The University System of Georgia Annual Financial Report FY 2013 TABLE OF CONTENTS Introductory Section Letter of Transmittal ....................................................................................................... 1 Members of the Fiscal Year 2013 Board of Regents ................................................... 2 Financial Section Independent Auditor's Report ....................................................................................... 4 Management's Discussion and Analysis ...................................................................... 7 Financial Statements (GAAP Basis) Statement of Net Position ................................................................................. 21 Statement of Revenues, Expenses and Changes in Net Position .................. 22 Statement of Cash Flows................................................................................... 24 Statement of Fiduciary Net Position ................................................................. 26 Statement of Changes in Fiduciary Net Position ............................................. 27 Notes to the Financial Statements Note 1 Summary of Significant Accounting Policies......................... 29 Note 2 Deposits and Investments ..................................................... 37 Note 3 Accounts Receivable .............................................................. 45 Note 4 Inventories .............................................................................. 45 Note 5 Notes/Loans Receivable........................................................ 45 Note 6 Capital Assets ......................................................................... 46 Note 7 Unearned Revenue................................................................. 46 Note 8 Long Term Liabilities .............................................................. 47 Note 9 Significant Commitments....................................................... 47 Note 10 Lease Obligations................................................................... 48 Note 11 Retirement Plans.................................................................... 49 Note 12 Risk Management .................................................................. 53 Note 13 Contingencies ......................................................................... 56 Note 14 Post-Employment Benefits Other Than Pension Benefits.... 56 Note 15 Natural Classifications with Functional Classifications ....... 60 Note 16 Affiliated Organizations .......................................................... 60 Supplementary Information Condensed Financial Statements Condensed Statement of Net Position by Institution................................................. 64 Condensed Statement of Revenues, Expenses and Changes in Net Position by Institution.......................................................................................... 68 Condensed Statement of Net Position by Affiliated Organization (unaudited) ........ 72 Condensed Statement of Revenues, Expenses and Changes in Net Position by Affiliated Organization (unaudited) ................................................. 76 Financial Statements (Statutory Basis) (unaudited) Balance Sheet (Non-GAAP Basis)................................................................................. 79 Budget Comparison and Surplus Analysis Report (Non-GAAP Basis) ........................ 80 Statement of Funds Available and Expenditures Compared to Budget (Non-GAAP Basis) .................................................................................. 82 Statement of Changes to Fund Balance (Non-GAAP Basis)............... ....................... 86 Financial Statement Findings........................................................................................ 91 Acknowledgements...................................................................................................................... 92 INTRODUCTORY SECTION LETTER OF TRANSMITTAL OFFICE OF FISCAL AFFAIRS 270 WASHINGTON STREET, SW ATLANTA, GEORGIA 30334 404-656-2232 January 31, 2014 Chancellor Henry M. "Hank" Huckaby Board of Regents University System of Georgia Dear Chancellor Huckaby: 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, 2013. 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 2013 and has issued an unmodified 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, _________________________ John E. Brown Vice Chancellor for Fiscal Affairs and Treasurer Board of Regents of the University System of Georgia University System of Georgia Annual Financial Report FY 2013 Page 1 Members of the 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; regents may be reappointed to subsequent terms by a sitting governor. Regents donate their time and expertise to serve the state through their governance of the University System of Georgia the positions are voluntary ones without financial remuneration. Today the Board of Regents is composed of 19 members, five of whom are appointed from the state-at-large, and one from each of the 14 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 the 31 colleges and universities that comprise the University System of Georgia, the Skidaway Institute of Oceanography and the Georgia Public Library System. Members of the Board in Fiscal 2013 included the following: C. Dean Alford Kenneth R. Bernard, Jr. Lori Durden Larry R. Ellis Rutledge A. (Rusty) Griffin, Jr. C. Thomas Hopkins, Jr., MD James M. Hull Donald M. Leebern, Jr. William "Dink" H. NeSmith, Jr. (Chair) Doreen Stiles Poitevint Neil L. Pruitt, Jr. Scott Smith Kessel Stelling, Jr. Benjamin"Ben" J. Tarbutton, III Richard L. Tucker Thomas Rogers Wade Larry Walker Don L. Waters Philip A. Wilheit, Sr. (Vice Chair) University System of Georgia Annual Financial Report FY 2013 Page 2 FINANCIAL SECTION University System of Georgia Annual Financial Report FY 2013 Page 3 Greg S. Griffin STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 January 31, 2014 Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia and Honorable Henry M. Huckaby, Chancellor INDEPENDENT AUDITOR'S REPORT Ladies and Gentlemen: Report on the Financial Statements We have audited the accompanying financial statements of the business-type activities and the aggregate remaining fund information of the University System of Georgia, which is an organizational unit of the State of Georgia, as of and for the year ended June 30, 2013 and the related notes to the financial statements, which collectively comprise the University System of Georgia's basic financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial University System of Georgia Annual Financial Report FY 2013 Page 4 statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the University System of Georgia's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the University System of Georgia's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and aggregate remaining fund information of the University System of Georgia as of June 30, 2013, and the respective changes in financial position and cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1, the financial statements of the University System of Georgia are intended to present the financial position and changes in financial position and cash flows of only that portion of the business-type activities of the State of Georgia that is attributable to the transactions of the University System of Georgia. They do not purport to, and do not, present fairly the financial position of the State of Georgia as of June 30, 2013, the changes in its financial position or its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. As described in Note 1 to the financial statements, in 2013, the University System of Georgia adopted new accounting guidance, GASB Statement No. 60, Service Concession Arrangements and GASB Statement No. 63, Reporting Deferred Outflows, Deferred Inflows, and Net Position. Our opinion is not modified with respect to these matters. As discussed in Note 1 to the financial statements, the prior period financial statements have been restated to correct a misstatement. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing University System of Georgia Annual Financial Report FY 2013 Page 5 standards generally accepted in the United States of America, which consisted of inquires of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the basic financial statements of the University System of Georgia. The accompanying Introductory and Supplementary Information Sections, as listed in the accompanying table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information, except for the portion marked "unaudited" on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting or other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Respectfully, GSG:th Greg S. Griffin State Auditor University System of Georgia Annual Financial Report FY 2013 Page 6 Management's Discussion and Analysis Introduction The mission of the University System of Georgia (USG) is achieved through the collective missions of our state's public colleges and universities. The roles of public higher education in Georgia is to drive economic development and produce more educated individuals to contribute to the qualiy of life in the state. USG institutions are responsible for producing graduates with the requisite skills and knowledge to ensure Georgia's strong future in the knowledge-based and global economy. The individual mission and function of each institution within the USG must be aligned with the overall USG mission in order to meet strategically the higher education needs of the State. This discussion and analysis provides a summary of the financial position of the USG for the fiscal year ending June 30, 2013. It should allow the user to review how the USG utilized its resources in pursuit of its primary goals of instruction, research and public service. The Board of Regents and Chancellor Henry M. "Hank" Huckaby are charged with the leadership of the thirty-one institutions of the University System of Georgia. The University System continues to prosper, as is demonstrated by the following information: FY2013 FY2012 FY2011 STUDENT HEADCOUNT 314,365 318,027 311,442 STUDENT FTE 278,319 281,559 276,109 State Resources The General Appropriations Act of 2013 (House Bill 742), as amended by House Bill 105, appropriated a total of $1,747,463,827 to the University System of Georgia. The following table presents the state appropriations available to the University System of Georgia from the General Appropriations Act of 2013, as amended: STATE APPROPRIATIONS AVAILABLE - GENERAL APPROPRIATIONS ACT House Bill 742 General State Funds $ 1,828,569,784 House Bill 105 General State Funds (81,105,957) Total State Appropriations Per Appropriations Act - University System of Georgia $ 1,747,463,827 University System of Georgia Annual Financial Report FY 2013 Page 7 The table below presents the FY 2013 allocations by the Board of Regents to the University System of Georgia institutions: ALLOCATIONS BY THE BOARD OF REGENTS Education and General Teaching $ Non-Teaching Other Activities Regents Central Office $ 8,102,099 Rental Payments - GA Military College 2,269,752 GA Public Telecommunications Commission 13,370,145 GA Public Libraries 31,223,436 Research Consortium 6,104,447 Total Other Activities Special Initiative Funding Total Education and General Net State Appropriations Available to the University System of Georgia 1,555,517,110 112,598,240 61,069,879 18,278,598 $ $ 1,747,463,827 1,747,463,827 The following chart illustrates the Board of Regents allocations to Teaching, Non-Teaching, Other Activities and Special Funding Initiatives: Overview of the Financial Statements and Financial Analysis The University System of Georgia is pleased to present its consolidated financial statements for fiscal year 2013. These statements contain information from the thirty-one institutions of the University System of Georgia, the Skidaway Institute of Oceanography and the University System Office. Each institution has prepared a separate annual financial report that is available upon request. University System of Georgia Annual Financial Report FY 2013 Page 8 The emphasis of discussions about these statements will be on current year data. There are three consolidated financial statements presented: the Statement of Net Position, the Statement of Revenues, Expenses and Changes in Net Position, and the Statement of Cash Flows. Two fiduciary fund statements for the Board of Regents Retiree Health Benefit Fund also are included with the financial statements noted above: the Statement of Fiduciary Net Position and the Statement of Changes in Fiduciary Net Position. The Notes to the Financial Statements immediately follow the consolidated and fiduciary fund statements, and 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 as well as information on affiliated organizations that have been deemed significant to their respective institutions. This section also includes consolidated financial statements presented on a statutory/budget basis. 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 2012 and 2013. Statement of Net Position The Statement of Net Position presents the assets, deferred outflows of resources, liabilities, deferred inflows of resources and net position of the University System of Georgia as of June 30, 2013. The Statement of Net Position is a point-in-time financial statement that presents a fiscal snapshot of the University System. It presents end-of-year data about assets (current and non-current) plus deferred inflows, and liabilities (current and noncurrent) plus deferred inflows, as well as net position (assets plus deferred outflows minus liabilities plus deferred inflows). The differences between current and non-current assets are discussed in the Notes to the Financial Statements. From the data presented, readers of the Statement of Net Position are able to determine the assets available to continue operations as well as the obligations of the University System. Finally, the Statement of Net Position provides a picture of the net position (assets plus deferred outflows of resources minus liabilities plus deferred inflows of resources) and their availability for expenditure by the institution. Net position is divided into three major categories. The first category, net investment in capital assets, provides the University System's equity in property, plant and equipment owned by the institution. The next category is restricted, which is divided into two categories, non-expendable and expendable. Restricted, nonexpendable net position consists solely of the University System's permanent endowment funds, which are available only for investment purposes. The corpus of non-expendable, restricted resources is available only for investment purposes. Expendable, restricted University System of Georgia Annual Financial Report FY 2013 Page 9 resources are available for expenditure, but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted resources, which are available to the University System for any lawful purpose. The University System of Georgia's financial position at June 30, 2013 is very strong, with total assets of $11.192 billion, total liabilities and deferred inflows of $5.947 billion, and net position of $5.245 billion. These amounts are illustrated below: Assets Increase of $554 Million Total assets of the University System of Georgia in fiscal 2013 were approximately $554 million more than those reported for fiscal 2012. A review of the Statement of Net Position will reveal that the increase primarily