) $ 1,933,309.57
1,716,709.57 $

31,536,735.00 $ 40,458,495.41
71,995,230.41 $

216,600.00 $ 379,572.59
596,172.59 $

0.00 $ 2,312,882.16
2,312,882.16 $

10,014.17 (40,979.98)
(30,965.81)

$ 28,359.72
28,359.72 $

10,014.17 2,300,261.90
2,310,276.07

66,260,385.00

74,002,390.00

74,543,643.37

1,175,456.20

75,719,099.57

1,716,709.57

73,406,217.41

596,172.59

2,312,882.16

(30,965.81)

28,359.72 $

2,310,276.07

Transfers
Transfers 0.00 0.00

Reserve

Program Fund Balances Surplus

Total

0.00 $

0.00 $

0.00

Reserve

Program Fund Balances Surplus

Total

$ 2,300,261.90
2,300,261.90 $

10,014.17 $ 0.00
10,014.17 $

10,014.17 2,300,261.90
2,310,276.07

2,300,261.90 $

10,014.17 $

2,310,276.07

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.

Unexpendable Reserves Uncollectible Accounts Receivable

33,515.86

$

2,343,791.93

GEORGIA HIGHLANDS COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

GEORGIA HIGHLANDS COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures

$ 1,495,992.22
579,423.14 858,289.83 459,181.14

Total Assets

$ 3,392,886.33

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Unreserved Surplus
Total Fund Balances Total Liabilities and Fund
Balances

$ 100,533.47 1,584,455.00 55,996.22 1,369,712.37 14,495.23
$ 3,125,192.29
$ 66,220.07 7,739.96
47,096.27 46,842.10 95,527.43
4,268.21
$ 267,694.04
$ 3,392,886.33

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.

GEORGIA HIGHLANDS COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

15,520,044.00 $

15,725,835.00 $

15,725,835.00 $

3,678,928.00 6,342,059.00

3,993,857.00 10,873,752.00

3,839,319.63 10,432,337.63

$

25,541,031.00 $

30,593,444.00 $

29,997,492.26 $

$

$

$

121,129.83 $

$

25,541,031.00 $

30,593,444.00 $

30,118,622.09 $

0 -154,537.37 -441,414.37
-595,951.74 121,129.83 -474,821.91

$

192,835.00

25,348,196.00

192,835.00 30,400,609.00

192,835.02 29,678,805.81

$

25,541,031.00 $

30,593,444.00 $

29,871,640.83 $

$

246,981.26

-0.02 721,803.19
721,803.17

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Indirect Cost Recovery

Technology Fees

Restricted/Sponsored Funds

Uncollectible Accounts Receivable

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

0 33,950.17
0 0
33,904.98 -47,142.37
267,694.04
66,220.07 7,739.96
47,096.27 46,842.10 95,527.43 263,425.83
4,268.21 267,694.04

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Reserve

Program Fund Balances Surplus

$

192,835.00

Original Appropriation

192,835.00
Final Budget

192,835.00 $

$

192,835.00 $

0.00 $

192,835.02 $

(0.02) $

(0.02) $

0.00 $

0.00 $

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

(0.02) $
Program Fund
Balances

0.02 $ Transfers

0.00 $

0.00 $

Reserve

Program Fund Balances Surplus

$ 15,327,209.00 $ 15,533,000.00 $

10,020,987.00

14,867,609.00

$ 25,348,196.00 $ 30,400,609.00 $

15,533,000.00 $ 14,271,657.26
29,804,657.26 $

$ 121,129.83
121,129.83 $

15,533,000.00 $ 14,392,787.09
29,925,787.09 $

0.00 $ (474,821.91)
(474,821.91) $

15,517,314.15 $ 14,161,491.66
29,678,805.81 $

15,685.85 $ 706,117.34
721,803.19 $

15,685.85 $ 231,295.43
246,981.28 $

(13,237.39) $ (13,237.39)

$ (61,577.26)
(61,577.26) $

2,448.46 169,718.17 $
172,166.63

(0.02) $ (0.02)

$ 167,898.40
167,898.40 $

2,448.46 $ 1,819.75
4,268.21 $

25,541,031.00

30,593,444.00

29,997,492.26

121,129.83

30,118,622.09

(474,821.91)

29,871,640.83

721,803.17

246,981.26

(13,237.39)

(61,577.26) $

172,166.61

0.00

167,898.40 $

4,268.21 $

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.

Unexpendable Reserves Uncollectible Accounts Receivable $

Total 0.00
Total 2,448.46
169,718.15 172,166.61 172,166.61
95,527.43 267,694.04

GAINESVILLE STATE COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

GAINESVILLE COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures

$ 5,145,517.88
56,905.88 454,437.78 279,495.92

Total Assets

$ 5,936,357.46

LIABILITIES AND FUND EQUITY
Liabilities Encumbrance Payable Accounts Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Uncollectible Accounts Receivable Tuition Carry - Forward Unreserved Surplus
Total Fund Balances Total Liabilities and Fund
Balances

$ 3,838,476.68 19,516.42
1,774,555.97
$ 5,632,549.07
$ 249,461.98 9,738.57
42,615.64 1,934.00 35.29 22.91
$ 303,808.39
$ 5,936,357.46

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.

GAINESVILLE COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

19,366,323.00 $

19,370,723.00 $

19,370,723.00 $

3,906,938.00 12,331,935.00

4,977,694.00 20,567,225.00

5,033,943.91 19,959,100.22

$

35,605,196.00 $

44,915,642.00 $

44,363,767.13 $

$

$

$

226,600.88 $

$

35,605,196.00 $

44,915,642.00 $

44,590,368.01 $

0 56,249.91 -608,124.78
-551,874.87 226,600.88 -325,273.99

$

9,988.00

35,595,208.00

9,988.00 44,905,654.00

9,988.00 44,276,476.62

$

35,605,196.00 $

44,915,642.00 $

44,286,464.62 $

$

303,903.39

0 629,177.38
629,177.38

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Receivables/Revenues

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Indirect Cost Recovery

Technology Fees

Uncollectible Accounts Receivable

Tuition Carry - Forward

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

0 0 22.91 -22.91
-95
303,808.39
249,461.98 9,738.57
42,615.64 1,934.00 35.29
303,785.48
22.91 303,808.39

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Reserve

Program Fund Balances Surplus

$

9,988.00 $

Original Appropriation

9,988.00 $

9,988.00 $

0.00 $

9,988.00 $

0.00 $

9,988.00 $

0.00 $

0.00 $

0.00 $

0.00 $

Actual

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

0.00 $
Total
Program Fund
Balances

0.00 $ Transfers

0.00 $

0.00 $

Reserve

Program Fund Balances Surplus

$ 19,356,335.00 $ 19,360,735.00 $ 19,360,735.00

16,238,873.00

25,544,919.00

24,993,044.13 $

$ 35,595,208.00 $ 44,905,654.00 $ 44,353,779.13 $

$ 226,600.88
226,600.88 $

19,360,735.00 $ 25,219,645.01
44,580,380.01 $

0.00 $ (325,273.99)
(325,273.99) $

19,360,735.00 $ 24,915,741.62
44,276,476.62 $

0.00 $ 629,177.38
629,177.38 $

0.00 303,903.39 $
303,903.39 $

(95.00) $ (95.00)

$ (1,934.00)
(1,934.00) $

0.00 $ 301,874.39
301,874.39 $

0.00 $
0.00

$ 301,851.48
301,851.48 $

0.00 $ 22.91
22.91 $

Total 0.00
Total 0.00
301,874.39 301,874.39

35,605,196.00

44,915,642.00 $

44,363,767.13 $

226,600.88 $ 44,590,368.01

(325,273.99) $ 44,286,464.62

629,177.38

303,903.39 $

(95.00) $

(1,934.00) $

301,874.39 $

0.00 $

301,851.48 $

22.91 $

301,874.39

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 comprehensive basis of accounting other than generally accepted accounting principles.

Unexpendable Reserves Uncollectible Accounts Receivable
$

1,934.00 303,808.39

GEORGIA PERIMETER COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

GEORGIA PERIMETER COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 17,718,330.60 7,845.78
3,588,876.82 10,392,574.12
2,193.00 206,594.17

Total Assets

$ 31,916,414.49

LIABILITIES AND FUND EQUITY
Liabilities Cash Overdraft Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Capital Outlay Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved
Total Fund Balances
Total Liabilities and Fund Balances

$ 6,369,518.72 729,915.14
8,782,257.29 1,077,883.74 9,067,837.32
104,998.35
$ 26,132,410.56
$ 1,080,755.88 -131,819.04 183,874.58 2,753,501.00 146,017.94 1,445,052.68 181,614.28 125,006.61
$ 5,784,003.93
$ 31,916,414.49

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.

GEORGIA PERIMETER COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

63,691,165.00 $

63,966,338.00 $

63,966,338.00 $

18,911,550.00 47,492,315.00

20,411,550.00 50,902,315.00

22,623,063.81 47,523,579.48

$ 130,095,030.00 $ 135,280,203.00 $ 134,112,981.29 $

$

$

$

2,695,336.30 $

$ 130,095,030.00 $ 135,280,203.00 $ 136,808,317.59 $

0 2,211,513.81 -3,378,735.52
-1,167,221.71 2,695,336.30 1,528,114.59

$

50,575.00

130,044,455.00

50,575.00 135,229,628.00

50,575.00 132,478,241.40

$ 130,095,030.00 $ 135,280,203.00 $ 132,528,816.40 $

$

4,279,501.19

0 2,751,386.60
2,751,386.60

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

175,368.73 1,402,909.94
369,306.65
-369,306.65
277,803.26 -351,579.19

Ending Fund Balance - June 30
Analysis of Fund Balance
Reserved Capital Outlay Department Sales & Services Indirect Cost Recovery Inventories Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus
Total Fund Balance

$

5,784,003.93

$

1,080,755.88

-131,819.04

183,874.58

181,614.28

2,753,501.00

146,017.94

1,445,052.68

125,006.61

$

5,784,003.93

0

$

5,784,003.93

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

$

50,575.00

Original Appropriation

50,575.00
Final Budget

50,575.00 $

$

50,575.00 $

0.00 $

50,575.00 $

0.00 $

0.00 $

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$
Other Adjustments

0.00
Total Program
Fund Balances

$ 63,640,590.00 $ 63,915,763.00 $ 63,915,763.00 $

66,403,865.00

71,313,865.00

70,146,643.29

$ 130,044,455.00 $ 135,229,628.00 $ 134,062,406.29 $

130,095,030.00

135,280,203.00

134,112,981.29

$ 2,695,336.30
2,695,336.30 $

63,915,763.00 $ 72,841,979.59
136,757,742.59 $

2,695,336.30

136,808,317.59

0.00 $ 1,528,114.59
1,528,114.59 $

64,154,722.59 $ 68,323,518.81
132,478,241.40 $

1,528,114.59

132,528,816.40

(238,959.59) $ 2,990,346.19 2,751,386.60 $
2,751,386.60

(238,959.59) $ 4,518,460.78
4,279,501.19 $
sch "2"
4,279,501.19

(73,775.93) (73,775.93)
(73,775.93)

$ (48,388.29)
(48,388.29) $

(238,959.59) 4,396,296.56
4,157,336.97

(48,388.29) $

4,157,336.97

Transfers
Transfers 238,959.59 (238,959.59) 0.00 0.00

Reserve

Program Fund Balances Surplus

0.00 $

0.00 $

Total 0.00

Reserve

Program Fund Balances Surplus

Total

$ 4,157,336.97
4,157,336.97 $

0.00 $ 0.00
0.00 $

0.00 4,157,336.97
4,157,336.97

4,157,336.97 $

0.00 $

4,157,336.97

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 comprehensive basis of accounting other than generally accepted accounting principles.

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

1,445,052.68 181,614.28

$

5,784,003.93

GEORGIA STATE UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

GEORGIA STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 67,107,998.29 2,004.40
3,279,385.90 23,241,075.07
3,613,625.20 110,777.76

Total Assets

$ 97,354,866.62

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Capital Outlay Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Carry-Over "Per State Accounting Office" Unreserved Surplus Tobacco Settlement Funds
Total Fund Balances
Total Liabilities and Fund Balances

$ 949,620.27 26,388,542.78 696,861.15 29,198,895.01 801,821.62
$ 58,035,740.83

$

1,575.02

6,343,397.82

15,030,951.73

3,069,564.24

7,788,149.38

3,048,763.76

117,753.14

2,290,076.03

1,200,000.00

428,586.24 308.43

$ 39,319,125.79

$ 97,354,866.62

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.

GEORGIA STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds Tobacco Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure
Total Funds Available
EXPENDITURES
Payments to Georgia Cancer Coalition Research Consortium Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$ 212,491,125.00 $ 213,285,261.00 $ 213,285,261.00 $

0

15,337,799.00

15,337,799.00

15,337,799.00

0

105,000,000.00 178,844,236.00

110,000,000.00 244,447,487.00

81,804,419.71 203,718,857.44

-28,195,580.29 -40,728,629.56

$ 511,673,160.00 $ 583,070,547.00 $ 514,146,337.15 $ -68,924,209.85

$

$

$

38,204,365.48 $

38,204,365.48

$ 511,673,160.00 $ 583,070,547.00 $ 552,350,702.63 $ -30,719,844.37

$

14,587,799.00

14,587,799.00

14,587,490.57

4,922,504.00 148,001.00

6,336,530.00 298,001.00

6,326,988.35 294,841.00

492,014,856.00

561,848,217.00

495,496,275.70

$ 511,673,160.00 $ 583,070,547.00 $ 516,705,595.62 $

$

35,645,107.01

308.43 9,541.65 3,160.00 66,351,941.30
66,364,951.38

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Non-Mandatory Transfers

89,732.15 3,583,736.63
442,218.14
-442,218.14
669,078.04 -669,078.04
550

Ending Fund Balance - June 30
Analysis of Fund Balance
Reserved Capital Outlay Department Sales & Services Indirect Cost Recovery Inventories Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward Property Reserves
Total Reserved
Unreserved Surplus
Total Fund Balance

$ 39,319,125.79

$

1,575.02

6,343,397.82

15,030,951.73

117,753.14

3,069,564.24

7,788,149.38

3,048,763.76

2,290,076.03

1,200,000.00

$ 38,890,231.12

428,894.67 $ 39,319,125.79

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.

