Annual financial report, fiscal year 2010

The University System of Georgia ANNUAL FINANCIAL REPORT FY2010
Annual Financial Report for the Year Ended June 30, 2010

The University System of Georgia ANNUAL FINANCIAL REPORT

TABLE OF CONTENTS
USG ANNUAL FINANCIAL REPORT

The University System of Georgia ANNUAL FINANCIAL REPORT

INTRODUCTORY SECTION

Letter of Transmittal



3

Members of the Fiscal Year 2010 Board of Regents

4

University System of Georgia Strategic Plan



5

Institutions of the University System of Georgia

6

FINANCIAL SECTION

Independent Auditor's Report



8

Management's Discussion and Analysis

10

Financial Statements (GAAP Basis)

Statement of Net Assets

25

Statement of Revenues, Expenses and Changes in Net Assets



26

Statement of Cash Flows

28

Statement of Fiduciary Net Assets

30

Statement of Changes in Fiduciary Net Assets



31

Notes to the Financial Statements

Note 1 Summary of Significant Accounting Policies

32

Note 2 Deposits and Investments

38

Note 3 Accounts Receivable



44

Note 4 Inventories

44

Note 5 Notes/Loans Receivable

45

Note 6 Capital Assets



45

Note 7 Deferred Revenue

46

Note 8 Long Term Liabilities



46

Note 9 Significant Commitments



46

Note 10 Lease Obligations

47

Note 11 Retirement Plans

49

Note 12 Risk Management

51

Note 13 Contingencies



54

Note 14 Post Employment Benefits Other Than Pension Benefits

54

Note 15 Natural Classifications with Functional Classifications



58

Note 16 Affiliated Organizations

58

SUPPLEMENTARY INFORMATION

Condensed Financial Statements

Condensed Statement of Net Assets by Institution

62

Condensed Statement of Revenues, Expenses and Net Assets by Institution

65

Condensed Statement of Net Assets - Affiliated Institutions (Unaudited)

68

Condensed Statement of Revenues, Expenses and Net Assets by Affiliated Organizations (Unaudited) 71

Financial Statements (Statutory Basis)

Consolidated Balance Sheet (Non-GAAP Basis) - Budget Funds

73

Consolidated Budget Comparison and Surplus Analysis Report (Non-GAAP Basis)

74

Financial Statement Findings

76

ACKNOWLEDGEMENTS

78

The University System of Georgia ANNUAL FINANCIAL REPORT

INTRODUCTORY SECTION
USG ANNUAL FINANCIAL REPORT
2

The University System of Georgia ANNUAL FINANCIAL REPORT

LETTER OF TRANSMITTAL
BOARD OF REGENTS of the UNIVERSITY SYSTEM OF GEORGIA OFFICE OF FISCAL AFFAIRS 270 WASHINGTON STREET, SW ATLANTA, GEORGIA 30334 404-656-2232
February 23, 2011
Chancellor Erroll B. Davis, Jr. Board of Regents University System of Georgia
Dear Chancellor Davis: We are pleased to present to you the Annual Financial Report for the Board of Regents of the University System of Georgia for the year ended June 30, 2010. The report provides financial information about the University System of Georgia's operations during the year and presents its financial position at the end of the fiscal year. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal controls established for this purpose, the objective of which is to provide reasonable assurance that the financial statements are free of material misstatements. Further, the officers of the various institutions of the University System of Georgia and its affiliated organizations have assured us that every effort has been made to reflect accurately the information considered important to all concerned parties. State law, federal guidelines, bond covenants and the by-laws of the Board of Regents require that the accounting and financial records of the University System of Georgia be audited each year. The Georgia Department of Audits and Accounts has performed the audit for fiscal 2010 and has issued an unqualified opinion, the most favorable outcome of the audit process. The State Auditor's report is located at the beginning of the financial section. Management's discussion and analysis (MD&A) immediately follows the auditor's report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction therewith.
Respectfully submitted,
_________________________ Usha Ramachandran Vice Chancellor for Fiscal Affairs and Treasurer Board of Regents of the University System of Georgia
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The University System of Georgia ANNUAL FINANCIAL REPORT

INTRODUCTORY SECTION
USG ANNUAL FINANCIAL REPORT MEMBERS OF THE FISCAL YEAR 2010 BOARD OF REGENTS
The Board of Regents of the University System of Georgia was created in 1931 as a 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 colleges and universities: four research universities, two regional universities, 13 state universities, eight state colleges, and eight two-year colleges. These institutions enroll approximately 302,000 students and employ over 40,000 faculty and staff to provide teaching and related services to students and the communities in which they are located.
(Standing left to right) Wanda Yancey Rodwell, Allan Vigil, Benjamin Tarbutton III, James R. Jolly, William NeSmith Jr., Frederick Cooper, Larry Ellis, Donald Leebern, Jr., Richard Tucker, and Kenneth Bernard, Jr. (Seated left to right) James A. Bishop, Doreen Stiles Poitevint, Willis J. Potts (Vice-Chair), Robert F. Hatcher (Chair), Erroll B. Davis Jr. (ex-officio), W. Mansfield Jennings, Jr., Larry Walker, and Felton Jenkins (Not pictured) Kessell Stelling, Jr.
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The University System of Georgia ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA STRATEGIC PLAN
It has been three years since the Board of Regents adopted the current University System of Georgia Strategic Plan. This marks the third year of reporting the annual progress on each of the plan's six goals. When the current plan was adopted in August 2007, few anticipated either the length or depth of the national economic recession. This recession has affected Georgia and has tested the state's ability to sustain key areas of public service, including public higher education. The University System has taken its share of budget reductions, which in turn have caused the regents, the chancellor and the 35 institutional presidents to focus closely on the System's core missions of teaching, research, and service. This renewed focus on core missions has benefited from the board's Strategic Plan. The Plan is the framework that enables the board to prioritize the use of available resources. The board's vision in developing and adopting its current Strategic Plan continues to provide the structure and the mechanism to strengthen the USG, even in difficult economic times.
STRATEGIC PLAN GOALS
1 STRATEGIC GOAL ONE Renew excellence in undergraduate education to meet students' 21st century educational needs.
2 STRATEGIC GOAL TWO Create enrollment capacity in the University System to meet the needs of 100,000 additional students by 2020.
3 STRATEGIC GOAL THREE Increase the USG's participation in research and economic development to the benefit of a global Georgia. Enhance and encourage the creation of new knowledge and basic research across all disciplines.
4 STRATEGIC GOAL FOUR Strengthen the USG's partnerships with the state's other education agencies.
5 STRATEGIC GOAL FIVE Maintain affordability so that money is not a barrier to participation in the benefits of higher education.
6 STRATEGIC GOAL SIX Increase efficiency, working as a System.
5

The University System of Georgia ANNUAL FINANCIAL REPORT

INTRODUCTORY SECTION
USG ANNUAL FINANCIAL REPORT INSTITUTIONS OF THE UNIVERSITY SYSTEM OF GEORGIA
6

The University System of Georgia ANNUAL FINANCIAL REPORT

FINANCIAL SECTION
USG ANNUAL FINANCIAL REPORT 77

The University System of Georgia ANNUAL FINANCIAL REPORT

8

The University System of Georgia ANNUAL FINANCIAL REPORT

9

The University System of Georgia ANNUAL FINANCIAL REPORT

Management's Discussion and Analysis
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT
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 high quality 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.
This discussion and analysis is intended to provide a summary of the financial position of the University System of Georgia for the fiscal year ending June 30, 2010. It should allow the user to review how the University System utilized its resources in pursuit of its primary goals of instruction, research and public service.
The Board of Regents and Chancellor Erroll B. Davis Jr. are charged with the leadership of the thirty-five institutions of the University System of Georgia. The University System continues to thrive, as is demonstrated by the following statistics:

FY2010 FY2009 FY2008

STUDENT HEADCOUNT
301,892 282,978 270,022

STUDENT FTE
266,575 247,168 235,186

310,000 300,000 290,000 280,000 270,000 260,000 250,000 240,000 230,000 220,000

Enrollment Growth

FY2008

FY2009

FY2010

Student Headcount

Student FTE

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The University System of Georgia ANNUAL FINANCIAL REPORT

STATE RESOURCES
The General Appropriations Act of 2010, as amended, appropriated a total of $1,710,617,245 to the University System of Georgia. In addition, House Bill 119, as amended by House Bill 947, appropriated $14,020,073 from Tobacco funds. In June 2010, $27,135,755 was withheld from the total appropriated amount by the Office of the Treasury, effectively reducing the University System of Georgia's fiscal 2010 State budget to $1,697,501,563.
The following table presents the State Appropriations available to the USG from the General Appropriations Act of 2010:

STATE APPROPRIATIONS AVAILABLE - GENERAL

House Bill 119

General State Funds

$

2,063,094,628.00

Tobacco Funds

17,259,466.00

House Bill 947

General State Funds

(352,477,383.00)

Tobacco Funds

(3,239,393.00)

Total State Appropriations Available Per Appropriations Act

$ 1,724,637,318.00

Less: Appropriations Withheld

(27,135,755.00)

Net State Appropriations available to the University System of Georgi$a 1,697,501,563.00

The table below presents the FY 2010 allocations by the Board of Regents to the USG institutions:

ALLOCATIONS BY THE BOARD OF REGENTS

Education and General

Teaching

$

Non-Teaching

Tobacco Funds

Other Activities

Regents Central Office

$

6,366,451

Rental Payments - GA Military College

2,360,431

GA Public Telecommunications Commission

14,685,203

GA Public Libraries

34,711,574

Research Consortium

23,307,334

Total Other Activities

Special Initiative Funding

Total Education and General

Net State Appropriations available to the University System of Georgia

1,458,664,648 126,184,032 14,020,073
81,430,993 17,201,817
$ 1,697,501,563.00 $ 1,697,501,563.00

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Management's Discussion and Analysis
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

The following chart illustrates the Board of Regents allocations to Teaching, Non-Teaching, Tobacco Funds, Other Activities and Special Funding Initiatives:

Board of Regents Allocations

$81,430,993 $14,020,073

$ 17,201,817

$ 126,184,032

The University System of Georgia ANNUAL FINANCIAL REPORT

$ 1,458,664,648

Teaching Tobacco Funds Special Funding Initiative

Non-Teaching Other Activities

OVERVIEW OF THE FINANCIAL STATEMENTS AND FINANCIAL ANALYSIS
The University System of Georgia is pleased to present its consolidated financial statements for fiscal year 2010. These statements contain information from the thirty-five 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 upon request.
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.
Two fiduciary fund statements also are included with the financial statements noted above: the Statement of Fiduciary Net Assets and the Statement of Changes in Fiduciary Net Assets. These statements provide information regarding the Board of Regents Retiree Health Benefit Fund, which was established in fiscal 2008.
The Notes to the Financial Statements immediately follow the consolidated and fiduciary fund statements. They contain essential information that serves both to support and clarify the information presented in the financial statements preceding them.
Finally, the Supplemental Information section includes selected information by institution. This section also includes information on affiliated organizations that have been deemed significant to their respective institutions.
This discussion and analysis of the University System of Georgia's consolidated financial statements provide an overview of its financial activities for the fiscal year. Further information is provided by comparative data for fiscal 2010 and 2009.
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The University System of Georgia ANNUAL FINANCIAL REPORT

STATEMENT OF NET ASSETS
The Statement of Net Assets presents the assets, liabilities and net assets of the University System of Georgia as of June 30, 2010. 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 a fiscal snapshot of the University System. It is prepared under the accrual basis of accounting, whereby revenues and assets are recognized when the services are provided and expenses and liabilities are recognized when others provide the service to the University System, regardless of when cash is exchanged. 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 also are able to determine how much the University System owes vendors, investors and lending institutions. 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 of Georgia. Current assets include resources that are available to support the current operations of the University System and include categories such as cash, cash equivalents, accounts receivable and inventory on hand. Non-current assets include capital and certain investments. Other assets include non-current assets such as endowment corpus, shortterm investments and notes receivable. Total assets as of June 30, 2010 were $9.124 billion, as compared to $8.225 billion as of June 30, 2009, for an increase of $899 million, or 10.9%. Current assets as of June 30, 2010 increased by $294 million; non-current assets increased $604 million. Current liabilities include those items that are expected to become due within the following fiscal year. They include accounts payable, salaries and wages payable and the current portion of capital leases. Non-current liabilities include the non-current portion of capital leases and lease purchases for capital items as well as compensated absences. Total liabilities increased by $725 million, from $3.424 billion at June 30, 2009 to $4.149 billion on June 30, 2010. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the University System's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is further reported in three components, non-expendable, expendable and capital projects. Restricted, non-expendable net assets consist solely of the University System's permanent endowment funds, which are only available for investment purposes. Restricted, expendable net assets are available for expenditure by the institution; however, they 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, which are available to the University System for any lawful purpose. The University System of Georgia's financial position at June 30, 2010 is very strong, with total assets of $9.1 billion, total liabilities of $4.1 billion, and net assets of $4.97 billion. These amounts are illustrated on the following page.
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The University System of Georgia ANNUAL FINANCIAL REPORT

Management's Discussion and Analysis
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT
Statement of Net Assets
(in millions)

$10,000 $8,000 $6,000 $4,000 $2,000

Assets

FY2008

Liabilities

FY2009

FY2010

Net Assets

Assets Increase of $899 Million Total assets of the University System of Georgia were approximately $899 million more than those reported for fiscal 2009. A review of the Statement of Net Assets will reveal that the increase primarily was due to an increase of $243 million in cash and investments, an increase of $83 million in accounts receivable, and a $581 million in capital assets, net of accumulated depreciation, which were partially offset by an $8 million decrease in prepaid items.
Liabilities Increase of $725 Million Total liabilities for fiscal 2010 were approximately $725 million more than those reported for fiscal 2009. The primary components of this increase were increases of $48 million in deferred revenue, $8 million in compensated absences, $407 million in lease purchase obligations and $263 million in the net Other Post-Employment Benefit (OPEB) obligation for fiscal 2010.
Net Assets Increase of $173 million The combination of the increase in total assets of $899 million and the increase in total liabilities of $725 million yielded a net increase in total net assets of $173.4 million, or 3.6%. The increase in total net assets primarily consists of a higher amount in the Invested in Capital Assets, net of related debt category totaling $173 million and an increase of $61 million in restricted net assets. These increases were partially offset by a net decrease of $60 million in unrestricted net assets, which is a direct result of the OPEB reporting requirements; the net OPEB obligation increased from $437.2 million in FY 2009 to $699.9 million in FY 2010.

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The University System of Georgia ANNUAL FINANCIAL REPORT

The following chart depicts the level, by category, for net assets: 15

The University System of Georgia ANNUAL FINANCIAL REPORT

Management's Discussion and Analysis
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

The following table summarizes the University System of Georgia's assets, liabilities and net assets as of June 30, 2010 and June 30, 2009.

CONDENSED STATEMENT OF NET ASSETS (in millions)
ASSETS Current Assets Capital Assets, Net Other Assets
TOTAL ASSETS

June 30, 2010

$

1,593

7,305

226

9,124

June 30, 2009

$

1,298

6,724

203

8,225

% Change
22.7% 8.6%
11.3% 10.9%

LIABILITIES Current Liabilities Non-current Liabilities TOTAL LIABILITIES

775 3,374 4,149

714 2,710 3,424

8.5% 24.5% 21.2%

NET ASSETS

Invested in Capital Assets, net of debt

Restricted, Non-Expendable

Restricted, Expendable

Capital Projects

Unrestricted

TOTAL NET ASSETS

$

4,660 133 258 32 (108)
4,975 $

4,486 123 225 14 (47)
4,801

3.9% 8.1% 14.7% 128.6% 129.8% 3.6%

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
The Statement of Revenues, Expenses and Changes in Net Assets presents the revenues earned and expenses incurred during the year. Activities are reported as either operating or non-operating. All things being equal, a public University's dependency on state appropriations and gifts will result in operating deficits. The Governmental Accounting Standards Board (GASB) requires state appropriations and gifts to be classified as non-operating revenues. The utilization of long-lived assets, referred to as Capital Assets, is reflected in the financial statements as depreciation, which amortizes the cost of an asset over its expected useful life.
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 institutions, both operating and non-operating, and the expenses paid by the institutions, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the University System institutions.
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 mission 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 or services for those revenues. State capital grants and gifts and other capital grants and gifts are considered neither operating nor non-operating revenues and are reported after "Income before other revenues, expenses, gains or losses."