was due to an increase of $339 million in capital assets, net of accumulated depreciation, a $236 million increase in cash and investments, and a $25 million increase in prepaid items, which was partially offset by a $46 million decrease in accounts receivable, net and other assets. Liabilities and Deferred Inflows Increase of $427 Million Total liabilities and deferred inflows for fiscal 2013 were approximately $427 million more than those reported for fiscal 2012. The primary components of this increase were $62 million in lease purchase obligations, $284 million in the net Other Post-Employment Benefit (OPEB) obligation, and Deferred Inflow of Resources of $78 million. University System of Georgia Annual Financial Report FY 2013 Page 10 Net Position Increase of $127 million The combination of the increase in total assets of $554 million and the increase in total liabilities of $427 million yielded a net increase in total net position of $127 million, or 2.5%. The increase in total net position primarily consists of a higher amount in the Net Investment in Capital Assets category totaling $196 million and an increase in Restricted Net resources of $124 million. This increase was partially offset by a net decrease of $193 million in Unrestricted Net resources, which is largely due to OPEB reporting requirements; the net OPEB obligation increased from $1,278.1 million in FY 2012 to $1,562.5 million in FY 2013. The following chart depicts the level, by category, of net position: University System of Georgia Annual Financial Report FY 2013 Page 11 The following table summarizes the University System of Georgia's assets, liabilities, deferred inflows and net position as of June 30, 2013 and June 30, 2012. CONDENSED STATEMENT OF NET POSITION (in millions) June 30, 2013 June 30, 2012 ASSETS Current Assets $ 1,909 $ 1,684 Capital Assets, Net 9,086 8,746 Other Assets 197 208 TOTAL ASSETS $ 11,192 $ 10,638 % Change 13.4% 3.9% -5.3% 5.2% LIABILITIES Current Liabilities Non-Current Liabilities TOTAL LIABILITIES $ 792 $ 785 5,077 4,735 $ 5,869 $ 5,520 0.9% 7.2% 6.3% DEFERRED INFLOWS $ 78 NET POSITION Net Investment in Capital Assets Restricted, Non-Expendable Restricted, Expendable Capital Projects Unrestricted TOTAL NET POSITION $ 5,502 $ 160 319 75 (811) $ 5,245 $ Statement of Revenues, Expenses and Changes in Net Position 5,306 149 269 12 (618) 5,118 3.7% 7.4% 18.6% 525.0% 31.2% 2.5% The Statement of Revenues, Expenses and Changes in Net Position presents the revenues earned and expenses incurred during the year. Activities are reported as either operating or non-operating. Changes in total net position as presented on the Statement of Net Position are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Position. 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 or losses received or spent by the University System institutions. Generally, 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." University System of Georgia Annual Financial Report FY 2013 Page 12 The Statement of Revenues, Expenses and Changes in Net Position indicates a positive year, which is represented by an increase in net position 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 POSITION (in millions) Operating Revenue Operating Expense Operating Loss Non-Operating Revenue and Expense Income (Loss) before Other Revenues, Expenses, Gains, or Losses Other Revenues, Expenses, Gains, Losses and Special Items Increase in Net Position Net Position at beginning of year, restated Net Position at End of Year June 30, 2013 June 30, 2012 $ 4,371 $ 4,214 6,894 6,738 $ (2,523) $ (2,524) $ 2,348 $ 2,280 $ (175) $ (244) $ 299 $ 295 $ 124 $ 51 $ 5,121 $ 5,067 $ 5,245 $ 5,118 % Change 3.7% 2.3% 0.0% 3% -28.3% 1.4% 143.1% 1.1% 2.5% University System of Georgia Annual Financial Report FY 2013 Page 13 Revenues Revenue by source (state appropriations, grants and contracts, tuition and fees, auxiliaries, gifts and other sources) is depicted by the following chart: State appropriations increased $42 million (2.5%) in fiscal 2013. Grants and contracts revenue increased $12 million (0.6%) in fiscal 2012. Tuition and fee revenues, net increased $75 million (4.6%) in fiscal 2013 when compared with fiscal 2012. Auxiliary operations increased by $27 million (3.4%) fiscal 2013 as compared to fiscal 2012. Primary components of this increase included residence halls ($20 million), food services ($5 million), and parking/transportation ($2 million). 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. University System of Georgia Annual Financial Report FY 2013 Page 14 Expenses An illustration of total operating expenses by functional classification is provided as follows: Total operating expenses were $6,894 million in fiscal 2013, an increase of $156 million (2.3%) when compared with fiscal 2012. These increases are primarily attributable to the following functional classifications: Instruction ($67 million); Research ($59 million); Auxiliaries (22 million); Academic Support ($13 million); Public Service ($12 million); Student Services ($5 million); Plant Operations ($4 million) and Institutional Support ($2 million). These amounts were partially offset by a decrease in Scholarships and Fellowships ($25 million) and Patient Care (GRU) ($3 million). University System of Georgia Annual Financial Report FY 2013 Page 15 The following depicts the fiscal 2013 operating expenses by natural classification: As noted above, expenses increased $156 million (2.3%) in fiscal 2013 when compared with fiscal 2012. The increases were substantially attributable to salaries and benefits, including other personal services ($138 million); depreciation ($40 million); supplies and other services ($7 million); and travel ($2 million). These increases were partially offset by decreases to scholarships and fellowships ($21 million) and utilities ($10 million). 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 and 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 noncapital financing activities, which 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 Position. University System of Georgia Annual Financial Report FY 2013 Page 16 A summary of the Statement of Cash Flows is provided below: CONDENSED STATEMENT OF NET CASH FLOWS (in millions) June 30, 2013 June 30, 2012 Cash Provided (Used) by: Operating Activities $ (1,720) $ (1,853) Non-Capital Financing Activities 2,511 2,488 Capital and Related Financing Activities (574) (549) Investing Activities 36 11 NET CHANGE IN CASH $ 253 $ 97 Cash, beginning of year (restated) 1,051 953 CASH, end of year $ 1,304 $ 1,050 Capital Assets Capital assets, net of accumulated depreciation, at June 30, 2013 and June 30, 2013 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, 2013 $ 351 210 448 5,410 417 2,029 216 5 $ 9,086 June 30, 2012 $ 322 202 414 5,175 395 2,017 215 6 $ 8,746 Increase (Decrease) % Change $ 29 9.0% 8 4.0% 34 8.2% 235 4.5% 22 5.6% 12 0.6% 1 0.5% (1) -16.7% $ 340 3.9% As shown above, The University System of Georgia increased $340 million, or 3.9%, in capital assets, net during fiscal 2013 when compared with fiscal 2012. Long-Term Debt and Liabilities The University System of Georgia had long-term debt and liabilities in fiscal 2013 of $5.3 billion, excluding related party liabilities and deferred revenue. Non-current liabilities included lease purchase obligations of $3.5 billion, compensated absences of $191 million, net OPEB obligation of $1,563 million, and other non-current liabilities of $1 million. Of these amounts, $188.7 million was reflected as current liabilities at June 30, 2013. 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. University System of Georgia Annual Financial Report FY 2013 Page 17 Retiree Health Benefit Fund The University System Office is the 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. As noted in the Long-Term Debt and Liabilities section above, the University System of Georgia carries a net OPEB Obligation liability of $1,563 million as of June 30, 2013. The Board of Regents continues to evaluate options to reduce this growing liability. For additional information concerning the Retiree Health Benefit Fund, please refer to note 14 in the Notes to Financial Statements. Affiliated Organizations System-wide, there were nineteen 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. Fourteen of these affiliated organizations also are reported in the State Comprehensive Annual Financial Report (CAFR) as discretely presented component units for fiscal 2013. In addition, six of these affiliated organizations are reported as blended in the CAFR in compliance with GASB Statement No. 61. Economic Outlook Focus on ensuring that students can afford and earn degrees results in increased emphasis on restructuring public higher education in Georgia to work more efficiently and effectively. Global economic indicators reveal that in the near future, two-thirds of the workforce will require post-secondary credentials to compete for jobs; thus, Georgia's education agencies are collaborating to increase college completion rates from the current level of 42 percent to a targeted 60 percent of the population. Key areas of consideration include institutional consolidation, a study of how facilities are used and proposed, assessment of degree program effectiveness, expansion of on-line education, a more rigorous approach to K-12 teacher preparation, increased focus on supporting economic development, and enhanced military outreach. The consolidation of eight institutions into four new ones has been successfully completed and another consolidation of two institutions is underway. This will allow more funding to be shifted from administration to the classroom. As a labor-intensive organization, the University System faces competitive pressures related to attracting and retaining quality faculty and staff. As is the case nationally, the University System also faces the rising costs of health-care benefits, but will continue to take proactive measures to mitigate these rising costs. University System of Georgia Annual Financial Report FY 2013 Page 18 A key component of the University's System's success and future is the strong relationship with Governor Deal and the Georgia General Assembly. Due to their support, and the excellent leadership of the Board of Regents and Chancellor Huckaby, the University System of Georgia will continue to progress in remaining affordable and maintaining access, while protecting the academic enterprise for the citizens of the State of Georgia. ___________________________________ John E. Brown Vice Chancellor for Fiscal Affairs and Treasurer University System of Georgia University System of Georgia Annual Financial Report FY 2013 Page 19 FINANCIAL STATEMENTS University System of Georgia Annual Financial Report FY 2013 Page 20 UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF NET POSITION June 30, 2013 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 Non-Current Assets Non-Current Cash Short-term Investments Investments (Externally Restricted) Other Non-Current Assets Investments Notes Receivable, Net Capital Assets, Net (Note 6) Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Accounts Payable Salaries Payable Benefits Payable Contracts Payable Deposits Unearned Revenue (Note 7) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences Total Current Liabilities Non-Current Liabilities (Note 8) Lease Purchase Obligations Unearned Revenue and Other Liabilities Compensated Absences Other Liabilities Net OPEB Obligation Total Non-Current Liabilities TOTAL LIABILITIES Deferred Inflow of Resources NET POSITION Net Investment in Capital Assets Restricted Non-Expendable Expendable Capital Projects Unrestricted TOTAL NET POSITION University System of Georgia Annual Financial Report FY 2013 $ 1,297,409,220 155,772,079 92,111,331 272,016,785 23,380,982 68,046,017 284,929 $ 1,909,021,343 $ 7,081,264 130,306 59,272,158 5,348,629 79,921,703 45,313,392 9,086,119,955 $ 9,283,187,407 $ 11,192,208,750 $ 168,767,222 15,782,731 33,165,850 17,018,797 40,613,351 226,955,468 10,421,177 90,226,576 70,816,138 117,869,709 $ 791,637,019 $ 3,427,025,450 13,796,997 73,108,793 817,770 1,562,541,568 $ 5,077,290,578 $ 5,868,927,597 $ 77,884,484 $ 5,502,628,831 160,121,655 318,451,613 75,187,745 (810,993,175) $ 5,245,396,669 Page 21 UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEAR ENDED JUNE 30, 2013 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 $ 2,213,709,672 (508,090,257) 17,486,190 760,493,178 19,427,931 224,324,434 519,579,589 173,482,066 3,351,378 320,413,228 74,101,091 157,858,964 77,538,179 51,682,674 103,908,661 30,543,783 131,343,939 $ 4,371,154,700 OPERATING EXPENSES Faculty Salaries Staff Salaries Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Total Operating Expenses Operating Income (Loss) $ 1,336,300,602 1,771,240,801 1,142,232,834 10,640,599 67,134,090 330,953,979 178,467,646 1,613,635,154 443,904,654 $ 6,894,510,359 $ (2,523,355,659) University System of Georgia Annual Financial Report FY 2013 Page 22 UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEAR ENDED JUNE 30, 2013 NON-OPERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal Federal Stimulus State Other Gifts Investment Income (Endowments, Auxiliary and Other) Interest Expense (Capital Assets) Other Non-Operating Revenues (Expenses) Net Non-Operating Revenues Income (Loss) before Other Revenues, Expenses, Gains, or Losses Capital Grants and Gifts Federal State Other Special Item - Capital Asset Transfer Total Other Revenues and Special Items Increase in Net Position $ 1,744,486,043 567,679,392 2,879,078 8,804,458 60,650,739 116,448,019 25,689,677 (189,176,990) 11,137,859 $ 2,348,598,275 $ (174,757,384) $ 4,002,320 194,562,860 86,499,055 13,823,358 $ 298,887,593 $ 124,130,209 Net Position, Beginning of Year, Restated 5,121,266,460 Net Position, End of Year $ 5,245,396,669 University System of Georgia Annual Financial Report FY 2013 Page 23 UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2013 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 Used by Operating Activities CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES State Appropriations Federal Stimulus Funds Agency Fund Transactions Gifts and Grants Received for Other Than Capital Purposes Other Non-Operating 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 Sales of Capital Assets Purchases of Capital Assets Prepayment of Construction Funds to GSFIC 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 by Investing Activities Net Increase/Decrease in Cash Cash and Cash Equivalents - Beginning of Year (Restated) Cash and Cash Equivalents - End of Year $ 1,698,522,109 18,269,046 1,541,209,955 180,167,676 (2,714,152,677) (3,103,688,714) (330,953,980) (10,120,291) 10,419,403 813,764,464 176,862,815 $ (1,719,700,194) $ 1,744,486,043 411,273 51,295,059 706,496,203 7,984,278 $ 2,510,672,856 $ 84,331,726 5,578,777 (387,859,354) (35,000,000) (53,025,000) (188,392,748) $ (574,366,599) $ 31,011,526 15,379,152 (9,868,460) $ 36,522,218 $ 253,128,281 1,051,362,203 $ 1,304,490,484 University System of Georgia Annual Financial Report FY 2013 Page 24 UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2013 RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating Income (Loss) Provided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Receivables, Net Inventories Other Assets Prepaid items Notes Receivable, Net Accounts Payable Unearned Revenue Other Liabilities Compensated Absences OPEB Obligation, Net Net Cash Used by Operating Activities $ (2,523,355,659) 443,904,654 62,946,955 531,292 (259,521) 7,153,662 5,415,507 (781,156) (7,812,513) 3,748,848 4,412,315 284,395,422 $ (1,719,700,194) NON-CASH TRANSACTIONS: Capital Assets Acquired by Incurring Capital Lease Obligations $ Change in Accounts Receivable Related to GSFIC Gifts $ Change in Fair Value of Investments Recognized as a Component of Interest Income $ Special Item - Capital Asset Transfer $ Amortization of Other Assets Reducing Interest Paid $ Change in Accrued Interest Payable Affecting Interest Paid $ Gifts Other Than Capital Assets Reducing Proceeds of Grants and Gifts for Other Than Capital Assets $ Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts $ Other Addition of Capital Assets $ Reduction In Capital Lease Obligations $ 186,330,341 309,249 10,265,141 21,799,501 6,260 798,212 30,839,467 198,958,284 2,120,300 9,616,636 University System of Georgia Annual Financial Report FY 2013 Page 25 UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF FIDUCIARY NET POSITION BOARD OF REGENTS RETIREE HEALTH BENEFIT FUND June 30, 2013 ASSETS Cash and Cash Equivalents Receivables Employer Employee Total Assets LIABILITIES Benefits Payable Other Total Liabilities NET POSITION Net Assets Held in Trust for Other Postemployment Benefits $ 4,075,222 4,123,959 1,698,060 $ 9,897,241 $ 9,326,592 353,874 $ 9,680,466 $ 216,775 University System of Georgia Annual Financial Report FY 2013 Page 26 UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION BOARD OF REGENTS RETIREE HEALTH BENEFIT FUND Year Ended June 30, 2013 ADDITIONS Contributions Employer Plan Member Other Total Contributions Investment Income Interest/Dividends TOTAL ADDITIONS DEDUCTIONS Benefits Life Insurance Premium Expense Administrative Expense Total Deductions Net Increase Beginning Net Position Net Assets Held in Trust for Other Postemployment Benefits $ 83,414,616 30,135,574 14,999,814 $ 128,550,004 107,533 $ 128,657,537 $ 114,296,083 8,398,592 5,911,771 $ 128,606,446 $ 51,091 165,684 $ 216,775 University System of Georgia Annual Financial Report FY 2013 Page 27 NOTES TO THE UNIVER FINANCIAL STATEMENTS University System of Georgia Annual Financial Report FY 2013 Page 28 UNIVERSITY SYSTEM OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS June 30, 2013 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-one (31) 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 31 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. Legally separate, tax-exempt organizations whose activities primarily support the University System of Georgia, which are organizational units of the State of Georgia, are considered potential component units of the State. See Note 16, Affiliated Organizations, for additional information. On January 10, 2012, based on the Chancellor's recommendation, the Board of Regents voted to consolidate certain institutions of the University System to enhance and improve educational offerings and student success. The following mergers became effective on January 8, 2013: Georgia Health Sciences University consolidated with Augusta State University to form Georgia Regents University; North Georgia College & State University consolidated with Gainesville State College to form University of North Georgia; Macon State College and Middle Georgia College consolidated to form Middle Georgia State College; and University System of Georgia Annual Financial Report FY 2013 Page 29 South Georgia College and Waycross College consolidated to form South Georgia State College. 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 position, revenues, expenses, changes in net position and cash flows. Basis of Accounting For financial reporting purposes, the University System of Georgia is considered a specialpurpose government engaged only in business-type activities. Accordingly, the University System's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-University System transactions have been eliminated. New Accounting Pronouncements In fiscal year 2013, the University System of Georgia adopted the Governmental Accounting Standards Board (GASB) Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements. The provisions of this Statement establish accounting and financial reporting standards for governments who enter into Service Concession Arrangements (SCA) with other governmental or non-governmental entities. In fiscal year 2013, the USG adopted the GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The provisions of this Statement incorporate certain accounting and financial reporting guidance into authoritative GASB literature. In fiscal year 2013, the USG adopted the GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position. The provisions of this Statement establish financial reporting standards for the presentation of deferred outflows of resources and deferred inflows of resources and their effects on a government's net position. The USG changed its presentation of net assets to net position for fiscal year 2013. 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 University System of Georgia Annual Financial Report FY 2013 Page 30 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 Position. 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. Non-current Cash and Investments Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as non-current assets in the Statement of Net Position. 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 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 fully understand 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 University System of Georgia Annual Financial Report FY 2013 Page 31 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 in its accounting records throughout the construction period and transfers the entire project to the institutional unit of the University System when complete. For projects managed by institutions of the University System, the institutions retain construction in progress on their books and are reimbursed by GSFIC. Deposits Deposits represent good faith deposits from students to reserve housing assignments in institutional residence halls. Unearned Revenues Unearned 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. Unearned 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 Position, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses, and Changes in Net Position. The University System of Georgia had accrued liability for compensated absences in the amount of $186,566,182 as of July 1, 2012. The ending balance as of June 30, 2013 in accrued liability for compensated absences was $190,978,502, which represents an increase of $4,412,320. Non-current Liabilities Non-current liabilities include: (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as non-current assets. Net Position The University System's net position is classified as follows: Net Investment in capital assets: This represents the University System's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. 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. University System of Georgia Annual Financial Report FY 2013 Page 32 Restricted nonexpendable includes 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 - expendable includes 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 position at June 30, 2013 included the following: Restricted - E&G and Other Organized Activities Federal Loans Institutional Loans Term Endowments Quasi-Endowments Health Insurance Reserve Total Restricted Expendable $ 133,981,254 42,782,397 24,958,327 3,477,824 17,452,411 95,799,400 $ 318,451,613 Expendable, restricted capital projects 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 represents 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 the State Treasurer. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff. Unrestricted net position included the following items at June 30, 2013, which are quasi-restricted by management: R & R Reserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted Total Unrestricted Net Position $ 181,423,619 327,440,246 12,559,997 (1,332,417,037) $ (810,993,175) University System of Georgia Annual Financial Report FY 2013 Page 33 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 Position classifies fiscal year activity as operating and non-operating according to the following criteria: 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 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 Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income. Operating expense includes activities that have the characteristics of exchange transactions. 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 Position. 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. Special Items Dalton State College had one significant capital asset reduction for facilities in fiscal year 2013. This reduction was related to a special item transfer of a building and related land transferred from the Dalton State East facility to Northwest Technical College, which is part of the Technical College System of Georgia. This building was valued at $3,970,571 at the time of the transfer and therefore resulted in a large one-time capital loss in fiscal year University System of Georgia Annual Financial Report FY 2013 Page 34 2013, which is reflected as a Special Item Transfer on the Statement of Revenues, Expenses and Changes in Net Position. The University System Office entered into a forty-year intergovernmental agreement with the Georgia Public Telecommunications Commission (Commission) effective July 1, 2012. The Commission transferred other property and equipment at its headquarters location to the University System Office. In fiscal 2013, building and equipment transferred to the University System Office totaled $28,339,594. The accumulated depreciation transferred totaled $10,545,665, for a net book value of $17,793,929. This transfer of assets is noted as a Special Item Transfer on the Statement of Revenues, Expenses and Changes in Net Position. Restatement of Prior Year Net Position The following institutions had restatements of prior year balances in fiscal year 2013: Institution Georgia Institute of Technology Georgia State University Georgia Southern University Fort Valley State University Southern Polytechnic State University Georgia Gwinnett College Middle Georgia State College Darton State College Georgia Perimeter College Total Effect on Beginning Net Position $ (3,500,000) (10,959,067) 9,764,649 312,247 267,634 7,130,000 (466,852) 587,763 367,783 $ 3,504,157 Georgia Institute of Technology has a restatement of prior year net position, decreasing beginning net position by $3.5 million. This restatement is a result of correcting the method of accounting for the up-front payments received in fiscal year 2010 and fiscal year 2011 for the Sodexho, Inc. vending contract. The funds were recognized as revenue in the year of receipt. The Institute corrected the accounting treatment for these transactions and has deferred the portion that will be recognized over the remaining life of the contract. Georgia State University has a restatement of prior year net position, decreasing net position by $10,959,067, due to a correction of a prior year misstatement in work-in-progress, as well as a change in accounting principle, necessitating adjustments made to bring capital lease liabilities and related asset values consistent with the Georgia State University Foundation's asset values in accordance with GASB 61. An aggregate adjustment to workin-progress was made to increase net position by $1,740,938 to correct an error made in its calculation in the prior year. An adjustment to align capital lease liabilities and asset values with the values stated by the Foundation in accordance with GASB 61 resulted in a decrease in prior year capital assets of $4,637,180 and an increase in lease liability of $8,985,806, for a net decrease in net position of $13,622,986. Additionally, an increase in net position and a decrease in accumulated depreciation of $922,981 aligned the values with those stated by the Foundation in accordance with GASB 61. University System of Georgia Annual Financial Report FY 2013 Page 35 Georgia Southern University has a restatement of prior year net position that increases beginning net position by $9,764,649, which is primarily related to the effect of merging Herty Advanced Materials Center into Georgia Southern University for an increase in net position of $10,861,224. In addition, a prior year capital asset correction was made to the RAC Facility for a decrease in net position of $1,087,058, and an adjustment to the Cone Endowment resulted in a $9,517 reduction in net position. The RAC Facility adjustment was due to the write-down of the acquisition value of the RAC asset, which was incorrectly capitalized in fiscal year 2007. The Cone Endowment adjustment was the result of the overstatement of fiscal year 2012 income and cash due to receipting a July 2012 Suntrust payment in fiscal year 2012. Fort Valley State University made several prior period adjustments in fiscal year 2013 related to various errors or omissions that resulted in an increase in net position of $312,247. These changes, which are in accordance with generally accepted accounting principles, include a net position increase of $1,153,977 due to adjustments to capital assets, a net position decrease of $544,844 related to prior year accrued interest expensed in fiscal year 2013, and a net position decrease of $296,886 due to a prior year receivable still outstanding for completed GSFIC projects. Southern Polytechnic State University had a restatement of prior year net position which increased beginning net position by $267,634, due to adjustments related to the University's capital leases. The leases in question were refinanced in fiscal year 2013 and the value of the new lease has been recorded. Georgia Gwinnett College has a restatement of prior year net position, increasing beginning net position by $7,130,000, due to errors and omissions in recording land assets donated to the College by Gwinnett County in calendar year 2000 for $6 million and in 2009 for $1.13 million. Middle Georgia State College has a restatement of prior year net position, decreasing beginning net position by $466,852, due to increased accumulated depreciation for equipment of $266,852, and removing an invalid accounts receivable of $200,000. Darton State College restated beginning net position in Fiscal Year 2013 due to the College not recognizing restricted grant revenues in the period in which the funds were expended. The College decreased deferred revenue by $587,763, which resulted in an increase in beginning net position of $587,763. This change is in accordance with generally accepted accounting principles. Georgia Perimeter College has a restatement of prior year net position, increasing beginning net position by $367,783. The transactions related to this increase included a $553,302 increase to beginning net position related to fiscal year 2012 grant revenue recognized in fiscal year 2013, a $362,516 decrease in beginning net position related to fiscal year 2012 interest expense paid in fiscal year 2013, a $152,506 increase in beginning net position related to fiscal year 2012 restricted fund analysis; a $34,804 decrease in beginning net position related to fiscal year 2012 supplies and other services paid in fiscal year 2013; a University System of Georgia Annual Financial Report FY 2013 Page 36 $26,441 increase in beginning net position related to fiscal year 2012 tuition and fee revenue recognized in fiscal year 2013; a $22,794 increase in beginning net position related to capital asset corrections; and a $10,060 increase in beginning net position related to fiscal year 