Georgia Cancer Coalition State Appropriation Tobacco Funds
Research Consortium State Appropriation State General Funds Tobacco Funds
Total Research Consortium
Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Reserve

Program Fund Balances Surplus

Total

$ 14,587,799.00 $ 14,587,799.00 $ 14,587,799.00 $

$ 14,587,799.00 $

0.00 $ 14,587,490.57 $

308.43 $

308.43 $

$

$

308.43 $

$

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

0.00 $

308.43 $

Reserve

Program Fund Balances Surplus

308.43 Total

$

4,172,504.00 $

750,000.00

$

4,922,504.00 $

Original Appropriation

5,586,530.00 $ 750,000.00

5,586,530.00 $ 750,000.00

0.00 $

5,586,530.00 $ 750,000.00

0.00 $ 0.00

5,576,988.35 $ 750,000.00

9,541.65 $ 0.00

9,541.65 $ 0.00

$

0.00 $

6,336,530.00 $

6,336,530.00 $

0.00 $

6,336,530.00 $

0.00 $

6,326,988.35 $

9,541.65 $

9,541.65 $

0.00

0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

9,541.65 $ 0.00
9,541.65
Program Fund
Balances

$ 0.00 Transfers

$ 0.00 $

9,541.65 $ 9,541.65 $

Reserve

Program Fund Balances Surplus

9,541.65 0.00
9,541.65
Total

$

148,001.00 $

Original Appropriation

298,001.00 $

298,001.00 $

0.00 $

298,001.00 $

0.00 $

294,841.00 $

3,160.00 $

3,160.00 $

0.00 $

0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

3,160.00 $
Total Program
Fund Balances

0.00 $ Transfers

0.00 $

3,160.00 $

Reserve

Program Fund Balances Surplus

3,160.00 Total

$ 208,170,620.00 $ 207,400,730.00 $ 207,400,730.00 $

283,844,236.00

354,447,487.00

285,523,277.15

$ 492,014,856.00 $ 561,848,217.00 $ 492,924,007.15 $

$ 38,204,365.48
38,204,365.48 $

207,400,730.00 $ 323,727,642.63
531,128,372.63 $

0.00 $ (30,719,844.37)
(30,719,844.37) $

207,398,626.64 $ 288,097,649.06
495,496,275.70 $

2,103.36 $ 66,349,837.94
66,351,941.30 $

2,103.36 $ 35,629,993.57
35,632,096.93 $

0.00

390,510.83 $

392,614.19

0.00

116,991.05

35,746,984.62

0.00

507,501.88 $ 36,139,598.81

$ 35,723,714.22

392,614.19 $ 23,270.40

392,614.19 35,746,984.62

0.00

35,723,714.22 $

415,884.59 $ 36,139,598.81

511,673,160.00

583,070,547.00

514,146,337.15

38,204,365.48

552,350,702.63

(30,719,844.37)

516,705,595.62

66,364,951.38

35,645,107.01

0.00

507,501.88 $ 36,152,608.89

0.00

35,723,714.22 $

428,894.67 $ 36,152,608.89

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 principle

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

3,048,763.76 117,753.14
$ 39,319,125.79

GORDON COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

GORDON COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures

$ 853,831.46
269,726.80 2,426,409.55
310,675.18

Total Assets

$ 3,860,642.99

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Technology Fees Uncollectible Accounts Receivable Tuition Carry - Forward Unreserved Surplus
Total Fund Balances Total Liabilities and Fund
Balances

$ 121,613.41 2,615,157.87 240,864.97 559,754.99 122,955.37
$ 3,660,346.61
$ 11,920.08 41,118.88 27,594.02
115,520.34 4,143.06
$ 200,296.38
$ 3,860,642.99

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.

GORDON COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

12,802,406.00 $

13,089,350.00 $

13,089,350.00 $

3,750,000.00 6,064,580.00

3,750,000.00 6,593,266.00

4,787,924.39 10,016,270.76

$

22,616,986.00 $

23,432,616.00 $

27,893,545.15 $

$

$

$

56,237.90 $

$

22,616,986.00 $

23,432,616.00 $

27,949,783.05 $

0 1,037,924.39 3,423,004.76
4,460,929.15 56,237.90
4,517,167.05

$

16,263.00

22,600,723.00

$

22,616,986.00 $

16,263.00 23,416,353.00 23,432,616.00 $
$

16,263.00 27,967,549.38 27,983,812.38 $
-34,029.33

0 -4,551,196.38
-4,551,196.38

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Non-Mandatory Transfers

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Technology Fees

Uncollectible Accounts Receivable

Tuition Carry - Forward

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

25,683.80 15,509.20
9,900.11 -9,900.11
1,961.71 2,104.00 189,067.00
200,296.38
11,920.08 41,118.88 27,594.02 115,520.34
196,153.32
4,143.06 200,296.38

Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Reserve

Program Fund Balances Surplus

$

16,263.00 $

Original Appropriation

16,263.00 $

16,263.00 $

$

16,263.00 $

0.00 $

16,263.00 $

0.00 $

0.00 $

0.00

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

0.00 $
Other Adjustments

0.00 $
Program Fund
Balances

0.00 $ Transfers

0.00 $

0.00 $

Reserve

Program Fund Balances Surplus

$ 12,786,143.00 $ 13,073,087.00 $ 13,073,087.00 $

9,814,580.00

10,343,266.00

14,804,195.15

$ 22,600,723.00 $ 23,416,353.00 $ 27,877,282.15 $

$ 56,237.90
56,237.90 $

13,073,087.00 $ 14,860,433.05
27,933,520.05 $

0.00 $ 4,517,167.05
4,517,167.05 $

13,288,112.29 $ 14,679,437.09
27,967,549.38 $

(215,025.29) $ (4,336,171.09)
(4,551,196.38) $

(215,025.29) 180,995.96 $
(34,029.33) $

4,065.71 $ 4,065.71

$ 202,665.98
202,665.98 $

(215,025.29) $ 387,727.65
172,702.36 $

215,025.29 (215,025.29) $
0.00 $

168,559.30 $ 168,559.30 $

4,143.06 $ 4,143.06 $

Total 0.00
Total
172,702.36 172,702.36

22,616,986.00

23,432,616.00

27,893,545.15

56,237.90

27,949,783.05

4,517,167.05

27,983,812.38

(4,551,196.38)

(34,029.33)

4,065.71

202,665.98 $

172,702.36 $

0.00 $

168,559.30 $

4,143.06 $

172,702.36

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 principle

Unexpendable Reserves Uncollectible Accounts Receivable

27,594.02

$

200,296.38

GEORGIA SOUTHERN UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

GEORGIA SOUTHERN UNIVERSITY BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 14,752,667.58 982,672.92
1,417,409.46 6,061,846.43 4,242,026.50
63,875.17

Total Assets

$ 27,520,498.06

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 799,149.06 14,372,808.39 214,561.90 8,324,024.87
$ 23,710,544.22
$ 647,074.34 1,082,489.76 1,038,445.14 20,763.98 91,965.18 111,000.00 713,849.11
104,366.33
$ 3,809,953.84
$ 27,520,498.06

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.

GEORGIA SOUTHERN UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Research Consortium Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

95,141,112.00 $

92,485,024.00 $

92,485,024.00 $

20,000,000.00 56,641,206.00

21,000,000.00 72,135,581.00

21,240,853.47 69,485,768.10

$ 171,782,318.00 $ 185,620,605.00 $ 183,211,645.57 $

$

$

$

2,106,151.02 $

$ 171,782,318.00 $ 185,620,605.00 $ 185,317,796.59 $

0
240,853.47 -2,649,812.90
-2,408,959.43 2,106,151.02 -302,808.41

$

425,253.00

842,070.00

170,514,995.00

425,253.00 293,850.00 184,901,502.00

425,253.00 293,850.00 182,089,278.36

$ 171,782,318.00 $ 185,620,605.00 $ 182,808,381.36 $

$

2,509,415.23

0 0 2,812,223.64
2,812,223.64

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Non-Mandatory Transfers

100,000.00 83,320.21 36,797.23
-36,797.23
102,409.40 1,014,809.00

Ending Fund Balance - June 30
Analysis of Fund Balance
Reserved Department Sales & Services Indirect Cost Recovery Inventories Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus
Total Fund Balance

$

3,809,953.84

$

647,074.34

1,082,489.76

111,000.00

1,038,445.14

20,763.98

91,965.18

713,849.11

$

3,705,587.51

104,366.33

$

3,809,953.84

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.

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

Special Funding Initiatives State Appropriation State General Funds

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year Carry-Over

Total Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Positive

Actual

(Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Program Fund Balances

Reserve

Surplus

Total

$

842,070.00 $

293,850.00 $

293,850.00 $

0.00 $

293,850.00 $

0.00 $

293,850.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

Research Consortium State Appropriation State General Funds

$

425,253.00 $

425,253.00 $

425,253.00 $

0.00 $

425,253.00 $

0.00 $

425,253.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

Teaching State Appropriation State General Funds Other Funds
Total Teaching
Georgia Eminent Scholars Endowment Trust Fund State Appropriation State General Funds Other Funds
Total Georgia Eminent Scholars Endowment Trust Fund
Grand Totals - All Programs

$

91,026,142.00 $

91,265,921.00 $

91,265,921.00 $

0.00 $

91,265,921.00 $

0.00 $

91,255,359.57 $

10,561.43 $

78,988,853.00

93,135,581.00

90,726,621.57

2,106,151.02

92,832,772.59

-302,808.41

90,333,918.79

2,801,662.21

$ 170,014,995.00 $ 184,401,502.00 $ 181,992,542.57 $ 2,106,151.02 $ 184,098,693.59 $ -302,808.41 $ 181,589,278.36 $ 2,812,223.64 $

10,561.43 $ 102,409.40 $

-19,644.97 $

93,325.86 $

2,498,853.80

0.00

1,014,809.00

3,513,662.80

2,509,415.23 $ 102,409.40 $ 995,164.03 $ 3,606,988.66 $

0.00 $

0.00 $

0.00

3,502,622.33

93,325.86 $

93,325.86

11,040.47

3,513,662.80

0.00 $ 3,502,622.33 $ 104,366.33 $ 3,606,988.66

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Program Fund
Balances

Transfers

Program Fund Balances

Reserve

Surplus

Total

$

500,000.00 $

500,000.00 $

500,000.00 $

$

500,000.00 $

500,000.00 $

500,000.00 $

$ 0.00 $

500,000.00 $ 0.00
500,000.00 $

0.00 $ 0.00
0.00 $

500,000.00 $ 500,000.00 $

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

$ 171,782,318.00 $ 185,620,605.00 $ 183,211,645.57 $ 2,106,151.02 $ 185,317,796.59 $ (302,808.41) $ 182,808,381.36 $ 2,812,223.64 $

2,509,415.23 $ 102,409.40 $

995,164.03 $ 3,606,988.66 $

0.00 $ 3,502,622.33 $ 104,366.33 $ 3,606,988.66

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.

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

91,965.18 111,000.00

$ 3,809,953.84

GEORGIA SOUTHWESTERN STATE UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

GEORGIA SOUTHWESTERN STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 2,923,445.65 200,650.43
40,040.39 295,937.34 175,039.23
35,399.18

Total Assets

$ 3,670,512.22

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 92,562.72 578,546.40 36,974.16
2,363,459.01 10,468.90
$ 3,082,011.19
$ 131,732.04 69,841.30 7,849.89
181,964.25 51,549.87 33,175.00
108,268.01
4,120.67
$ 588,501.03
$ 3,670,512.22

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.

GEORGIA SOUTHWESTERN STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

14,249,851.00 $

14,338,893.00 $

14,338,893.00 $

5,515,279.00 8,897,152.00

6,969,745.00 10,406,836.00

6,901,166.92 10,399,254.33

$

28,662,282.00 $

31,715,474.00 $

31,639,314.25 $

$

$

$

319,631.07 $

$

28,662,282.00 $

31,715,474.00 $

31,958,945.32 $

$

21,761.00

28,640,521.00

21,761.00 31,693,713.00

19,442.45 31,412,317.16

$

28,662,282.00 $

31,715,474.00 $

31,431,759.61 $

$

527,185.71

0 -68,578.08
-7,581.67
-76,159.75 319,631.07 243,471.32
2,318.55 281,395.84 283,714.39

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Indirect Cost Recovery

Inventories

Technology Fees

Restricted/Sponsored Funds

Uncollectible Accounts Receivable

Tuition Carry - Forward

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

36,500.00 34,014.98
1,813.39
-1,813.39
870.07 -10,069.73
588,501.03
131,732.04 69,841.30 33,175.00 7,849.89
181,964.25 51,549.87
108,268.01
584,380.36
4,120.67 588,501.03

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

$

21,761.00

Original Appropriation

21,761.00
Final Budget

21,761.00 $

0.00 $

21,761.00 $

0.00 $

19,442.45 $

2,318.55 $

2,318.55 $

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

$
Other Adjustments

2,318.55
Program Fund
Balances

$ 14,228,090.00 $ 14,317,132.00 $ 14,317,132.00 $

14,412,431.00

17,376,581.00

17,300,421.25

$ 28,640,521.00 $ 31,693,713.00 $ 31,617,553.25 $

$ 319,631.07
319,631.07 $

14,317,132.00 $ 17,620,052.32
31,937,184.32 $

0.00 $ 243,471.32
243,471.32 $

14,318,806.00 $ 17,093,511.16
31,412,317.16 $

(1,674.00) $ 283,069.84
281,395.84 $

(1,674.00) $ 526,541.16
524,867.16 $

(1,056.98) (8,142.68)
(9,199.66)

$ (14,209.89)
(14,209.89) $

(2,730.98) 504,188.59
501,457.61

28,662,282.00

31,715,474.00

31,639,314.25

319,631.07

31,958,945.32

243,471.32

31,431,759.61

283,714.39

527,185.71

(9,199.66)

(14,209.89) $

503,776.16

Transfers (2,318.55)
Transfers 2,730.98 (412.43) 2,318.55 0.00

Reserve

Program Fund Balances Surplus

Total

0.00 $

0.00 $

0.00

Reserve

Program Fund Balances Surplus

Total

$ 499,655.49
499,655.49 $

0.00 $ 4,120.67
4,120.67 $

0.00 503,776.16
503,776.16

499,655.49 $

4,120.67 $

503,776.16

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.