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The University System of Georgia ANNUAL FINANCIAL REPORT

The Statement of Revenues, Expenses and Changes in Net Assets reflects a positive year, which is represented by an increase in net assets at the end of the year. Some highlights of the information presented on this statement are as follows:

CONDENSED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (in millions)
Operating Revenue Operating Expense Operating Loss Non-Operating Revenue and Expense Income (Loss) before other revenue, expense, gains, losses or other items Other revenue, expense, gains, losses and special items
Increase in Net Assets Net Assets at beginning of year, as originally reported Prior Year Adjustments Net Assets at beginning of year, restated Net Assets at end of year

June 30, 2010

$

3,427

6,033

(2,606)

2,503

(103)

229

126

4,801

48

4,849

$

4,975

June 30, 2009

$

3,165

5,843

(2,678)

2,351

(327)

357

30

4,788

(17)

4,771

$

4,801

% Change
8.3% 3.3% -2.7% 6.5%
-68.5% -35.9% 320.0%
0.3% -382.4%
1.6% 3.6%

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

6,300 5,300 4,300 3,300 2,300 1,300
300 (700)

FY2008 Operating Revenues Capital Gifts, Grants, and Other Increase in Net Assets

FY2009

FY2010

Non-Operating Revenues, net Operating Expenses

17

Management's Discussion and Analysis
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT
REVENUES
Revenue by source (State appropriations, grants and contracts, tuition and fees, auxiliaries, gifts and other sources) is depicted by the following chart:
Revenue by Source
(in millions)

The University System of Georgia ANNUAL FINANCIAL REPORT

$1,234 $686

$1,819

$857

$1,693

$310 $280 $267

State Appropriations Tuition and Fees Gifts Other

Grants and Contracts Auxiliaries Federal Stimulus Stabilization

State appropriations decreased $327 million (16.2%) in fiscal 2010 due to the continued economic downturn in Georgia, which also was experienced throughout the United States. This decrease was partially mitigated by an award of Federal Stimulus Stabilization Funds of $280.4 million, an increase of $263 million when compared to fiscal 2009.
Grants and contracts revenue increased $234 million (12.9%) in fiscal 2010. This increase is largely attributable to increased Pell grant revenues.
Tuition and fee revenues, net increased $176 million (16.6%) in fiscal 2010 when compared with fiscal 2009. The tuition and fee increase is attributable to increased enrollment and annual tuition and fee increases, including a mandatory "institutional fee" that was established to partially meet the funding gap created by decreased State appropriations.
Auxiliary operations increased by $56 million (8.9%) in fiscal 2010 as compared to fiscal 2009. Primary components of this increase included housing ($25 million), food services ($12 million), intercollegiate athletics ($9 million), health services ($7 million), and transportation and parking ($6 million); these increases were partially offset by a $3 million decrease in other organizations.
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The University System of Georgia ANNUAL FINANCIAL REPORT

The gifts revenue category includes both capital and non-capital gifts. The largest element of gift revenue relates to amounts received from the Georgia State Financing and Investment Commission (GSFIC). Institutions with the University System of Georgia receive gift revenue either through reimbursement or capital asset transfer for approved construction, capital additions or maintenance projects.
EXPENSES
An illustration of total operating expenses by functional classification is provided as follows:
Total operating expenses were $6,033 million in fiscal 2010, an increase of $191 million (3%) when compared with fiscal 2009. These increases are primarily attributable to the following functional classifications: Scholarships and Fellowships ($106 million); Instruction ($28 million); Research ($34 million); Academic Support ($15 million); Student Services ($12 million); Plant Operations and Maintenance ($26 million); and Auxiliaries ($36 million). The amounts were partially offset by decreases in the following classifications: Public Service ($12 million); Institutional Support ($48 million); and Medical College of Georgia (MCG) Patient Care ($6 million).
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The University System of Georgia ANNUAL FINANCIAL REPORT

Management's Discussion and Analysis
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT
The following depicts the fiscal 2010 operating expenses by natural classification:

Operating Expenses by Natural Classification

(in millions)

$334

$185

$48

$351

$1,320

$3,795

Salaries and Benefits Scholarships

Supplies and Other Services Utilities

Depreciation Travel

As noted above, expenses increased $191 million (3%) in fiscal 2010 when compared with fiscal 2009. The increases were substantially attributable to increased salaries and benefits, including other personal services ($98 million) associated with increased enrollment in the University System of Georgia institutions, increased scholarships ($103 million), and increased depreciation expense ($28 million). These increases were partially offset by decreased supplies and services expense ($32 million) and decreased utilities expense ($6 million).

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The University System of Georgia ANNUAL FINANCIAL REPORT

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 is concerned with operating cash flows and reflects the net cash used by the various operating activities of the University System. The second section is related to cash flows from non-capital financing activities. This section reflects the cash received and spent for non-capital financing purposes. The third section summarizes cash flows from capital and related financing activities and contains cash used for the acquisition and construction of capital and related items. The fourth section is comprised of the cash flows from investing activities and includes the purchases, proceeds and interest received from investing activities. The fifth, and final, section reconciles the net cash used to the operating income or loss as reflected on the Statement of Revenues, Expenses and Changes in Net Assets.

CONDENSED STATEMENT OF NET CASH FLOWS (in millions)
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 CASH, end of year

June 30, 2010 June 30, 2009

$

(1,966) $

(2,025)

2,579

2,447

(401)

(464)

16

37

228

(5)

$

760

765

$

988 $

760

CAPITAL ASSETS
Capital assets, net of accumulated depreciation, at June 30, 2010 and June 30, 2009 were as follows:

CAPITAL ASSETS, net of accumulated depreciation (in millions) Land Construction in Progress Infrastructure, Facilities, and Improvements Building and Improvements
Equipment
Capital Leases Library and other collections Software Capital Assets, net of accumulated depreciation

June 30, 2010

$

244

223

360

4,424

364

1,469

213

8

$

7,305

June 30, 2009

$

228

212

347

4,179

355

1,195

208

-

$

6,724

Increase

(Decrease)

$

16

11

13

245

9

274

5

8

% Change 7.0% 5.2% 3.7% 5.9%
2.5%
22.9% 2.4%
100.0%

$

581

8.6%

The University System of Georgia increased $581 million in capital assets, net during fiscal 2010, primarily in the Buildings and Capital Lease categories. The spending includes classroom buildings, libraries, student services, housing, parking, recreation centers, health services and other facilities necessary to support the mission of the University System of Georgia.

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Management's Discussion and Analysis
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

Significant Building and Capital Lease additions that occurred in fiscal 2010 are as follows:

FY10 Major Capital Asset Additions

Student, Recreation, &
Health Centers
41%

Academic, Research & Public
Service Bldgs 12%
Dining Halls
5%

The University System of Georgia ANNUAL FINANCIAL REPORT

Parking Decks
7%
Residence Halls
35%
LONG-TERM DEBT AND LIABILITIES
The University System of Georgia had long-term debt and liabilities in FY 2010 of $3.5 billion, excluding related party liabilities and deferred revenue. Non-current liabilities included lease purchase obligations of $2.65 billion, compensated absences of $181 million, net OPEB obligation of $699.9 million, US DOE Settlement of $0.3 million, and other non-current liabilities of $1 million. Of these amounts, $162.6 million was reflected as current liabilities at June 30, 2010. For additional information concerning long-term debt of the University System of Georgia, please refer to notes 1, 8 and 10 in the Notes to the Financial Statements.
RETIREE HEALTH BENEFIT FUND
In fiscal 2008, the University System Office established and became custodian of the Board of Regents Retiree Health Benefit Fund. This fund was authorized pursuant to the Official Code of Georgia Annotated Section 47-21-21 for the purpose of accumulating funds necessary to meet employer costs of retiree post-employee health insurance benefits. The University System of Georgia implemented GASB Statements No. 43, Financial Reporting for Post-employment Benefit Plans Other Than Pension Plans, and No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions in fiscal 2008. Statement No. 45 requires reporting entities with singleemployer OPEB plans to record an annual OPEB obligation for any unfunded annual OPEB cost, as defined in the statement. As a result of this requirement, the University System of Georgia carries a NET OPEB Obligation liability
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The University System of Georgia ANNUAL FINANCIAL REPORT

of $699.9 million as of June 30, 2010. The Board of Regents is actively evaluating options to reduce this growing liability. For additional information concerning the Retiree Health Benefit Fund, please refer to notes 1 and 14 in the Notes to Financial Statements.
AFFILIATED ORGANIZATIONS
System-wide, there were seventeen affiliated organizations that met one or more criteria for component units of the State of Georgia in compliance with GASB Statement No. 39. These organizations are reported in the supplementary information section and also are reported in the State Comprehensive Annual Financial Report (CAFR) as discretely presented component units for fiscal 2010.
ECONOMIC OUTLOOK
Fiscal conditions have been challenging for most States, including Georgia, during fiscal year 2010; it is expected that economic conditions will continue to be challenging in fiscal years 2011 and 2012 as well. The decline in overall revenue collections for the State of Georgia resulted in a consequent decrease of $327 million in State Appropriations for the University System of Georgia. These reductions were partially offset by an award of $280 million in Federal Stimulus Stabilization Funds. The Board of Regents and the thirty-five institutions of the University System of Georgia have responded to reductions in State appropriations through a number of cost-saving and efficiency measures. The employees of the University System of Georgia paid a higher overall percentage for health insurance, did not receive pay raises and took at least six furlough days during FY 2010. University System of Georgia students continued to be assessed a special fee to sustain excellence in the classroom. The institutions also have used existing reserves to assist with the revenue shortfall. Other actions necessitated by budget reductions include increased class size, decreased class availability, reductions in hours at campus libraries and laboratories, and fewer staff to assist with advising and financial aid. Despite the economic downturn, the University System of Georgia has continued to thrive and to serve the higher education needs of the citizens of Georgia, as is evinced by the growth in enrollment to more than 300,000 students in Fiscal 2010. An enrollment increase is expected in Fiscal 2011 as well. Due to the exemplary leadership of the Chancellor and the Board of Regents, and the professionalism, hard work and dedication of the faculty and staff of the University System, who continue to demonstrate grace under pressure, quality has been maintained and the mission of teaching, research and service has continued to advance, which is essential to the prosperity of the State of Georgia.
________________________________ Usha Ramachandran Vice Chancellor for Fiscal Affairs University System of Georgia
23

The University System of Georgia ANNUAL FINANCIAL REPORT

24 24

Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT
UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF ASSETS JUNE 30, 2010
ASSETS Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, net (note 3) Receivables - Federal Financial Assistance Receivables - Other Inventories (note 4) Prepaid Items Other Assets Total Current Assets
Noncurrent Assets Noncurrent Cash Short-term Investments Investments (Externally Restricted) Other Noncurrent Assets Investments Notes Receivable, net Capital Assets, net (note 6) Total Noncurrent Assets TOTAL ASSETS
LIABILITIES Current Liabilities Accounts Payable Salaries Payable Benefits Payable Contracts Payable Deposits Deferred Revenue (note 7) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations (current portion) Compensated Absences (current portion) US DOE Settlement (Fort Valley) (current portion) Notes and Loans Payable (current portion) Total Current Liabilities Noncurrent Liabilities (note 8) Lease Purchase Obligations (noncurrent) Deferred Revenue (noncurrent) and Other Noncurrent Liabilities Net OPEB Obligation Compensated Absences (noncurrent) US DOE Settlement (Fort Valley) (noncurrent) Other 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 NET ASSETS
25

June 30, 2010
$975,199,582 89,645,689
109,143,436 324,044,678
26,529,034 67,897,123
98,877 1,592,558,419
13,291,750 2,916,295 49,689,980
873,935 113,746,827 45,910,168 7,304,806,687 7,531,235,642 9,123,794,061
156,311,076 19,626,049 15,940,912 15,847,595 29,032,196 300,667,628 12,331,509 62,485,999 58,260,024 103,901,958
239,585 15,265 774,659,796
2,588,838,267 7,586,754
699,938,000 77,249,904 61,787 828,793 -
3,374,503,505 4,149,163,301
4,659,564,125
132,841,369 257,612,795
32,180,642 (107,568,171) $4,974,630,760

The University System of Georgia ANNUAL FINANCIAL REPORT

The University System of Georgia ANNUAL FINANCIAL REPORT

Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30, 2010

REVENUES

June 30, 2010

Operating Revenues Student Tuition and Fees (net of allowance for doubtful accounts) Less: Scholarship Allowances Federal Appropriations Grants and Contracts Federal Federal Stimulus 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
Total Operating Expenses Operating Income (loss)

$ 1,639,126,573 (404,895,396) 16,622,913
592,059,344 28,037,914
243,207,099 397,284,985 125,660,015
3,648,250
246,924,430 82,609,290
124,404,899 67,375,726 48,419,537 87,131,512 28,891,283
100,810,814 3,427,319,188
1,158,421,412 1,602,187,283 1,020,343,964
15,173,767 48,381,887 333,528,052 185,354,635 1,319,821,987 350,656,642 6,033,869,629 (2,606,550,441)

26

The University System of Georgia ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS continued FOR THE FISCAL YEAR ENDED JUNE 30, 2010

NONOPERATING REVENUES (EXPENSES) State Appropriations Federal Stimulus - Stabilization Funds Grants and Contracts Federal Federal Stimulus 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 Federal State Other Special Item - Capital Asset Transfers Total 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

June 30, 2010
1,693,157,533 280,410,317
479,067,506 1,718,160 1,502,535 76,037,280 81,980,790 28,607,657
(129,185,455) (9,475,921)
2,503,820,402 (102,730,039)
634,932 191,118,615 36,661,762
8,376 228,423,685 125,693,646
4,801,209,328 47,727,786
4,848,937,114 $4,974,630,760

27

The University System of Georgia ANNUAL FINANCIAL REPORT

Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT
UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED JUNE 30, 2010
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 Other Receipts (payments) Net Cash Provided (used) by Operating Activities
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES State Appropriations Federal Stimulus - Stabilization Funds 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 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 sale of Capital Assets 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

June 30, 2010
$1,264,933,490 16,633,818
1,239,260,001 122,352,844
(2,264,202,920) (2,761,242,206)
(334,255,333) (9,064,001) 9,003,179
667,804,209 82,609,713
(1,966,167,206)
1,693,157,533 280,410,317 (20,823,369) 633,092,032 (413,033) (13,216) (5,671,684)
2,579,738,580
123,434,195 (59,024,103)
43,536 (290,246,546) (52,295,958) (123,133,038) (401,221,914)
23,398,190 14,692,629 (22,104,282) 15,986,537 228,335,997 760,155,335 $988,491,332

28

The University System of Georgia ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF CASH FLOWS continued FOR THE FISCAL YEAR ENDED JUNE 30, 2010
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 Benefits Payable Lease Purchase Obligations Other Liabilities Net OPEB Obligation Compensated Absences
Net Cash Provided (used) by Operating Activities
** 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 accounts receivable related to private gifts Change in receivable from State Agency affecting proceeds of capital debt Change in fair value of investments recognized as a component of interest income Special Item - Altamaha Technical College Equipment Transfer Special Item - Note Receivable Transfer Special Item - Bond Defeasance Special Item - Capital Asset Transfer Change in accrued interest payable affecting interest paid Amortization of bond issuance costs reducing interest paid Interest on capital debt paid by State Agency on behalf of University Principal on capital debt paid by State Agency on behalf of University Gifts other than capital assets reducing proceeds of grants & gifts for other than capital assets Gift of capital assets reducing proceeds of capital grants and gifts Loss on Disposal of Buildings Not Fully Depreciated Reduction in Capital Lease Obligation

(2,606,550,441)
350,656,642
(69,227,069) (1,395,725) (39,832)
(14,365,758) (416,674)
16,063,409 47,923,099
0 0 (993,934) 304,463,000 7,716,077
($1,966,167,206)
$464,107,715 $0 $0 $0
$13,918,274 $8,376
($3,294,805) ($695)
($104,981,114) ($3,294,805) $0 $2,585,321
($695) ($104,981,114)
$0 $2,585,321

29

The University System of Georgia ANNUAL FINANCIAL REPORT

Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF FIDUCIARY NET ASSETS BOARD OF REGENTS RETIREE HEALTH BENEFIT FUND JUNE 30, 2010