2013 insurance expensed in fiscal year 2012. Kennesaw State University has a restatement of prior year capital assets, increasing beginning building and building improvements by $108,634,017 and associated depreciation of $27,167,343, for a net increase to capital assets of $81,466,674; this increase is offset by an increase to beginning deferred inflows of $81,466,674 and has no overall effect to beginning net position. This is due to recording three Service Concession Arrangements with Kennesaw State University Foundation, Inc., to construct and operate dormitories at the Kennesaw State University Campus, in accordance with the adoption of GASB 60, Accounting and Financial Reporting for Service Concession Arrangements. The University of North Georgia had a restatement of prior year capital assets, decreasing beginning capital assets obtained through a capital lease by $19,619,823. This decrease is offset by a decrease to lease obligations of $19,619,823, which results in no overall effect to beginning net position. This is due to a change in the methodology in reporting leases by the University of North Georgia Foundation, and is in accordance with generally accepted accounting principles. Georgia Highlands College has a restatement of prior year capital assets, decreasing beginning capital assets obtained through a capital lease by $1,365,796. This decrease is offset by an increase in lease obligations of $1,365,796, which results in no overall effect to beginning net position. This change is due to a change in the value of the lease by the foundation, which is in accordance with generally accepted accounting principles. Note 2 Deposits and Investments A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the University System's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University System of Georgia) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59: 1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia. 2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia. 3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose. University System of Georgia Annual Financial Report FY 2013 Page 37 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, 2013, the carrying value of deposits was $569,412,304 and the bank balance was $619,398,244. Of the University System's deposits, $547,084,859 was uninsured; however, these uninsured deposits were collateralized with securities held by the financial institution's trust department or agent in the University System's name. 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. University System of Georgia Annual Financial Report FY 2013 Page 38 The University System's investments as of June 30, 2013 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 Bond Securities Corporate Bonds Corporate Debt General Obligation Bonds Money Market Mutual Fund Municipal Bonds Mutual Funds - Bonds Repurchase Agreements Fair Value Less Than 1 Year Investment Maturity 1-5 Years 6-10 Years More Than 10 Years $ 12,718,088 30,873,525 349,099,047 44,888,756 107,619 1,716,245 1,079,183 3,581,937 5,000 15,694,162 46,392,219 $ 506,155,781 $ 10,284 387 14,747,107 - 18,575 29,961 3,216,632 5,000 2,133 46,392,219 $ 64,422,298 $ 5,435,039 4,609,281 51,619,991 10,309,778 49,221 1,606,621 207,883 365,305 8,919,402 $ 83,122,521 $ 7,272,765 26,018,946 58,626,076 27,987,278 39,823 79,663 775,553 6,755,876 - $ 127,555,980 $ 244,911 224,105,873 6,591,700 95,747 16,751 - $ 231,054,982 Other Investments Bond/Equity Mutual Funds Bond/Equity Mutual Funds - International Cash Surrender Value Equity Mutual Funds - Domestic Equity Mutual Funds - International Equity Securities - Domestic Equity Securities - International Real Asset Funds Real Estate Fund Real Estate Held for Investments Real Estate Investment Trusts Other - Equity Securities Other - International Fixed Investment Pools Office of the State Treasurer Georgia Fund 1 Georgia Extended Asset Pool 8,250,026 96,617 10,445 29,149,903 444,297 91,471,747 2,610,824 130,386 7,631,191 6,185,902 489,859 8,157 4,991 369,470,050 6,851,531 $ 1,028,961,707 The Georgia Fund 1 Investment Pool, managed by the Office of the State Treasurer, 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 AAAf rated investment pool by Standard and Poor's; the weighted average maturity of the fund is 43 days. The Georgia Extended Asset Pool, managed by the Office of the State Treasurer, 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 $2.00 at June 30, 2013. The Georgia Extended Asset Pool is an AA+f rated investment pool by Standard and Poor's; the weighted average maturity of the fund is 0.26 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 University System of Georgia Annual Financial Report FY 2013 Page 39 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 University System of Georgia Annual Financial Report FY 2013 Page 40 quality institutional money market mutual funds or other high quality, short term instruments. Total Return Fund The Total Return fund is another pool designed to be a vehicle to invest funds that are not subject to state regulations concerning investing in equities. This pool offers the greatest percentage of overall equity exposure, with well over half of the funds typically invested in equities. The equity allocation range shall be between 60% and 70%, with a target of 65% of the total portfolio. The fixed income (bond) portion of the portfolio shall be between 30% and 40%, with a target of 35% of the total portfolio. Reserves for contingencies and stock and bond purchases are expected to comprise the balance of the fund. Reserves and excess income should be invested at all times in practical amounts. Reserves can be invested in high quality institutional money market mutual funds or other high quality, short term instruments. Diversified Fund The Diversified fund is designed to gain further diversification and increase exposures to assets that have lower correlation to equity and bond markets by utilizing alternative asset classes. In addition, this fund is constructed to build an optimal portfolio where return is increased and risk is reduced. The equity allocation range shall be between 50% and 75% of the portfolio. The fixed income (bond) portion of the portfolio shall be between 20% and 40%. The portfolio may also consist of Hedge Funds, Real Estate and Venture Capital/Private Equity/Post Venture Capital. Hedge Funds The investment approach to this asset class is to use a multi-strategy, multimanager fund of hedge funds. The Board of Regents believes that a fund of fund strategy will provide the best access to a highly diversified pool of hedge fund strategies and managers. Real Estate The Board of Regents' approach to investing in this asset class is to use real estate investment trusts (REITs). REITs are more liquid than owning commercial real estate and diversification can be achieved by purchasing a mutual fund. Venture Capital/Private Equity/Post Venture Capital This asset class is the riskiest and most volatile permitted investment opportunity. This asset should be considered as an additional diversification investment strategy due to the low correlation with stock and bonds. Reserves for contingencies and stock and bond purchases are expected to comprise the balance of the fund. Reserves and excess income should be invested at all times in practical amounts. Reserves can be invested in high quality, institutional money market mutual funds or other high quality, short term instruments. University System of Georgia Annual Financial Report FY 2013 Page 41 Condensed financial information for the investment pool is as follows: Assets Investments Accrued Interest Net Assets $ 461,272,757 681,211 $ 461,953,968 Additions Pool Participant Deposits Investment Income Fair Value Decreases Less: Investment Expense $ 44,336,544 12,619,781 5,556,208 (800,751) Distribution of Net Assets External Participant Account Balance Internal Participant Account Balance Total Distribution $ 23,390,898 438,563,070 $ 461,953,968 Total Additions Deductions Pool Participant Withdrawals Net Increase (Decrease) $ 61,711,782 (56,774,356) $ 4,937,426 Net Assets July 1, 2012 457,016,542 June 30, 2013 $ 461,953,968 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 U.S. government agency and corporate debt instruments that meet investment eligibility under Georgia Code 50-17-63. 4. The fixed income target allocation is defined in the investment policy guidelines for each pooled investment fund. These targets may be modified upon recommendation of the fund's investment manager and approval by the Board of Regents. Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the University System of Georgia will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The University System of Georgia's policy for managing custodial credit risk for investments is: University System of Georgia Annual Financial Report FY 2013 Page 42 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, 2013, $629,333,651 of the University System of Georgia's applicable investments was uninsured and held by the investment's counterparty 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. University System of Georgia Annual Financial Report FY 2013 Page 43 The University System investments subject to credit quality risk follow: Related Debt Investments U.S.T reasuries U. S. Agencies Bond Securities Corporate Bonds Corporate Debt General Obligation Bonds Money Market Mutual Fund Municipal Bond Mutual Funds - Bonds Repurchase Agreements Related Debt Investments U.S.T reasuries U. S. Agencies Bond Securities Corporate Bonds Corporate Debt General Obligation Bonds Money Market Mutual Fund Municipal Bond Mutual Funds - Bonds Repurchase Agreements Fair Value AAA AAAm AA AA+ AA- A+ A- A $ 12,718,088 349,099,047 44,888,756 107,619 1,716,245 1,079,183 3,581,937 5,000 15,694,162 46,392,219 $ 475,282,256 $ 8,747,034 $ $ - - - - 5,120 - 101,394 - 1,079,183 - - 3,141,195.00 5,000 - 738,255 3,613,864 - 46,392,219 $ 10,675,986 $ 53,147,278 $ 10,288 20,579 30,867 $ 3,818,530 $ - - 6,010 111,266 - - - - - $ 3,935,806 $ $ $ $ - - - - - - 9,815 8,385 36,173 110,862 78,010 602,440 - - - - - - - - - - - - - - - 120,677 $ 86,395 $ 638,613 $ 12,630 262,784 2,079 277,493 Aaf Af A-f $ $ $ $ - - - 4,835,319 30,007,431 3,454,306 - - - - - - - - - - - - - - - - - - - - - $ 4,835,319 $ 30,007,431 $ 3,454,306 $ B BBB+f BBB- BBB+ BBB $ $ - - - 6,591,700 - - - - - - - - - - 13,436 - - - 13,436 $ 6,591,700 $ 3,082 6,165 9,247 $ $ - - 10,436 202,505 - - - 31,731 - $ 244,672 $ 5,680 208,857 27,142 241,679 Un rated $ 152,524 349,099,047 - - 11,383 - 440,742.00 - 11,267,655 0 $ 360,971,351 Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The University System's policy for managing concentration of credit risk is to diversify investments to the extent that any single issuer shall be limited to 5% of the market value in a particular investment fund. The following U.S. agency investments exceeded 5% of the total reported investment amount as of June 30, 2013: Investment Federal National Mortgage Association Federal Home Loan Mortgage Corporation Amount $ 264,539,599 $ 82,952,061 % of Total 25.7% 8.1% University System of Georgia Annual Financial Report FY 2013 Page 44 Note 3 Accounts Receivable Accounts receivable consisted of the following at June 30, 2013: Student Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Georgia State Financing and Investment Commission Due from Component Units Other Less: Allowance for Doubtful Accounts Net Accounts Receivable $ 52,698,637 26,112,172 92,111,331 14,453,298 146,346,685 55,638,462 387,360,585 23,232,469 $ 364,128,116 Note 4 Inventories Inventories consisted of the following at June 30, 2013: Bookstore Food Services Physical Plant Other Total $ 16,495,058 1,608,803 3,892,799 1,384,322 $ 23,380,982 Note 5 Notes/Loans Receivable The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2013. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University System for amounts cancelled under these provisions. As the University System determines that loans are uncollectible and not eligible for reimbursement by the federal government, the loans are written off and assigned to the U.S. Department of Education. The University System has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2013, the allowance for uncollectible loans was $13,592,847. University System of Georgia Annual Financial Report FY 2013 Page 45 Note 6 Capital Assets Changes in capital assets for the year ended June 30, 2013 are shown below: Capital Assets, Not Being Depreciated: Land Capitalized Collections Construction Work-in-Progress Total Capital Assets Not Being Depreciated Capital Assets, Being Depreciated: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections Software Total Assets Being Depreciated Less: Accumulated Depreciation Infrastructure Buildings Facilities and Other improvements Equipment Capital Leases Library Collections Capitalized Collections Software Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Net Capital Assets, net Restated Beginning Balance July 1, 2012 Special Item Transfer Additions Reductions Ending Balance June 30, 2013 $ 329,182,104 $ (603,000) $ 22,472,540 $ - $ 351,051,644 41,120,395 - 3,278,346 5,550 44,393,191 204,367,748 - 158,975,291 153,655,858 209,687,181 $ 574,670,247 $ (603,000) $ 184,726,177 $ 153,661,408 $ 605,132,016 $ 287,969,459 7,411,523,502 336,405,419 1,328,101,447 2,307,974,890 773,784,219 7,320,588 20,361,212 $ 12,473,440,736 $ - 23,285,537 - 1,477,760 - - - - 24,763,297 $ 23,575,638 330,903,058 33,269,283 129,288,821 166,744,164 32,964,150 310,429 - $ 717,055,543 $ 2,627,293 16,200,401 3,271,885 52,885,382 65,918,292 2,444,655 36,423 1 $ 143,384,332 308,917,804 7,749,511,696 366,402,817 1,405,982,646 2,408,800,762 804,303,714 7,594,594 20,361,211 13,071,875,244 $ 91,141,604 $ - $ 9,775,749 $ 2,153,496,880 9,159,011 190,369,650 119,555,726 - 11,529,819 931,169,014 1,177,928 103,386,885 309,224,092 92,812,959 606,587,417 - 34,892,676 863,050 - 140,997 14,264,610 - 995,919 $ 4,226,302,393 $ 10,336,939 $ 443,904,654 $ 2,117,912 13,179,947 2,440,556 46,896,468 22,525,656 2,496,142 - 89,656,681 98,799,441 2,339,845,594 128,644,989 988,837,359 379,511,395 638,983,951 1,004,047 15,260,529 4,590,887,305 $ 8,247,138,343 $ 14,426,358 $ 273,150,889 $ 53,727,651 8,480,987,939 $ 8,821,808,590 $ 13,823,358 $ 457,877,066 $ 207,389,059 $ 9,086,119,955 Note 7 Unearned Revenue Unearned revenue (current portion) consisted of the following at June 30, 2013: Prepaid Tuition and Fees Research Other Unearned Revenue Total $ 116,403,944 44,338,592 66,212,932 $ 226,955,468 University System of Georgia Annual Financial Report FY 2013 Page 46 Note 8 Long-Term Liabilities Long-term liability activity for the year ended June 30, 2013 was as follows: Leases Lease Obligations Other Liabilities Compensated Absences Net OPEB Obligation Notes & Loans Other Liabilities Total Total Long-Term Obligations Restated Beginning Balance July 1, 2012 Additions Reductions Ending Balance June 30, 2013 Current Portion $ 3,425,996,607 $ 187,409,126 $ 115,564,145 $ 3,497,841,588 $ 70,816,138 $ 186,566,182 1,278,146,146 918,236 $ 1,465,630,564 $ 4,891,627,171 $ 127,670,952 284,395,422 175,024 $ 412,241,398 $ 599,650,524 $ 123,258,632 - 137,745 $ 123,396,377 $ 238,960,522 $ 190,978,502 1,562,541,568 955,515 $ 1,754,475,585 $ 5,252,317,173 $ 117,869,709 - 137,745 $ 118,007,454 $ 188,823,592 Note 9 Significant Commitments The University System of Georgia had significant unearned, outstanding construction or renovation contracts executed in the amount of $154,181,532 as of June 30, 2013, which are not reflected in the accompanying basic financial statements. Institution Abraham Baldwin Agricultural College College of Coastal Georgia Columbus State University Fort Valley State University Georgia Institute of Technology Georgia Perimeter College Georgia Regents University Georgia Southern University Georgia State University Gordon State College Kennesaw State University University of Georgia University of West Georgia Valdosta State University Commitment Amount $ 197,971 112,512 1,770,720 1,313,659 27,919,797 5,000 7,690,409 11,760,507 23,888,974 536,111 47,218,045 14,552,112 14,631,990 2,583,725 Project Construction and renovation contracts Construction and renovation contracts Rental agreement with Greenhill at Columbus, LLC Construction and renovation contracts Construction and renovation contracts Construction and renovation contracts Construction and renovation contracts Construction and renovation contracts Construction and renovation contracts Construction and renovation contracts Construction and renovation contracts/Student Center Lease Construction and renovation contracts Construction and renovation contracts Construction and renovation contracts $154,181,532 University System of Georgia Annual Financial Report FY 2013 Page 47 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 $3.5 billion in capital lease liability as of June 30, 2013. Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between fiscal 2014 and 2048. Expenditures for fiscal year 2013 were $204,159,139, of which $156,272,623 represented interest. Total principal reductions on capital leases were $42,931,995 for the fiscal year ended June 30, 2013. Interest rates range from 0.75 percent to 29.88 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2013: Assets Held Under Accumulated Capital Lease, Net at Description Gross Amount Depreciation June 30, 2013 Land $ 48,434,601 $ 48,434,601 Infrastructure 55,001,904 (13,517,550) 41,484,354 Equipment 179,154,709 (38,724,771) 140,429,938 Buildings 3,394,461,317 (522,005,184) 2,872,456,133 Facilities and Improvements 17,526,464 (2,078,243) 15,448,221 Total Assets Held Under Capital Lease at June 30, 2013 $3,694,578,995 $ (576,325,748) $ 3,118,253,247 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. 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 2014 through 2048. 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. Systemwide real property and equipment operating lease expense for fiscal 2013 was $38,176,069. University System of Georgia Annual Financial Report FY 2013 Page 48 Future commitments for capital leases, which here and on the Statement of Net Position include other installment purchase agreements, and for non-cancellable operating leases having remaining terms in excess of one year as of June 30, 2013, are as follows: Year Ending June 30: 2014 2015 2016 2017 2018 2019 through 2023 2024 through 2028 2029 through 2033 2034 through 2038 2039 through 2043 2044 through 2048 Total minimum lease payments Less: Interest Less: Executory costs (if paid) Principal Outstanding Year 1 2 3 4 5 6-10 11-15 16-20 21-25 26-30 31-35 Capital Leases Operating Leases $ 261,143,877 262,168,539 263,607,162 266,006,582 268,411,088 1,359,860,633 1,375,050,375 1,256,902,734 876,657,484 202,748,486 112,348 $ 6,392,669,308 2,736,073,667 158,754,053 $ 3,497,841,588 $ 29,165,390 7,625,347 7,349,401 5,348,772 3,870,109 18,428,756 19,412,725 11,538,395 261,195 53,817 - $ 103,053,907 Note 11 Retirement Plans The University System of Georgia participates in various retirement plans administered by the State of Georgia under two major retirement systems: Employees' Retirement System of Georgia (ERS System) and Teachers Retirement System of Georgia. These two systems issue separate, publicly available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained from the respective system offices. The significant retirement plans that the University System of Georgia participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law. Employees' Retirement System of Georgia The ERS System is comprised of individual retirement systems and plans covering substantially all employees of the State of Georgia except for teachers and other employees covered by the Teachers Retirement System of Georgia. One of the ERS System plans, the Employees' Retirement System of Georgia (ERS), is a cost-sharing, multiple-employer, defined-benefit pension plan that was established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees and has the powers and privileges of a corporation. ERS acts pursuant to statutory direction and guidelines, which may be amended prospectively for new hires, but for existing members and beneficiaries may be amended in some aspects only subject to potential application of certain constitutional restraints against impairment of contract. University System of Georgia Annual Financial Report FY 2013 Page 49 On November 20, 1997, the Board created the Supplemental Retirement Benefit Plan (SRBP-ERS) of ERS. SRBP-ERS was established as a qualified, governmental-excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of the SRBP-ERS is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC Section 415. Beginning January 1, 1998, all members and retired former members in ERS are eligible to participate in the SRBP-ERS whenever their benefits under ERS exceed the limitation on benefits imposed by IRC Section 415. The benefit structure of ERS is established by the Board of Trustees under statutory guidelines. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are "new plan" members subject to the modified plan provisions. Effective January 1, 2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). ERS members hired prior to January 1, 2009 also have the option to change their membership to the GSEPS plan. Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirement benefits after completing 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. There also are some provisions allowing for early retirement after 25 years of creditable service for members under age 60. Retirement benefits paid to members are based upon a formula adopted by the Board of Trustees for such purpose. The formula considers the monthly average of the member's highest 24 consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Post-retirement cost-of-living adjustments may be made to members' benefits provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS. Member contribution rates are set by law. Member contributions under the old plan are 4% of annual compensation up to $4,200 plus 6% of annual compensation in excess of $4,200. Under the old plan, the University System of Georgia pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these University System of Georgia contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The University System of Georgia is required to contribute at a specified percentage of active member payroll established by the Board of Trustees determined annually in accordance with actuarial valuation and minimum funding standards as provided by law. These University System of Georgia contributions are not at any time refundable to the member or the member's beneficiary. University System of Georgia Annual Financial Report FY 2013 Page 50 Employer contributions required for fiscal year 2013 were based on the June 30, 2010 actuarial valuation as follows: Old Plan* New Plan GSEPS 14.90% 14.90% 11.54% *10.15% exclusive of contributions paid by the employer on behalf of old plan members Members become vested after ten years of service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member; however, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits. Teachers Retirement System of Georgia The Teachers Retirement System of Georgia (TRS) is a cost-sharing, multiple-employer, defined-benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. On October 25, 1996, the Board created the Supplemental Retirement Benefit Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified, governmental-excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits. TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service. Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits also are available. University System of Georgia Annual Financial Report FY 2013 Page 51 TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2013 were 6% of annual salary. Employer contributions required for fiscal year 2013 were 11.41% of annual salary as required by the June 30, 2010 actuarial valuation. The following table summarizes the University System of Georgia contributions by defined benefit plan for the years ending June 30, 2013, June 30, 2012, and June 30, 2011: Fiscal Year 2013 2012 2011 ERS Required Percent Contribution $ 1,238,577 $ 896,604 $ 709,947 Contributed 100% 100% 100% TRS Required Percent Contribution $ 164,293,969 $ 148,193,749 $ 143,479,581 Contributed 100% 100% 100% Regents Retirement Plan Plan Description The Regents Retirement Plan (Plan) is a single-employer, defined-contribution plan. This optional retirement Plan was authorized pursuant to OCGA Section 47-21-1 and administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-368(a) defines who may participate in the 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 Plan, a Plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts. Funding Policy The University System of Georgia makes monthly employer contributions for the 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 2013, the employer contribution was 9.24% for the participating employee's earned compensation. Employees contribute 6% of their earned compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times. The University System of Georgia and the covered employees made the required contributions of $105,192,757 (9.24%) and $63,037,110 (6%), respectively. University System of Georgia Annual Financial Report FY 2013 Page 52 AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports that may be obtained through their respective corporate offices. Georgia Defined Contribution Plan Plan Description The University System of Georgia participates in the Georgia Defined Contribution Plan (GDCP), which is a single-employer, defined-contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, or 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 payments will be based upon mortality tables and interest assumptions 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 death of a member, a lump sum distribution equaling the amount credited to the member's account will be paid to the member's designated beneficiary(ies). Benefit provisions are established by State statute. Contributions Member contributions are 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 2013 were $7,834,301, which represents 7.5% of covered payroll. These contributions met the requirements of the plan. The Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices. Note 12 Risk Management The University System of Georgia offers its employees and retirees access to three different self-insured healthcare plan options. For the University System of Georgia's Plan Year 2013, the following health care options were available: Blue Choice HMO plan, (Blue Cross Blue Shield) HAS Open Access POS plan, and the (Blue Cross Blue Shield) Open Access POS plan. The University System of Georgia institutions and participating employees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these plans are considered to be a self-sustaining risk fund. 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 self-insured healthcare University System of Georgia Annual Financial Report FY 2013 Page 53 plan products. In addition to the self-insured healthcare plan products offered to the employees of the University System of Georgia, a fully insured HMO healthcare plan option also is offered to System employees through Kaiser. 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 claim liabilities for employees and retirees for the fiscal years ended June 30, 2013 and June 30, 2012 is provided below: Employees: Unpaid Claims and Claim Adjustments (Prior Year IBNR) June 30, 2013 $ 26,269,302 June 30, 2012 $ 23,289,175 Incurred Claims and Claim Adjustments Expenses Provisions for Insured Events of the Current Year 325,395,148 318,490,596 Payments - Claims and Claim Adjustments Attributable To Insured Events of the Current Year and Prior Years 318,927,296 315,510,469 Unpaid Claims and Claim Adjustments (Current Year IBNR) $ 32,737,154 $ 26,269,302 Retirees: Unpaid Claims and Claim Adjustments (Prior Year IBNR) $ 9,714,307 $ 7,539,783 Incurred Claims and Claim Adjustments Expenses Provisions for Insured Events of the Current Year 113,908,368 117,510,071 Payments - Claims and Claim Adjustments Attributable To Insured Events of the Current Year and Prior Years 114,296,083 115,335,547 Unpaid Claims and Claim Adjustments (Current Year IBNR) $ 9,326,592 $ 9,714,307 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 University System of Georgia Annual Financial Report FY 2013 Page 54 liability, fidelity and certain other risks. The University System of Georgia is part of the State of Georgia reporting entity and, as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment. A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund. As of June 30, 2013, three University System of Georgia institutions had projects or events that met one of the five obligating events related to recognition of pollution remediation. Georgia Institute of Technology is responsible for pollution monitoring and remediation in all Institute facilities, including asbestos abatement. Monitoring and remediation activities are performed during renovation/construction projects when deemed necessary by Institute management. As of June 30, 2013, the Institute recorded a liability and expense in the amount of $504,440 for pollution monitoring and remediation projects in various Institute structures. The liability is reflected on the Statement of Net Position in Accounts Payable and on the Statement of Revenues, Expenses, and Changes in Net Position in Supplies and Other Services. 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 2013 was as follows: Balance July 1, 2012 Additions Reductions Balance June 30, 2013 Current Portion $ 145,486 $ 504,440 $ 145,486 $ 504,440 $ 504,440 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 $955,515. The liability is reflected on the Statement of Net Position in Accounts Payable and on the Statement of Revenues, Expenses and Changes in Net Position in Supplies and Other Services. The liability was determined using a 5 year budget estimate provided by Brown and Caldwell. 