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

51,549.87 33,175.00

$

588,501.03

GEORGIA GWINNETT COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

GEORGIA GWINNETT COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Other Prepaid Expenditures

$ 2,232,786.99
448,513.98 1,990.00

Total Assets

$ 2,683,290.97

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Funds Held for Others Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Technology Fees Unreserved Surplus
Total Fund Balances Total Liabilities and Fund
Balances

$ 7,282.09 1,781,496.89 232,036.01 138,774.92 164 26,876.84
$ 2,186,630.75
$ 69,690.00 311,802.82 115,167.40
$ 496,660.22
$ 2,683,290.97

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.

GEORGIA GWINNETT COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES State Appropriations State General Funds Non-State Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES Special Funding Initiative Teaching
Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

$

22,762,467.00 $

23,010,556.00 $

3,367,500.00

3,148,947.00

$

26,129,967.00 $

26,159,503.00 $

$

$

$

$

26,129,967.00 $

26,159,503.00 $

$

11,010,778.00

15,119,189.00

11,010,778.00 15,148,725.00

$

26,129,967.00 $

26,159,503.00 $

$

ACTUAL

VARIANCE

23,010,556.00 $ 2,278,614.62
25,289,170.62 $ 314,178.93 $
25,603,349.55 $

0 -870,332.38
-870,332.38 314,178.93 -556,153.45

11,010,778.00 14,209,494.61 25,220,272.61 $
383,076.94

0 939,230.39
939,230.39

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Technology Fees

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

0 0 2,629.16 -2,629.16
113,583.28
496,660.22
69,690.00 311,802.82 381,492.82
115,167.40 496,660.22

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available Over/(Under)
Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Program Fund Balances

Reserve

Surplus

Total

$

11,010,778.00

Original Appropriation

11,010,778.00
Final Budget

11,010,778.00 $

$

11,010,778.00 $

0.00 $

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

11,010,778.00 $

0.00 $

0.00 $

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$
Other Adjustments

0.00
Total Program
Fund Balances

Transfers

0.00 $

0.00 $

0.00

Program Fund Balances

Reserve

Surplus

Total

$

11,607,506.00 $ 11,999,778.00 $ 11,999,778.00 $

$

3,511,683.00

3,148,947.00

2,278,614.62

314,178.93

$

15,119,189.00 $ 15,148,725.00 $ 14,278,392.62 $ 314,178.93 $

11,999,778.00 $ 2,592,793.55
14,592,571.55 $

0.00 $ (556,153.45)
(556,153.45) $

12,127,080.42 $ 2,082,414.19
14,209,494.61 $

(127,302.42) $ 1,066,532.81
939,230.39 $

(127,302.42) $ 510,379.36
383,076.94 $

109,873.89 3,709.39
113,583.28

$ 0.00 $

(17,428.53) 514,088.75
496,660.22

127,302.42 (127,302.42)
0.00

$ 109,873.89 $ 109,873.89

381,492.82

5,293.51

386,786.33

381,492.82 $ 115,167.40 $ 496,660.22

26,129,967.00

26,159,503.00

25,289,170.62

314,178.93

25,603,349.55

(556,153.45)

25,220,272.61

939,230.39

383,076.94

113,583.28

0.00 $

496,660.22

0.00

381,492.82 $ 115,167.40 $ 496,660.22

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.

KENNESAW STATE UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

KENNESAW STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures

$ 15,785,535.93 3,000,000.00
2,060,708.30 19,859,936.37
3,362,207.53

Total Assets

$ 44,068,388.13

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 395,293.69 6,882,917.71 2,602,676.72
30,021,628.19
$ 39,902,516.31
$ 691,592.33 1,066,633.81 803,740.04 271,066.20 614,711.98 718,074.60
52.86
$ 4,165,871.82
$ 44,068,388.13

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.

KENNESAW STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Research Consortium Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

81,828,464.00 $

82,057,339.00 $

82,057,339.00 $

11,698,136.00 95,453,139.00

19,930,912.00 90,480,752.00

18,745,152.07 83,633,009.57

$ 188,979,739.00 $ 192,469,003.00 $ 184,435,500.64 $

$

$

$

2,166,635.31 $

$ 188,979,739.00 $ 192,469,003.00 $ 186,602,135.95 $

0 -1,185,759.93 -6,847,742.43
-8,033,502.36 2,166,635.31 -5,866,867.05

$

263,971.00

459,114.00

188,256,654.00

263,971.00 459,114.00 191,745,918.00

263,971.00 459,114.00 183,149,835.29

$ 188,979,739.00 $ 192,469,003.00 $ 183,872,920.29 $

$

2,729,215.66

0 0 8,596,082.71
8,596,082.71

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Mandatory Transfers

0 514,635.49
944.95
-944.95
53 -144,258.33 1,066,226.00

Ending Fund Balance - June 30
Analysis of Fund Balance
Reserved Department Sales & Services Indirect Cost Recovery Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus
Total Fund Balance

$

4,165,871.82

$

691,592.33

1,066,633.81

803,740.04

271,066.20

614,711.98

718,074.60

$

4,165,818.96

52.86

$

4,165,871.82

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.

Special Funding Initiative State Appropriation State General Funds
Research Consortium State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

KENNESAW STATE UNIVERSITY STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET (NON-GAAP BASIS) BUDGET FUND
YEAR ENDED JUNE 30, 2008

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Reserve

Program Fund Balances Surplus

$

459,114.00

Original Appropriation

459,114.00
Final Budget

459,114.00 $

0.00 $

459,114.00 $

0.00 $

459,114.00 $

0.00 $

0.00 $

0.00 $

0.00

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

0.00 $
Total Program
Fund Balances

0.00 $ Transfers

0.00 $

0.00 $

Reserve

Program Fund Balances Surplus

$

263,971.00 $

Original Appropriation

263,971.00 $

263,971.00 $

0.00 $

263,971.00 $

0.00 $

263,971.00 $

0.00 $

0.00 $

0.00 $

0.00

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

0.00 $
Program Fund
Balances

0.00 $ Transfers

0.00 $

0.00 $

Reserve

Program Fund Balances Surplus

$ 81,105,379.00 $ 81,334,254.00 $ 81,334,254.00 $

107,151,275.00

110,411,664.00

102,378,161.64

$ 188,256,654.00 $ 191,745,918.00 $ 183,712,415.64 $

$ 2,166,635.31
2,166,635.31 $

81,334,254.00 $ 104,544,796.95
185,879,050.95 $

0.00 $ (5,866,867.05)
(5,866,867.05) $

81,334,254.00 $ 101,815,581.29
183,149,835.29 $

0.00 $ 8,596,082.71
8,596,082.71 $

0.00 $ 2,729,215.66
2,729,215.66 $

53.00 (144,258.33) $
(144,205.33) $

966,149.51 966,149.51

53.00 $ 3,551,106.84
3,551,159.84 $

(0.14) 0.14 $
0.00 $

$ 3,551,106.98
3,551,106.98 $

52.86 $ 52.86 $

Total 0.00
Total 0.00
Total 52.86
3,551,106.98 3,551,159.84

188,979,739.00

192,469,003.00

184,435,500.64

2,166,635.31

186,602,135.95

(5,866,867.05)

183,872,920.29

8,596,082.71

2,729,215.66 $

(144,205.33) $

966,149.51

3,551,159.84 $

0.00 $

3,551,106.98 $

52.86 $

3,551,159.84

Actual amounts were prepared on a prescribed basis of accounting that demonstrate compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.

Unexpendable Reserves Uncollectible Accounts Receivable

614,711.98

$

4,165,871.82

MACON STATE COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

MACON STATE COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures

$

0

605,187.72

84,909.02 7,356,763.21
188,314.45

Total Assets

$ 8,235,174.40

LIABILITIES AND FUND EQUITY
Liabilities Cash Overdraft Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Capital Outlay Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 576,646.98 114,232.25 943,320.94 10,984.44
4,958,713.77 143,744.63
$ 6,747,643.01
$ 53,430.60 280,888.82 100,370.98 142,177.03 598,985.97 103,363.52 204,406.81
3,907.66
$ 1,487,531.39
$ 8,235,174.40

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.

MACON STATE COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

$

22,686,340.00 $

22,478,451.00 $

8,600,000.00 12,615,556.00

10,913,314.00 25,866,145.00

$

43,901,896.00 $

59,257,910.00 $

$

$

$

$

43,901,896.00 $

59,257,910.00 $

$

683,825.00

43,218,071.00

648,025.00 58,609,885.00

$

43,901,896.00 $

59,257,910.00 $

$

ACTUAL

VARIANCE

22,478,451.00 $ 10,168,122.01 25,401,264.55
58,047,837.56 $ 792,222.35 $
58,840,059.91 $

0 -745,191.99 -464,880.45
-1,210,072.44 792,222.35 -417,850.09

648,025.00 56,770,986.42 57,419,011.42 $
1,421,048.49

0 1,838,898.58
1,838,898.58

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Other Additions (Deletions)

0 81,086.91 22,216.71
-22,216.71
3,215.66 -24,077.09
6,257.42

Ending Fund Balance - June 30
Analysis of Fund Balance
Reserved Capital Outlay Department Sales & Services Indirect Cost Recovery Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus
Total Fund Balance

$

1,487,531.39

$

53,430.60

280,888.82

100,370.98

142,177.03

598,985.97

103,363.52

204,406.81

$

1,483,623.73

3,907.66

$

1,487,531.39

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.

Special Funding Initiative State Appropriation State General Funds

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$

683,825.00 $

648,025.00 $

648,025.00 $

0.00 $

648,025.00 $

0.00 $

648,025.00 $

0.00 $

0.00 $

0.00

Other Adjustments

Total Program
Fund Balances

$

0.00

Transfers

Reserve

Program Fund Balances Surplus

Total

$

0.00 $

0.00 $

0.00

Teaching State Appropriation State General Funds Other Funds
Total Teaching

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Program Fund
Balances

Transfers

Reserve

Program Fund Balances Surplus

Total

$ 22,002,515.00 $ 21,830,426.00 $ 21,301,164.00

21,215,556.00

36,779,459.00

36,098,648.56 $

$ 43,218,071.00 $ 58,609,885.00 $ 57,399,812.56 $

$ 792,222.35
792,222.35 $

21,301,164.00 $ 36,890,870.91
58,192,034.91 $

(529,262.00) $ 111,411.91
(417,850.09) $

21,301,164.00 $ 35,469,822.42
56,770,986.42 $

529,262.00 $ 1,309,636.58
1,838,898.58 $

0.00 $ 1,421,048.49
1,421,048.49 $

3,907.66 (24,769.09) $
(20,861.43) $

$ (16,019.19)
(16,019.19) $

3,907.66 1,380,260.21 $
1,384,167.87 $

0.00 $ 0.00 $

$ 1,380,260.21
1,380,260.21 $

3,907.66 $ 0.00
3,907.66 $

3,907.66 1,380,260.21
1,384,167.87

43,901,896.00

59,257,910.00 $ 58,047,837.56 $

792,222.35 $ 58,840,059.91

(417,850.09) $ 57,419,011.42

1,838,898.58

1,421,048.49 $

(20,861.43) $

(16,019.19) $

1,384,167.87 $

0.00 $

1,380,260.21 $

3,907.66 $

1,384,167.87

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.

Unexpendable Reserves Uncollectible Accounts Receivable

103,363.52

$

1,487,531.39

MEDICAL COLLEGE OF GEORGIA
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

MEDICAL COLLEGE OF GEORGIA BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Margin Allocation Prepaid Expenditures Inventories

$ 27,113,832.42 34,422,833.10
4,174,859.61 22,159,953.36 7,231,443.00 7,603,386.87
129,989.41

Total Assets

$ 102,836,297.77

LIABILITIES AND FUND EQUITY
Liabilities Contracts Payable Encumbrance Payable Accounts Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Capital Outlay Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Early Retirement Program Unreserved
Total Fund Balances Total Liabilities and Fund
Balances

$ 2,906,076.67 17,899,750.46 1,465,718.64 25,729,048.61
$ 48,000,594.38
$ 153,399.84 1,741,880.35 9,189,588.39 608,011.49
35,506,285.19 144,054.70 127,466.90
7,365,016.53
$ 54,835,703.39
$ 102,836,297.77

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.

MEDICAL COLLEGE OF GEORGIA BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds Tobacco Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Georgia Radiation Therapy Center Research Consortium Special Funding Initiative Student Education Enrichment Program Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$ 156,635,429.00 $ 156,678,006.00 $ 156,678,006.00 $

5,000,000.00

5,000,000.00

5,000,000.00

361,053,550.00 60,098,203.00

372,841,747.00 64,055,599.00

381,853,723.56 57,215,181.59

$ 582,787,182.00 $ 598,575,352.00 $ 600,746,911.15 $

$

$

$

44,357,297.62 $

$ 582,787,182.00 $ 598,575,352.00 $ 645,104,208.77 $

0 0
9,011,976.56 -6,840,417.41
2,171,559.15
51,529,399.15 53,700,958.30

$

3,625,810.00

0

13,292,639.00

314,737.00

565,553,996.00

3,625,810.00 904,658.00
13,447,543.00 314,737.00
580,282,604.00

3,625,810.00 904,658.00
13,448,021.48 314,737.00
579,399,159.94

$ 582,787,182.00 $ 598,575,352.00 $ 597,692,386.42 $

$

47,411,822.35

0 0 -478.48 0
883,444.06
882,965.58

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable Early Retirement Program
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

119,814.32 131,965.19 7,172,101.53
80,148.40
-80,148.40
977,297.77 -977,297.77

Ending Fund Balance - June 30

$ 54,835,703.39

Analysis of Fund Balance
Reserved Capital Outlay Department Sales & Services Early Retirement Program Indirect Cost Recovery Inventories Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable
Total Reserved
Unreserved Surplus
Total Fund Balance

$

153,399.84

1,741,880.35

7,365,016.53

9,189,588.39

127,466.90

608,011.49

35,506,285.19

144,054.70

$ 54,835,703.39

0 $ 54,835,703.39

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.