ASSETS

June 30, 2010

Cash and Cash Equivalents Receivables
Employer Total Receivables

$6,878,538 0

Investments, at fair value TOTAL ASSETS

0 6,878,538

LIABILITIES

Benefits payable TOTAL LIABILITIES

6,756,000 6,756,000

NET ASSETS

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

122,538 $122,538

30

The University System of Georgia ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS BOARD OF REGENTS RETIREE HEALTH BENEFIT FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2010
ADDITIONS
Contributions Employer Plan member Total Contributions
Investment Income Net appreciation/(depreciation) in fair value of investments Interest/dividends
Less: Investment expense Net Investment Income
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, 2010
$69,888,771 27,198,290 97,087,061
98,878 366,033 464,911 (19,926) 444,985
99,235,047 4,492,887 4,247,987 107,975,921 (10,443,875)
10,566,413 $122,538

31

The University System of Georgia ANNUAL FINANCIAL REPORT

Notes to the Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT
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, an organizational unit of the State 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 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 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.
Financial Statement Presentation The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the University System's assets, liabilities, net assets, revenues, expenses, changes in net assets and cash flows.
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.
New Accounting Pronouncements In fiscal year 2010, The University System of Georgia adopted the Governmental Accounting and Standards Board (GASB) Statement No. 51, Accounting and Reporting for Intangible Assets. The provisions of this Statement generally required retroactive reporting for intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated.
In addition, The University System of Georgia adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. The provisions of this Statement affect disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 2.
Basis of Accounting For financial reporting purposes, the University System of Georgia is considered a special-purpose government engaged only in business-type activities. Accordingly, the University System's financial statements have been presented
32

The University System of Georgia ANNUAL FINANCIAL REPORT

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 System 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 of Georgia 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. These 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 Investments include financial instruments with terms in excess of 13 months, certain other securities for the production of revenue, land, and other real estate held as investments by endowments. The University System of Georgia accounts for its investments at fair value. 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 whom reside 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/or significantly increase the value or extend the useful life of the structure
33

The University System of Georgia ANNUAL FINANCIAL REPORT

Notes to the Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT
are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation, which also includes amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, and copyrights, as well as software, 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, 2010, GSFIC transferred capital additions valued at approximately $54,343,103 to The University System of Georgia.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in University 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 the end of the fiscal year for financial statement purposes. The liability and expense incurred are recorded at the end of the fiscal year 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 of Georgia had accrued liability for compensated absences in the amount of $173,435,787 as of July 1, 2010. For FY2010, $119,213,767 was earned in compensated absences and employees were paid $111,497,692, for a net increase of $7,716,075. The ending balance as of June 30, 2010 in accrued liability for compensated absences was $181,151,862.
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 System's net assets are classified as follows:
Invested in capital assets, net of related debt: Invested in capital assets, net 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
34

The University System of Georgia ANNUAL FINANCIAL REPORT

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 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 by external third parties.
Expendable Restricted Net Assets include the following: June 30, 2010

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

$ 136,438,045 44,324,982 22,740,735 4,159,806 32,475,768 17,473,459
$ 257,612,795

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 self-supporting activities that provide services for students, faculty and staff.
Unrestricted Net Assets includes the following items, which are quasi-restricted by management: June 30, 2010

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

$ 166,577,422 361,296,959 3,168,863 (638,611,415)
$ (107,568,171)

35

The University System of Georgia ANNUAL FINANCIAL REPORT

Notes to the Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

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.
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 and Expenses The Statement of Revenues, Expenses and Changes in Net Assets classify fiscal year activity as operating and nonoperating according to the following criteria:
Operating Revenues: Operating revenue includes activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) certain federal, state and local grants and contracts, and (3) sales and services.
Non-operating revenue: Non-operating revenue includes activities that have the characteristics of non-exchange transactions, such as gifts and contributions, and other revenue sources that are defined as non-operating revenue by GASB No. 9, Reporting Cash Flows of Proprietary and Non-expendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income.
Operating Expense: Operating expense includes activities that have the characteristics of exchange transactions.
Non-operating Expense: Non-operating expense includes activities that have the characteristics of non-exchange transactions, such as capital financing costs and costs related to investment activity.
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 $5,963,931 in allowances.
Special Items

Armstrong Atlantic State University College of Coastal Georgia Capital Asset Transfer Total

$ 17,025 (8,649)
$ 8,376

Armstrong Atlantic State University Armstrong Atlantic State University transferred Equipment to Bainbridge College in early fiscal year 2010. The equipment was transferred at the book value of $17,025. This amount is reported as a Special Item on the Statement of Revenues, Expenses and Changes in Net Assets and Changes in Net Assets and the Statement of Cash Flow.
36

The University System of Georgia ANNUAL FINANCIAL REPORT

College of Coastal Georgia College of Coastal Georgia transferred Equipment to Altamaha Technical College effective August 31, 2009. The Equipment was transferred at its historical cost of $18,721 with an accumulated depreciation balance of $10,072, for a net transfer of $8,649. This amount is reported as a Special Item on the Statement of Revenues, Expenses and Changes in Net Assets and the Statement of Cash Flow.

Restatement of Prior Year Net Assets The following institutions had restatements of prior year balances in FY2010:

Georgia Institute of Technology

$

7,307,600

Valdosta State University

1,881,233

Albany State University

(2,535,263)

Gordon College

(268,767)

Macon State College

(701,210)

Abraham Baldwin Agricultural College

(407,017)

University System of Georgia

701,210

University System of Georgia

41,750,000

Total

$

47,727,786

Georgia Institute of Technology In fiscal year 2009, the Institute embarked upon a project (The Building Project) to review cost, depreciation and depreciation methodology for all non-equipment assets. During this process, the cost of building assets was reconciled to the AAA report. The Institute inadvertently reconciled the cost of building assets to the incorrect cost line on the report, thus removing Federal Funding from the cost of all building assets with this type of funding. In fiscal year 2010, the Institute thoroughly reviewed all building assets with Federal Funding and corrected all issues with cost and accumulated depreciation in the beginning balance for capital assets on the financial statement.
During fiscal year 2010, in accordance with GASB 51, Accounting and Financial Reporting for Intangible Assets, the Institute identified all intangible assets that met the capitalization threshold and retroactively included their cost and accumulated amortization in the July 1, 2009 beginning balance for capital assets on the financial statement.
During the fiscal year 2010 year-end review, the Institute noted a few additional issues with assets that needed to be corrected. These issues included the following: (1) Prior year Construction Work-in-Progress (WIP) that should have been capitalized; (2) an affiliate organization asset mistakenly included in WIP for the Institute; (3) a building asset incorrectly classified as Infrastructure; and (4) a profile correction for an asset erroneously set up for cost and depreciation purposes. All issues with cost and accumulated depreciation for these assets have been corrected in the beginning balance for capital assets on the financial statement.
The net effect on the financial statements for Capital Assets Disclosure in the Beginning Balance Column of Note 6 is as follows: (1) the beginning balance for Capital Assets, Not Being Depreciated for Construction Work-in-Progress was restated and reduced by $1,386,863; (2) the beginning balance for Capital Assets, Being Depreciated/Amortized for Infrastructure was restated and reduced by $2,738,281; (3) the beginning balance for Capital Assets, Being Depreciated/Amortized for Buildings was restated and increased by $10,774,021; (4) the beginning balance for Capital Assets, Being Depreciated/Amortized for Software was restated and increased by $1,530,895; (5) the beginning balance for Accumulated Depreciation/Amortization for Infrastructure was restated and reduced by $98,551; (6) the beginning balance for Accumulated Depreciation/Amortization for Buildings was restated and increased by $434,910;
37

The University System of Georgia ANNUAL FINANCIAL REPORT

Notes to the Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT
and (7) the beginning balance for Accumulated Depreciation/Amortization for Software was restated and increased by $535,813.
Valdosta State University Valdosta State University has a restatement of prior year net assets increasing beginning net assets by $1,881,233, due to a correction of fiscal year 2009 Construction Work-in-Process that was recorded as an expense in error.
Albany State University Albany State University has a restatement of prior year net assets decreasing beginning net assets by $2,535,263.00, due to revaluation of a capital lease and restatement of accumulated depreciation for the capital lease.
Gordon College Gordon College has a restatement of prior year net assets decreasing beginning net assets by $268,767, due to a reduction in Construction Work-In-Progress (C.W.I.P.) for the Gordon College Project J-139 (Allied Health/Nursing Building), as project management was transferred to GSFIC during the year.
Macon State College Macon State College has a restatement of prior year net assets decreasing beginning net assets by $701,210, which includes $85,506 for capital assets, due to removing the new University System Shared Services Center activity, for which the College is the fiscal agent, and transferring the activity to the University System Office for reporting purposes.
Abraham Baldwin Agricultural College Abraham Baldwin Agricultural College has a restatement of prior year net assets, increasing beginning net assets by $407,017, due to the addition of capital assets that were not correctly added to the asset listing in the prior year.
University System Office The University System Office has a restatement of prior year net assets, increasing beginning net assets by $701,210. This restatement is related to the prior year operations of the Shared Services Center, which was reported by Macon State College in fiscal year 2009. Due to the financial significance of the Shared Services Center in fiscal year 2010 and projected future significance, this prior year activity has been transferred to the University System Office in fiscal year 2010. The Shared Services Center revenue and expenses for fiscal year 2010 are included in the University System Office's Statement of Revenues, Expenses and Changes in Net Assets.
An error was discovered in the methodology for determining the split between retiree and active employee claims expenses, which resulted in an increase in retiree claim costs and decrease in active employee claim costs. The $41,750,000 adjustment to net assets represents that cumulative difference between the Annual Required Contribution (ARC) and the employer contributions since fiscal year 2008. See Note 14 for additional information.
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.
38

The University System of Georgia ANNUAL FINANCIAL REPORT

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, 2010, the carrying value of deposits was $464,021,401 and the bank balance was $536,830,266. Of the University System's deposits, $294,344,672 were uninsured. Of these uninsured deposits, $261,851,088 were collateralized with securities held by the financial institution's trust department or agent in the University System's name, $32,166,747 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University System's name and $326,837 were uncollateralized.

B. Investments The University System 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 System's investments as of June 30, 2010 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 Repurchase Agreements

Fair Value
$ 20,558,049 7,873,784
258,353,702 7,885,154 1,089,127 5,000
29,500,219 33,097,975 $ 358,363,010

LessThan 1 Year
$3,189,804 1,786,613
15,579,210 255,381 61,021 5,000 174,234
33,097,975 $ 54,149,238

Investment Maturity

1-5 Years

6-10 Years

$8,462,861 1,095
31,399,865 3,156,212 165,411

$7,927,026 1,678,450
17,312,660 3,146,434 862,695

1,228,302

23,738,573

$44,413,746

$ 54,665,838

More Than 10 Years
$978,358 4,407,626 194,061,967 1,327,127
4,359,110
$ 205,134,188

Other Investments Bond/Fixed Income Mutual Funds Equity Mutual Funds Equity Securities - Domestic Equity Securities - International Real Estate Held for Investment Purposes Real Estate Investment Fund Cash Surrender Value

2,591,971 49,566,232 39,414,772
87,953 6,071,012 1,775,432
9,517

Investment Pools Office of Treasury and Fiscal Services Georgia Fund 1 Georgia Extended Asset Pool

316,667,502 6,745,573

$ 781,292,974

39

The University System of Georgia ANNUAL FINANCIAL REPORT

Notes to the Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT
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 46 days at June 30, 2010.
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 $2.03 at June 30, 2010. 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 2010 is 0.97 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 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 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
40

The University System of Georgia ANNUAL FINANCIAL REPORT

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, multi-manager 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.
41

The University System of Georgia ANNUAL FINANCIAL REPORT

Notes to the Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

Condensed financial information for the investment pool is as follows:

Regents Investment Pool Statement of Net Assets
June 30, 2010

Regents Investment Pool Statement of Changes in Net Assets For the Fiscal Year Ended June 30, 2010

Assets Investments Accrued Interest Net Assets
Distribution of Net Assets External Participant Account Balance Internal Participant Account Balance

$ 248,460,015 654,998
$ 249,115,013

Additions Pool Participant Deposits Investment Income
Interest Fair Value Decreases

Total Additions

Less: Investment Expense

$ 76,012,495 3,640,894
10,391,138 (441,380)
$ 89,603,147

$

13,768,370

235,346,643

$ 249,115,013

Deductions Pool Participant Withdrawals Net Increase (Decrease)
Net Assets July 1, 2009 June 30, 2010

$ (9,642,119) $ 79,961,028
169,153,985 $ 249,115,013

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.
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. 42

The University System of Georgia ANNUAL FINANCIAL REPORT

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, 2010, $369,206,783 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 $19,612,891 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.

3. The portfolio shall be well diversified as to issuer and maturity.

The University System investments subject to credit quality risk follow:

Fair Value

AAA

AA

A

B

BBB

Unrated

Related Debt Investments

U. S. Agencies Corporate Debt General Obligation Bonds Municipal Obligation Mutual Bond Fund Repurchase Agreements U.S.Treasuries

$ 258,353,702 7,885,154 1,089,127 5,000
29,500,219 33,097,975
$ 329,931,177

$ 3,854,060 1,089,127 5,000 369,062
$ 5,317,249

$436,140
369,062
$ 805,202

$

-

1,772,882

225,881

$ 1,998,763

$-

$371,813

$ 254,499,642 5,304,320

18,996

28,517,218 33,097,975

$ 18,996 $ 371,813 $ 321,419,155

43

The University System of Georgia ANNUAL FINANCIAL REPORT

Notes to the Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

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.

Investment Federal National Mortgage Association

Amount

$

41,190,407

% of Total 5.3%

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, 2010, $87,953, or less than 0.0001% of total investments, was invested in international equity mutual funds.

NOTE 3. ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following at June 30, 2010:
Student Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Georgia State Financing and Investment Commission Other
Sub Total Less Allowance for Doubtful Accounts
Net Accounts Receivable

June 30, 2010
$ 44,909,303 28,804,144
109,143,436 25,471,778 241,167,116
449,495,777 16,307,663
$ 433,188,114

NOTE 4. INVENTORIES
Inventories consisted of the following at June 30, 2010:
Bookstore Food Services Physical Plant Other
Total
44

June 30, 2010
$ 14,495,581 1,903,005 6,892,621 3,237,827
$ 26,529,034

The University System of Georgia ANNUAL FINANCIAL REPORT

NOTE 5. NOTES/LOANS RECEIVABLE
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2010. 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, 2010 the allowance for uncollectible loans was $2,819,135.

NOTE 6. CAPITAL ASSETS
Following are the changes in capital assets for the year ended June 30, 2010:

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

Restated Beginning Balance
July 1, 2009

Special Item Transfer

Additions

$ 227,984,988 39,425,599
212,196,735 479,607,322

$0 0 0

$ 16,871,764 621,783
176,039,805 193,533,352

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

232,075,711 5,849,675,815
272,919,661 1,125,770,172 1,331,173,579
692,487,868 1,511,338
10,917,386 9,516,531,530

0 0 0 (1,696) 0 0 0 0 (1,696)

19,092,276 385,560,071
14,002,375 111,204,586 335,329,720
32,114,312 4,165,469 4,608,825
906,077,634

Less: Accumulated Depreciation Infrastructure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections Capitalized Collections Software Total Accumulated Depreciation

67,878,963 1,659,934,067
93,135,206 775,915,618 138,637,779 525,296,468
509,546 4,770,551 3,266,078,198

0 0 0 (10,072) 0 0 0 0 (10,072)

7,437,190 148,107,421
8,272,506 94,426,218 58,823,449 31,143,319
85,568 2,360,971 350,656,642

Total Capital Assets, Being Depreciated, Net

6,250,453,332

8,376

555,420,992

Capital Assets, net

$ 6,730,060,654

$ 8,376

$ 748,954,344

Reductions
$ 784,857 0
164,894,656 165,679,513
2,080,755 11,963,819
217,195 50,954,650
6,647,407 3,110,845
5,800 0
74,980,471
968,783 8,779,049
30,056 48,704,542
5,124,754 2,836,113
0 0 66,443,297
8,537,174
$ 174,216,687

Ending Balance June 30, 2010
$ 244,071,895 40,047,382
223,341,884 507,461,161
249,087,232 6,223,272,067
286,704,841 1,186,018,412 1,659,855,892
721,491,335 5,671,007
15,526,211 10,347,626,997
74,347,370 1,799,262,439
101,377,656 821,627,222 192,336,474 553,603,674
595,114 7,131,522 3,550,281,471
6,797,345,526
$ 7,304,806,687

45

Notes to the Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

NOTE 7. DEFERRED REVENUE
Deferred revenue consisted of the following at June 30, 2010:
Prepaid Tuition and Fees Research Other Deferred Revenue
Totals

June 30, 2010
$ 188,600,012 51,387,733 60,679,883
$ 300,667,628

The University System of Georgia ANNUAL FINANCIAL REPORT

NOTE 8. LONG-TERM LIABILITIES

Long-term liability activity for the year ended June 30, 2010 was as follows:

Restated Beginning Balance
July 1, 2009

Additions

Reductions

Leases Lease Obligations

$ 2,239,558,079

$ 467,843,148

$ 60,302,936

Other Liabilities Compensated Absences Net OPEB Obligation US DOE Settlement (Fort Valley) Notes & Loans Other Liabilities Total

173,435,787 395,475,000
547,780 56,518
958,692 570,473,777

119,213,767 304,463,000
0 0 132,155 423,808,922

111,497,692 0
246,408 41,253
128,334 111,913,687

Total Long Term Obligations

$ 2,810,031,856

$ 891,652,070

$ 172,216,623

Ending Balance June 30, 2010
$ 2,647,098,291
181,151,862 699,938,000
301,372 15,265
962,513 882,369,012
$ 3,529,467,303

Current Portion
$ 58,260,024
103,901,958 0
239,585 15,265
133,720 104,290,528
$ 162,550,552

NOTE 9. SIGNIFICANT COMMITMENTS
The University System of Georgia had significant unearned, outstanding construction or renovation contracts executed in the amount of $183,821,327 as of June 30, 2010.