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. Pollution remediation liability activity in fiscal 2013 was as follows: University System of Georgia Annual Financial Report FY 2013 Page 55 Balance July 1, 2012 Additions Reductions Balance June 30, 2013 Current Portion $ 918,236 $ 175,024 $ 137,745 $ 955,515 $ 137,745 Georgia Regents University is responsible for asbestos abatement as a small part of the project costs for various projects. The University has recorded a liability and expense related to this pollution remediation in the amount of $26,023. The liability is reflected on the Statement of Net Position in Accounts Payable and on the Statement of Revenues, Expenses, and Changes in Net Position in Supplies and Other Services. The liability is the remaining amount of project abatement costs at June 30, 2013. The University does not anticipate any significant changes to the expected remediation outlay. Pollution remediation liability activity in fiscal year 2013 was as follows: Balance July 1, 2012 Additions Reductions Balance June 30, 2013 Current Portion $ 2,992 $ 72,727 $ 49,696 $ 26,023 $ 26,023 Note 13 Contingencies Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures that may be disallowed by the grantor cannot be determined at this time, although the University System 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, generally are 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, 2013. Note 14 Post-Employment Benefits Other Than Pension Benefits Plan Description and Funding Policy The Regents Plan is a single-employer, defined-benefit, healthcare plan administered by the Board of Regents (BOR). The plan was authorized pursuant to OCGA Section 47-21-21 for the purpose of accumulating funds necessary to meet employer costs of retiree postemployment health insurance benefits. Financial statements and required supplementary information for the plan are available in the Board of Regents University System Office stand-alone audit report. A copy of the report may be obtained at www.audits.ga.gov. Pursuant to the general powers conferred by the OCGA Section 20-3-31, the BOR has established group health and life insurance programs for regular employees of the University System of Georgia (USG). It is the policy of the BOR to permit employees of the USG eligible University System of Georgia Annual Financial Report FY 2013 Page 56 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 BOR define and delineate who is eligible for these post-employment health and life insurance benefits. Membership of the Plan consisted of the following at June 30, 2013: Retirees and beneficiaries receiving benefits Terminated plan members entitled to but not yet receiving benefits Active employee plan contracts 21,601 37,768 Total 59,369 The contribution requirements of plan members and the employer are established and may be amended by the BOR. 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 BOR designation. Organizational units of the BOR 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 BOR for the upcoming plan year. For the 2013 plan year, the employer rate was approximately 70% of the total health insurance cost for eligible retirees and the retiree rate was approximately 30%. 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. In fiscal year 2013, the USG contributed $83,414,616 to the Plan for current premiums or claims; Plan members receiving benefits contributed $29,960,449. 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. Annual OPEB Cost and Net OPEB Obligation The annual OPEB cost (expense) for the Regents Plan is calculated based on the ARC of the employer, 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 30 years. University System of Georgia Annual Financial Report FY 2013 Page 57 The following table presents the components of the annual OPEB cost, the amount actually contributed, and changes in the net OPEB obligation for the Regents Plan for FY 2013, 2012, and 2011 (dollars in millions): 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 Net OPEB obligation - end of year Fiscal Year Ended 6/30/2013 $ 362.4 57.5 (52.1) $ 367.8 (83.4) $ 284.4 1,278.2 $ 1,562.6 Fiscal Year Ended 6/30/2012 $ 345.3 45.8 (41.5) $ 349.6 (88.8) $ 260.8 1,017.4 $ 1,278.2 Fiscal Year Ended 6/30/2011 $ 411.5 31.5 (45.3) $ 397.7 (80.2) $ 317.5 699.9 $ 1,017.4 Percentage of annual OPEB cost contributed 22.7% 25.4% 20.2% Funded Status, Funding Progress, and Actuarial Methods and Assumptions Actuarial Valuation Date 7/1/2010 7/1/2011 7/1/2012 Actuarial Value of Assets (a) $ 122,538 $ 123,230 $ 165,684 Actuarial Accrued Liability (AAL) - Projected Unit Credit (b) $ 3,384,099,942 $ 3,494,501,238 $ 3,758,969,936 Unfunded AAL (UAAL) (b-a) $ 3,383,977,404 $ 3,494,378,008 $ 3,758,804,252 Funded Ratio (a/b) 0.0% 0.0% 0.0% Annual Covered Payroll (c) $ 2,432,366,796 $ 2,526,211,986 $ 2,466,313,700 UAAL as a Percentage of Covered Payroll ((b-a)/c) 139.1% 138.3% 152.4% 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 trends. Actuarially determined amounts are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress with multi-year trend information is presented as required supplementary information following the notes to the financial statements. The multi-year trend schedules indicate whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. 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- University System of Georgia Annual Financial Report FY 2013 Page 58 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 is as follows: Valuation date Actuarial cost method Amortization method Asset Valuation method Remaining amortization period Actuarial assumptions: Investment rate of return Salary growth Salary scale Inflation rate Healthcare cost trend rate - initial Pre-Medicare eligible Medicare eligible Ultimate trend rate Pre-Medicare eligible Medicare eligible Year Ultimate Trend is reached July 1, 2012 Projected Unit Credit Level Percent of Payroll, Closed Market Value 30 years 4.50% 3.00% 4.00% 2.50% 7.80% 7.30% 4.50% 4.50% 2027 Please note that the investment rate of return percentage can change. University System of Georgia Annual Financial Report FY 2013 Page 59 Note 15 Natural Classifications with Functional Classifications The University's operating expenses by functional classification for FY2013 are shown below: Natural Classification Fac u l ty S taf f B en ef i ts Personal Services T ravel Scholarships and Fellowships Utilities Supplies and Others Services Dep rec i ati on T otal Expenses In s tru c ti on $ 856,180,798 295,045,656 405,291,396 540,588 17,365,516 9,013,237 5,671,362 90,936,227 73,328,184 $ 1,753,372,964 Research $ 320,245,322 283,878,342 182,317,153 64,146 26,602,655 3,647,051 3,655,754 222,600,165 71,696,356 $ 1,114,706,944 Functional Classification Public A c ad em i c Service S u p p ort $ 34,462,531 $ 40,180,320 155,883,671 215,419,662 75,147,377 96,683,797 673,477 562,469 6,201,264 5,462,790 2,349,645 616,450 4,168,135 2,971,951 106,487,278 86,081,626 6,512,465 52,825,307 $ 391,885,843 $ 500,804,372 S tu d en t Services $ 1,826,836 149,184,798 54,555,558 194,257 3,533,930 4,327,404 2,653,704 62,477,212 18,963,916 $ 297,717,615 In s ti tu ti on al S u p p ort $ 12,557,501 263,848,290 150,104,338 7,881,074 4,777,709 2,177,377 6,661,282 450,641,082 31,345,459 $ 929,994,112 Natural Classification Fac u l ty S taf f B en ef i ts Personal Services T ravel Scholarships and Fellowships Utilities Supplies and Others Services Dep rec i ati on T otal Expenses P l an t Op erati on s & Maintenance $ (800,375) 175,332,548 75,426,040 (8,920,491) 539,137 3,847 116,998,653 208,760,821 73,554,354 $ 640,894,534 S c h ol ars h i p s & Fellowships $ 3,000 214,327 287,462 657,167 1,346 286,158,442 - 292,772 5,143 $ 287,619,659 Functional Classification P ati en t A u x i l i ary Care E n terp ri s es (GRU Only) $ 2,449,532 $ 69,195,137 161,145,805 71,287,702 56,853,845 45,565,868 8,987,830 82 2,365,611 284,132 22,660,526 - 35,314,176 372,629 306,472,343 78,885,628 115,673,470 - $ 711,923,138 $ 265,591,178 T otal E x p en s es $ 1,336,300,602 1,771,240,801 1,142,232,834 10,640,599 67,134,090 330,953,979 178,467,646 1,613,635,154 443,904,654 $ 6,894,510,359 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 considered potential component units of the State of Georgia in accordance with GASB Statement No. 61, The Financial Reporting Entity: Omnibus an amendment of GASB Statements No. 14 and No. 34, and GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statement of the affiliated organizations are not included in these financial statements. 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. The following affiliated organizations have been determined to be significant to the State of Georgia for the year ended June 30 2013 and, as such, are reported as blended or University System of Georgia Annual Financial Report FY 2013 Page 60 discretely presented component units in the Comprehensive Annual Financial Report of the State of Georgia (CAFR). 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 institution's annual financial reports. The following affiliated organizations have been determined to be significant to the State of Georgia for the year ended June 30 2013 and, as such, are reported as blended or discretely presented component units in the Comprehensive Annual Financial Report 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 System, 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. Armstrong Atlantic State University Educational Properties, Inc. Kennesaw State University Foundation, Inc. Georgia College and State University Foundation, Inc. University System of Georgia Foundation, Inc. University of North Georgia Real Estate Foundation, Inc. and Subsidiaries Fiscal Year Ending June 30, 2013 June 30, 2013 June 30, 2013 June 30, 2013 June 30, 2013 June 30, 2013 June 30, 2013 June 30, 2013 June 30, 2013 June 30, 2013 June 30, 2013 June 30, 2013 June 30, 2013 December 31, 2012 December 31, 2012 June 30, 2013 June 30, 2013 June 30, 2013 June 30, 2013 Reporting Basis FASB GASB GASB FASB FASB GASB GASB FASB FASB FASB GASB GASB FASB FASB FASB FASB FASB FASB FASB University System of Georgia Annual Financial Report FY 2013 Page 61 (This page intentionally left blank) University System of Georgia Annual Financial Report FY 2013 Page 62 SUPPLEMENTARY INFORMATION University System of Georgia Annual Financial Report FY 2013 Page 63 UNIVERSITY SYSTEM OF GEORGIA Condensed Statement of Net Position by Institution June 30, 2013 Institution Georgia Institute of Technology Georgia State University Georgia Regents University University of Georgia Georgia Southern University Valdosta State University Albany State University Armstrong Atlantic State University Clayton State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State University Kennesaw State University University of North Georgia Savannah State University Southern Polytechnic State University University of West Georgia Abraham Baldwin Agricultural College College of Coastal Georgia Dalton State College Georgia Gwinnett College Gordon State College Middle Georgia State College Atlanta Metropolitan State College Bainbridge State College Darton State College East Georgia State College Georgia Highlands College Georgia Perimeter College South Georgia State College Skidaway Institute of Oceanography University System Office Elimination/Consolidation Entries Total Current Assets Noncurrent Cash/ Investments Assets Capital Assets Other Assets Total Assets $306,877,204 $64,913,602 $1,707,211,661 $12,918,576 $2,091,921,043 224,657,473 910,789 816,950,835 6,112,651 1,048,631,748 118,061,072 98,983,147 485,226,134 3,330,387 705,600,740 374,569,087 75,776,270 1,637,202,052 8,845,360 2,096,392,769 58,102,738 10,601,214 506,804,821 2,579,165 578,087,938 31,662,981 13,258,763 327,120,659 55,707 372,098,110 14,271,575 - 156,365,265 375,681 171,012,521 24,490,407 2,878,010 161,591,036 7,741 188,967,194 13,612,213 1,352,658 125,201,685 106,092 140,272,648 24,129,097 4,164,004 129,578,656 1,160,326 159,032,083 7,728,075 52,226 154,175,831 1,790,068 163,746,200 24,119,146 9,268,895 175,428,895 2,220,339 211,037,275 10,245,035 663,791 92,941,135 886,338 104,736,299 67,530,707 663,043 477,199,638 440,657 545,834,045 34,573,091 2,520,158 289,251,517 1,318,581 327,663,347 14,613,404 5,312,253 157,654,471 885,759 178,465,887 27,766,557 2,942,956 172,786,418 163,602 203,659,533 55,857,444 480,376 258,736,231 2,210,153 317,284,204 6,605,464 - 84,166,684 296,164 91,068,312 3,540,953 113,049 88,334,065 - 91,988,067 7,887,527 - 28,609,024 - 36,496,551 15,231,055 - 234,631,943 - 249,862,998 10,104,402 - 77,125,684 - 87,230,086 22,695,556 2,653,477 222,820,199 - 248,169,232 4,674,488 - 34,933,515 - 39,608,003 6,352,625 730,646 52,830,803 - 59,914,074 10,126,256 - 78,069,771 - 88,196,027 4,745,778 - 31,491,779 - 36,237,557 6,445,704 33,299 55,778,802 - 62,257,805 14,627,060 119,291 157,330,188 - 172,076,539 6,117,666 447,310 57,735,147 49,273 64,349,396 559,769 - 9,963,003 - 10,522,772 609,427,923 8,855,822 40,872,408 1,732,832 660,888,985 (252,988,189) (156,380,218) (1,732,831) (411,101,238) $1,909,021,343 $151,314,831 $9,086,119,955 $45,752,621 $11,192,208,750 University System of Georgia Annual Financial Report FY 2013 Page 64 UNIVERSITY SYSTEM OF GEORGIA Condensed Statement of Net Position by Institution June 30, 2013 Institution Georgia Institute of Technology Georgia State University Georgia Regents University University of Georgia Georgia Southern University Valdosta State University Albany State University Armstrong Atlantic State University Clayton State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State University Kennesaw State University University of North Georgia Savannah State University Southern Polytechnic State University University of West Georgia Abraham Baldwin Agricultural College College of Coastal Georgia Dalton State College Georgia Gwinnett College Gordon State College Middle Georgia State College Atlanta Metropolitan State College Bainbridge State College Darton State College East Georgia State College Georgia Highlands College Georgia Perimeter College South Georgia State College Skidaway Institute of Oceanography University System Office Elimination/Consolidation Entries Total Liabilities Current Liabilities Noncurrent Liabilities $147,996,331 $498,000,385 81,522,526 376,022,248 123,132,038 69,644,066 132,412,134 289,022,018 27,376,599 197,586,716 17,343,357 209,024,890 5,882,257 76,683,302 7,732,770 99,546,657 6,570,560 77,528,161 10,828,393 64,570,372 8,156,490 83,034,482 11,720,943 139,495,058 4,688,376 38,513,984 31,476,875 202,342,185 11,481,457 148,658,771 5,959,545 108,822,406 17,669,842 89,094,259 14,566,551 142,317,072 3,518,955 44,600,112 2,800,218 27,093,376 2,141,397 7,273,172 7,232,460 184,529,106 3,368,881 32,029,060 6,230,727 75,206,884 2,130,635 10,528,832 2,366,417 20,370,916 4,352,820 45,651,037 1,615,598 8,489,356 2,319,267 17,546,593 13,814,692 78,145,487 2,152,928 37,036,267 474,409 131,176 480,082,245 14,831,908 (409,481,674) 1,560,920,264 $791,637,019 $5,074,290,578 Total Liabilities Deferred Inflow of Resources $645,996,716 $ 3,000,000 457,544,774 - 192,776,104 - 421,434,152 - 224,963,315 - 226,368,247 - 82,565,559 - 107,279,427 - 84,098,721 - 75,398,765 - 91,190,972 - 151,216,001 - 43,202,360 - 233,819,060 77,884,484 160,140,228 - 114,781,951 - 106,764,101 - 156,883,623 - 48,119,067 - 29,893,594 - 9,414,569 - 191,761,566 - 35,397,941 - 81,437,611 - 12,659,467 - 22,737,333 - 50,003,857 - 10,104,954 - 19,865,860 - 91,960,179 - 39,189,195 - 605,585 - 494,914,153 - 1,151,438,590 - $5,865,927,597 $ 80,884,484 University System of Georgia Annual Financial Report FY 2013 Page 65 (This page intentionally left blank) University System of Georgia Annual Financial Report FY 2013 Page 66 UNIVERSITY SYSTEM OF GEORGIA Condensed Statement of Net Position by Institution June 30, 2013 Institution Georgia Institute of Technology Georgia State University Georgia Regents University University of Georgia Georgia Southern University Valdosta State University Albany State University Armstrong Atlantic State University Clayton State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State University Kennesaw State University University of North Georgia Savannah State University Southern Polytechnic State University University of West Georgia Abraham Baldwin Agricultural College College of Coastal Georgia Dalton State College Georgia Gwinnett College Gordon State College Middle Georgia State College Atlanta Metropolitan State College Bainbridge State College Darton State College East Georgia