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

Georgia Radiation Therapy Center State Appropriation Other Funds
Special Funding Initiative State Appropriation State General Funds Tobacco Funds
Total Special Funding Initiative
Research Consortium State Appropriation State General Funds

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

3,625,810.00
Original Appropriation

3,625,810.00
Final Budget

3,625,810.00
Current Year Revenues

0.00

3,625,810.00

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

0.00
Variance Positive (Negative)

3,625,810.00

0.00

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

0.00 Actual Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

0.00 Total Program Fund Balances

$

8,292,639.00

5,000,000.00

$

13,292,639.00 $

Original Appropriation

8,447,543.00 5,000,000.00
13,447,543.00 $

8,447,543.00 $ 5,000,000.00
13,447,543.00 $

$ 0.00 $

8,447,543.00 $ 5,000,000.00
13,447,543.00 $

0.00 $ 0.00
0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

8,448,021.48 $ 5,000,000.00

(478.48) $ 0.00

(478.48) $ 0.00

26,940.69

13,448,021.48 $

(478.48) $

(478.48) $

26,940.69

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$ 0.00 $
Other Adjustments

26,462.21 0.00
26,462.21
Total Program
Fund Balances

$

0.00 $

904,658.00 $

904,658.00 $

$

904,658.00 $

0.00 $

904,658.00 $

0.00 $

0.00 $

(973,934.33)

0.00 $

(973,934.33)

Student Education Enrichment Program

State Appropriation

State General Funds

$

Original Appropriation
314,737.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

314,737.00 $

314,737.00 $

$

314,737.00 $

0.00 $

314,737.00 $

0.00 $

0.00 $

Other Adjustments

Program Fund
Balances

0.00 $

0.00

Teaching State Appropriation State General Funds Other Funds
Total Teaching

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

$ 148,028,053.00 $ 147,011,068.00 $ 147,011,068.00 $

417,525,943.00

433,271,536.00

435,443,095.15

$ 565,553,996.00 $ 580,282,604.00 $ 582,454,163.15 $

$ 44,357,297.62
44,357,297.62 $

147,011,068.00 $ 479,800,392.77
626,811,460.77 $

0.00 $ 46,528,856.77
46,528,856.77 $

147,017,814.12 $ 432,381,345.82
579,399,159.94 $

(6,746.12) $ 890,190.18
883,444.06 $

(6,746.12) $ 47,419,046.95
47,412,300.83 $

112,528.03 834,465.61
946,993.64

Other Adjustments

Program Fund
Balances

$ (212,657.09)
(212,657.09) $

105,781.91 48,040,855.47
48,146,637.38

582,787,182.00

598,575,352.00

600,746,911.15

44,357,297.62

645,104,208.77

46,528,856.77

597,692,386.42

882,965.58

47,411,822.35

0.00

(212,657.09) $ 47,199,165.26

Transfers
Transfers 478.48 478.48
Transfers 820,085.30
Transfers
Transfers 6,746.12
(827,309.90) (820,563.78)
0.00

Reserve

Program Fund Balances Surplus

0.00

Reserve

Program Fund Balances Surplus

0.00 $ 0.00
0.00 $

26,940.69 $ 26,940.69 $

Total 0.00
Total 26,940.69 0.00 26,940.69

Reserve

Program Fund Balances Surplus

$

(153,849.03) $

Total (153,849.03)

Reserve

Program Fund Balances Surplus

$

0.00 $

Total 0.00

Reserve

Program Fund Balances Surplus

Total

$ 47,199,165.26
47,199,165.26 $

112,528.03 $ 14,380.31
126,908.34 $

112,528.03 47,213,545.57
47,326,073.60

47,199,165.26 $

0.00 $

47,199,165.26

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.

Unexpendable Reserves Early Retirement Program Uncollectible Accounts Receivable Inventories

7,365,016.53 144,054.70 127,466.90

$

54,835,703.39

MIDDLE GEORGIA COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

MIDDLE GEORGIA COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 3,549,841.75 31,611.56
337,697.13 2,218,785.64
12,998.24 4,401.37

Total Assets

$ 6,155,335.69

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 255,367.41 4,575,226.59 162,836.98 175,855.24 5,528.15
$ 5,174,814.37
$ 229,238.49 33,053.03
354,657.59 83,442.19 31,955.49 5,040.39
154,000.00
89,134.14
$ 980,521.32
$ 6,155,335.69

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.

MIDDLE GEORGIA COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

$

18,455,944.00 $

18,241,937.00 $

4,394,000.00 7,350,028.00

5,644,667.00 8,813,862.00

$

30,199,972.00 $

32,700,466.00 $

$

$

$

$

30,199,972.00 $

32,700,466.00 $

$

523,725.00

29,676,247.00

523,725.00 32,176,741.00

$

30,199,972.00 $

32,700,466.00 $

$

ACTUAL

VARIANCE

18,241,937.00 $ 5,651,260.36 17,585,090.13
41,478,287.49 $ 237,819.72 $
41,716,107.21 $

0 6,593.36 8,771,228.13
8,777,821.49 237,819.72
9,015,641.21

520,943.49 40,479,417.87 41,000,361.36 $
715,745.85

2,781.51 -8,302,676.87
-8,299,895.36

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Unreserved, Unreserved Fund Balance (Surplus) Returned to Georgia Department of Technical and Adult Education
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Other Additions (Deletions)

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Indirect Cost Recovery

Inventories

Technology Fees

Restricted/Sponsored Funds

Uncollectible Accounts Receivable

Tuition Carry - Forward

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

8,987.60 24,962.82 33,209.40 -33,209.40
-44,250.50
62,746.10 -26,591.10 238,920.55
980,521.32
229,238.49 33,053.03 5,040.39
354,657.59 83,442.19 31,955.49
154,000.00
891,387.18
89,134.14 980,521.32

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Reserve

Program Fund Balances Surplus

$

523,725.00 $

Original Appropriation

523,725.00 $

523,725.00 $

0.00 $

523,725.00 $

0.00 $

520,943.49 $

2,781.51 $

2,781.51 $

0.00 $

0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

2,781.51 $
Total Program
Fund Balances

0.00 $ Transfers

0.00 $

2,781.51 $

Reserve

Program Fund Balances Surplus

$ 17,932,219.00 $ 17,718,212.00 $ 17,718,212.00 $

11,744,028.00

14,458,529.00

23,236,350.49

$ 29,676,247.00 $ 32,176,741.00 $ 40,954,562.49 $

0.00 $ 237,819.72
237,819.72 $

17,718,212.00 $ 23,474,170.21
41,192,382.21 $

0.00 $ 9,015,641.21
9,015,641.21 $

17,723,000.22 $ 22,756,417.65
40,479,417.87 $

(4,788.22) $ (8,297,888.65)
(8,302,676.87) $

(4,788.22) $ 717,752.56
712,964.34 $

(26,591.10) $ 62,746.10
36,155.00

117,731.95 $ 73,892.64
191,624.59 $

86,352.63 $ 854,391.30
940,743.93

0.00 $ 0.00
0.00

0.00 $ 854,391.30
854,391.30 $

86,352.63 $ 0.00
86,352.63 $

Total 2,781.51
Total 86,352.63
854,391.30 940,743.93

30,199,972.00

32,700,466.00

41,478,287.49

237,819.72

41,716,107.21

9,015,641.21

41,000,361.36

(8,299,895.36)

715,745.85

36,155.00

191,624.59 $

943,525.44

0.00

854,391.30 $

89,134.14 $

943,525.44

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.

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

31,955.49 5,040.39

$

980,521.32

NORTH GEORGIA COLLEGE AND STATE UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

NORTH GEORGIA COLLEGE & STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 3,506,183.62
200,663.10 1,355,862.44
894,212.86 47,362.68

Total Assets

$ 6,004,284.70

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 179,853.12 2,529,171.00 295,979.08 2,206,900.78
$ 5,211,903.98
$ 159,418.53 73,923.75 7,280.12 217,063.38 138,438.63 41,613.46 150,573.18
4,069.67
$ 792,380.72
$ 6,004,284.70

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.

NORTH GEORGIA COLLEGE & STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

26,501,391.00 $

26,798,099.00 $

26,798,099.00 $

3,190,289.00 16,129,965.00

5,987,458.00 19,574,721.00

5,792,941.30 19,458,527.50

$

45,821,645.00 $

52,360,278.00 $

52,049,567.80 $

$

$

$

461,834.69 $

$

45,821,645.00 $

52,360,278.00 $

52,511,402.49 $

0
-194,516.70 -116,193.50
-310,710.20 461,834.69 151,124.49

$

865,632.00

44,956,013.00

865,632.00 51,494,646.00

865,632.00 51,050,734.69

$

45,821,645.00 $

52,360,278.00 $

51,916,366.69 $

$

595,035.80

0 443,911.31
443,911.31

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Mandatory Transfers - Restricted

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Indirect Cost Recovery

Inventories

Technology Fees

Restricted/Sponsored Funds

Uncollectible Accounts Receivable

Tuition Carry - Forward

Total Reserved

$

Unreserved

Surplus

Total Fund Balance

$

40,572.34 157,548.05
5,766.80
-5,766.80
3,107.69 -45
-3,838.16
792,380.72
159,418.53 73,923.75 41,613.46 7,280.12
217,063.38 138,438.63 150,573.18
788,311.05
4,069.67 792,380.72

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$

865,632.00

Original Appropriation

865,632.00
Final Budget

865,632.00 $

$

865,632.00 $

0.00 $

865,632.00 $

0.00 $

0.00 $

1,550.39

Actual

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

$ 25,635,759.00 $ 25,932,467.00 $ 25,932,467.00 $

19,320,254.00

25,562,179.00

25,251,468.80

$ 44,956,013.00 $ 51,494,646.00 $ 51,183,935.80 $

$ 461,834.69
461,834.69 $

25,932,467.00 $ 25,713,303.49
51,645,770.49 $

0.00 $ 151,124.49
151,124.49 $

25,931,758.24 $ 25,118,976.45
51,050,734.69 $

708.76 $ 443,202.55
443,911.31 $

708.76 $ 594,327.04
595,035.80 $

1,512.30 1,512.30

Other Adjustments

Total Program
Fund Balances

$
Other Adjustments

1,550.39
Total
Program Fund
Balances

$ 14,230.14
14,230.14 $

708.76 610,069.48
610,778.24

45,821,645.00

52,360,278.00

52,049,567.80

461,834.69

52,511,402.49

151,124.49

51,916,366.69

443,911.31

595,035.80

3,062.69

14,230.14 $

612,328.63

Transfers
Transfers 0.00 0.00

Reserve

Program Fund Balances Surplus

Total

0.00 $

1,550.39 $

1,550.39

Reserve

Program Fund Balances Surplus

Total

$ 608,258.96
608,258.96 $

708.76 $ 1,810.52
2,519.28 $

708.76 610,069.48
610,778.24

608,258.96 $

4,069.67 $

612,328.63

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.

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

138,438.63 41,613.46

$

792,380.72

SAVANNAH STATE UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

SAVANNAH STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 1,173,072.93 8,275.65
1,181,567.63 1,932,279.19
37,099.90 55,548.49

Total Assets

$ 4,387,843.79

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 235,313.28 2,143,624.84 63,314.16 389,878.60
$ 2,832,130.88
$ 110,832.61 509,384.37 177,751.33 67,283.72 402,170.83 49,863.99 149,648.01
88,778.05
$ 1,555,712.91
$ 4,387,843.79

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.

SAVANNAH STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

20,154,108.00 $

19,262,450.00 $

19,262,450.00 $

13,887,286.00 10,801,683.00

13,593,485.00 16,822,900.00

13,539,286.90 16,441,852.02

$

44,843,077.00 $

49,678,835.00 $

49,243,588.92 $

$

$

$

1,253,482.78 $

$

44,843,077.00 $

49,678,835.00 $

50,497,071.70 $

0 -54,198.10 -381,047.98
-435,246.08 1,253,482.78
818,236.70

$

466,038.00

44,377,039.00

466,038.00 49,212,797.00

462,177.49 49,063,722.03

$

44,843,077.00 $

49,678,835.00 $

49,525,899.52 $

$

971,172.18

3,860.51 149,074.97
152,935.48

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

0 495,762.68 369,564.64
-369,564.64
318,799.63 -230,021.58

Ending Fund Balance - June 30

$

1,555,712.91

Analysis of Fund Balance
Reserved Department Sales & Services Indirect Cost Recovery Inventories Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus
Total Fund Balance

$

110,832.61

509,384.37

49,863.99

177,751.33

67,283.72

402,170.83

149,648.01

$

1,466,934.86

88,778.05

$

1,555,712.91

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.

SAVANNAH STATE UNIVERSITY STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008

Special Funding Initiatives State Appropriation State General Funds

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year Carry-Over

Total Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Positive

Actual

(Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Program Fund Balances

Reserve

Surplus

Total

$

466,038.00 $

466,038.00 $

466,038.00 $

0.00 $

466,038.00 $

0.00 $

462,177.49 $

3,860.51 $

3,860.51 $

0.00 $

0.00 $

3,860.51 $

0.00 $

0.00 $ 3,860.51 $

3,860.51

Teaching State Appropriation State General Funds Other Funds
Total Teaching

$

18,639,605.00 $

18,796,412.00 $

25,737,434.00

30,416,385.00

$

44,377,039.00 $

49,212,797.00 $

18,796,412.00 $ 29,981,138.92
48,777,550.92 $

0.00 $ 1,253,482.78
1,253,482.78 $

18,796,412.00 $ 31,234,621.70
50,031,033.70 $

0.00 $ 818,236.70
818,236.70 $

18,591,449.81 $ 30,472,272.22
49,063,722.03 $

204,962.19 $ -55,887.22
149,074.97 $

204,962.19 $ 762,349.48
967,311.67 $

-120,044.65 $ 208,822.70
88,778.05 $

0.00 $

84,917.54 $

43,727.86

1,014,900.04

43,727.86 $ 1,099,817.58 $

0.00 $

0.00 $ 84,917.54 $

84,917.54

0.00

1,014,900.04

0.00

1,014,900.04

0.00 $ 1,014,900.04 $ 84,917.54 $ 1,099,817.58

Grand Totals - All Programs

$

44,843,077.00 $

49,678,835.00 $

49,243,588.92 $

1,253,482.78 $

50,497,071.70 $

818,236.70 $ 49,525,899.52 $ 152,935.48 $

971,172.18 $

88,778.05 $ 43,727.86 $ 1,103,678.09 $

0.00 $ 1,014,900.04 $ 88,778.05 $ 1,103,678.09

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.