In addition, certain institutions executed rental agreements for student housing and/or other facilities during fiscal 2010; however, these agreements will not commence until fiscal 2011 or later. The rental agreements are long-term in nature, with annually renewable lease terms. The projects and the present value of the minimum lease payments over the life of the rental agreements can be seen below:

Institution Kennesaw State University North Georgia College & State University Total

Commitment Amount

$

59,000,000

212,722,145

$ 271,722,145

Project Sports Park Student Housing & Parking Deck

46

The University System of Georgia ANNUAL FINANCIAL REPORT

Georgia State University entered into a lease agreement, which is not reflected in the schedule above, with Panther Place, LLC in May 2007, 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 basis for consecutive one-year periods until June 30, 2037.
These amounts above are not reflected in the accompanying basic financial statements.

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.
Capital Leases The University System of Georgia is obligated under approximately $2.6 billion in capital lease liability as of June 30, 2010. Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between fiscal 2010 and 2039. Expenditures for fiscal year 2010 were $189,696,756, of which $127,785,776 represented interest. Total principal reductions on capital leases were $59,751,161 for the fiscal year ended June 30, 2010. Of the $127,785,776 in interest expenditures, approximately $2,159,819 was added to outstanding principal during fiscal 2010. 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, 2010:

Land Infrastruture Buildings Facilities Equipment
Subtotal
Less: Accumulated Depreciation
Total Assets Held Under Capital Lease

$

43,924,082

47,725,157

37,156,030

2,707,491,492

498,285

2,836,795,047

(253,979,251)

$

2,582,815,796

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.

47

Notes to the Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

The University System of Georgia ANNUAL FINANCIAL REPORT

Capital lease additions during fiscal 2010 are summarized below:

Institution Georgia State University University of Georgia University of Georgia University of Georgia Georgia Southern University Valdosta State University Valdosta State University Valdosta State University Valdosta State University Valdosta State University Valdosta State University Armstrong Atlantic State University Kennesaw State University Georgia College & State University Georgia Perimeter College Georgia Perimeter College University System Office Various - 3rd Party Leases

Project Petit Science Center Parking Decks Fraternity Row Housing Medical Partnership Bldg Centenniel Place Georgia and Reade Halls Student Union Building Hopper Hall Student Health Center Oak Street Parking Deck Sustella Parking Deck Student Union Center Housing Campus Theatre Newton Campus - Student Success Center Clarkston Campus - International Center Shared Services Center Equipment, furniture and fixtures

Amount $ 74,016,116
17,655,000 12,505,000 15,705,000 56,096,073 30,419,725 60,747,911 27,484,345 12,222,729 24,869,880 21,468,631 23,427,477
242,257 9,326,118 12,900,000 3,000,000 3,578,343 6,614,424 $ 412,279,029

Interest Rate
6.480% 5.000% 6.300% 5.000% 5.256% 4.150% 4.514% 4.554% 4.649% 4.649% 4.649% 5.125% 6.040% 6.250% 4.830% 4.830% 4.000%

Lease Expiration
2039 2039 2039 2028 2039 2039 2039 2039 2039 2039 2039 2039 2039 2038 2035 2035 2030

Operating Leases The University System of Georgia's non-cancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2011 through 2034. 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 2010 was $31,159,365.

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, 2010, are as follows:

Year Ending June 30: 2011 2012 2013 2014 2015 2016 through 2020 2021 through 2025 2026 through 2030 2031 through 2035 2036 through 2040 2041 through 2045 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

Capital Leases
$ 189,661,875 188,588,460 188,704,875 188,832,967 221,605,794 971,756,679 978,709,909 971,312,883 656,861,256 283,903,988 771,617.00
4,840,710,303 2,120,830,081
72,781,931 $ 2,647,098,291

Operating Leases
$ 29,016,375 9,391,505 8,734,597 5,598,780 3,841,169
15,029,876 10,720,729
7,902,558 1,642,734
0 0 $ 91,878,323

48

The University System of Georgia ANNUAL FINANCIAL REPORT

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 5.25% 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 2010, the employer contribution rate was 9.74% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year 2010 2009 2008

Percentage Contributed
100% 100% 100%

Contribution $ 135,412,616 $ 128,072,380 $ 122,832,156

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. Employees hired on or after July 1, 1982, but prior to January 1, 2009 are "new plan" members subject to the modified plan provisions. Effective January 1, 2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). ERS members hired prior to January 1, 2009 also have the option to change their membership to the GSEPS plan.
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
49

Notes to the Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

The University System of Georgia ANNUAL FINANCIAL REPORT

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, 2010 for employees covered by ERS was $6,349,501. The University System of Georgia's total payroll for all employees was $2,760,608,695.

For the year ended June 30, 2010 under the old plan, member contributions consist of 4% of annual compensation up to $4,200 plus 6% of annual compensation in excess of $4,200. 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 and GSEPS, 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, 2010, 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 2010 2009 2008

Percentage Contributed
100% 100% 100%

Contribution

$

654,124

$

687,652

$

602,995

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2010 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 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.
50

The University System of Georgia ANNUAL FINANCIAL REPORT

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 year 2010, the employer contribution was 8.15% for the first six months and 9.24% 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 System of Georgia and the covered employees made the required contributions of $88,167,788 (9.24%) and $49,317,179 (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 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.
Total contributions made by employees during fiscal year 2010 amounted to $7,268,961 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 offered its employees and retirees access to two different self-insured healthcare plan options a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. The indemnity plan was discontinued effective January 1st, 2010. The University System Office and participating employees and retirees paid premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-
51

The University System of Georgia ANNUAL FINANCIAL REPORT

Notes to the Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

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 during the fiscal year, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
The prescription drug plan is administered through Medco Health Solutions. Pharmacy drug claims are processed in accordance with guidelines established for the Board of Regents' Prescription Drug Benefit Program. Generally, claims are submitted by participating pharmacies directly to Medco Health Solutions for verification, processing and payment. Medco Health Solutions 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, 2010 and June 30, 2009 is shown below:

Employees: 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

June 30, 2010 $ 21,827,567
181,684,842 187,858,409

Unpaid Claims and Claim Adjustments (Current Year IBNR) $ 15,654,000

Retirees: Unpaid Claims and Claim Adjustments (Prior Year IBNR) $

6,626,917

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

93,786,415 93,657,332

Unpaid Claims and Claim Adjustments (Current Year IBNR) $

6,756,000

June 30, 2009 $ 24,048,856
204,169,368 206,390,657 $ 21,827,567
$ 6,702,660 91,436,410 91,512,153
$ 6,626,917

52

The University System of Georgia ANNUAL FINANCIAL REPORT

Prior year claims incurred and paid have been adjusted in this schedule for a correction in the breakout between Active and Retired employees. Beginning and ending IBNR liabilities are not affected by this correction. See Note 14 for additional explanation.
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 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.
The University System of Georgia implemented GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations in fiscal 2009. This statement requires recognition of pollution remediation liabilities (if estimable) when a specified obligating event occurs, as defined in the Statement. Five institutions with the University System of Georgia had conditions or projects in progress that met one of the five obligating events as of June 30, 2010.
Augusta State University has been notified as a potential responsible party for pollution remediation related to a Superfund site located in North Carolina. Other alleged customers of the facility, dating back 30 plus years, have also been notified as potential responsible parties. To date, the University has not been named in any legal action pursuant to this case. As of June 30, 2009, Augusta State University cannot reasonably estimate a liability for this pollution remediation obligation.
The Medical College of Georgia is responsible for asbestos abatement as a small part of the project costs for the renovation of the third floor of the Hamilton Wing in the Research and Education building, renovation of several labs in the Research and Education building, and removal of mastic material in the dental building basement. The College has recorded a liability and expense related to this pollution remediation in the amount of $763. The liability is the remaining amount of project abatement costs at June 30, 2010. The College does not anticipate any significant changes to the expected remediation outlay.
The University of Georgia is responsible for pollution remediation at the Milledge Avenue landfill site. The University of Georgia has recorded a liability and expense related to this pollution remediation in the amount of $962,513. The liability was determined using a 5 year budget estimate provided by environmental engineers & consultants. The University of Georgia does not anticipate any significant changes to the expected remediation outlay. There are no expected recoveries that have reduced the liability.
Savannah State University is responsible for mold remediation at Camilla Hubert Hall. The University had recorded a liability and expense related to this pollution remediation in the amount of $86,450 as of June 30, 2009. The liabil-
53

The University System of Georgia ANNUAL FINANCIAL REPORT

Notes to the Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

ity was determined using the Expected Cash Flow Measurement Technique, which measures the liability as the sum of probability-weighted amounts in a range of possible estimated amounts. There were no changes, the remediation occurred during the current fiscal year, and there are no expected recoveries that have reduced the liability.

Georgia Institute of Technology is responsible for pollution remediation, including asbestos abatement, for all Insti-

tute facilities. Asbestos abatement is performed during renovation/construction projects when deemed necessary by

Institute management. As of June 30, 2010, the Institute recorded a liability and expense in the amount of $298,617

for asbestos abatement projects in various Institute structures. The liability was determined using the Expected Cash

Flow Measurement Technique, which measures the liability as the sum of probability-weighted amounts in a range of

possible estimated amounts. The Institute does not anticipate any significant changes to the expected remediation

outlay. There are no expected recoveries that have reduced the liability. Pollution remediation liability activity in

fiscal 2010 was as follows:

Pollution Remediation Obligation

Beginning Balance July 1,
2009
$ 1,125,797

Additions $ 467,160

Reductions $ 331,064

Ending Balance June 30, 2010
$ 1,261,893

Current Portion
$ 433,100

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, 2010.

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 postemployment health insurance benefits.
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, 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 online at: http://www.usg.edu/fiscal_affairs/reporting/annual_fin_rep/.
54

Membership of the plan consisted of the following at June 30, 2010:
Retirees and beneficiaries receiving benefits Terminated plan members entitled to but not yet receiving benefits Active plan members Total

June 30, 2010 17,471
37,076 54,547

The University System of Georgia ANNUAL FINANCIAL REPORT

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 2010 plan year, the employer rate was approximately 70% of the total health insurance cost for eligible retirees and the retiree rate was approximately 30%. 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 2010, the University System of Georgia contributed $69,888,771 to the plan, for current premiums or claims. Plan members receiving benefits contributed $27,198,290 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.
In fiscal 2010, a review and correction of the claims expense breakout between Active and Retired participants was performed by the third party claims administrator. The outcome of this review resulted in an increase to previously reported Employer contributions and Claims/Administrative expenses totaling $21.1 million in FY2009 and $20.4 million in FY2008.
Because plan contributions and expenses increased by the same amounts, no restatement was required to the Retiree Health Benefit Fund financial statements. However, the increased Employer contributions in fiscal 2009 and
55

Notes to the Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

2008 impacted both the Annual OPEB cost and Net OPEB Obligation amounts reported in the University System Office Annual Financial Report notes in those years. The tables below have been updated for the effect of the increases in Employer contributions in fiscal 2009 and 2008.
The following table shows the components of the University System's annual OPEB cost for fiscal year 2010, 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):

June 30, 2010

Annual required contribution

$

Interest on net OPEB obligation

Adjustment to annual required contribution

Annual OPEB cost (expense)

Less: Contributions made

Increase in net OPEB obligation

Net OPEB obligation - beginning of year (restated)

Net OPEB obligation - end of year

$

381.7 17.8 (25.2) 374.3 (69.9) 304.4 395.5
699.9

The University System of Georgia ANNUAL FINANCIAL REPORT

The University System's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the

net OPEB obligation for the Retiree Health Benefit Plan for fiscal years 2008 through 2010 were as follows (dollar

amounts in millions):

Fiscal Year Ended June 30

Annual OPEB Cost

Percentage of Annual OPEB Cost Contributed

Net OPEB Obligation

2008 2009 2010

$224.9 $346.9 $374.3

38.7% 25.7% 18.7%

$ 137.8 $ 395.5 $ 699.9

Funded Status and Funding Progress

Actuarial Valuation
Date 7/1/07 7/1/08 7/1/09

Actuarial Value of Assets

(a)

$

-

$ 290,000

$ 10,566,000

Actuarial Accrued Liability (AAL) Projected Unit Credit (b) $ 1,985,200,000 $ 3,258,200,000 $ 3,129,508,000

Unfunded AAL (UAAL) (b-a)
$ 1,985,200,000 $ 3,257,910,000 $ 3,118,942,000

Funded Ratio (a/b) 0.0% 0.0% 0.3%

Covered Payroll (c)
$ 2,201,804,000 $ 2,372,385,000 $ 2,399,532,000

UAAL as a Percentage of Covered Payroll
((b-a)/c) 90.2%
137.3% 130.0%

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
56

The University System of Georgia ANNUAL FINANCIAL REPORT

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 multi-year 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

July 1, 2009 Projected Unit Credit Level Dollar, Closed, 30-year Market Value of Assets 28 years
4.50% 8.25% 4.50% 2027

*Includes inflation assumption of 2.5%

Please note that the Investment Rate of Return percentage can change.

57

The University System of Georgia ANNUAL FINANCIAL REPORT

Notes to the Financial Statements
FINANCIAL SECTION USG ANNUAL FINANCIAL REPORT

NOTE 15. NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS
The University's operating expenses by functional classification for FY2010 are shown below:

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

Instruction
$ 783,263,584 276,627,165 370,219,276 3,487,544 12,712,547 5,617,254 5,684,344 70,908,668 58,896,098

Total Expenses

$1,587,416,480

Research
$ 272,623,648 258,591,990 161,180,609 331,310 19,324,529 3,565,789 2,194,860 192,946,218 52,551,406
$ 963,310,359

Functional Classification FY2010

Public Service

Academic Support

$ 61,386,788 146,007,093 77,430,842 665,335 5,399,941 1,496,516 17,454,780 126,405,670 6,258,034

$ 30,981,237 184,389,817 82,507,648 1,539,253 3,620,309 405,476 2,702,170 83,667,345 45,113,957

$ 442,504,999

$ 434,927,212

Student Services
$ 1,853,074 130,514,096 48,835,822 746,519 2,461,542 3,046,341 1,803,972 55,909,526 9,531,715
$ 254,702,607

Institutional Support
$ 4,190,837 247,009,347 136,339,452 7,038,620 2,650,625 1,244,037 10,292,618 283,758,085 39,680,429
$ 732,204,050

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

Plant Operations & Maintenance

$

(34,364)

154,056,034

67,283,432

(7,507,321)

243,577

-

118,529,974

117,694,036

61,378,244

Scholarships & Fellowships

$

-

28,119

45,530

376,542

753

300,096,684

-

62,379

-

Total Expenses

$ 511,643,612

$ 300,610,007

Functional Classification FY2010

Auxiliary Enterprises

Unallocated Expenses

$ 2,157,779

$

-

136,431,951

-

48,853,047

-

8,495,965

-

1,680,324

-

18,055,955

-

26,449,543

-

285,271,892

-

77,246,759

-

$ 604,643,215

$

-

MCG only Patient Care
$ 1,998,829 68,531,671 27,648,306 287,740 242,374
103,198,168 -
$ 201,907,088

Total Expenses
$ 1,158,421,412 1,602,187,283 1,020,343,964 15,173,767 48,381,887 333,528,052 185,354,635 1,319,821,987 350,656,642
$ 6,033,869,629

NOTE 16. AFFILIATED ORGANIZATIONS
Under Board of Regents policy, each individual institution may establish a separate foundation, or affiliated organization, to provide valuable assistance in fundraising, public outreach and other support for the missions of the respective campus and the University System. Although independent boards govern these foundations, their assets are dedicated for the benefit of the related institution and the University System of Georgia.
These affiliated organizations are private nonprofit organizations that report under either Financial Accounting Standards Board (FASB) standards, including FASB Statement No. 117, Financial Reporting for Not-for-Profit Organizations, or Governmental Accounting Standards Board (GASB) standards, including Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments and Statement No. 35, Basic
58

The University System of Georgia ANNUAL FINANCIAL REPORT

Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities, as amended by GASB Statements No. 37 and No. 38. For the organizations reporting under the FASB basis, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features.