State College Georgia Highlands College Georgia Perimeter College South Georgia State College Skidaway Institute of Oceanography University System Office Elimination/Consolidation Entries Total Net Investment in Restricted Capital Assets Unexpendable $1,210,752,738 $56,145,130 427,819,355 57,340 428,889,825 1,864,982 1,360,617,195 71,829,738 305,636,637 2,465,814 116,251,269 3,047,107 79,278,375 - 61,047,948 2,561,570 48,059,802 1,250,218 64,114,028 1,778,020 71,620,683 - 42,357,681 3,581,838 54,388,823 388,318 194,923,797 514,662 140,085,050 2,649,952 48,166,663 5,141,861 81,964,288 1,362,564 115,179,013 - 38,480,881 - 61,115,776 68,879 21,393,034 - 49,791,762 - 44,678,749 - 147,597,362 - 24,447,916 - 32,482,451 649,785 33,058,036 - 23,095,653 37,100 38,251,071 33,301 79,388,404 31,338 20,620,020 286,490 9,963,003 - 27,111,543 4,375,648 $5,502,628,831 $160,121,655 Net Position Restricted Expendable $59,577,493 22,115,361 84,327,423 82,014,761 8,997,442 3,484,583 394,136 322,164 3,283,329 3,457,619 5,091,736 1,598,039 384,882 2,158,931 1,144,802 1,764,272 2,851,979 660,127 65,443 1,961 - 3,004,247 - 158,649 - 15,493 34,721 493,268 251,326 105,985,171 $393,639,358 Unrestricted $116,448,966 141,094,918 (2,257,594) 160,496,923 36,024,730 22,946,904 8,774,451 17,756,085 6,863,907 14,457,941 (2,523,074) 8,790,019 5,158,759 38,307,160 22,629,186 9,230,610 11,804,308 $42,369,589 3,808,237 844,375 5,686,987 8,309,670 7,153,396 16,130,012 2,500,620 3,885,856 5,134,134 2,984,357 4,072,852 203,350 4,002,365 (45,816) 28,502,470 (1,562,539,828) ($810,993,175) Total Net Position 1,442,924,327 591,086,974 512,824,636 1,674,958,617 353,124,623 145,729,863 88,446,962 81,687,767 56,173,927 83,633,318 72,555,228 59,821,274 61,533,939 234,130,501 167,523,119 63,683,936 96,895,432 160,400,581 42,949,245 62,094,473 27,081,982 58,101,432 51,832,145 166,731,621 26,948,536 37,176,741 38,192,170 26,132,603 42,391,945 80,116,360 25,160,201 9,917,187 165,974,832 ($1,562,539,828) $5,245,396,669 University System of Georgia Annual Financial Report FY 2013 Page 67 UNIVERSITY SYSTEM OF GEORGIA Condensed Statement of Revenues, Expenses and Changes in Net Position by Institution For the Year Ended June 30, 2013 Institution Georgia Institute of Technology Georgia State University Georgia Regents University University of Georgia Georgia Southern University Valdosta State University Albany State University Armstrong Atlantic State University Clayton State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State University Kennesaw State University University of North Georgia Savannah State University Southern Polytechnic State University University of West Georgia Abraham Baldwin Agricultural College College of Coastal Georgia Dalton State College Georgia Gwinnett College Gordon State College Middle Georgia State College Atlanta Metropolitan State College Bainbridge State College Darton State College East Georgia State College Georgia Highlands College Georgia Perimeter College South Georgia State College Skidaway Institute of Oceanography University System Office Elimination/Consolidation Entries Total Revenues Operating Tuition & Fees, Federal Approp, Net Grants & Contracts Auxiliaries Other Operating Expenses Operating Loss $271,444,683 $754,543,784 $97,309,346 $45,992,632 ($1,311,667,293) ($142,376,848) 225,375,296 76,792,933 70,552,589 25,447,738 (592,305,276) (194,136,720) 72,453,759 424,467,679 15,160,666 10,422,988 (717,166,668) (194,661,576) 349,901,990 199,925,068 162,159,742 67,400,813 (1,225,847,104) (446,459,491) 106,587,178 16,442,179 76,767,433 6,346,643 (308,534,580) (102,391,147) 60,105,797 2,811,985 41,549,891 2,565,013 (168,231,323) (61,198,637) 16,227,815 9,957,634 14,256,512 939,506 (76,063,301) (34,681,834) 29,948,421 5,618,077 19,224,953 305,067 (90,108,583) (35,012,065) 27,046,979 1,965,466 14,746,614 2,062,556 (87,028,171) (41,206,556) 40,906,237 2,075,097 11,455,028 3,218,510 (109,232,888) (51,578,016) 9,512,951 6,377,401 15,302,375 965,585 (78,028,421) (45,870,109) 48,336,371 361,402 25,303,564 2,121,903 (113,475,137) (37,351,897) 11,688,171 3,070,990 9,300,051 268,344 (42,968,156) (18,640,600) 122,535,115 6,787,922 48,185,688 10,328,751 (309,003,067) (121,165,591) 51,993,872 73,858 30,442,174 4,210,503 (157,006,427) (70,286,020) 12,316,374 10,551,630 27,709,322 864,784 (86,634,358) (35,192,248) 33,333,528 765,993 16,507,265 565,579 (81,976,841) (30,804,476) 55,871,970 3,272,770 35,332,906 4,010,493 (157,069,310) (58,581,171) 5,394,870 88,375 11,624,720 364,833 (42,699,228) (25,226,430) 5,921,194 29,084 5,561,739 79,528 (35,853,105) (24,261,560) 8,376,203 1,786,949 2,977,146 98,727 (38,797,296) (25,558,271) 27,400,777 198,714 11,975,215 234,240 (97,970,548) (58,161,602) 6,326,468 37,337 10,108,639 278,132 (39,524,955) (22,774,379) 19,460,951 703,261 16,067,131 961,954 (95,032,312) (57,839,015) 3,523,000 2,433,194 2,216,610 202,510 (28,840,591) (20,465,277) 6,788,915 2,403,267 478,125 209,316 (29,744,107) (19,864,484) 12,466,412 2,327,814 6,009,220 354,027 (50,230,958) (29,073,485) 3,876,826 17,985 2,451,821 62,762 (22,838,235) (16,428,841) 10,273,549 477,891 1,284,978 262,513 (39,510,776) (27,211,845) 47,276,044 3,005,443 8,387,808 802,362 (147,068,688) (87,597,031) 2,947,699 13,120 5,637,019 141,800 (26,840,106) (18,100,468) - 3,690,992 47,081 643,890 (7,342,161) (2,960,198) - 8,671,582 - 406,416,212 (496,930,143) (81,842,349) - (10,435,554) (46,791) (290,972,831) 17,059,754 (284,395,422) $1,705,619,415 $1,541,311,322 $816,046,580 $308,177,383 ($6,894,510,359) ($2,523,355,659) University System of Georgia Annual Financial Report FY 2013 Page 68 UNIVERSITY SYSTEM OF GEORGIA Condensed Statement of Revenues, Expenses and Changes in Net Position by Institution For the Year Ended June 30, 2013 Non-Operating Institution Georgia Institute of Technology Georgia State University Georgia Regents University University of Georgia Georgia Southern University Valdosta State University Albany State University Armstrong Atlantic State University Clayton State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State University Kennesaw State University University of North Georgia Savannah State University Southern Polytechnic State University University of West Georgia Abraham Baldwin Agricultural College College of Coastal Georgia Dalton State College Georgia Gwinnett College Gordon State College Middle Georgia State College Atlanta Metropolitan State College Bainbridge State College Darton State College East Georgia State College Georgia Highlands College Georgia Perimeter College South Georgia State College Skidaway Institute of Oceanography University System Office Elimination/Consolidation Entries Total State Appropriations Other Revenues/ (Expenses) $206,883,732 $74,171,211 178,932,830 80,330,926 161,880,219 55,235,778 363,084,970 216,552,843 76,019,111 70,137,922 44,831,698 26,945,276 18,637,434 13,797,291 26,669,365 18,464,286 21,870,327 19,680,963 30,830,595 25,796,854 21,758,049 28,284,638 27,229,767 10,614,127 11,084,310 14,376,421 75,897,167 72,891,509 40,968,231 53,237,792 17,256,227 17,166,578 19,276,552 12,798,846 42,936,722 39,233,582 12,438,856 16,132,945 12,868,032 19,420,716 13,262,082 8,936,335 34,785,950 31,636,268 11,367,744 10,762,707 32,206,090 23,895,029 8,205,013 12,675,112 8,799,961 11,077,903 14,154,796 17,572,487 6,486,544 9,450,920 13,433,137 12,797,424 44,795,320 47,744,711 10,103,719 9,908,153 2,366,845 278,265 133,164,644 10,338,762 4 (167,765) $1,744,486,043 $1,092,176,815 University System of Georgia Annual Financial Report FY 2013 Interest Expense ($27,066,882) (24,688,429) (3,441,423) (17,747,476) (11,083,207) (9,130,370) (3,674,051) (4,654,275) (3,808,195) (2,890,641) (3,969,872) (6,614,858) (1,902,626) (11,811,257) (8,702,815) (5,454,204) (4,752,595) (7,288,660) (2,105,100) (1,427,944) (433,964) (9,650,241) (1,341,743) (3,820,617) (606,348) (1,133,513) (2,704,276) (456,903) (377,601) (3,886,864) (1,768,969) (880,754) 99,683 ($189,176,990) Page 69 (This page intentionally left blank) University System of Georgia Annual Financial Report FY 2013 Page 70 UNIVERSITY SYSTEM OF GEORGIA Condensed Statement of Revenues, Expenses and Changes in Net Position by Institution For the Year Ended June 30, 2013 Net Position Institution Georgia Institute of Technology Georgia State University Georgia Regents University University of Georgia Georgia Southern University Valdosta State University Albany State University Armstrong Atlantic State University Clayton State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State University Kennesaw State University University of North Georgia Savannah State University Southern Polytechnic State University University of West Georgia Abraham Baldwin Agricultural College College of Coastal Georgia Dalton State College Georgia Gwinnett College Gordon State College Middle Georgia State College Atlanta Metropolitan State College Bainbridge State College Darton State College East Georgia State College Georgia Highlands College Georgia Perimeter College South Georgia State College Skidaway Institute of Oceanography University System Office Elimination/Consolidation Entries Total Increase/ (Decrease) in Net Position $111,611,213 40,438,607 19,012,998 115,430,846 32,682,679 1,447,967 (5,921,160) 5,467,311 (3,463,461) 2,158,792 202,706 (6,122,861) 4,917,505 15,811,828 15,217,188 (6,223,647) (3,481,673) 16,300,473 1,240,271 6,599,244 (3,793,818) (1,389,625) (1,985,671) (5,558,513) (191,500) (1,120,133) (50,478) (948,280) (1,358,885) 1,056,136 142,435 (315,088) 60,780,303 (284,463,500) $124,130,209 Net Position Beginning of Year $1,334,813,114 561,607,434 493,811,638 1,559,527,771 310,677,295 144,281,896 94,368,122 76,220,456 59,637,388 81,474,526 72,040,275 65,944,135 56,616,434 218,318,673 152,305,931 69,907,583 100,109,471 144,100,108 41,708,974 55,495,229 30,875,800 52,361,057 53,817,816 172,756,986 27,140,036 38,296,874 37,654,885 27,080,883 43,750,830 78,692,441 25,017,766 10,232,275 105,194,529 (1,278,076,328) $5,117,762,303 Prior Year Adjustments ($3,500,000) (10,959,067) 9,764,649 312,247 267,634 7,130,000 (466,852) 587,763 367,783 $3,504,157 Net Position Beginning of Year Restated $1,331,313,114 550,648,367 493,811,638 1,559,527,771 320,441,944 144,281,896 94,368,122 76,220,456 59,637,388 81,474,526 72,352,522 65,944,135 56,616,434 218,318,673 152,305,931 69,907,583 100,377,105 144,100,108 41,708,974 55,495,229 30,875,800 59,491,057 53,817,816 172,290,134 27,140,036 38,296,874 38,242,648 27,080,883 43,750,830 79,060,224 25,017,766 10,232,275 105,194,529 (1,278,076,328) $5,121,266,460 Net Position End of Year $1,442,924,327 591,086,974 512,824,636 1,674,958,617 353,124,623 145,729,863 88,446,962 81,687,767 56,173,927 83,633,318 72,555,228 59,821,274 61,533,939 234,130,501 167,523,119 63,683,936 96,895,432 160,400,581 42,949,245 62,094,473 27,081,982 58,101,432 51,832,145 166,731,621 26,948,536 37,176,741 38,192,170 26,132,603 42,391,945 80,116,360 25,160,201 9,917,187 165,974,832 (1,562,539,828) $5,245,396,669 University System of Georgia Annual Financial Report FY 2013 Page 71 UNIVERSITY SYSTEM OF GEORGIA Condensed Statement of Net Position by Affiliated Organization (Unaudited) For the Year Ended June 30, 2013 Affiliated Organizations Abraham Baldwin Agricultural College Foundation, Inc. and Subsidiaries Albany State University Foundation, Inc. Armstrong Atlantic State University Educational Properties Foundation, Inc. and Subsidiaries Armstrong Atlantic State University Foundation, Inc. Atlanta Metropolitan College Foundation, Inc. Augusta State University Foundation, Inc. and Subsidiaries Bainbridge College Foundation Clayton State University Foundation, Inc. College of Coastal Georgia Foundation, Inc. Columbus State University Alumni Association, Inc. Columbus State University Athletic Fund, Inc. Columbus State University Foundation, Inc. Dalton State College Athletic Club Dalton State College Foundation, Inc. Darton Boosters, Inc. Darton College Foundation, Inc. East Georgia College Foundation, Inc. Fort Valley State University Foundation, Inc. Foundation Properties, Inc. Georgia Advanced Technology Ventures, Inc. Georgia College & State University Alumni Association, Inc. Georgia College & State University Foundation, Inc. and Subsidiaries Georgia Gwinnett College Foundation Inc. and Subsidiaries Georgia Highlands College Foundation, Inc. Georgia Perimeter College Foundation, Inc. Georgia Regents University Research Institute, Inc. Georgia Regents University, College of Dental Medicine Faculty Practice Group d/b/a GRU Dental Faculty Practice Group Georgia Southern University Athletic Foundation, Inc. Georgia Southern University Foundation, Inc. Georgia Southern University Housing Foundation, Inc. and Subsidiaries Georgia Southern University Research and Service Foundation, Inc. Georgia Southwestern Foundation, Inc. Georgia State University Foundation, Inc. Georgia State University Research Foundation, Inc. and Affiliates Georgia Tech Alumni Association Georgia Tech Athletic Association Georgia Tech Facilities, Inc. Georgia Tech Foundation, Inc. Georgia Tech Research Corporation Gordon College Foundation, Inc. and Subsidiaries Kennesaw State University Foundation, Inc. Macon State College Foundation, Inc. and Subsidiaries MCG Health System, Inc. d/b/a Georgia Regents Health System Medical College of Georgia Foundation, Inc. Middle Georgia State College Real Estate Foundation, Inc. and Subsidiaries Current Assets Noncurrent Cash/ Investments Assets Capital Assets Other Assets Total Assets Deferred Outflows of Resources $ 7,985,771 $ 13,421,079 6,612,857 $ 1,607,085 3,206,231 $ 380,000 80,770,367 $ 69,288,153 98,575,226 84,696,317 3,788,864 1,414,823 169,273 4,009,670 1,050,918 3,634,782 15,483,647 143,922 83,685 2,350,306 925,374 2,261,829 1,750,613 3,171,646 207,911 5,754,974 2,177,855 4,703,558 296,283 8,269,579 7,549,737 26,573,129 5,513,648 7,534 1,733,317 6,807,771 23,535,255 1,149,123 1,154,176 838,864 11,351,930 1,740,449 788,205 6,293,774 2,780,148 957,195 63,521,506 52,770 7,580,872 407,917 32,803 1,794,612 93,635,100 112,299,046 24,377 102,199,700 13,609 44,392,684 5,558,166 475,728 183,132 49,152,380 3,840,411 360,475 21,423,053 55,785,521 3,345,919 2,529,079 4,500 117,038,291 8,978,169 169,273 75,932,678 1,050,918 78,228,102 15,959,375 334,588 1,869,772 58,310,457 4,765,785 33,738,431 24,322,789 4,733,739 1,079,578 74,687,037 100,899,323 120,319,888 6,618,934 10,440,802 13,053,684 1,900,695 2,112,926 11,694,889 36,874,487 21,404,696 1,357,990 3,728,949 264,425 3,464,295 10,998,163 10,409 3,000,000 89,388,297 349,640,052 17,594,689 78,309,549 140,167,881 395,096,595 20,863,783 87,151,424 11,959,314 1,739,395 4,570,179 50,139,840 10,373,615 4,071,230 2,068,407 28,904,759 38,672,554 148,283 10,324,789 37,168,720 42,344,713 172,175,340 2,500,746 21,614,158 398,997 189,295,683 1,714,940 258,388 8,945,398 21,076,131 145,500 37,795,180 29,532,939 205,179,985 4,477,457 5,062 1,405,196,000 7,471 9,576,762 105,146,014 9,400,327 161,214,276 151,023,597 30,350,229 2,911,553 409,750 22,562,365 910 453,327 10,262,417 5,733,063 134,869 167,831,728 898,381 36,802,000 1,413,469 113,976,268 205,351,815 4,477,218 4,471,926 1,416,556 10,684,793 33,029,789 52,111,646 200,398,131 271,129,291 39,292,288 235,123,466 4,072,140 71,346,961 479,470,627 79,519,390 109,969,452 227,447,802 245,144,287 200,000 30,471,211 204,243,740 120,885 128,402,464 283,152 288,125,969 265,519,965 1,729,487,000 173,796,280 42,548,719 444,980,180 9,920,209 6,749,374 376,834 562,611,148 157,592,589 83,681,554 114,290,171 25,691,663 Savannah State University Foundation, Inc. and Subsidiaries 2,063,697 