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

402,170.83 49,863.99

$ 1,555,712.91

SKIDAWAY INSTITUTE OF OCEANOGRAPHY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

SKIDAWAY INSTITUTE OF OCEANOGRAPHY-A BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures

$ 152,199.72
465,146.15 503,421.96
3,000.00

Total Assets

$ 1,123,767.83

LIABILITIES AND FUND EQUITY
Liabilities Encumbrance Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Indirect Cost Recoveries Unreserved
Total Fund Balances Total Liabilities and Fund
Balances

$ 350,560.29 252,641.74
$ 603,202.03
$ 520,565.80
$ 520,565.80 $ 1,123,767.83

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.

SKIDAWAY INSTITUTE OF OCEANOGRAPHY-A BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Research Consortium Skidaway Institute of Oceanography Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

$

2,530,780.00 $

2,647,780.00 $

4,113,000.00 1,545,000.00

3,613,000.00 1,345,000.00

$

8,188,780.00 $

7,605,780.00 $

$

$

$

$

8,188,780.00 $

7,605,780.00 $

$

0

7,370,710.00

100,000.00 6,470,710.00

818,070.00

1,035,070.00

$

8,188,780.00 $

7,605,780.00 $

$

ACTUAL

VARIANCE

2,647,780.00 $ 3,592,742.59 1,901,455.25
8,141,977.84 $ 404,244.31 $
8,546,222.15 $

0 -20,257.41 556,455.25
536,197.84 404,244.31 940,442.15

100,000.00 6,443,433.25 1,482,223.10 8,025,656.35 $
520,565.80

0 27,276.75
-447,153.10
-419,876.35

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment

0 0 0.99
-0.99

Ending Fund Balance - June 30
Analysis of Fund Balance Reserved
Indirect Cost Recovery
Total Reserved Unreserved
Surplus Total Fund Balance

$

520,565.80

$

520,565.80

$

520,565.80

0

$

520,565.80

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.

Research Consortium State Appropriation State General Funds

SKIDAWAY INSTITUTE OF OCEANOGRAPHY STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET (NON-GAAP BASIS) BUDGET FUND
YEAR ENDED JUNE 30, 2008

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$

0.00 $

100,000.00 $

100,000.00 $

$

100,000.00 $

0.00 $

100,000.00 $

0.00 $

0.00 $

Original

Appropriation

Skidaway Institute of Oceanography

State Appropriation

State General Funds

$

1,712,710.00 $

Other Funds

5,658,000.00

Total Teaching

$

7,370,710.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

1,712,710.00 $ 4,758,000.00

1,712,710.00 $ 4,847,044.74

$

1,712,710.00 $

4,847,044.74

0.00 $ 89,044.74

1,712,710.00 $ 4,730,723.25

0.00 $ 27,276.75

0.00 $ 116,321.49

6,470,710.00 $

6,559,754.74 $

0.00 $

6,559,754.74 $

89,044.74 $

6,443,433.25 $

27,276.75 $

116,321.49 $

0.00

Teaching State Appropriation State General Funds Other Funds
Total Teaching

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

$

818,070.00

835,070.00 200,000.00

835,070.00 $ 647,153.10

0.00 $ 404,244.31

835,070.00 $ 1,051,397.41

0.00 $ 851,397.41

835,070.00 $ 647,153.10

0.00 $ (447,153.10)

0.00 $ 404,244.31

$

818,070.00 $

1,035,070.00 $

1,482,223.10 $

404,244.31 $

1,886,467.41 $

851,397.41 $

1,482,223.10 $

(447,153.10) $

404,244.31 $

0.00

8,188,780.00

7,605,780.00

8,141,977.84

404,244.31

8,546,222.15

940,442.15

8,025,656.35

(419,876.35)

520,565.80

0.00

Other Adjustments

Total Program
Fund Balances

0.00 $
Other Adjustments

0.00
Total Program
Fund Balances

$ 0.00 $
Other Adjustments

0.00 116,321.49
116,321.49
Total Program
Fund Balances

0.00 $ 0.00 $ 0.00 $

0.00 404,244.31
404,244.31
520,565.80

Transfers
Transfers 0.00 0.00
Transfers 0.00 0.00 0.00

Reserve

Program Fund Balances Surplus

Total

$

0.00 $

0.00

Reserve

Program Fund Balances Surplus

Total

$ 116,321.49
116,321.49 $

0.00 $ 0.00 $

0.00 116,321.49
116,321.49

Reserve

Program Fund Balances Surplus

Total

$ 404,244.31
404,244.31 $
520,565.80 $

0.00 $ 0.00
0.00 $
0.00 $

0.00 404,244.31
404,244.31
520,565.80

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 COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

SOUTH GEORGIA COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008
ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures
Total Assets

$

0

84,281.57 316,572.15
19,758.39

$ 420,612.11

LIABILITIES AND FUND EQUITY
Liabilities Cash Overdraft Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 89,610.39 72,620.01
114,283.40 -37,733.65
930
$ 239,710.15

$

5,893.38

26,194.46

337.39

64,920.39

24,761.00

34,909.56

23,885.78

$ 180,901.96

$ 420,612.11

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 COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

7,592,377.00 $

7,731,643.00 $

7,731,643.00 $

2,569,068.00 3,318,686.00

3,614,068.00 6,262,786.00

3,642,242.93 5,695,951.37

0
28,174.93 -566,834.63

Total Revenue Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

$

13,480,131.00 $

17,608,497.00 $

17,069,837.30 $

$

$

$

55,879.44 $

$

13,480,131.00 $

17,608,497.00 $

17,125,716.74 $

$

3,918.00

13,476,213.00

3,918.00 17,604,579.00

3,918.00 16,958,144.93

$

13,480,131.00 $

17,608,497.00 $

16,962,062.93 $

$

163,653.81

-538,659.70 55,879.44
-482,780.26
0 646,434.07 646,434.07

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Indirect Cost Recovery

Technology Fees

Restricted/Sponsored Funds

Uncollectible Accounts Receivable

Tuition Carry - Forward

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

0 19,000.00 15,037.38
-15,037.38
-7,512.85 5,761.00
180,901.96
5,893.38 26,194.46
337.39 64,920.39 24,761.00 34,909.56
157,016.18
23,885.78 180,901.96

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 COLLEGE STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008

Special Funding Initiatives State Appropriation State General Funds

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year Carry-Over

Total Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Positive

Actual

(Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Program Fund Balances

Reserve

Surplus

Total

$

3,918.00 $

3,918.00 $

3,918.00 $

0.00 $

3,918.00 $

0.00 $

3,918.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00

Teaching State Appropriation State General Funds Federal Funds Other Funds
Total Teaching

$ 7,588,459.00 $ 7,727,725.00 $

2,569,068.00

3,614,068.00

3,318,686.00

6,262,786.00

$ 13,476,213.00 $ 17,604,579.00 $

7,727,725.00 $ 3,594,502.71 5,743,691.59

0.00 $ 0.00 55,879.44

17,065,919.30 $ 55,879.44 $

7,727,725.01 $ 3,594,502.71 5,799,571.02

0.01 $ -19,565.29 -463,214.98

17,121,798.74 $ -482,780.26 $

7,703,839.23 $ 3,592,526.87 5,661,778.83
16,958,144.93 $

23,885.77 $ 21,541.13 601,007.17
646,434.07 $

23,885.78 $ 1,975.84
137,792.19
163,653.81 $

0.00 $ 0.00 -1,751.85
-1,751.85 $

0.00 $ 0.00 -5,761.00

23,885.78 $ 1,975.84
130,279.34

-5,761.00 $ 156,140.96 $

0.00 $ 0.00 0.00

0.00 $ 1,975.84 130,279.34

23,885.78 $ 0.00 0.00

23,885.78 1,975.84
130,279.34

0.00 $ 132,255.18 $ 23,885.78 $ 156,140.96

Grand Totals - All Programs

$ 13,480,131.00 $ 17,608,497.00 $ 17,069,837.30 $ 55,879.44 $ 17,125,716.74 $ -482,780.26 $ 16,962,062.93 $

646,434.07 $

163,653.81 $ -1,751.85 $ -5,761.00 $ 156,140.96 $

0.00 $ 132,255.18 $ 23,885.78 $ 156,140.96

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.

Unexpendable Reserves Uncollectible Accounts Receivable

24,761.00 $ 180,901.96

SOUTHERN POLYTECHNIC STATE UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

SOUTHERN POLYTECHNIC STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures

$ 2,479,128.55
282,644.30 9,555,519.61
680,286.91

Total Assets

$ 12,997,579.37

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward Unreserved Surplus
Total Fund Balances Total Liabilities and Fund
Balances

$ 215,967.03 8,661,629.92 50,442.73 2,521,141.85
$ 11,449,181.53
$ 182,201.71 185,874.55 17,998.76 7,308.08 807,016.06 306,552.62
41,446.06
$ 1,548,397.84
$ 12,997,579.37

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.

SOUTHERN POLYTECHNIC STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Research Consortium Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

$

22,047,327.00 $

22,506,649.00 $

3,000,000.00 17,244,432.00

4,400,000.00 30,405,236.00

$

42,291,759.00 $

57,311,885.00 $

$

$

$

$

42,291,759.00 $

57,311,885.00 $

$

105,945.00

10,613.00

42,175,201.00

105,945.00 10,613.00 57,195,327.00

$

42,291,759.00 $

57,311,885.00 $

$

ACTUAL

VARIANCE

22,506,649.00 $ 3,925,825.82 25,716,942.85
52,149,417.67 $ 1,425,615.40 $ 53,575,033.07 $

0 -474,174.18 -4,688,293.15
-5,162,467.33 1,425,615.40 -3,736,851.93

105,944.14 10,603.38 52,526,423.50 52,642,971.02 $
932,062.05

0.86 9.62 4,668,903.50
4,668,913.98

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

0 615,757.53
9,573.44
-9,573.44
25,952.83 -25,374.57

Ending Fund Balance - June 30

$

1,548,397.84

Analysis of Fund Balance
Reserved Department Sales & Services Indirect Cost Recovery Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus
Total Fund Balance

$

182,201.71

185,874.55

17,998.76

7,308.08

807,016.06

306,552.62

$

1,506,951.78

41,446.06

$

1,548,397.84

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.

SOUTHERN POLYTECHNIC STATE UNIVERSITY STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008

Special Funding Initiatives State Appropriation State General Funds

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year Carry-Over

Total Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Positive

Actual

(Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Program Fund Balances

Reserve

Surplus

Total

$

10,613.00 $

10,613.00 $

10,613.00 $

0.00 $

10,613.00 $

0.00 $

10,603.38 $

9.62 $

9.62 $

0.00 $

0.00 $

9.62 $

0.00 $

0.00 $

9.62 $

9.62

Research Consortium State Appropriation State General Funds

$

105,945.00 $

105,945.00 $

105,945.00 $

0.00 $

105,945.00 $

0.00 $

105,944.14 $

0.86 $

0.86 $

0.00 $

0.00 $

0.86 $

0.00 $

0.00 $

0.86 $

0.86

Teaching State Appropriation State General Funds Other Funds
Total Teaching

$ 21,930,769.00 $ 22,390,091.00 $ 22,390,091.00 $

0.00 $ 22,390,091.00 $

0.00 $ 22,390,669.26 $

-578.26 $

20,244,432.00

34,805,236.00

29,642,768.67

1,425,615.40

31,068,384.07

-3,736,851.93

30,135,754.24

4,669,481.76

$ 42,175,201.00 $ 57,195,327.00 $ 52,032,859.67 $ 1,425,615.40 $ 53,458,475.07 $ -3,736,851.93 $ 52,526,423.50 $ 4,668,903.50 $

-578.26 $ 932,629.83
932,051.57 $

578.26 $ 0.00
578.26 $

0.00 $

0.00 $ 578.26 $

0.00 $

578.26 $

-191,258.53

741,371.30

-578.26

699,935.72

40,857.32

-191,258.53 $ 741,371.30 $

0.00 $ 699,935.72 $ 41,435.58 $

578.26 740,793.04
741,371.30

Grand Totals - All Programs

$ 42,291,759.00 $ 57,311,885.00 $ 52,149,417.67 $ 1,425,615.40 $ 53,575,033.07 $ -3,736,851.93 $ 52,642,971.02 $ 4,668,913.98 $

932,062.05 $

578.26 $ -191,258.53 $ 741,381.78 $

0.00 $ 699,935.72 $ 41,446.06 $ 741,381.78

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.

Unexpendable Reserves Uncollectible Accounts Receivable

807,016.06 $ 1,548,397.84

GEORGIA INSTITUTE OF TECHNOLOGY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

GEORGIA INSTITUTE OF TECHNOLOGY BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories Other Assets

$

0

33,522,496.07 33,727,392.40 12,549,374.18
289,062.83 5,543,577.60

Total Assets

$ 85,631,903.08

LIABILITIES AND FUND EQUITY
Liabilities Cash Overdraft Accounts Payable Deferred Revenue Funds Held for Others Other Liabilities
Total Liabilities
Fund Balances Reserved Capital Outlay Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Carry-Over "Per State Accounting Office" Unreserved Surplus
Total Fund Balances Total Liabilities and Fund
Balances

$ 15,004,420.84 26,110,736.00 16,103,589.12 15,295,138.32 9,351,450.23
$ 81,865,334.51
$ 2,929,316.27 347,083.65
1,014,295.59 286,219.08
-1,189,669.34
379,323.32
$ 3,766,568.57
$ 85,631,903.08

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.