Summarized financial statements for these affiliated organizations are included in the Supplementary Information.

Information for obtaining complete financial statements for these organizations can be found within the respective campus' annual financial reports.

The following affiliated organizations were considered significant for reporting purposes to the State of Georgia and were considered component units of the State of Georgia.

Component Units of the State of Georgia Georgia Tech Foundation, Inc. Georgia Tech Athletic Association Georgia Tech Research Corporation Georgia Tech Facilities, Inc. Georgia State University Foundation, Inc. Georgia State University Research Foundation, Inc. MCG Health, Inc. Medical College of Georgia Foundation, Inc. Medical College of Georgia Physicians Practice Group Foundation University of Georgia Foundation University of Georgia Athletic Association, Inc. University of Georgia Research Foundation, Inc. Georgia Southern University Housing Foundation, Inc. VSU Auxiliary Services Real Estate Foundation, Inc. Kennesaw State University Foundation, Inc. Georgia College and State University Foundation, Inc. University System of Georgia Foundation, Inc.

Fiscal Year End June 30, 2010 June 30, 2010 June 30, 2010 June 30, 2010 June 30, 2010 June 30, 2010 June 30, 2010 June 30, 2010 June 30, 2010 June 30, 2010 June 30, 2010 June 30, 2010 June 30, 2010 December 31, 2009 June 30, 2010 June 30, 2010 June 30, 2010

Reporting Basis FASB GASB GASB FASB FASB GASB GASB FASB FASB FASB GASB GASB FASB FASB FASB FASB GASB

59

The University System of Georgia ANNUAL FINANCIAL REPORT

60

The University System of Georgia ANNUAL FINANCIAL REPORT

SUPPLEMENTARY INFORMATION to the FINANCIAL STATEMENTS
USG ANNUAL FINANCIAL REPORT
61

The University System of Georgia ANNUAL FINANCIAL REPORT

Condensed Financial Statements
SUPPLEMENTARY INFORMATION USG ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA CONDENSED STATEMENT OF NET ASSETS BY INSTITUTION JUNE 30, 2010

Institution Georgia Institute of Technology Georgia State University Medical College of Georgia University of Georgia Georgia Southern University Valdosta State University Albany State University Armstrong Atlantic State University Augusta State University Clayton College & State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State Univ. Kennesaw State University North Georgia College & State Univ. Savannah State University Southern Polytechnic State Univ. University of West Georgia Abraham Baldwin Agricultural Coll. College of Coastal Georgia Dalton State College Gainesville State College Georgia Gwinnett College Gordon College Macon State College Middle Georgia College Atlanta Metropolitan College Bainbridge College Darton College East Georgia College Georgia Highlands College Georgia Perimeter College South Georgia College Waycross College Skidaway Institute of Oceanography University System Office Elimination/Consolidation Entries Total

Current Assets $ 220,487,917
218,932,952 89,912,220
369,421,730 66,110,870 29,935,140 14,374,824 20,478,350 16,251,956 16,016,876 24,001,674 8,567,218 24,361,575 9,569,338 74,400,162 18,819,573 13,922,771 24,675,095 45,219,847 6,971,749 4,502,969 6,488,491 15,344,771 11,210,946 13,848,000 14,400,942 12,964,188 5,944,700 10,634,352 9,941,839 4,850,039 5,237,867 26,657,615 1,998,729 2,411,239 1,029,520
275,296,772 (142,636,397) $1,592,558,419

Noncurrent Cash/
Investments $ 54,934,882
861,561 93,279,389 57,901,902
2,475,331 11,874,030
2,347,500 376,640 918,001
2,404,246 42,950
5,130,396 552,944
3,809,086 2,443,279 3,728,944 2,731,825
344,143
82,797
1,077,949 940,743
602,605
28,037 1,042,965
150,000 253,845
7,623,524 (78,314,662) $179,644,852

Assets
Capital Assets $1,538,480,605
667,178,623 301,645,933 1,384,238,294 436,129,376 321,876,158 121,358,109 126,571,408 103,070,297
99,740,361 128,464,321 126,496,967 155,070,031
79,746,638 249,511,523 118,632,475 116,042,030 101,122,370 210,198,861
75,704,771 34,287,383 31,873,036 43,406,170 71,268,450 61,635,944 71,134,744 128,943,799 12,124,375 29,660,295 37,641,034 19,224,926 39,835,099 162,412,057 27,544,856
9,011,521 10,947,858 52,575,989
$7,304,806,687

Other Assets $10,359,726
5,801,191 4,039,136 10,862,954 3,015,332
28,910 383,777
11,654 582,300
39,497 1,052,920 1,830,194 2,879,884
786,709 447,709 1,116,517 804,539 173,748 2,060,855 335,686
4,182
10,267
107,138
-
5 49,273
2,033,301 (2,033,301) $46,784,103

Total Assets $ 1,824,263,130
892,774,327 488,876,678 1,822,424,880 507,730,909 363,714,238 136,116,710 149,408,912 120,281,193 116,714,735 155,923,161 136,937,329 187,441,886
90,655,629 328,168,480 141,011,844 134,498,284 128,703,038 257,823,706
83,012,206 38,877,331 38,361,527 58,750,941 82,479,396 75,494,211 86,613,635 142,955,868 18,069,075 40,897,252 47,582,873 24,074,965 45,101,003 190,112,642 29,742,858 11,676,605 11,977,378 337,529,586 (222,984,360) $ 9,123,794,061

62

The University System of Georgia ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA CONDENSED STATEMENT OF NET ASSETS BY INSTITUTION continued JUNE 30, 2010

Institution Georgia Institute of Technology Georgia State University Medical College of Georgia University of Georgia Georgia Southern University Valdosta State University Albany State University Armstrong Atlantic State University Augusta State University Clayton College & State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State Univ. Kennesaw State University North Georgia College & State Univ. Savannah State University Southern Polytechnic State Univ. University of West Georgia Abraham Baldwin Agricultural Coll. College of Coastal Georgia Dalton State College Gainesville State College Georgia Gwinnett College Gordon College Macon State College Middle Georgia College Atlanta Metropolitan College Bainbridge College Darton College East Georgia College Georgia Highlands College Georgia Perimeter College South Georgia College Waycross College Skidaway Institute of Oceanography University System Office Elimination/Consolidation Entries Total

Liabilities

Current Liabilities Noncurrent Liabilities Total Liabilities

$ 143,846,353 $ 524,039,484 $ 667,885,837

84,613,156

303,681,965

$388,295,121

110,395,883

41,333,985

$151,729,868

142,699,148

256,484,017

$399,183,165

33,161,247

177,506,865

$210,668,112

13,698,630

218,326,673

$232,025,303

3,356,096

35,037,455

$38,393,551

13,278,076

70,488,295

$83,766,371

8,642,646

31,932,827

$40,575,473

5,413,722

47,289,704

$52,703,426

13,460,688

59,144,104

$72,604,792

8,085,229

64,326,824

$72,412,053

12,330,622

109,560,376

$121,890,998

6,394,019

39,483,423

$45,877,442

42,962,754

114,020,926

$156,983,680

9,813,226

43,275,231

$53,088,457

4,288,492

54,461,537

$58,750,029

16,682,743

47,189,916

$63,872,659

18,067,394

111,436,873

$129,504,267

3,301,435

48,669,533

$51,970,968

2,318,595

224,509

$2,543,104

2,184,055

7,502,065

$9,686,120

4,848,438

12,479,487

$17,327,925

4,024,078

40,701,536

$44,725,614

4,122,648

33,618,170

$37,740,818

5,328,226

983,238

$6,311,464

2,538,598

63,673,439

$66,212,037

2,146,243

378,958

$2,525,201

3,766,985

293,471

$4,060,456

4,847,667

1,168,427

$6,016,094

1,914,391

184,457

$2,098,848

2,924,738

379,957

$3,304,695

17,131,166

81,599,466

$98,730,632

837,523

16,483,726

$17,321,249

906,377

112,140

$1,018,517

623,416

75,969

$699,385

240,750,926

18,955,004

$259,705,930

(221,045,833)

697,999,473

$476,953,640

$ 774,659,796 $ 3,374,503,505 $ 4,149,163,301

63

The University System of Georgia ANNUAL FINANCIAL REPORT

Condensed Financial Statements
SUPPLEMENTARY INFORMATION USG ANNUAL FINANCIAL REPORT
UNIVERSITY SYSTEM OF GEORGIA CONDENSED STATEMENT OF NET ASSETS BY INSTITUTION continued JUNE 30, 2010

Institution Georgia Institute of Technology

Invested in Capital

Restricted

Assets

Unexpendable

$ 1,016,751,704 $ 47,648,301

Georgia State University

363,951,148

42,476

Medical College of Georgia

274,705,038

1,495,902

University of Georgia

1,139,354,681

58,106,618

Georgia Southern University

255,444,309

2,465,814

Valdosta State University

102,182,637

2,052,958

Albany State University

87,049,434

Armstrong Atlantic State University

55,182,014

2,051,849

Augusta State University

71,513,660

14,000

Clayton College & State University

53,313,362

918,001

Columbus State University

68,322,145

1,652,040

Fort Valley State University

62,889,249

68,099

Georgia College & State University

49,830,192

3,189,665

Georgia Southwestern State Univ.

40,549,903

344,842

Kennesaw State University

134,658,873

659,643

North Georgia College & State Univ.

76,018,761

2,514,667

Savannah State University

61,939,332

3,579,321

Southern Polytechnic State Univ.

53,434,960

1,437,399

University of West Georgia

99,187,844

Abraham Baldwin Agricultural Coll.

26,326,161

College of Coastal Georgia

34,287,383

68,879

Dalton State College

24,475,099

Gainesville State College

30,795,075

Georgia Gwinnett College

30,554,140

Gordon College

27,731,018

Macon State College

71,134,744

Middle Georgia College

66,259,251

Atlanta Metropolitan College

12,124,375

Bainbridge College

29,660,295

538,024

Darton College

37,487,770

East Georgia College

19,208,339

37,100

Georgia Highlands College

39,835,099

28,039

Georgia Perimeter College

81,631,170

29,449

South Georgia College

11,156,440

150,000

Waycross College

9,011,521

136,240

Skidaway Institute of Oceanography

10,947,858

University System Office

30,659,141

3,612,043

Elimination/Consolidation Entries

Total

$ 4,659,564,125 $ 132,841,369

Net Assets Restricted
Expendable $ 67,474,184
9,514,175 72,528,242 74,741,788
3,465,787 3,344,869
386,824 315,387 1,876,093 758,430 3,021,987 1,549,400 4,851,633 1,398,075 2,551,107 1,812,559 1,077,238 1,563,014 2,456,678 825,499
37,550 1,961
5,956 13,053 1,360,826 1,330,389
81,254
12,523 32,851 753,359 121,028 70,808
30,458,910
$ 289,793,437

Unrestricted Total Net Assets

$ 24,503,104 $ 1,156,377,293

130,971,407

504,479,206

(11,582,372)

337,146,810

151,038,628 1,423,241,715

35,686,887

297,062,797

24,108,471

131,688,935

10,286,901

97,723,159

8,093,291

65,642,541

6,301,967

79,705,720

9,021,516

64,011,309

10,322,197

83,318,369

18,528

64,525,276

7,679,398

65,550,888

2,485,367

44,778,187

33,315,177

171,184,800

7,577,400

87,923,387

9,152,364

75,748,255

8,395,006

64,830,379

$26,674,917

128,319,439

3,889,578

31,041,238

1,940,415

36,334,227

4,198,347

28,675,407

10,627,941

41,423,016

7,193,686

37,753,782

10,009,322

37,753,393

7,806,601

80,302,171

9,154,191

76,743,831

3,419,499

15,543,874

6,557,223

36,836,796

4,079,009

41,566,779

2,718,155

21,976,117

1,900,319

41,796,308

8,968,032

91,382,010

994,141

12,421,609

1,439,519

10,658,088

330,135

11,277,993

13,093,562

77,823,656

(699,938,000) (699,938,000)

$ (107,568,171) $ 4,974,630,760

64

The University System of Georgia ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA CONDENSED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS BY INSTITUTION FOR THE FISCAL YEAR ENDED JUNE 30, 2010

Revenues

Operating

Institution Georgia Institute of Technology Georgia State University Medical College of Georgia University of Georgia Georgia Southern University Valdosta State University Albany State University Armstrong Atlantic State University Augusta State University Clayton College & State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State Univ. Kennesaw State University North Georgia College & State Univ. Savannah State University Southern Polytechnic State Univ. University of West Georgia Abraham Baldwin Agricultural Coll. College of Coastal Georgia Dalton State College Gainesville State College Georgia Gwinnett College Gordon College Macon State College Middle Georgia College Atlanta Metropolitan College Bainbridge College Darton College East Georgia College Georgia Highlands College Georgia Perimeter College South Georgia College Waycross College Skidaway Institute of Oceanography University System Office Elimination/Consolidation Entries Total

Tuition & Fees, Net
$ 177,483,251 170,000,895 35,057,042 254,395,648 75,024,715 46,453,440 11,884,154 24,156,884 23,306,149 19,615,429 30,111,461 6,488,217 32,675,762 8,270,333 90,913,006 19,592,350 7,431,966 22,675,330 39,855,050 3,848,877 4,467,898 7,774,072 17,155,084 8,319,355 5,088,814 11,521,261 3,690,242 3,627,237 3,017,528 8,178,363 2,555,335 8,671,768 48,707,712 1,003,617 1,212,932
$ 1,234,231,177

Grants & Contracts $ 564,747,448
61,407,021 379,035,814 181,507,451
7,834,988 3,476,218 7,903,284 6,459,753
302,968 2,178,519 1,073,922 11,173,626
586,863 2,937,232 5,236,327
333,496 9,431,043
451,118 2,245,181
460,006 47,770
2,728,346 1,026
18,052 389,042 605,167 430,829 1,654,731 2,087,485 2,506,547
224,966 2,714,527 272,718
2,316 3,141,959 8,382,332 (13,400,749) $ 1,260,589,342

Auxiliaries $ 86,485,013
52,847,734 7,424,129
144,824,788 63,796,969 40,607,143 11,421,832 14,718,554
9,074,428 10,967,890
8,281,681 17,855,531 23,221,286
8,758,273 39,407,422 16,784,928 19,689,971
9,941,257 30,791,546 11,576,970
1,855,157 4,126,641 4,550,604
894,862 10,446,699
4,072,841 12,454,171
2,375,892 501,675
1,923,510 549,868 587,867
8,387,735 4,019,491
788,031 38,637
(294,349) $ 685,756,677

Other $ 39,431,135
14,876,355 10,229,675 55,536,222
4,729,467 1,560,661
843,860 937,599 1,630,801 2,026,298 3,260,804 6,580,983 2,132,849 627,367 8,614,888 1,312,906 367,535 1,901,027 3,402,926 426,034 273,942 306,177 1,168,606 185,301 187,694 550,701 253,378
81,574 437,076 299,821
38,640 218,340 1,886,819 162,570
4,486 380,470 237,311,706 (157,434,701) $ 246,741,992

Expenses $ (1,065,581,868)
(516,954,365) (600,943,395) (1,106,667,243) (248,813,339) (148,920,301)
(66,186,892) (82,326,049) (72,645,517) (72,654,507) (93,359,287) (76,558,683) (93,749,472) (39,377,335) (243,650,955) (70,430,941) (66,475,065) (58,189,289) (130,443,784) (37,595,121) (28,009,877) (41,981,511) (52,649,915) (39,671,665) (36,077,527) (53,213,593) (41,459,410) (25,014,271) (25,268,618) (42,882,552) (16,363,741) (32,051,935) (168,919,939) (18,939,242)
(9,296,487) (6,739,207) (370,473,530) (133,333,201) $ (6,033,869,629)

Operating Loss $ (197,435,021)
(217,822,360) (169,196,735) (470,403,134)
(97,427,200) (56,822,839) (34,133,762) (36,053,259) (38,331,171) (37,866,371) (50,631,419) (34,460,326) (35,132,712) (18,784,130) (99,479,312) (32,407,261) (29,554,550) (23,220,557) (54,149,081) (21,283,234) (21,365,110) (27,046,275) (29,774,595) (30,254,095) (19,965,278) (36,463,623) (24,630,790) (17,274,837) (19,224,854) (29,974,311) (13,219,898) (22,348,994) (107,223,146) (13,480,846)
(7,288,722) (3,178,141) (124,779,492) (304,463,000) $ (2,606,550,441)

65

The University System of Georgia ANNUAL FINANCIAL REPORT

Condensed Financial Statements
SUPPLEMENTARY INFORMATION USG ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA CONDENSED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS BY INSTITUTION continued FOR THE FISCAL YEAR ENDED JUNE 30, 2010

Non-Operating

Institution Georgia Institute of Technology Georgia State University Medical College of Georgia University of Georgia Georgia Southern University Valdosta State University Albany State University Armstrong Atlantic State University Augusta State University Clayton College & State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State Univ. Kennesaw State University North Georgia College & State Univ. Savannah State University Southern Polytechnic State Univ. University of West Georgia Abraham Baldwin Agricultural Coll. College of Coastal Georgia Dalton State College Gainesville State College Georgia Gwinnett College Gordon College Macon State College Middle Georgia College Atlanta Metropolitan College Bainbridge College Darton College East Georgia College Georgia Highlands College Georgia Perimeter College South Georgia College Waycross College Skidaway Institute of Oceanography University System Office Elimination/Consolidation Entries Total

State Appropriations $ 207,583,762
174,985,105 129,797,176 372,310,666
69,555,517 41,876,536 17,291,479 25,002,899 22,191,957 19,818,176 28,770,505 17,870,376 26,335,916 9,881,424 67,363,053 20,318,199 15,502,685 17,363,494 38,474,634 11,204,035 11,046,460 11,376,109 16,044,898 28,436,272 9,425,455 17,048,144 14,368,356 6,305,778 7,328,940 12,359,784 4,896,404 11,476,317 46,853,579 6,167,512 3,180,681 2,454,136 150,891,111
3 $ 1,693,157,533

Other Revenues/ (Expenses)
$ 82,804,942 140,298,333 53,815,654 250,038,269 49,956,578 37,175,565 20,327,351 18,051,705 18,480,309 23,168,588 24,337,899 33,339,943 18,281,329 9,566,649 54,095,908 14,628,842 19,319,781 12,945,791 32,490,725 13,219,658 12,359,572 16,379,083 16,413,349 8,077,072 13,906,254 21,228,089 14,205,078 11,553,057 16,861,336 20,786,061 11,912,820 11,345,842 57,970,277 7,988,702 5,271,991 1,748,075 (5,962,914) (115,554)
$ 1,168,272,009

Interest Expense $ (28,336,365)
(14,665,641) (1,886,002)
(17,253,812) (8,900,886) (8,556,965) (1,605,287) (2,106,450) (1,602,205) (2,122,347) (366,394) (2,540,221) (4,701,455) (1,860,998) (6,890,921) (2,036,165) (2,352,293) (1,497,555) (5,058,222) (2,264,975) (353,560) (295,506) (1,987,433) (1,624,704) (13,216) (3,023,410) (13,619) (8,149) (3,670,371) (737,108) (3,636) (965,135) 115,551
$ (129,185,455)

66

The University System of Georgia ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA CONDENSED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS BY INSTITUTION continued FOR THE FISCAL YEAR ENDED JUNE 30, 2010
Net Assets

Institution

Increase/ (Decrease) in Net
Assets

Net Assets Beginning of Year

Prior Year Adjustments

Net Assets Beginning of Year
Restated

Net Assets - End of Year

Georgia Institute of Technology

$

64,617,318 $ 1,084,452,375 $ 7,307,600 $ 1,091,759,975 $ 1,156,377,293

Georgia State University

82,795,437

421,683,769

421,683,769

504,479,206

Medical College of Georgia

12,530,093

324,616,717

324,616,717

337,146,810

University of Georgia

134,691,989

1,288,549,726

1,288,549,726

1,423,241,715

Georgia Southern University

13,184,009

283,878,788

283,878,788

297,062,797

Valdosta State University

13,672,297

116,135,405

1,881,233

118,016,638

131,688,935

Albany State University

1,879,781

98,378,641

(2,535,263)

95,843,378

97,723,159

Armstrong Atlantic State University

4,894,895

60,747,646

60,747,646

65,642,541

Augusta State University

738,890

78,966,830

78,966,830

79,705,720

Clayton College & State University

2,998,046

61,013,263

61,013,263

64,011,309

Columbus State University

2,110,591

81,207,778

81,207,778

83,318,369

Fort Valley State University

14,209,772

50,315,504

50,315,504

64,525,276

Georgia College & State University

4,783,078

60,767,810

60,767,810

65,550,888

Georgia Southwestern State Univ.

(1,197,055)

45,975,242

45,975,242

44,778,187

Kennesaw State University

15,088,728

156,096,072

156,096,072

171,184,800

North Georgia College & State Univ.

503,615

87,419,772

87,419,772

87,923,387

Savannah State University

2,915,623

72,832,632

72,832,632

75,748,255

Southern Polytechnic State Univ.

5,591,173

59,239,206

59,239,206

64,830,379

University of West Georgia

11,758,056

116,561,383

116,561,383

128,319,439

Abraham Baldwin Agricultural Coll.

875,484

30,572,771

(407,017)

30,165,754

31,041,238

College of Coastal Georgia

2,040,922

34,293,305

34,293,305

36,334,227

Dalton State College

355,357

28,320,050

28,320,050

28,675,407

Gainesville State College

2,388,146

39,034,870

39,034,870

41,423,016

Georgia Gwinnett College

4,271,816

33,481,966

33,481,966

37,753,782

Gordon College

1,741,727

36,280,433

(268,767)

36,011,666

37,753,393

Macon State College

1,799,394

79,203,987

(701,210)

78,502,777

80,302,171

Middle Georgia College

919,234

75,824,597

75,824,597

76,743,831

Atlanta Metropolitan College

583,998

14,959,876

14,959,876

15,543,874

Bainbridge College

4,965,422

31,871,374

31,871,374

36,836,796

Darton College

3,157,915

38,408,864

38,408,864

41,566,779

East Georgia College

3,581,177

18,394,940

18,394,940

21,976,117

Georgia Highlands College

473,165

41,323,143

41,323,143

41,796,308

Georgia Perimeter College

(6,069,661)

97,451,671

97,451,671

91,382,010

South Georgia College

(61,740)

12,483,349

12,483,349

12,421,609

Waycross College

1,163,950

9,494,138

9,494,138

10,658,088

Skidaway Institute of Oceanography

1,020,434

10,257,559

10,257,559

11,277,993

University System Office

19,183,570

57,938,876

701,210

58,640,086

77,823,656

Elimination/Consolidation Entries Total

(304,463,000)

(437,225,000)

41,750,000

(395,475,000)

(699,938,000)

$ 125,693,646 $ 4,801,209,328 $ 47,727,786 $ 4,848,937,114 $ 4,974,630,760

67

The University System of Georgia ANNUAL FINANCIAL REPORT

Condensed Financial Statements
SUPPLEMENTARY INFORMATION USG ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA CONDENSED STATEMENT OF NET ASSETS AFFILIATED INSTITUTIONS (UNAUDITED) JUNE 30, 2010

Component Units Georgia Tech Foundation, Inc. Georgia Tech Athletic Association Georgia Tech Research Corporation Georgia Advanced Technology Ventures, Inc. Georgia Tech Alumni Association Georgia Tech Facilities, Inc. Georgia State University Foundation, Inc. Georgia State University Research Foundation, Inc. MCG Health, Inc. Medical College of Georgia Foundation, Inc. Medical College of Georgia Physicians Practice Group Foundation Medical College of Georgia Research Institute, Inc. Medical College of Georgia Dental Foundation University of Georgia Foundation University of Georgia Athletic Assoc., Inc. Arch Foundation for the University of Georgia, Inc. University of Georgia Research Foundation, Inc. Georgia Southern University Foundation, Inc. Georgia Southern University Housing Foundation, Inc. Georgia Southern University Athletic Foundation, Inc. Georgia Southern University Research and Service Foundation, Inc. Valdosta State University Foundation, Inc. VSU Auxiliary Services Real Estate Foundation, Inc. Albany State University Foundation, Inc.
Armstrong Atlantic State University Foundation, Inc. AASU Educational Properties Foundation, Inc. Augusta State University Foundation, Inc. (Clayton State University) Walter & Emilie Spivey Foundation Clayton State University Foundation, Inc. Columbus State University Foundation, Inc. (Columbus State University) Foundation Properties, Inc. Columbus State University Athletic Fund, Inc. Columbus State University Alumni Association, Inc.
Fort Valley State University Foundation, Inc. Georgia College & State University Alumni Association, Inc. Georgia College and State University Foundation, Inc. Georgia Southwestern Foundation, Inc. Kennesaw State University Foundation, Inc. North Georgia College & State University Foundation, Inc. Southern Polytechnic State University Foundation, Inc. University of West Georgia Foundation, Inc. UWG Real Estate Foundation, Inc. Abraham Baldwin Agricultural College Foundation, Inc. College of Coastal Georgia Foundation, Inc. Dalton State College Foundation, Inc. Gainesville State College Foundation, Inc. Gordon College Foundation, Inc. Macon State College Foundation, Inc. Middle Georgia College Foundation, Inc. Bainbridge College Foundation Darton College Foundation, Inc. East Georgia College Foundation, Inc. Georgia Highlands College Foundation, Inc. Georgia Perimeter College Foundation, Inc. South Georgia College Foundation, Inc. Waycross College Foundation, Inc. University System of Georgia Foundation, Inc.
Total

Current Assets $ 42,058,556
12,488,503 143,994,477
7,395,839 871,735
31,710,354 27,281,528 45,537,587 172,938,424
7,997,287
63,014,653 13,240,320
2,301,748 34,901,228 88,592,961 46,898,157 73,467,907 39,406,325
8,607,401 2,531,650
2,903,015 2,282,635 1,186,404 5,925,353
795,988 855,230 3,458,652
72,125 1,086,267 4,016,793 3,732,033
55,888 135,349
5,518,688 337,073 1,832,093 3,168,008 19,454,446 1,598,647 4,677,632 3,436,066 3,625,872 6,316,128 5,923,227 3,677,932 12,115,871 2,045,074
361,714 1,351,647
559,783 542,536 375,853 658,588 1,945,498 707,917
93,706 8,170,673 $ 980,237,044

Noncurrent Cash/ Investments
$ 449,002,201 -
353,247 -
27,483,476 171,456,198
5,519,931 136,090,745 108,828,098
418,770 53,910
5,038,105 477,953,255
970,261 44,327,778 63,068,566
325,500 21,909,554
-
20,226,197 23,778,458
2,248,370
6,131,068 31,866,322 23,658,196
5,600,623 6,855,032 7,285,120
789,765 1,283,474 163,435
8,355,074 5,043,510 26,121,831 23,435,566 59,808,779 32,724,081 8,455,071 26,533,947
1,104,879 17,990,601
2,269,548 17,547,122 10,462,491 10,054,089
7,239,276 10,384,855
978,169 739,037 821,597 2,626,858 6,512,068 1,491,957 42,990,523 $ 1,966,376,584

Assets
Capital Assets $ 36,451,157
102,239,806 1,189,387
112,269,521 272,434
3,834,245 53,406,652
5,272,328 168,246,200
1,819,478
10,127,040 -
13,488,476 201,275,291
22,919,662 62,986,713
414,750 -
1,562,800
6,745,778 43,956,758 1,023,113
32,273,947
139,882 -
27,986,666 99,321,465
-
1,693,805 25,965 3,754,387
228,482 178,168,512
849,916 73,578
53,911,589 3,047,887
6,165,966
12,761
581,957
8,696,383
63,482 -
78,409,519 41,260 -
99,076,024 $ 1,444,025,022

Other Assets $ 910,917,294
94,048,088 79,248
4,791,050 -
247,446,595 162,405,736
70,928,413 1,688,271 488,345
78,694,824 -
11,622,414 13,911,743
247,746,524
1,439,428 163,916,589 1,123,917
872,640 156,331,621 29,385,943
27,144 47,985,127 54,556,204
40,910,325
8,854,406 3,814,330
100,209 -
53,890,267 4,500
94,628,941 40,262,856
116,720,269 43,026,482 26,526,789
58,669,406 3,913,079
80,747,533 563,322
4,097,439 276,033
31,721,908 77,792
64,317,166 -
36,313 39,900 584,889 1,342,785 25,140,902
62,799,947 $ 3,063,474,946

Total Assets $1,438,429,208
208,776,397 145,263,112 124,809,657
1,144,169 310,474,670 414,550,114 127,258,259 478,963,640 119,133,208
152,255,287 13,294,230
7,339,853 537,965,373 304,750,256 114,145,597 447,269,710 41,586,003 194,433,544 5,218,367
2,903,015 30,127,250 225,253,241
38,582,779
6,954,200 112,980,626
81,673,052
5,812,630 48,851,624 48,142,985 107,657,593
1,439,571 298,784
69,457,834 5,411,048
126,337,252 67,094,912 374,152,006
78,199,126 39,659,492 88,712,997 62,555,419 108,102,149
8,756,097 31,488,459 22,854,395 43,833,832
7,678,782 76,635,625
559,783 10,253,401
1,218,272 2,065,074 84,324,660 32,402,147 1,585,663 213,037,167 $ 7,454,113,596

68

The University System of Georgia ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA CONDENSED STATEMENT OF NET ASSETS AFFILIATED INSTITUTIONS (UNAUDITED) continued JUNE 30, 2010

Liabilities

Component Units Georgia Tech Foundation, Inc. Georgia Tech Athletic Association Georgia Tech Research Corporation Georgia Advanced Technology Ventures, Inc. Georgia Tech Alumni Association Georgia Tech Facilities, Inc. Georgia State University Foundation, Inc. Georgia State University Research Foundation, Inc. MCG Health, Inc. Medical College of Georgia Foundation, Inc. Medical College of Georgia Physicians Practice Group Foundation Medical College of Georgia Research Institute, Inc. Medical College of Georgia Dental Foundation University of Georgia Foundation University of Georgia Athletic Assoc., Inc. Arch Foundation for the University of Georgia, Inc. University of Georgia Research Foundation, Inc. Georgia Southern University Foundation, Inc. Georgia Southern University Housing Foundation, Inc. Georgia Southern University Athletic Foundation, Inc. Georgia Southern University Research and Service Foundation, Inc. Valdosta State University Foundation, Inc. VSU Auxiliary Services Real Estate Foundation, Inc. Albany State University Foundation, Inc.

Noncurrent

Current Liabilities

Liabilities

Total Liabilities

$ 45,260,634 $ 393,115,574 $ 438,376,208

17,115,111

121,220,993

138,336,104

108,083,894

-

108,083,894

9,405,698

111,367,992

120,773,690

740,326

-

740,326

19,887,367

303,985,481

323,872,848

10,173,898

258,249,478

268,423,376

18,566,638

91,033,567

109,600,205

66,507,514

160,988,017

227,495,531

-

1,391,466

1,391,466

8,035,966 7,066,751 7,419,019 6,739,742 30,087,626 4,407,718 73,581,571 2,840,229 13,887,016 822,550

57,408,139 -
18,600,885 103,675,678
302,956,992
177,448,789
403,548

65,444,105 7,066,751 7,419,019
25,340,627 133,763,304
4,407,718 376,538,563
2,840,229 191,335,805
1,226,098

2,080,342 1,183,257 9,821,922 1,101,613

5,684,846 189,771,043 34,189,690

2,080,342 6,868,103 199,592,965 35,291,303

Armstrong Atlantic State University Foundation, Inc. AASU Educational Properties Foundation, Inc. Augusta State University Foundation, Inc.

105,892 4,837,400 3,633,703

96,607,060 52,115,534

105,892 101,444,460
55,749,237

(Clayton State University) Walter & Emilie Spivey Foundation Clayton State University Foundation, Inc. Columbus State University Foundation, Inc. (Columbus State University) Foundation Properties, Inc. Columbus State University Athletic Fund, Inc. Columbus State University Alumni Association, Inc.