GEORGIA INSTITUTE OF TECHNOLOGY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$ 265,179,112.00 $ 275,144,403.00 $ 275,144,403.00 $

384,344,736.00 329,983,610.00

391,594,736.00 364,286,743.00

358,774,404.00 338,204,390.13

$ 979,507,458.00 $ 1,031,025,882.00 $ 972,123,197.13 $

$

$

$

26,162,429.46 $

$ 979,507,458.00 $ 1,031,025,882.00 $ 998,285,626.59 $

0 -32,820,332.00 -26,082,352.87
-58,902,684.87 26,162,429.46 -32,740,255.41

Advanced Technology Development Center/EDI $ Georgia Tech Research Institute Research Consortium Special Funding Initiative Teaching

Total Expenditures

$

Excess of Funds Available over Expenditures

27,974,712.00 130,786,385.00
9,955,999.00 631,882.00
810,158,480.00
979,507,458.00 $

29,574,712.00 154,736,385.00
19,621,406.00 931,082.00
826,162,297.00
1,031,025,882.00 $

27,175,514.08 149,869,704.44
19,621,406.00 931,082.00
812,649,991.31
1,010,247,697.83 $

$ -11,962,071.24

2,399,197.92 4,866,680.56
0 0 13,512,305.69
20,778,184.17

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus)
Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Increase (Decrease) in Inventories Non-Mandatory Transfers

273,503.32 955,382.69
0
0
563,596.88 -184,273.56
12,715.76 14,107,714.72

Ending Fund Balance - June 30

$

3,766,568.57

Analysis of Fund Balance
Reserved Capital Outlay Inventories Restricted/Sponsored Funds Uncollectible Accounts Receivable Property Reserves
Total Reserved
Unreserved Surplus
Total Fund Balance

$

2,929,316.27

286,219.08

347,083.65

1,014,295.59

-1,189,669.34

$

3,387,245.25

379,323.32

$

3,766,568.57

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.

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

Advanced Technology Development Center State Appropriation State General Funds Other Funds
Total Advanced Technology Development Center
Georgia Tech Research Institute State Appropriation State General Funds Other Funds
Total Georgia Tech Research Institute
Special Funding Initiative State Appropriation State General Funds
Research Consortium State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Variance

Carry-Over

Funds Available Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

$ 15,099,712.00 $ 12,875,000.00

15,099,712.00 $ 15,099,712.00 $

14,475,000.00

12,042,668.25

0.00 $ 15,099,712.00 $

0.00 $

12,042,668.25

(2,432,331.75)

15,099,712.26 $ 12,075,801.82

(0.26) $ 2,399,198.18

(0.26) $ (33,133.57)

16,806.44 8,410.50

$ 27,974,712.00 $ 29,574,712.00 $ 27,142,380.25 $

0.00 $ 27,142,380.25 $ (2,432,331.75) $ 27,175,514.08 $ 2,399,197.92 $

(33,133.83) $

25,216.94

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Variance

Carry-Over

Funds Available Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$ 7,868,427.00 $ 7,868,427.00 $ 7,868,427.00 $

122,917,958.00

146,867,958.00

142,001,279.33

$ 130,786,385.00 $ 154,736,385.00 $ 149,869,706.33 $

0.00 $ 7,868,427.00 $

0.00 $

7,868,427.00 $

142,001,279.33

(4,866,678.67)

142,001,277.44

0.00 $ 149,869,706.33 $ (4,866,678.67) $ 149,869,704.44 $

0.00 $ 4,866,680.56
4,866,680.56 $

0.00 $ 1.89
1.89 $

1,294.50 73,237.59
74,532.09

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Variance

Carry-Over

Funds Available Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$ 631,882.00 $
Original Appropriation

931,082.00 $

931,082.00 $

0.00 $

931,082.00 $

0.00 $

931,082.00 $

0.00 $

0.00 $

0.00

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Variance

Carry-Over

Funds Available Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$ 9,955,999.00 $ 19,621,406.00 $ 19,621,406.00 $

0.00 $ 19,621,406.00 $

0.00 $ 19,621,406.00 $

0.00 $

0.00 $

0.00

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Variance

Carry-Over

Funds Available Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

$ 225,628,986.00 $ 231,623,776.00 $ 231,623,776.00 $

0.00 $ 231,623,776.00 $

0.00 $ 231,623,776.00 $

0.00 $

0.00 $

584,529,494.00

594,538,521.00

542,934,846.55

26,162,429.46

569,097,276.01 (25,441,244.99)

581,026,215.31

13,512,305.69

(11,928,939.30)

$ 810,158,480.00 $ 826,162,297.00 $ 774,558,622.55 $ 26,162,429.46 $ 800,721,052.01 $ (25,441,244.99) $ 812,649,991.31 $ 13,512,305.69 $ (11,928,939.30) $

151,425.68 128,148.61
279,574.29

Other Adjustments

$

0.26 $

46,268.01

$

46,268.27 $

$ Other
Adjustments

$ 115,397.67

$

115,397.67 $

$ Other
Adjustments

0.00 $

Other Adjustments

$

0.00 $

Other Adjustments

$

0.00 $

13,887,135.88

$ 13,887,135.88 $

Total Program
Fund Balances
16,806.44 $ 21,544.94
38,351.38 $
Total Program
Fund Balances
1,294.50 $ 188,637.15
189,931.65 $
Total Program
Fund Balances
0.00 $
Total Program
Fund Balances
0.00 $
Total Program
Fund Balances
151,425.68 $ 2,086,345.19
2,237,770.87 $

Transfers

Program Fund Balances Reserve

Surplus

0.00 $ 0.00 $

0.00 $ 13,134.44
13,134.44 $

16,806.44 $ 8,410.50
25,216.94 $

Transfers

Reserve

Program Fund Balances Surplus

0.00 $ 0.00 $

0.00 $ 115,399.56
115,399.56 $

1,294.50 $ 73,237.59
74,532.09 $

Transfers

Reserve

Program Fund Balances Surplus

0.00 $

0.00 $

0.00 $

Transfers

Reserve

Program Fund Balances Surplus

0.00 $

0.00 $

0.00 $

Transfers

Reserve

Program Fund Balances Surplus

0.00 $

0.00 $

1,958,196.58

0.00 $ 1,958,196.58 $

151,425.68 $ 128,148.61
279,574.29 $

Total 16,806.44 21,544.94 38,351.38
Total 1,294.50
188,637.15 189,931.65
Total 0.00
Total 0.00
Total 151,425.68 2,086,345.19 2,237,770.87

Grand Totals - All Programs

$ 979,507,458.00 $ 1,031,025,882.00 $ 972,123,197.13 $ 26,162,429.46 $ 998,285,626.59 $ (32,740,255.41) $ 1,010,247,697.83 $ 20,778,184.17 $ (11,962,071.24) $

379,323.32 $ 14,048,801.82 $

2,466,053.90 $

0.00 $ 2,086,730.58 $

379,323.32 $

2,466,053.90

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.

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

1,014,295.59 286,219.08

$

3,766,568.57

UNIVERSITY OF GEORGIA
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

UNIVERSITY OF GEORGIA BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 137,371,268.33
12,619,453.07 36,604,056.60
3,832,996.75 3,017,703.79

Total Assets

$ 193,445,478.54

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Capital Outlay Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved Surplus
Total Fund Balances Total Liabilities and Fund
Balances

$ 5,133,159.09 61,227,611.71 48,151,087.04 768,469.62
$ 115,280,327.46
$ 2,433,217.90 4,231,941.07 18,552,620.71 1,248,013.66 47,302,633.36 576,499.70 1,487,000.00 2,098,741.90
234,482.78
$ 78,165,151.08
$ 193,445,478.54

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.

UNIVERSITY OF GEORGIA BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure
Total Funds Available
EXPENDITURES
Agricultural Experiment Station Athens Tifton Vet Labs Cooperative Extension Service Forestry Cooperative Extension Forestry Research Marine Institute Marine Resources Extension Center Office of Minority Business Research Consortium Special Funding Initiative Teaching Veterinary Medicine Experiment Station Veterinary Medicine Teaching Hospital
Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$ 483,422,073.00 $ 471,193,907.00 $ 471,193,907.00 $

293,164,217.00 345,593,939.00

306,514,217.00 408,661,861.00

237,666,986.00 396,771,069.60

$ 1,122,180,229.00 $ 1,186,369,985.00 $ 1,105,631,962.60 $

$

$

$

64,853,118.80 $

$ 1,122,180,229.00 $ 1,186,369,985.00 $ 1,170,485,081.40 $

0
-68,847,231.00 -11,890,791.40
-80,738,022.40 64,853,118.80 -15,884,903.60

$

75,377,483.00

4,882,330.00

58,486,061.00

987,793.00

5,826,331.00

1,731,994.00

2,761,521.00

480,169.00

1,384,244.00

1,240,580.00

958,434,884.00

3,384,254.00

7,202,585.00

86,015,877.00 6,268,386.00
68,438,718.00 1,170,484.00 7,706,916.00 1,786,536.00 4,316,521.00 480,169.00 6,404,587.00 1,648,860.00
986,496,092.00 3,384,254.00
12,252,585.00

80,354,212.99 5,908,662.02
65,093,392.11 1,008,149.45 7,645,793.68 1,420,923.86 3,684,272.67 480,169.00 6,404,587.00 1,648,860.00
907,588,930.13 3,384,254.00
10,068,145.59

$ 1,122,180,229.00 $ 1,186,369,985.00 $ 1,094,690,352.50 $

$ 75,794,728.90

5,661,664.01 359,723.98
3,345,325.89 162,334.55 61,122.32 365,612.14 632,248.33 0 0 0
78,907,161.87 0
2,184,439.41
91,679,632.50

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

1,487,000.00 268,548.95 16,622.11
-16,622.11
674,071.08 -59,197.85

Ending Fund Balance - June 30

$ 78,165,151.08

Analysis of Fund Balance
Reserved Capital Outlay Department Sales & Services Indirect Cost Recovery Inventories Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus
Total Fund Balance

$

2,433,217.90

4,231,941.07

18,552,620.71

1,487,000.00

1,248,013.66

47,302,633.36

576,499.70

2,098,741.90

$ 77,930,668.30

234,482.78 $ 78,165,151.08

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.

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

Forestry Research State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Forestry Research

Original Appropriation

$

3,276,331.00 $

2,000,000.00 550,000.00

$

5,826,331.00 $

Forestry Cooperative Extension Service State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Forestry Cooperative Extension Service

Original Appropriation

$

687,388.00 $

200,000.00 100,405.00

$

987,793.00 $

Agricultural Experiment Station State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Agricultural Experiment Station

Original Appropriation

$

42,936,221.00 $

22,000,000.00 10,441,262.00

$

75,377,483.00 $

Cooperative Extension Service State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Cooperative Extension Service

Original Appropriation

$

35,391,924.00 $

13,000,000.00 10,094,137.00

$

58,486,061.00 $

Marine Extension Service State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Marine Extension Service

Original Appropriation

$

1,576,721.00 $

600,000.00 584,800.00

$

2,761,521.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

3,276,331.00 $
3,500,000.00 930,585.00
7,706,916.00 $

3,276,331.00 $
3,553,178.63 1,070,782.29
7,900,291.92 $

$
673,544.71 358,490.09
1,032,034.80 $

3,276,331.00 $
4,226,723.34 1,429,272.38
8,932,326.72 $

0.00 $
726,723.34 498,687.38
1,225,410.72 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

3,276,331.00 $

0.00 $

0.00 $

8,848.57 $

$

8,848.57 $

$

3,438,216.89 931,245.79

61,783.11 (660.79)

788,506.45 498,026.59

2,163.69

788,506.45 500,190.28

7,645,793.68 $

61,122.32 $

1,286,533.04 $

11,012.26 $

0.00 $

1,297,545.30 $

0.00 $

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

687,388.00 $
350,000.00 133,096.00
1,170,484.00 $

687,388.00 $
317,731.81 16,477.69
1,021,597.50 $

$
29,896.06 38,801.37
68,697.43 $

687,388.00 $
347,627.87 55,279.06
1,090,294.93 $

0.00 $
(2,372.13) (77,816.94)
(80,189.07) $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

687,388.00 $

0.00 $

0.00 $

145.68 $

$

145.68 $

$

287,675.19 33,086.26
1,008,149.45 $

62,324.81 100,009.74
162,334.55 $

59,952.68 22,192.80
82,145.48 $

300.00 445.68 $

0.00 $

59,952.68 22,492.80
82,591.16 $

0.00 $

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

42,936,221.00 $ 25,000,000.00 18,079,656.00 86,015,877.00 $
Final Budget

42,936,221.00 $

$

42,936,221.00 $

0.00 $

23,791,106.14 14,305,679.24

7,974,091.98 709,197.47

31,765,198.12 15,014,876.71

6,765,198.12 (3,064,779.29)

81,033,006.38 $ 8,683,289.45 $

89,716,295.83 $

3,700,418.83 $

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

42,936,221.00 $

0.00 $

0.00 $

72,724.38 $

$

72,724.38 $

$

23,249,351.41 14,168,640.58

1,750,648.59 3,911,015.42

8,515,846.71 846,236.13

6,830.63

363.40

8,515,846.71 853,430.16

80,354,212.99 $ 5,661,664.01 $

9,362,082.84 $

79,555.01 $

363.40 $

9,442,001.25 $

0.00 $

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

35,391,924.00 $
19,000,000.00 14,046,794.00
68,438,718.00 $

35,391,924.00 $
18,567,741.73 11,571,359.19
65,531,024.92 $

$
1,914,732.87 240,190.33
2,154,923.20 $

35,391,924.00 $
20,482,474.60 11,811,549.52
67,685,948.12 $

0.00 $
1,482,474.60 (2,235,244.48)
(752,769.88) $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