1,110,074
401,227 22,649,479
262,011 15,648

41,951,460
3,133,301 72,997,587
218,502 -

43,061,534
3,534,528 95,647,066
480,513 15,648

Fort Valley State University Foundation, Inc.

2,929,714

62,229,769

65,159,483

Georgia College & State University Alumni Association, Inc.

16,220

-

16,220

Georgia College and State University Foundation, Inc.

19,538,767

107,435,884

126,974,651

Georgia Southwestern Foundation, Inc.

836,611

44,125,071

44,961,682

Kennesaw State University Foundation, Inc.

74,658,971

273,669,814

348,328,785

North Georgia College & State University Foundation, Inc.

2,709,029

50,284,474

52,993,503

Southern Polytechnic State University Foundation, Inc.

1,509,738

31,300,890

32,810,628

University of West Georgia Foundation, Inc.

3,234,327

55,498,127

58,732,454

UWG Real Estate Foundation, Inc.

1,075,882

55,702,347

56,778,229

Abraham Baldwin Agricultural College Foundation, Inc.

5,440,033

81,115,259

86,555,292

College of Coastal Georgia Foundation, Inc.

314,616

-

314,616

Dalton State College Foundation, Inc.

332,858

2,319,673

2,652,531

Gainesville State College Foundation, Inc.

3,519,505

6,365,000

9,884,505

Gordon College Foundation, Inc.

1,204,987

34,558,475

35,763,462

Macon State College Foundation, Inc.

257,259

-

257,259

Middle Georgia College Foundation, Inc.

1,710,750

63,070,000

64,780,750

Bainbridge College Foundation

-

-

-

Darton College Foundation, Inc.

512,554

6,133,251

6,645,805

East Georgia College Foundation, Inc.

2,232

-

2,232

Georgia Highlands College Foundation, Inc.

5,197

-

5,197

Georgia Perimeter College Foundation, Inc.

1,319,857

75,655,000

76,974,857

South Georgia College Foundation, Inc.

221,412

29,699,820

29,921,232

Waycross College Foundation, Inc.

8,109

-

8,109

University System of Georgia Foundation, Inc.

14,768,798

194,069,032

208,837,830

Total

$ 633,959,262 $ 3,771,747,508 $ 4,405,706,770

69

The University System of Georgia ANNUAL FINANCIAL REPORT

Condensed Financial Statements
SUPPLEMENTARY INFORMATION USG ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA CONDENSED STATEMENT OF NET ASSETS AFFILIATED INSTITUTIONS (UNAUDITED) continued JUNE 30, 2010

Component Units Georgia Tech Foundation, Inc. Georgia Tech Athletic Association Georgia Tech Research Corporation Georgia Advanced Technology Ventures, Inc. Georgia Tech Alumni Association Georgia Tech Facilities, Inc. Georgia State University Foundation, Inc. Georgia State University Research Foundation, Inc. MCG Health, Inc. Medical College of Georgia Foundation, Inc. Medical College of Georgia Physicians Practice Group Foundation Medical College of Georgia Research Institute, Inc. Medical College of Georgia Dental Foundation University of Georgia Foundation University of Georgia Athletic Assoc., Inc. Arch Foundation for the University of Georgia, Inc. University of Georgia Research Foundation, Inc. Georgia Southern University Foundation, Inc. Georgia Southern University Housing Foundation, Inc. Georgia Southern University Athletic Foundation, Inc. Georgia Southern University Research and Service Foundation, Inc. Valdosta State University Foundation, Inc. VSU Auxiliary Services Real Estate Foundation, Inc. Albany State University Foundation, Inc.
Armstrong Atlantic State University Foundation, Inc. AASU Educational Properties Foundation, Inc. Augusta State University Foundation, Inc. (Clayton State University) Walter & Emilie Spivey Foundation Clayton State University Foundation, Inc. Columbus State University Foundation, Inc. (Columbus State University) Foundation Properties, Inc. Columbus State University Athletic Fund, Inc. Columbus State University Alumni Association, Inc.
Fort Valley State University Foundation, Inc. Georgia College & State University Alumni Association, Inc. Georgia College and State University Foundation, Inc. Georgia Southwestern Foundation, Inc. Kennesaw State University Foundation, Inc. North Georgia College & State University Foundation, Inc. Southern Polytechnic State University Foundation, Inc. University of West Georgia Foundation, Inc. UWG Real Estate Foundation, Inc. Abraham Baldwin Agricultural College Foundation, Inc. College of Coastal Georgia Foundation, Inc. Dalton State College Foundation, Inc. Gainesville State College Foundation, Inc. Gordon College Foundation, Inc. Macon State College Foundation, Inc. Middle Georgia College Foundation, Inc. Bainbridge College Foundation Darton College Foundation, Inc. East Georgia College Foundation, Inc. Georgia Highlands College Foundation, Inc. Georgia Perimeter College Foundation, Inc. South Georgia College Foundation, Inc. Waycross College Foundation, Inc. University System of Georgia Foundation, Inc.
Total

Invested in

Capital Assets

$

(102,561)

(10,949,347)

1,189,387

478,702

272,434

(37,636,319)

(46,600,063)

5,272,328

61,844,155

1,819,478

10,127,040

-

-

6,625,988

109,837,449

-

9,964,291

414,750

7,719,080

1,245,376

-

1,573,016

33,439,192

(4,803,621)

Restricted Unexpendable $ 449,002,201
28,375,579 -
75,121,679 2,000,000 30,000
95,159,486 -
301,901,618
41,573,277 -
30,722,431 -
-
18,571,295 -

-

4,553,416

5,596,149 139,882
(1,162,857) -
27,902,417 -
-

15,917,313 -
2,240,289 28,292,265
1,345,583 56,206

1,045,913

3,290,184

25,965

4,434,749

(1,948,210)

11,894,518

(237,628)

11,049,577

(3,182,661)

22,927,511

(217,536)

23,347,362

-

2,268,012

12,051,731

10,627,767

1,471,002

-

7,634,246

6,799,351

-

5,433,547

3,893,334

9,623,948

8,298,912

(1,328,715)

2,033,518

-

6,528,588

12,070,229

858,783

-

559,783

2,050,578

1,008,118

63,482

-

-

1,281,541

4,376,599

1,417,100

(29,699,820)

2,296,176

-

1,358,770

-

-

$ 192,274,855 $1,232,200,453

Net Assets Restricted Expendable $ 491,691,026
63,065,273 -
3,700,497 -
10,566,106 47,007,466
774,130 1,332,269 10,531,762
75,373 109,427 184,804,165
66,476,557 2,623,064 6,273,973 9,349,309
2,558,934 -
2,564,977
7,220,900
2,128,525
2,784,946 -
2,912,260 14,109,889
194,839 -
2,547,051 390,689 3,539,336 3,503,661 12,889,476 4,106,876 2,422,420 7,382,055
2,545,218
1,707,186 3,282,013 3,394,136 4,773,917
505,206 509,156
2,505,279 1,056,685 1,043,011
795,173 177,991 105,083 1,035,685 $ 993,072,970

Unrestricted $ 59,462,334
(10,051,212) 35,989,831
(143,232) 131,409 13,672,035 70,597,656 9,611,596 188,261,685 10,231,016 76,684,142 6,152,106 (188,593) 19,292,975 61,149,503 1,688,045 58,143,792 1,334,620 (13,970,650) 187,959 822,673 549,859 (7,778,916) 874,197

Total Net Assets $ 1,000,053,000
70,440,293 37,179,218
4,035,967 403,843
(13,398,178) 146,126,738
17,658,054 251,468,109 117,741,742
86,811,182 6,227,479 (79,166)
512,624,746 170,986,952 109,737,879
70,731,147 38,745,774
3,097,739 3,992,269
822,673 23,259,147 25,660,276
3,291,476

166,367 11,536,166
1,625,407 5,672,748 1,800,398 2,206,303 (15,891,890)
(581,364) 226,930

6,848,308 11,536,166 25,923,815
5,812,630 5,790,090 44,608,457 12,010,527
959,058 283,136

(2,584,797) 543,425 (14,123,043) 7,817,620 (6,811,105) (2,031,079) 2,148,432
(81,010) 4,306,188 4,568,042 1,300,748 12,036,633 1,276,842 2,591,650
387,729 (1,583,293)
(1,956,379)
95,873 (264,675) 760,931 29,706,568 113,701 3,163,652 $ 630,848,548

4,298,351 5,394,828 (637,399) 22,133,230 25,823,221 25,205,623 6,838,864 29,980,543 5,777,190 21,546,857 8,441,481 28,835,928 12,969,890 8,070,370 7,421,523 11,854,875
559,783 3,607,596 1,216,040 2,059,877 7,349,803 2,480,915 1,577,554 4,199,337 $ 3,048,396,826

70

The University System of Georgia ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA CONDENSED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS AFFILIATED INSTITUTIONS (UNAUDITED) FOR THE FISCAL YEAR ENDED JUNE 30, 2010

Component Units Georgia Tech Foundation, Inc. Georgia Tech Athletic Association Georgia Tech Research Corporation Georgia Advanced Technology Ventures, Inc. Georgia Tech Alumni Association Georgia Tech Facilities, Inc. Georgia State University Foundation, Inc. Georgia State University Research Foundation, Inc. MCG Health, Inc. Medical College of Georgia Foundation, Inc. Medical College of Georgia Physicians Practice Group Foundation Medical College of Georgia Research Institute, Inc. Medical College of Georgia Dental Foundation University of Georgia Foundation University of Georgia Athletic Assoc., Inc. Arch Foundation for the University of Georgia, Inc.
University of Georgia Research Foundation, Inc. Georgia Southern University Foundation, Inc. Georgia Southern University Housing Foundation, Inc. Georgia Southern University Athletic Foundation, Inc. Georgia Southern University Research and Service Foundation, Inc. Valdosta State University Foundation, Inc. VSU Auxiliary Services Real Estate Foundation, Inc. Albany State University Foundation, Inc. Armstrong Atlantic State University Foundation, Inc. AASU Educational Properties Foundation, Inc. Augusta State University Foundation, Inc. (Clayton State University) Walter & Emilie Spivey Foundation Clayton State University Foundation, Inc. Columbus State University Foundation, Inc. (Columbus State University) Foundation Properties, Inc. Columbus State University Athletic Fund, Inc. Columbus State University Alumni Association, Inc. Fort Valley State University Foundation, Inc. Georgia College & State University Alumni Association, Inc. Georgia College and State University Foundation, Inc. Georgia Southwestern Foundation, Inc. Kennesaw State University Foundation, Inc. North Georgia College & State University Foundation, Inc. Southern Polytechnic State University Foundation, Inc. University of West Georgia Foundation, Inc. UWG Real Estate Foundation, Inc. Abraham Baldwin Agricultural College Foundation, Inc. College of Coastal Georgia Foundation, Inc. Dalton State College Foundation, Inc. Gainesville State College Foundation, Inc. Gordon College Foundation, Inc. Macon State College Foundation, Inc. Middle Georgia College Foundation, Inc. Bainbridge College Foundation Darton College Foundation, Inc. East Georgia College Foundation, Inc. Georgia Highlands College Foundation, Inc. Georgia Perimeter College Foundation, Inc. South Georgia College Foundation, Inc. Waycross College Foundation, Inc. University System of Georgia Foundation, Inc.
Total

Grants and

Contracts

$

-

-

465,722,210

-

-

-

-

48,012,953

-

-

-

-

-

-

-

-

1,724,863

5,896,519

613,137

78,451

527,465 $ 522,575,598

Operating

Revenues

Rents and

Net Patient

Royalties

Revenue

Other

$ 15,435,519 $

- $ 34,156,205

8,351,685

-

41,400,361

7,502,234

-

3,576

14,947,570

-

220,246

807,238

-

5,583,017

13,391,889

32,312

20,489,333

11,861,984

442,083

427,732

412,979,040

4,198,697

453,840

92,378

1,945,740

1,888,186 104,160,275

-

-

-

66,587,835

-

-

9,104,825

1,290,532

-

18,520,498

-

-

86,763,698

-

-

30,289,112

28,334,190 189,276
9,208,854 176,400 5,100
2,058,149 6,138,211
1,413,637 1,864,486

-

132,209,120

142,065

-

1,094,660

-

2,400,810

-

-

2,534,311

82,978

1,827,450

1,630

-

2,248,924

412,969

574,714

282,192

7,317,650

2,076,128

10,240

429,719

117,659

2,734,692

1,275,185

535,994

6,930,560

2,957,353

1,640,416

432,085

30,432,705

7,350,427

247,581

1,296,993

5,084,440

429,222

15,201,758

115,935

1,577,556

3,301,986

808,929

1,240,261

371,011

1,786,889

548,652

1,291,874

1,877,261

105,244

573,164

3,296,372

327,128

83,595

1,157,733

681,217

239,305

202,569

253,887

2,308,351

1,409,080

848,727

153,185

77,031

1,029,977

$ 198,558,693 $ 517,231,693 $ 502,905,106

Non-Operating

Operating Profit/

Expenses

(Loss)

Revenues

$ (96,800,234) $ (47,208,510) $ 176,742,685 $

(49,260,598)

491,448

9,642,594

(472,503,536)

724,484

33,339

(13,489,307)

1,678,509

4,104

(6,148,093)

242,162

-

(1,507,739)

11,916,462

(21,251,162)

11,100,155

26,995,112

(48,735,413)

(280,377)

1,131,784

(441,273,837)

(23,668,368)

47,494,497

(11,511,236)

(9,019,278)

13,375,307

(93,177,793)

12,870,668

4,350,635

(65,292,150)

1,295,685

98,830

(9,683,892)

(579,067)

859,040

(29,043,324)

(9,232,294)

45,109,162

(71,913,258)

14,850,440

216,599

(23,469,224)

6,819,888

5,471,374

(153,312,567) (3,909,673) (5,221,210) (1,770,139) (5,728,997) (3,530,698) (2,166,556) (696,815) (1,792,283) (1,202,971) (1,791,054) (417,216) (2,898,066) (7,281,230) (6,635,069) (417,188) (103,902) (1,869,427) (264,977) (3,592,190) (1,517,956)
(23,251,431) (3,780,878) (3,132,027) (5,201,112) (171,792) (2,622,658) (1,442,166) (1,289,979) (1,359,555) (114,165) (764,485) (614,360) (13,777) (977,754) (369,115) (760,421) (2,587,360) (266,702) (93,763) (2,043,428)
$(1,712,037,908) $

7,230,743

2,458,529

(1,853,469)

4,563,801

5,082,304

1,182,182

807,071

29,305

172,622

21,707

1,061,762

4,481,574

4,054,633

18,694,804

1,743,772

223,553

(1,790,653)

2,355,496

210,666

2,582,725

2,322,356

1,103,879

(417,216)

980,013

(1,910,383)

1,963,778

(6,999,038)

457,872

2,758,709

22,771

13,757

2,140,450

619,885

271,017

66,481

6,295,723

2,375,750

554,545

2,837,958

14,531,701

3,256,089

(2,236,304)

5,656,624

2,030,864

833,600

10,429,868

4,063,466

1,521,699

2,500,226

1,488,257

2,307,010

(201,905)

316,147

867,921

3,832,887

480,971

334,959

1,868,340

929,197

(191,321)

1,395,167

3,009,140

4,802,598

69,818

6,168

861,196

118,903

(129,810)

30,900

(303,965)

92,371

1,130,071

735,210

54,992

(16,732)

286,838

(485,986)

2,806,290

29,233,182 $ 412,148,786 $

Expenses (20,657,175) (6,366,595)
(7,348,164) -
(14,666,625) (12,389,298)
(18,287,426) -
(1,364,990)
(21,361) (844,439) (5,711,187)
-
(11,201,547) (257,614)
(8,299,546) (19,079) -
(4,101,901) (5,643,293) (1,580,173)
(2,273,219) (1,540,322)
(317,169) (4,502,886) (254,940) (6,035) (3,363,590)
(8,789,221) (1,855,635) (13,136,220) (2,082,315) (1,522,378) (1,906,686) (2,989,851) (1,967,625)
(129,169)
(1,563,051)
(3,103,314) -
(283,210)
(1,014,219) (470,835)
(2,920,089) (174,752,392)

71

Condensed Financial Statements
SUPPLEMENTARY INFORMATION USG ANNUAL FINANCIAL REPORT

The University System of Georgia ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA CONDENSED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS AFFILIATED INSTITUTIONS (UNAUDITED) continued FOR THE FISCAL YEAR ENDED JUNE 30, 2010

Net Assets

Component Units Georgia Tech Foundation, Inc. Georgia Tech Athletic Association Georgia Tech Research Corporation Georgia Advanced Technology Ventures, Inc. Georgia Tech Alumni Association Georgia Tech Facilities, Inc. Georgia State University Foundation, Inc. Georgia State University Research Foundation, Inc. MCG Health, Inc. Medical College of Georgia Foundation, Inc. Medical College of Georgia Physicians Practice Group Foundation Medical College of Georgia Research Institute, Inc. Medical College of Georgia Dental Foundation University of Georgia Foundation University of Georgia Athletic Assoc., Inc. Arch Foundation for the University of Georgia, Inc.
University of Georgia Research Foundation, Inc. Georgia Southern University Foundation, Inc. Georgia Southern University Housing Foundation, Inc. Georgia Southern University Athletic Foundation, Inc. Georgia Southern University Research and Service Foundation, Inc. Valdosta State University Foundation, Inc. VSU Auxiliary Services Real Estate Foundation, Inc. Albany State University Foundation, Inc. Armstrong Atlantic State University Foundation, Inc. AASU Educational Properties Foundation, Inc. Augusta State University Foundation, Inc. (Clayton State University) Walter & Emilie Spivey Foundation Clayton State University Foundation, Inc. Columbus State University Foundation, Inc. (Columbus State University) Foundation Properties, Inc. Columbus State University Athletic Fund, Inc. Columbus State University Alumni Association, Inc. Fort Valley State University Foundation, Inc. Georgia College & State University Alumni Association, Inc. Georgia College and State University Foundation, Inc. Georgia Southwestern Foundation, Inc. Kennesaw State University Foundation, Inc. North Georgia College & State University Foundation, Inc. Southern Polytechnic State University Foundation, Inc. University of West Georgia Foundation, Inc. UWG Real Estate Foundation, Inc. Abraham Baldwin Agricultural College Foundation, Inc. College of Coastal Georgia Foundation, Inc. Dalton State College Foundation, Inc. Gainesville State College Foundation, Inc. Gordon College Foundation, Inc. Macon State College Foundation, Inc. Middle Georgia College Foundation, Inc. Bainbridge College Foundation Darton College Foundation, Inc. East Georgia College Foundation, Inc. Georgia Highlands College Foundation, Inc. Georgia Perimeter College Foundation, Inc. South Georgia College Foundation, Inc. Waycross College Foundation, Inc. University System of Georgia Foundation, Inc.
Total

Increase/ (Decrease) in Net
Assets

Net Assets Beginning of Year

Prior Year Adjustments

$ 108,877,000 $ 891,176,000 $

-

3,767,447

66,672,846

-

757,823

36,421,395

-

(5,665,551)

9,701,518

-

242,162

161,681

-

(2,750,163)

(10,648,015)

-

25,705,969

120,420,769

-

851,407

16,806,647

-

5,538,703

245,929,406

-

4,356,029

113,385,713

-

Net Assets Beginning of Year
Restated

$

891,176,000

66,672,846

36,421,395

9,701,518

161,681

(10,648,015)

120,420,769

16,806,647

245,929,406

113,385,713

Net Assets - End of Year
$ 1,000,053,000 70,440,293 37,179,218 4,035,967 403,843 (13,398,178)
146,126,738 17,658,054
251,468,109 117,741,742

15,856,313 1,394,515 258,612
35,032,429 9,355,852
12,291,262
(1,512,275) 2,452,718 (2,035,060)
817,297

70,954,869 4,832,964 (337,778)
477,592,317 161,631,100
95,569,642
72,243,422 36,293,056
5,132,799 3,174,972

1,876,975
-

70,954,869 4,832,964 (337,778)
477,592,317 161,631,100
97,446,617
72,243,422 36,293,056
5,132,799 3,174,972

86,811,182 6,227,479
(79,166) 512,624,746 170,986,952 109,737,879
70,731,147 38,745,774
3,097,739 3,992,269

194,329

628,344

1,441,435

21,817,712

17,106,144

(1,548,035)

387,152

1,062,503

564,843

6,283,465

520,172

11,015,994

1,885,913

24,037,902

562,797

5,249,833

53,395

5,736,695

(6,858,335)

51,466,792

(1,744,177)

13,754,704

(232,169)

1,191,227

7,722

275,414

(603,255)

4,901,606

337,498

5,057,330

(117,748)

(519,651)

1,536,868

20,596,362

4,651,570

21,785,798

1,338,005

23,867,618

1,342,086

5,496,778

12,586,648

16,929,388

1,032,074

4,745,116

1,827,642

11,748,946

114,242

8,327,239

4,571,639

24,264,289

815,930

11,790,487

1,234,486

6,835,884

1,203,846

6,217,677

4,708,424

7,146,451

75,986

483,797

696,889

2,910,707

(98,910)

1,314,950

(211,594)

2,271,471

115,852

7,246,254

319,367

2,161,548

270,106

1,307,448

(599,785)

4,799,122

$ 266,629,576 $ 2,759,774,488 $

10,102,167
1,841,821
(614,147) 464,507 7,970,269 363,473
(12,303) 21,992,762 $

628,344 21,817,712
8,554,132 2,904,324 6,283,465 11,015,994 24,037,902 5,249,833 5,736,695 51,466,792 13,754,704 1,191,227
275,414 4,901,606 5,057,330
(519,651) 20,596,362 21,171,651 23,867,618
5,496,778 17,393,895
4,745,116 19,719,215
8,327,239 24,264,289 12,153,960
6,835,884 6,217,677 7,146,451
483,797 2,910,707 1,314,950 2,271,471 7,233,951 2,161,548 1,307,448 4,799,122 2,781,767,250 $

822,673 23,259,147 25,660,276
3,291,476 6,848,308 11,536,166 25,923,815 5,812,630 5,790,090 44,608,457 12,010,527
959,058 283,136 4,298,351 5,394,828 (637,399) 22,133,230 25,823,221 25,205,623 6,838,864 29,980,543 5,777,190 21,546,857 8,441,481 28,835,928 12,969,890 8,070,370 7,421,523 11,854,875 559,783 3,607,596 1,216,040 2,059,877 7,349,803 2,480,915 1,577,554 4,199,337 3,048,396,826

72

The University System of Georgia ANNUAL FINANCIAL REPORT

Financial Statements (Statutory Basis) (Non-GAAP)
SUPPLEMENTARY INFORMATION USG ANNUAL FINANCIAL REPORT
UNIVERSITY SYSTEM OF GEORGIA CONSOLIDATED BALANCE SHEET (NON-GAAP BASIS) BUDGET FUNDS JUNE 30, 2010

ASSETS Cash and Cash Equivalents Investments Accounts Receivable
State Appropriation Federal Financial Assistance Other Margin Allocation Prepaid Expenditures Inventories Other Assets
TOTAL ASSETS
LIABILITIES AND FUND EQUITY Liabilities
Cash Overdraft Contracts Payable Accrued Payroll Payroll Withholdings Encumbrance Payable Accounts 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
TOTAL FUND BALANCES
TOTAL LIABILITIES AND FUND BALANCES

$

487,569,848.32

73,360,003.99

113,653,404.84 242,060,700.35
8,525,000.00 45,640,956.34 8,867,249.47 8,408,465.48

$

988,085,628.79

$

8,708,389.28

-

14,740,873.54

-

274,434,729.49

126,489,137.48

273,797,010.25

45,619.28

13,490,845.34

$

711,706,604.66

$

1,404,479.60

36,413,659.58

56,459,807.65

12,989,921.56

112,446,403.24

11,819,055.83

3,303,174.03

21,841,661.29

9,213,870.39

7,445,381.53

3,041,609.43

$

276,379,024.13

$

988,085,628.79

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.

73

The University System of Georgia ANNUAL FINANCIAL REPORT

Financial Statements (Statutory Basis) (Non-GAAP)
SUPPLEMENTARY INFORMATION USG ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA CONSOLIDATED BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS) BUDGET FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2010

REVENUES State Appropriations State General Funds Federal Stimulus Stabilization Fund Tobacco Funds Non-State Funds Research Funds - Other Research Funds - Federal Stimulus Agency Funds Total Revenue Prior Year Reserves Available for Expenditure Total Funds Available

ORIGINAL BUDGET

FINAL BUDGET

ACTUAL

VARIANCE

$ 2,063,094,628.00 $ 1,710,617,245.00 $ 1,683,481,490.00 $

92,617,896.00

280,410,317.00

280,410,317.00

17,259,466.00

14,020,073.00

14,020,073.00

1,514,912,621.00

1,880,677,666.00

1,735,070,079.69

-

46,593,863.00

27,292,527.92

1,618,217,100.00

2,255,289,124.00

2,024,216,836.82

$

5,306,101,711.00 $ 6,187,608,288.00 $ 5,764,491,324.43 $

-

190,134,559.11

$

5,306,101,711.00 $ 6,187,608,288.00 $ 5,954,625,883.54 $

(27,135,755.00) -
(145,607,586.31) (19,301,335.08)
(231,072,287.18) (423,116,963.57) 190,134,559.11 (232,982,404.46)

EXPENDITURES UGA - Forestry Research UGA - Agricultural Experiment Station UGA - Athens Tifton Vet Labs UGA - Cooperative Extension Service UGA - Forestry Cooperative Extension UGA - Marine Institute UGA - Marine Resources Extension Center UGA - Veterinary Medicine Experiment Station UGA - Veterinary Medicine Teaching Hospital MCG - Student Education Enrichment Program MCG - Georgia Radiation Therapy Center GT - Advanced Technology Development Center/EDI

$

7,082,107.00 $

10,393,188.00 $

9,785,549.85 $

607,638.15

79,073,095.00

91,238,693.00

78,146,621.44

13,092,071.56

4,944,522.00

7,362,088.00

5,595,798.11

1,766,289.89

60,065,569.00

66,211,459.00

61,693,529.31

4,517,929.69

1,043,589.00

1,196,196.00

1,057,092.52

139,103.48

1,377,916.00

1,506,730.00

1,405,031.00

101,699.00

2,810,773.00

3,518,643.00

3,190,347.87

328,295.13

3,155,597.00

2,858,730.00

2,853,114.00

5,616.00

10,160,245.00

10,692,009.00

9,380,064.82

1,311,944.18

-

-

-

-

3,625,810.00

3,625,810.00

3,625,810.00

-

24,761,796.00

21,390,436.00

13,381,493.03

8,008,942.97

GT - Center for Assistive Technology and Environmental Access

GT - Georgia Tech Research Institute

USO - Public Libraries

USO - Regents Central Office

USO - MCG Hospitals and Clinics

USO - Georgia Public Telecommunications Commission

USO - Georgia Military College

SKIO - Skidaway Institute of Oceanography-B

GSU - Georgia Cancer Coalition

Georgia Eminent Scholar Endowment Trust Fund

Office of Minority Business

Research Consortium

Special Funding Initiative

Teaching

Total Expenditures

$

155,895,062.00
43,040,443.00 6,777,980.00 34,265,312.00 16,398,957.00 2,729,058.00 6,208,946.00 11,509,466.00
26,324,718.00 43,131,266.00 4,761,719,484.00 5,306,101,711.00

227,509,476.00 39,978,706.00
6,382,390.00 31,914,306.00 14,714,031.00
2,364,930.00 5,491,397.00 8,270,073.00
24,057,334.00 22,201,817.00 5,584,729,846.00 $ 6,187,608,288.00

216,756,329.14
39,774,880.84 6,359,286.00 31,850,037.00 14,685,203.00 2,360,431.00 5,113,081.46 8,270,072.80
24,057,049.43 20,675,353.86 5,183,812,507.14 $ 5,743,828,683.62

10,753,146.86
203,825.16 23,104.00 64,269.00 28,828.00 4,499.00
378,315.54 0.20 -
284.57 1,526,463.14 400,917,338.86 $ 443,779,604.38

Excess of Funds Available over Expenditures

$ 210,797,199.92

74

The University System of Georgia ANNUAL FINANCIAL REPORT

UNIVERSITY SYSTEM OF GEORGIA CONSOLIDATED BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS) BUDGET FUNDS continued FOR THE FISCAL YEAR ENDED JUNE 30, 2010

Beginning Fund Balance July 1, 2009 Reserved

212,460,426.69

Unreserved, Undesignated Fund Balance (Surplus) for FY09

2,620,056.02

Unreserved, Unreserved Fund Balance (Surplus) Returned to Office of Treasury & Fiscal Services Year Ended June 30, 2009

(2,620,056.02)

Early Return of Surplus in Fiscal 2010

(1,723,973.90)

Adjustments Prior Year Payables/Expenditures Prior Year Receivables/Revenues Increase (Decrease) in Inventories Mandatory Transfers Mandatory Transfers - Restricted Non-Mandatory Transfers Other Additions (Deletions) Reserved Fund Balance Carried Over from Prior Year as Funds Available
Ending Fund Balance - June 30, 2010

4,214,437.02 (1,221,997.41)
(338,039.16) 3,001,795.04
39,323,735.04
(190,134,559.11)

$

276,379,024.13

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 Tuition Carry - Forward Property Reserves
Total Reserved Unreserved
Surplus
Total Fund Balance - June 30, 2010

1,404,479.60 36,413,659.58 7,445,381.53 56,459,807.65 3,303,174.03 12,989,921.56 112,446,403.24 11,819,055.83 21,841,661.29 9,213,870.39
273,337,414.70

3,041,609.43

$

276,379,024.13

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.

75

The University System of Georgia ANNUAL FINANCIAL REPORT

Financial Statements Findings
SUPPLEMENTARY INFORMATION USG ANNUAL FINANCIAL REPORT
Abraham Baldwin Agricultural College FS-557-10-01 FS-557-10-02
Armstrong Atlantic State University FS-524-10-01 FS-524-10-02
Bainbridge College FS-562-10-01
Fort Valley State University FS-533-10-01 FS-533-10-02
Georgia Perimeter College FS-571-10-01
Georgia Southern University FS-539-10-01
Savannah State University FS-548-10-01
Valdosta State University FS-551-10-01
University System Office FS-472-10-01 FS-472-10-02
Detailed information on these findings is available in the State of Georgia Single Audit Report for Fiscal Year Ended June 30, 2010 located at http://www.audits.ga.gov.
76

The University System of Georgia ANNUAL FINANCIAL REPORT

77

The University System of Georgia ANNUAL FINANCIAL REPORT

ACKNOWLEDGEMENTS
USG ANNUAL FINANCIAL REPORT
78

The University System of Georgia ANNUAL FINANCIAL REPORT

Published by: Office of Fiscal Affairs Usha Ramachandran Vice Chancellor, Fiscal Affairs Vikki L. Williamson Ben M. Riden, Jr. Theresa Jackson Bruce Jackson
Office of Media & Publications John Millsaps Associate Vice Chancellor, Media & Publications Sonja Roberts Design/Layout
Photography: Courtesy of University System of Georgia Institutions
University System of Georgia Chief Business Officers: John Clemens, Abraham Baldwin Agricultural College Larry Wakefield, Albany State University David Carson, Armstrong Atlantic State University Freddie Johnson, Atlanta Metropolitan College Therese Rosier, Augusta State University Shawn McGee, Bainbridge College Corlis Cummings, Clayton State University C. Tom Saunders, College of Coastal Georgia J. Thomas Helton, Columbus State University Scott Bailey, Dalton State College Ronnie A. Henry, Darton College Cliff Gay, East Georgia College Arthur Henderson, Fort Valley State University Paul Glaser, Gainesville State College Peter Shields, Georgia College & State University Laura Maxwell, Georgia Gwinnett College Robert Whitaker, Georgia Highlands College Steve Swant, Georgia Institute of Technology Ron Carruth, Georgia Perimeter College Ronald Core, Georgia Southern University Cody King, Georgia Southwestern State University Jerry Rackliffe, Georgia State University Lee Fruitticher, Gordon College Randy Hinds, Kennesaw State University Nancy Stroud, Macon State College Bill Bowes, Medical College of Georgia Lynn Hobbs, Middle Georgia College Mac McConnell, North Georgia College & State University Edward Jolley, Savannah State University Natalie Higley, Skidaway Institute of Oceanography Wanda E. Lloyd, South Georgia College Patrick B. McCord, Southern Polytechnic State University Tim Burgess, University of Georgia Jim Sutherland, University of West Georgia Traycee Martin, Valdosta State University Marcus Latham, Waycross College
79

"Creating a More Educated Georgia" www.usg.edu
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