35,391,924.00 $
18,014,357.14 11,687,110.97
65,093,392.11 $

0.00 $
985,642.86 2,359,683.03
3,345,325.89 $

0.00 $
2,468,117.46 124,438.55
2,592,556.01 $

26,629.73 $
8,349.92 34,979.65 $

$
(828.00) (828.00) $

26,629.73 $
2,468,117.46 131,960.47
2,626,707.66 $

$ 0.00 $

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

1,576,721.00 $
2,000,000.00 739,800.00
4,316,521.00 $

1,576,721.00 $
1,400,996.35 702,918.25
3,680,635.60 $

$ 185,949.68
185,949.68 $

1,576,721.00 $
1,586,946.03 702,918.25
3,866,585.28 $

0.00 $
(413,053.97) (36,881.75)
(449,935.72) $

1,576,721.00 $
1,404,633.42 702,918.25
3,684,272.67 $

0.00 $
595,366.58 36,881.75
632,248.33 $

0.00 $
182,312.61 0.00
182,312.61 $

814.45 $
65.82 880.27 $

$

814.45 $

$

182,312.61 65.82

$

183,192.88 $

0.00 $

Reserve

Program Fund Balances Surplus

Total

0.00 $
788,506.45 500,190.28
1,288,696.73 $

8,848.57 $
0.00 0.00
8,848.57 $

8,848.57
788,506.45 500,190.28
1,297,545.30

Reserve

Program Fund Balances Surplus

Total

0.00 $
59,952.68 22,492.80
82,445.48 $

145.68 $
0.00 0.00
145.68 $

145.68
59,952.68 22,492.80
82,591.16

Reserve

Program Fund Balances Surplus

Total

0.00 $
8,515,846.71 853,430.16
9,369,276.87 $

72,724.38 $
0.00 0.00
72,724.38 $

72,724.38
8,515,846.71 853,430.16
9,442,001.25

Reserve

Program Fund Balances Surplus

Total

0.00 $
2,468,117.46 131,960.47
2,600,077.93 $

26,629.73 $
0.00 0.00
26,629.73 $

26,629.73
2,468,117.46 131,960.47
2,626,707.66

Reserve

Program Fund Balances Surplus

Total

0.00 $
182,312.61 65.82
182,378.43 $

814.45 $
0.00 0.00
814.45 $

814.45
182,312.61 65.82
183,192.88

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

Marine Institute State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Marine Institute

Original Appropriation

$

964,361.00 $

$

700,000.00 $

67,633.00

$

1,731,994.00 $

Veterinary Medicine State Appropriation State General Funds

Original Appropriation

$

3,384,254.00 $

Veterinary Teaching Hospital State Appropriation State General Funds Other Funds
Total Veterinary Teaching Hospital

Original Appropriation

$

502,585.00 $

6,700,000.00

$

7,202,585.00 $

Teaching State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Teaching

Original Appropriation

$

391,535,103.00 $

249,844,079.00 317,055,702.00

$

958,434,884.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

964,361.00 $
700,000.00 $ 122,175.00
1,786,536.00 $

964,361.00 $
372,941.32 $ 48,194.24
1,385,496.56 $

$
11,273.94 $ 54,542.13
65,816.07 $

964,361.00 $
384,215.26 $ 102,736.37
1,451,312.63 $

0.00 $
(315,784.74) $ (19,438.63)
(335,223.37) $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

964,361.00 $

0.00 $

0.00 $

800.00 $

$

800.00 $

$

369,274.87 $ 87,287.99
1,420,923.86 $

330,725.13 $ 34,887.01
365,612.14 $

14,940.39 $ 15,448.38
30,388.77 $

$ 800.00 $

$ 0.00 $

14,940.39 $ 15,448.38
31,188.77 $

$ 0.00 $

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

3,384,254.00 $

3,384,254.00 $

$

3,384,254.00 $

0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

3,384,254.00 $

0.00 $

0.00 $

1,575.25 $

$

1,575.25 $

$

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

502,585.00 $ 11,750,000.00
12,252,585.00 $

502,585.00 $ 10,042,989.90
10,545,574.90 $

$ 1,103,276.21
1,103,276.21 $

502,585.00 $ 11,146,266.11
11,648,851.11 $

0.00 $ (603,733.89)
(603,733.89) $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

502,585.00 $

0.00 $

0.00 $

$

$

0.00 $

$

9,565,560.59

2,184,439.41

1,580,705.52

13,465.19

(17,993.35)

1,576,177.36

10,068,145.59 $ 2,184,439.41 $

1,580,705.52 $

13,465.19 $

(17,993.35) $

1,576,177.36 $

0.00 $

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

373,878,314.00 $
249,844,079.00 362,773,699.00
986,496,092.00 $

373,878,314.00 $

$

183,891,333.06 358,939,507.79

30,853,721.75 18,377,049.52

916,709,154.85 $ 49,230,771.27 $

373,878,314.00 $
214,745,054.81 377,316,557.31
965,939,926.12 $

0.00 $
(35,099,024.19) 14,542,858.31
(20,556,165.88) $

373,878,314.00 $

0.00 $

181,654,164.45 352,056,451.68

68,189,914.55 10,717,247.32

907,588,930.13 $ 78,907,161.87 $

0.00 $
33,090,890.36 25,260,105.63
58,350,995.99 $

108,075.11 $
349,215.20 457,290.31 $

$
(289,162.80) (289,162.80) $

108,075.11 $
33,090,890.36 25,320,158.03
58,519,123.50 $

$ 0.00 $

Reserve

Program Fund Balances Surplus

Total

0.00 $
14,940.39 $ 15,448.38
30,388.77 $

800.00 $
0.00 $ 0.00
800.00 $

800.00
14,940.39 15,448.38
31,188.77

Reserve

Program Fund Balances Surplus

Total

0.00 $

1,575.25 $

1,575.25

Reserve

Program Fund Balances Surplus

Total

0.00 $ 1,576,177.36
1,576,177.36 $

0.00 $ 0.00
0.00 $

0.00 1,576,177.36
1,576,177.36

Reserve

Program Fund Balances Surplus

Total

0.00 $
33,090,890.36 25,320,158.03
58,411,048.39 $

108,075.11 $
0.00 0.00
108,075.11 $

108,075.11
33,090,890.36 25,320,158.03
58,519,123.50

Minority Business State Appropriation State General Funds

Original Appropriation

$

480,169.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

Reserve

Program Fund Balances Surplus

Total

480,169.00 $

480,169.00 $

$

480,169.00 $

0.00 $

480,169.00 $

0.00 $

0.00 $

$

$

0.00 $

$

0.00 $

0.00 $

0.00

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

Athens and Tifton Veterinary Lab State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Athens and Tifton Veterinary Lab

Original Appropriation

$

62,192.00 $

4,820,138.00

$

4,882,330.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

62,192.00 $
6,120,138.00 86,056.00
6,268,386.00 $

62,192.00 $
5,771,956.96 73,161.01
5,907,309.97 $

$
2,293,261.29 35,099.40
2,328,360.69 $

62,192.00 $
8,065,218.25 108,260.41
8,235,670.66 $

0.00 $
1,945,080.25 22,204.41
1,967,284.66 $

61,862.00 $
5,776,490.08 70,309.94
5,908,662.02 $

330.00 $
343,647.92 15,746.06
359,723.98 $

330.00 $
2,288,728.17 37,950.47
2,327,008.64 $

(330.00) $
330.00 0.00 $

$
(330.00) (330.00) $

0.00 $
2,288,728.17 37,950.47
2,326,678.64 $

$ 0.00 $

Reserve

Program Fund Balances Surplus

Total

0.00 $
2,288,728.17 37,950.47
2,326,678.64 $

0.00 $
0.00 0.00
0.00 $

0.00
2,288,728.17 37,950.47
2,326,678.64

Special Funding Initiative State Appropriation State General Funds

Original Appropriation

$

1,240,580.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

Reserve

Program Fund Balances Surplus

Total

1,648,860.00 $

1,648,860.00 $

$

1,648,860.00 $

0.00 $

1,648,860.00 $

0.00 $

0.00 $

$

$

0.00 $

$

0.00 $

0.00 $

0.00

Research Consortium State Appropriation State General Funds

Original Appropriation

$

1,384,244.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program Fund
Balances

Transfers

Reserve

Program Fund Balances Surplus

Total

6,404,587.00 $

6,404,587.00 $

$

6,404,587.00 $

0.00 $

6,404,587.00 $

0.00 $

0.00 $

14,869.61 $

$

14,869.61 $

$

0.00 $

14,869.61 $

14,869.61

1,122,180,229.00

1,186,369,985.00

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.

1,105,631,962.60

64,853,118.80

1,170,485,081.40

(15,884,903.60)

1,094,690,352.50

91,679,632.50

75,794,728.90

614,873.23

(307,950.75)

76,101,651.38

0.00 $

75,867,168.60 $

234,482.78 $ 76,101,651.38

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

576,499.70 1,487,000.00
$ 78,165,151.08

UNIVERSITY SYSTEM OFFICE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

Office of Information & Instructional Technology and Regents Central Office-A BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures

$ 17,616,810.87 6,829,486.47
1,172,624.18 1,025,405.13
4,435.91

Total Assets

$ 26,648,762.56

LIABILITIES AND FUND EQUITY
Liabilities Encumbrance Payable Accounts Payable
Total Liabilities
Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Restricted/Sponsored Funds Uncollectible Accounts Receivable Carry-Over "Per State Accounting Office" Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 4,996,554.78 4,112,587.49
$ 9,109,142.27
$ 4,255,053.79 863,343.89
8,195,842.15 39,716.59
3,538,743.57 646,920.30
$ 17,539,620.29
$ 26,648,762.56

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.

Office of Information & Instructional Technology and Regents Central Office-A BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

156,386,398 $

165,382,996 $ 165,382,996.00 $

0

14,722,400 24,835,604

29,601,575 28,350,116

14,737,661.08 27,912,280.63

-14,863,913.92 -437,835.37

Total Revenue

$

Prior Year Reserves Available for Expenditure

$

Total Funds Available

$

EXPENDITURES

Georgia Military College

$

Georgia Public Telecommunications

$

MCG Hospitals and Clinics

$

Public Libraries

$

Regents Central Office

$

Research Consortium

$

Special Funding Initiative

$

Teaching

$

Total Expenditures

$

Excess of Funds Available over Expenditures

195,944,402 $ $
195,944,402.00 $
3,062,152 18,069,614 33,181,112 45,537,501
7,683,800 1,500,000 7,904,779 79,005,444 195,944,402 $

223,334,687 $ $
223,334,687.00 $
3,062,152 18,069,614 33,181,112 44,851,896
7,762,975 2,000,000 9,151,732 105,255,206 223,334,687 $
$

208,032,937.71 $ 14,070,744.18 $
222,103,681.89 $
3,062,152.00 18,069,614.00 33,181,112.00 44,657,879.92
8,442,787.75 2,000,000.00 9,144,603.17 86,606,885.20 205,165,034.04 $
16,938,647.85

-15,301,749.29 14,070,744.18 -1,231,005.11
0 0 0 194,016.08 -679,812.75 0 7,128.83 18,648,320.80 18,169,652.96

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus)
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services Year Ended June 30, 2007 Unreserved Fund Balance (Surplus) Returned to Board of Regents - University System Office Year Ended June 30, 2007
FUND BALANCE JUNE 30
Ending Fund Balance - June 30
Analysis of Fund Balance
Reserved Department Sales & Services Indirect Cost Recovery Restricted/Sponsored Funds Uncollectible Accounts Receivable Property Reserves
Total Reserved
Unreserved Surplus Total Fund Balance

0 39,716.59 210,614.62
559,262.85 1,993.00
-1,968,440.84 1,757,826.22
$ 17,539,620.29
$ 17,539,620.29

$

4,255,053.79

863,343.89

8,195,842.15

39,716.59

3,538,743.57

$ 16,892,699.99

646,920.30 $ 17,539,620.29

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.

OFFICE OF INSTRUCTIONAL TECHNOLOGY AND REGENTS CENTRAL OFFICE - A STATEMENT OF PROGRAM REVENUES AND EXPENDITURES
BY FUNDING SOURCE COMPARED TO BUDGET (NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008

Georgia Military College State Appropriation State General Funds
Georgia Public Telecommunications State Appropriation State General Funds
MCG Hospital and Clinics State Appropriation State General Funds
Public Libraries State Appropriation State General Funds Other Funds
Total Public Libraries
Regents Central Office State Appropriation State General Funds Other Funds
Total Regents Central Office
Research Consortium State Appropriation State General Funds
Special Funding Initiative State Appropriation State General Funds

Original Appropriation

$

3,062,152.00

Original Appropriation

$ 18,069,614.00 $

Original Appropriation

$ 33,181,112.00 $

Original Appropriation

$ 41,015,101.00 4,522,400.00
$ 45,537,501.00 $

Original Appropriation

$

7,683,800.00 $

0.00

$

7,683,800.00 $

Original Appropriation

$

1,500,000.00 $

Original Appropriation

$

7,904,779.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

3,062,152.00
Final Budget

3,062,152.00 $

0.00 $

3,062,152.00 $

0.00 $

3,062,152.00 $

0.00 $

0.00 $

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

18,069,614.00 $ 18,069,614.00 $

0.00 $ 18,069,614.00 $

0.00 $ 18,069,614.00 $

0.00 $

0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

33,181,112.00 $ 33,181,112.00 $

0.00 $ 33,181,112.00 $

0.00 $ 33,181,112.00 $

0.00 $

0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

40,329,496.00 4,522,400.00

40,329,496.00 $ 4,395,430.71

0.00 $ 22,773.34

40,329,496.00 $ 4,418,204.05

0.00 $ (104,195.95)

40,298,425.87 $ 4,359,454.05

31,070.13 $ 162,945.95

31,070.13 $ 58,750.00

133,382.40

44,851,896.00 $ 44,724,926.71 $

22,773.34 $ 44,747,700.05 $

(104,195.95) $ 44,657,879.92 $

194,016.08 $

89,820.13 $

133,382.40

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

7,683,800.00 $ 79,175.00

7,683,800.00 $ 73,319.24

0.00 $ 5,696,782.64

7,683,800.00 $ 5,770,101.88

0.00 $ 5,690,926.88

7,641,783.99 $ 801,003.76

42,016.01 $ (721,828.76)

42,016.01 $ 4,969,098.12

7,762,975.00 $

7,757,119.24 $

5,696,782.64 $ 13,453,901.88 $

5,690,926.88 $

8,442,787.75 $

(679,812.75) $

5,011,114.13 $

0.00

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

2,000,000.00 $

2,000,000.00 $

0.00 $

2,000,000.00 $

0.00 $

2,000,000.00 $

0.00 $

0.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

9,151,732.00 $

9,151,732.00 $

0.00 $

9,151,732.00 $

0.00 $

9,144,603.17 $

7,128.83 $

7,128.83 $

57,014.57

Other Adjustments

Total Program
Fund Balances

$
Other Adjustments

0.00
Total Program
Fund Balances

0.00 $
Other Adjustments

0.00
Program Fund
Balances

$
Other Adjustments

0.00
Program Fund
Balances

0.00 $
0.00 $
Other Adjustments

164,452.53 58,750.00
223,202.53
Program Fund
Balances

0.00 $
0.00 $
Other Adjustments

42,016.01 4,969,098.12
5,011,114.13
Program Fund
Balances

0.00 $
Other Adjustments

0.00
Program Fund
Balances

0.00 $

64,143.40

Transfers
Transfers Transfers Transfers
0.00 Transfers
0.00 Transfers Transfers

Reserve

Program Fund Balances Surplus

0.00 $

0.00 $

Total 0.00

Reserve

Program Fund Balances Surplus

Total

$

0.00 $

0.00

Reserve

Program Fund Balances Surplus

Total

$

0.00 $

0.00

Reserve

Program Fund Balances Surplus

Total

0.00 $ 58,750.00
58,750.00 $

164,452.53 $ 164,452.53 $

164,452.53 58,750.00
223,202.53

Reserve

Program Fund Balances Surplus

Total

$ 4,969,098.12
4,969,098.12 $

42,016.01 $ 42,016.01 $

42,016.01 4,969,098.12
5,011,114.13

Reserve

Program Fund Balances Surplus

Total

$

0.00 $

0.00

Reserve

Program Fund Balances Surplus

Total

$

64,143.40 $

64,143.40

VALDOSTA STATE UNIVERSITY
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

VALDOSTA STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 1,823,022.96 8,684,204.36
804,902.26 1,830,272.43
52,187.97 378,503.08

Total Assets

$ 13,573,093.06

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 1,500,634.75 7,409,908.50 104,900.22 376,382.98 52,418.27
$ 9,444,244.72
$ 179,476.95 207,556.15 183,936.14
2,445,630.02 56,187.51
338,131.23 645,187.90
72,742.44
$ 4,128,848.34
$ 13,573,093.06

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.

VALDOSTA STATE UNIVERSITY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

54,732,043.00 $

53,123,276.00 $

53,123,276.00 $

15,489,808.00 33,788,406.00

17,472,050.00 38,995,436.00

14,984,855.86 38,358,491.95

$ 104,010,257.00 $ 109,590,762.00 $ 106,466,623.81 $

$

$

$

2,823,361.79 $

$ 104,010,257.00 $ 109,590,762.00 $ 109,289,985.60 $

0 -2,487,194.14
-636,944.05
-3,124,138.19 2,823,361.79 -300,776.40

$

32,480.00

103,977,777.00

32,480.00 109,558,282.00

33,491.33 106,309,488.99

$ 104,010,257.00 $ 109,590,762.00 $ 106,342,980.32 $

$

2,947,005.28

-1,011.33 3,248,793.01
3,247,781.68

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Non-Mandatory Transfers

338,131.23 46,516.33 44,275.82
-44,275.82
62,640.32 9,671.18
724,884.00

Ending Fund Balance - June 30
Analysis of Fund Balance
Reserved Department Sales & Services Indirect Cost Recovery Inventories Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus
Total Fund Balance

$

4,128,848.34

$

179,476.95

207,556.15

338,131.23

183,936.14

2,445,630.02

56,187.51

645,187.90

$

4,056,105.90

72,742.44

$

4,128,848.34

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.

VALDOSTA STATE UNIVERSITY STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008

Special Funding Initiatives State Appropriation State General Funds

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year Carry-Over

Total Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Positive

Actual

(Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Program Fund Balances

Reserve

Surplus

Total

$

32,480.00 $

32,480.00 $

32,480.00 $

0.00 $

32,480.00 $

0.00 $

33,491.33 $

-1,011.33 $

-1,011.33 $

0.00 $

0.00 $

-1,011.33 $

0.00 $

0.00 $ -1,011.33 $

-1,011.33

Teaching State Appropriation State General Funds Federal Funds Other Funds
Total Teaching

$ 52,986,037.00 $ 53,090,796.00 $ 53,090,796.00 $

0.00 $ 53,090,796.00 $

0.00 $ 53,079,682.55 $

11,113.45 $

15,489,808.00

17,472,050.00

12,498,852.80

0.00

12,498,852.80

-4,973,197.20

12,498,852.80

4,973,197.20

35,501,932.00

38,995,436.00

40,844,495.01

2,823,361.79

43,667,856.80

4,672,420.80

40,730,953.64

-1,735,517.64

$ 103,977,777.00 $ 109,558,282.00 $ 106,434,143.81 $ 2,823,361.79 $ 109,257,505.60 $

-300,776.40 $ 106,309,488.99 $ 3,248,793.01 $

11,113.45 $ 0.00
2,936,903.16
2,948,016.61 $

72,311.50 $ 0.00 0.00
72,311.50 $

-9,671.18 $ 0.00
724,884.00

73,753.77 $ 0.00
3,661,787.16

715,212.82 $ 3,735,540.93 $

0.00 $ 0.00 0.00

0.00 $ 73,753.77 $

0.00

0.00

3,661,787.16

0.00

73,753.77 0.00
3,661,787.16

0.00 $ 3,661,787.16 $ 73,753.77 $ 3,735,540.93

Grand Totals - All Programs

$ 104,010,257.00 $ 109,590,762.00 $ 106,466,623.81 $ 2,823,361.79 $ 109,289,985.60 $

-300,776.40 $ 106,342,980.32 $ 3,247,781.68 $

2,947,005.28 $ 72,311.50 $ 715,212.82 $ 3,734,529.60 $

0.00 $ 3,661,787.16 $ 72,742.44 $ 3,734,529.60

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.

Unexpendable Reserves Uncollectibles Accounts Receivable Inventories

56,187.51 338,131.23
$ 4,128,848.34

WAYCROSS COLLEGE
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

WAYCROSS COLLEGE BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 742,515.19 79,057.66
1,153.80 162,545.78
1,935.00 13,957.79

Total Assets

$ 1,001,165.22

LIABILITIES AND FUND EQUITY
Liabilities Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 624,813.13 2,674.32
177,095.70 6,904.99
$ 811,488.14
$ 33,831.93 4,395.14 119.43
105,942.32 1,494.00
12,790.02 30,676.54
427.7
$ 189,677.08
$ 1,001,165.22

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.

WAYCROSS COLLEGE BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching
Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

4,074,804.00 $

4,083,611.00 $

4,083,611.00 $

1,200,000.00 1,567,722.00

1,299,695.00 1,753,707.00

1,270,131.08 1,682,840.07

$

6,842,526.00 $

7,137,013.00 $

7,036,582.15 $

$

$

$

140,742.97 $

$

6,842,526.00 $

7,137,013.00 $

7,177,325.12 $

0 -29,563.92 -70,866.93
-100,430.85 140,742.97
40,312.12

$

7,388.00

6,835,138.00

7,388.00 7,129,625.00

7,388.00 6,993,130.97

$

6,842,526.00 $

7,137,013.00 $

7,000,518.97 $

$

176,806.15

0 136,494.03
136,494.03

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007 Adjustment
Prior Year Payables/Expenditures Increase (Decrease) in Inventories

Ending Fund Balance - June 30

$

Analysis of Fund Balance

Reserved

Department Sales & Services

$

Indirect Cost Recovery

Inventories

Technology Fees

Restricted/Sponsored Funds

Uncollectible Accounts Receivable

Tuition Carry - Forward

Total Reserved

$

Unreserved Surplus

Total Fund Balance

$

11,888.21 0
360.84
-360.84
80.91 901.81
189,677.08
33,831.93 4,395.14
12,790.02 119.43
105,942.32 1,494.00
30,676.54
189,249.38
427.7 189,677.08

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.

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

Special Funding Initiative State Appropriation State General Funds

Original Appropriation

$

7,388.00

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

7,388.00

7,388.00 $

0.00 $

7,388.00 $

0.00 $

Teaching State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Teaching

Original Appropriation

$

4,067,416.00 $

1,200,000.00 1,567,722.00

$

6,835,138.00 $

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

4,076,223.00 $
1,299,695.00 1,753,707.00
7,129,625.00 $

4,076,223.00 $
1,179,541.29 1,773,429.86
7,029,194.15 $

0.00 $
0.00 140,742.97
140,742.97 $

4,076,223.00 $
1,179,541.29 1,914,172.83
7,169,937.12 $

0.00 $
(120,153.71) 160,465.83
40,312.12 $

6,842,526.00

7,137,013.00 $

7,036,582.15 $

140,742.97 $

7,177,325.12

40,312.12 $

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

Transfers

Reserve

Program Fund Balances Surplus

7,388.00 $

0.00 $

0.00 $

0.00 $

0.00 $

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

0.00 $
Total Program
Fund Balances

0.00 $ Transfers

0.00 $

0.00 $

Reserve

Program Fund Balances Surplus

4,075,876.21 $
1,179,541.29 1,737,713.47
6,993,130.97 $

346.79 $
120,153.71 15,993.53
136,494.03 $

346.79 $
0.00 176,459.36
176,806.15 $

80.91 $
0.00 0.00
80.91 $

0.00 $
0.00 (1,494.00)
(1,494.00) $

427.70 $
0.00 174,965.36
175,393.06 $

0.00 $
0.00 0.00
0.00 $

0.00 $
0.00 174,965.36
174,965.36 $

427.70 $
0.00 0.00
427.70 $

7,000,518.97

136,494.03

176,806.15 $

80.91 $

(1,494.00) $

175,393.06 $

0.00 $

174,965.36 $

427.70 $

Total 0.00
Total 427.70 0.00
174,965.36 175,393.06 175,393.06

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.

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

1,494.00 12,790.02

$

189,677.08

UNIVERSITY OF WEST GEORGIA
Balance Sheet (Non-GAAP Basis) Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) Statement of Program Revenues and Expenditures by Funding Source
Compared to Budget (Non-GAAP Basis)
For the Year Ended June 30, 2008

UNIVERSITY OF WEST GEORGIA BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

$ 11,491,062.09
187,388.74 3,161,492.19
466,428.68 134,832.41

Total Assets

$ 15,441,204.11

LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and
Services Indirect Cost Recoveries Technology Fees Uncollectible Accounts Receivable Inventories Tuition Carry - Forward Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

$ 405,855.60 6,287,520.75 1,128,551.55 5,121,181.35 122,585.99
$ 13,065,695.24
$ 304,357.11 388,712.48 443,074.45 473,219.56 129,803.25 595,280.21
41,061.81
$ 2,375,508.87
$ 15,441,204.11

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.

UNIVERSITY OF WEST GEORGIA BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND Year Ended June 30, 2008

REVENUES
State Appropriations State General Funds
Non-State Funds Research Funds Agency Funds
Total Revenue
Prior Year Reserves Available for Expenditure Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching Total Expenditures
Excess of Funds Available over Expenditures

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$

49,644,625.00 $

48,576,452.00 $

48,576,452.00 $

8,192,406.00 50,054,664.00

15,027,022.00 40,506,275.00

11,750,500.00 39,947,004.59

$ 107,891,695.00 $ 104,109,749.00 $ 100,273,956.59 $

$

$

$

620,292.99 $

$ 107,891,695.00 $ 104,109,749.00 $ 100,894,249.58 $

0 -3,276,522.00
-559,270.41
-3,835,792.41 620,292.99
-3,215,499.42

$

84,040.00

107,807,655.00

84,040.00 104,025,709.00

$ 107,891,695.00 $ 104,109,749.00 $

$

83,980.59 98,821,084.42 98,905,065.01 $
1,989,184.57

59.41 5,204,624.58
5,204,683.99

Beginning Fund Balance July 1
Prior Year Reserves NOT Available for Expenditure Inventories Uncollectible Accounts Receivable
Unreserved, Undesignated Fund Balance (Surplus) Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services
Year Ended June 30, 2007
Adjustment
Prior Year Payables/Expenditures Prior Year Receivables/Revenues

109,660.34 246,614.50
75.06
-75.06
36,481.47 -6,432.01

Ending Fund Balance - June 30
Analysis of Fund Balance
Reserved Department Sales & Services Indirect Cost Recovery Inventories Technology Fees Uncollectible Accounts Receivable Tuition Carry - Forward
Total Reserved
Unreserved Surplus
Total Fund Balance

$

2,375,508.87

$

304,357.11

388,712.48

129,803.25

443,074.45

473,219.56

595,280.21

$

2,334,447.06

41,061.81

$

2,375,508.87

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.

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching

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

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

Total Program
Fund Balances

$

84,040.00

Original Appropriation

84,040.00
Final Budget

84,040.00 $

0.00 $

84,040.00 $

0.00 $

83,980.59 $

59.41 $

59.41 $

Actual

Current Year Revenues

Funds Available Compared to Budget

Prior Year

Total

Carry-Over

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Funds Available Over/(Under) Expenditures

Prior Period Adjustments

$
Other Adjustments

59.41
Total
Program Fund
Balances

$ 49,560,585.00 $ 48,492,412.00 $ 48,492,412.00 $

58,247,070.00

55,533,297.00

51,697,504.59

$ 107,807,655.00 $ 104,025,709.00 $ 100,189,916.59 $

$ 620,292.99
620,292.99 $

48,492,412.00 $ 52,317,797.58
100,810,209.58 $

0.00 $ (3,215,499.42)
(3,215,499.42) $

48,479,140.21 $ 50,341,944.21
98,821,084.42 $

13,271.79 $ 5,191,352.79
5,204,624.58 $

13,271.79 $ 1,975,853.37
1,989,125.16 $

36,481.47 (6,432.01)
30,049.46

$ (246,747.97)
(246,747.97) $

49,753.26 1,722,673.39
1,772,426.65

107,891,695.00

104,109,749.00

100,273,956.59

620,292.99

100,894,249.58

(3,215,499.42)

98,905,065.01

5,204,683.99

1,989,184.57

30,049.46

(246,747.97) $

1,772,486.06

Transfers
Transfers (8,750.86) 8,750.86 0.00 0.00

Reserve

Program Fund Balances Surplus

Total

0.00 $

59.41 $

59.41

Reserve

Program Fund Balances Surplus

Total

$ 1,731,424.25
1,731,424.25 $

41,002.40 $ 0.00
41,002.40 $

41,002.40 1,731,424.25
1,772,426.65

1,731,424.25 $

41,061.81 $

1,772,486.06

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.

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

473,219.56 129,803.25

$

2,375,508.87