South Georgia College Foundation, Inc. and Subsidiaries 1,255,917 Southern Polytechnic Applied Research Corporation 1,234,328 Southern Polytechnic State University Foundation, Inc. 1,996,759 The Medical College of Georgia Physicians Practice Group Foundation (d/b/a Georgia Regents Medical Associates and Subsidiaries) 59,205,176 University of Georgia Athletic Assoc., Inc. 71,538,143 University of Georgia Foundation 95,175,447 University of Georgia Research Foundation, Inc. 42,285,214 University of North Georgia Foundation - Dahlonega, Inc. 2,182,033 University of North Georgia Real Estate Foundation, Inc. and Subsidiaries 11,167,119 University of West Georgia Foundation, Inc. 4,579,951 University of West Georgia Real Estate Foundation, Inc. 14,362,863 University System of Georgia Foundation, Inc. and Affiliates 7,202,473 Valdosta State University Foundation, Inc. 3,339,621 VSU Auxiliary Services Real Estate Foundation, Inc. 4,197,255 Walter & Emilie Spivey Foundation 64,892 Waycross College Foundation, Inc. 161,755 Total $ 1,054,487,158 $ 4,147,872 5,481,230 8,676,517 7,590 330,395 1,278,101 92,694,874 32,776,574 35,632,221 98,914,033 39,844,116 1,234,328 47,583,598 25,297,972 705,610,632 111,209,016 31,771,686 7,217,582 225,473,269 15,239,248 42,408,362 397,621 23,892,814 35,861,630 49,573,312 276,222,793 1,533,307 115,613,544 332,873,042 865,598,639 472,125,385 35,884,647 20,519,383 1,697,117 130,242,615 163,626,234 31,169,271 73,578 55,174,182 90,996,982 4,045,353 36,537,137 88,375,179 143,320,532 17,425,279 271,252,628 295,880,380 23,388,588 10,324,942 864,503 37,917,654 16,197,096 227,338 208,552,196 229,173,885 6,001,292 249,900 6,316,084 1,774,074 1,935,829 3,365,170,495 $ 1,218,576,857 $ 3,747,555,162 $ 9,385,789,672 $ 7,721,701 7,610,337 41,023,701 University System of Georgia Annual Financial Report FY 2013 Page 72 UNIVERSITY SYSTEM OF GEORGIA Condensed Statement of Net Position by Affiliated Organization (Unaudited) For the Year Ended June 30, 2013 Abraham Baldwin Agricultural College Foundation, Inc. and Subsidiaries Albany State University Foundation, Inc. Armstrong Atlantic State University Educational Properties Foundation, Inc. and Subsidiaries Armstrong Atlantic State University Foundation, Inc. Atlanta Metropolitan College Foundation, Inc. Augusta State University Foundation, Inc. and Subsidiaries Bainbridge College Foundation Clayton State University Foundation, Inc. College of Coastal Georgia Foundation, Inc. Columbus State University Alumni Association, Inc. Columbus State University Athletic Fund, Inc. Columbus State University Foundation, Inc. Dalton State College Athletic Club Dalton State College Foundation, Inc. Darton Boosters, Inc. Darton College Foundation, Inc. East Georgia College Foundation, Inc. Fort Valley State University Foundation, Inc. Foundation Properties, Inc. Georgia Advanced Technology Ventures, Inc. Georgia College & State University Alumni Association, Inc. Georgia College & State University Foundation, Inc. and Subsidiaries Georgia Gwinnett College Foundation Inc. and Subsidiaries Georgia Highlands College Foundation, Inc. Georgia Perimeter College Foundation, Inc. Georgia Regents University Research Institute, Inc. Georgia Regents University, College of Dental Medicine Faculty Practice Group d/b/a GRU Dental Faculty Practice Group Georgia Southern University Athletic Foundation, Inc. Georgia Southern University Foundation, Inc. Georgia Southern University Housing Foundation, Inc. and Subsidiaries Georgia Southern University Research and Service Foundation, Inc. Georgia Southwestern Foundation, Inc. Georgia State University Foundation, Inc. Georgia State University Research Foundation, Inc. and Affiliates Georgia Tech Alumni Association Georgia Tech Athletic Association Georgia Tech Facilities, Inc. Georgia Tech Foundation, Inc. Georgia Tech Research Corporation Gordon College Foundation, Inc. and Subsidiaries Kennesaw State University Foundation, Inc. Macon State College Foundation, Inc. and Subsidiaries MCG Health System, Inc. d/b/a Georgia Regents Health System Medical College of Georgia Foundation, Inc. Middle Georgia State College Real Estate Foundation, Inc. and Subsidiaries Current Liabilities Liabilities Noncurrent Liabilities Total Liabilities Deferred Inflows of Resources $ 4,408,533 $ 65,793,091 $ 70,201,624 3,282,365 77,185,096 80,467,461 2,752,338 353,905 40 2,527,016 90,904,279 44,151,162 93,656,617 353,905 40 46,678,178 1,839,248 796,429 5,613 192,113 950,452 29,015 163,541 360,000 70,151,881 12,605 3,374,048 2,141,082 22,579,750 71,991,129 809,034 5,613 192,113 4,324,500 29,015 2,304,623 22,939,750 8,280 1,913,502 22,783,809 11,213,163 23,532 63,557,677 66,474,999 106,408,194 8,280 65,471,179 89,258,808 117,621,357 23,532 21,304,949 17,642,652 403,035 1,585,160 5,182,320 106,471,456 380,627,342 18,326,623 72,945,000 127,776,405 398,269,994 18,729,658 74,530,160 5,182,320 9,557,804 570,867 1,442,724 14,067,132 2,856,402 537,003 17,137,604 16,504,348 379,236 17,619,309 12,091,723 133,702,283 128,065,861 933,575 20,607,026 217,899 83,912,534 4,229,459 246,187 23,571,578 247,685,802 42,599,395 266,575,867 86,340,989 227,715,827 279,939,018 398,717,717 31,410,301 394,786,425 200,023,348 3,095,263 97,961,425 9,803,991 24,142,445 1,442,724 261,752,934 2,856,402 43,136,398 283,713,471 102,845,337 379,236 245,335,136 292,030,741 532,420,000 128,065,861 32,343,876 415,393,451 217,899 283,935,882 3,095,263 102,190,884 Savannah State University Foundation, Inc. and Subsidiaries 11,526,396 81,727,750 93,254,146 South Georgia College Foundation, Inc. and Subsidiaries 539,126 34,803,399 35,342,525 Southern Polytechnic Applied Research Corporation 569,648 569,648 Southern Polytechnic State University Foundation, Inc. 2,840,431 38,348,579 41,189,010 The Medical College of Georgia Physicians Practice Group Foundation (d/b/a Georgia Regents Medical Associates and Subsidiaries) 8,844,394 27,958,697 36,803,091 University of Georgia Athletic Assoc., Inc. 34,482,710 117,154,967 151,637,677 University of Georgia Foundation 8,047,595 49,308,615 57,356,210 University of Georgia Research Foundation, Inc. 65,906,056 320,704,604 386,610,660 University of North Georgia Foundation - Dahlonega, Inc. 991,193 15,375 1,006,568 University of North Georgia Real Estate Foundation, Inc. and Subsidiaries 7,775,926 152,653,865 160,429,791 University of West Georgia Foundation, Inc. 2,364,454 52,018,673 54,383,127 University of West Georgia Real Estate Foundation, Inc. 4,876,965 133,544,481 138,421,446 University System of Georgia Foundation, Inc. and Affiliates 5,058,495 278,637,074 283,695,569 Valdosta State University Foundation, Inc. 1,501,981 6,583,934 8,085,915 VSU Auxiliary Services Real Estate Foundation, Inc. 13,639,484 183,915,090 197,554,574 Walter & Emilie Spivey Foundation Waycross College Foundation, Inc. 4,050 4,050 Total $ 733,122,703 $ 4,969,148,530 $ 5,702,271,233 $ - University System of Georgia Annual Financial Report FY 2013 Page 73 (This page intentionally left blank) University System of Georgia Annual Financial Report FY 2013 Page 74 UNIVERSITY SYSTEM OF GEORGIA Condensed Statement of Net Position by Affiliated Organization (Unaudited) For the Year Ended June 30, 2013 Abraham Baldwin Agricultural College Foundation, Inc. and Subsidiaries Albany State University Foundation, Inc. Armstrong Atlantic State University Educational Properties Foundation, Inc. and Subsidiaries Armstrong Atlantic State University Foundation, Inc. Atlanta Metropolitan College Foundation, Inc. Augusta State University Foundation, Inc. and Subsidiaries Bainbridge College Foundation Clayton State University Foundation, Inc. College of Coastal Georgia Foundation, Inc. Columbus State University Alumni Association, Inc. Columbus State University Athletic Fund, Inc. Columbus State University Foundation, Inc. Dalton State College Athletic Club Dalton State College Foundation, Inc. Darton Boosters, Inc. Darton College Foundation, Inc. East Georgia College Foundation, Inc. Fort Valley State University Foundation, Inc. Foundation Properties, Inc. Georgia Advanced Technology Ventures, Inc. Georgia College & State University Alumni Association, Inc. Georgia College & State University Foundation, Inc. and Subsidiaries Georgia Gwinnett College Foundation Inc. and Subsidiaries Georgia Highlands College Foundation, Inc. Georgia Perimeter College Foundation, Inc. Georgia Regents University Research Institute, Inc. Georgia Regents University, College of Dental Medicine Faculty Practice Group d/b/a GRU Dental Faculty Practice Group Georgia Southern University Athletic Foundation, Inc. Georgia Southern University Foundation, Inc. Georgia Southern University Housing Foundation, Inc. and Subsidiaries Georgia Southern University Research and Service Foundation, Inc. Georgia Southwestern Foundation, Inc. Georgia State University Foundation, Inc. Georgia State University Research Foundation, Inc. and Affiliates Georgia Tech Alumni Association Georgia Tech Athletic Association Georgia Tech Facilities, Inc. Georgia Tech Foundation, Inc. Georgia Tech Research Corporation Gordon College Foundation, Inc. and Subsidiaries Kennesaw State University Foundation, Inc. Macon State College Foundation, Inc. and Subsidiaries MCG Health System, Inc. d/b/a Georgia Regents Health System Medical College of Georgia Foundation, Inc. Middle Georgia State College Real Estate Foundation, Inc. and Subsidiaries Net Investment in Capital Assets Nonexpendable $ 8,970,960 $ 330,598 7,963,728 $ 3,867,485 2,780,148 3,380,839 3,624,549 4,946,563 145,403 17,207,787 1,050,918 52,770 (19,915) 5,488,495 1,377,431 407,917 32,803 3,545,411 6,132,586 71,658 1,349,733 31,669,046 9,570,215 1,154,176 154,735 3,655,568 1,935,747 24,377 4,653,489 3,597,373 3,632,901 (1,111,525) 12,086,111 14,658,252 320,003 735,774 980,533 (246,187) 1,204,922 409,750 (1,307,560) 910 1,319,104 28,777,798 5,729,928 134,869 (31,201,706) (53,738,900) (28,943,000) 1,413,469 (1,003,706) (3,639,411) 7,950,338 54,282,363 2,264,012 9,118,630 32,661,940 11,799,294 92,001,157 2,000,000 28,162,212 533,294,000 2,344,661 25,199,321 1,583,352 88,950,857 Net Position Expendable Capital Projects Unrestricted Total Net Position 4,030,626 $ 7,408,288 $ 30,773 28,373,602 4,228,856 3,334,329 5,631,353 5,891,251 6,047,815 294,138 18,002,185 4,646,961 5,373,656 1,542,954 894,599 3,812,890 28,756,951 10,735,497 1,562,172 1,393,325 864,036 - 16,976,977 343,372 23,830 3,034,521 345,722 1,576,615 257,317 (18,982) 4,314,726 109,724 11,001,442 5,608 764,656 (10,839) (1,798,011) (17,116,436) (9,972,713) 355,364 23,381,674 8,624,264 169,233 29,254,500 1,050,918 6,236,973 15,150,341 328,975 1,677,659 53,985,957 4,736,770 31,433,808 1,383,039 4,733,739 1,071,298 9,215,858 11,640,515 2,698,531 6,595,402 6,181,976 1,027,019 1,202,586 11,904,534 69,973 (12,046,125) 12,391,476 (8,153,322) (3,173,399) 1,307,290 2,134,125 - (12,349,914) 12,621,264 6,707,021 6,776,994 7,620,797 13,584,875 15,997,395 7,386,192 61,306,474 7,763,188 (230,953) 10,015,692 596,704,000 7,061,182 9,346,477 49,836,622 72,358,573 10,250,000 1,126,989 61,625 4,012,357 (5,313,478) 1,214,828 7,705,973 13,671,727 10,064,011 (836,583) 17,212,432 85,762,000 44,316,950 1,802,706 (1,319,658) 168,620 224,392,903 13,445,835 2,980,657 880,802 8,887,344 50,668,922 9,376,357 1,215,738 28,210,563 195,757,156 25,557,127 (96,084) 68,482,496 (26,510,776) 1,197,067,000 45,730,419 10,204,843 29,586,729 9,702,310 278,675,266 154,497,326 12,099,287 Savannah State University Foundation, Inc. and Subsidiaries South Georgia College Foundation, Inc. and Subsidiaries Southern Polytechnic Applied Research Corporation Southern Polytechnic State University Foundation, Inc. The Medical College of Georgia Physicians Practice Group Foundation (d/b/a Georgia Regents Medical Associates and Subsidiaries) University of Georgia Athletic Assoc., Inc. University of Georgia Foundation University of Georgia Research Foundation, Inc. University of North Georgia Foundation - Dahlonega, Inc. University of North Georgia Real Estate Foundation, Inc. and Subsidiaries University of West Georgia Foundation, Inc. University of West Georgia Real Estate Foundation, Inc. University System of Georgia Foundation, Inc. and Affiliates Valdosta State University Foundation, Inc. VSU Auxiliary Services Real Estate Foundation, Inc. Walter & Emilie Spivey Foundation Waycross College Foundation, Inc. Total $ 14,990,219 368,365 (364,958) 4,961,272 112,282,169 9,271,039 10,299,167 397,621 5,849,224 12,566,268 (3,907,415) 4,714,782 3,846,638 41,666,045 255,978,500 $ 110,000 2,719,798 2,943,684 395,933,132 19,999,316 15,622,838 73,791 22,963,336 249,900 1,664,947 1,394,189,737 $ 71,323 186,934 1,622,062 345,125,294 1,379,529 15,026,005 7,577,645 1,533,127 3,679,759 6,001,292 137,295 1,289,675,671 $ (9,511,655) 1,226,494 664,680 2,193,800 5,659,887 4,501,591 664,680 6,394,588 84,865,934 $ 73,849,181 76,674,897 57,912,964 73,836,029 (544,863) (2,652,781) 847,104 8,806,501 5,863,111 (657,994) (2,436,397) 64,892 129,537 699,832,298 $ 78,810,453 188,957,066 808,242,429 85,514,725 34,878,079 3,196,443 36,613,855 4,899,086 12,184,811 29,831,739 39,229,648 6,316,084 1,931,779 3,724,542,140 University System of Georgia Annual Financial Report FY 2013 Page 75 UNIVERSITY SYSTEM OF GEORGIA Condensed Statements of Revenues, Expenses and Changes in Net Position by Affiliated Organization (Unaudited) For the Year Ended June 30, 2013 Affiliated Organization Abraham Baldwin Agricultural College Foundation, Inc. and Subsidiaries Albany State University Foundation, Inc. Armstrong Atlantic State University Educational Properties Foundation, Inc. and Subsidiaries Armstrong Atlantic State University Foundation, Inc. Atlanta Metropolitan College Foundation Augusta State University Foundation, Inc. and Subsidiaries Bainbridge College Foundation Clayton State University Foundation, Inc. College of Coastal Georgia Foundation, Inc. Columbus State University Alumni Association, Inc. Columbus State University Athletic Fund, Inc. Columbus State University Foundation, Inc. Dalton State Athletic Club Dalton State College Foundation, Inc. Darton Boosters, Inc. Darton College Foundation, Inc. East Georgia College Foundation, Inc. Fort Valley State University Foundation, Inc. Foundation Properties, Inc. Georgia Advanced Technology Ventures, Inc. Georgia College & State University Alumni Association, Inc. Georgia College & State University Foundation, Inc. and Subsidiaries Georgia Gwinnett College Foundation, Inc. and Subsidiaries Georgia Highlands College Foundation, Inc. Gifts, Contributions, Grants & Contracts Operating Revenues Clinical Patient Sales, Services, Fees/Net Patient Rents & Royalties Revenue Other Expenses Operating Profit/ (Loss) $ 1,056,631 $ 2,990,124 1,105,776 $ 537,624 $ (1,350,648) $ 3,233,731 (1,022,622) 83,154 1,092,318 1,999,120 239,229 3,445,811 2,959,227 50,733 507,430 5,943,913 4,765,857 803,464 442,492 245,723 1,139,559 53,292 3,414,484 720,907 1,605,699 157,931 1,693,288 1,164,995 29,869 304,312 844,588 321,096 1,970,069 24,000 2,975,734 6,618,352 15,655,187 4,700,898 6,384 7,196 36,308 4,237 441,969 674,448 74,068 (1,494,478) (1,260,942) (108,559) (1,990,739) (41,065) (674,957) (1,150,463) (106,622) (417,733) (6,464,697) (29,087) (1,745,808) (1,141,525) (749,557) (230,344) (1,209,495) (4,451,587) (16,318,603) (381,034) 4,812,119 (168,624) 49,372 1,701,669 198,164 3,935,849 1,808,764 (19,636) 401,205 360,112 4,736,770 (621,248) 828,544 (283,065) 19,616 2,905,798 2,662,026 3,425,516 413,941 3,449,345 921,716 179,754 7,306,349 10,981,935 654,128 57,551 79,964 (3,711,214) (4,894,744) (2,162,158) 7,044,480 7,066,458 (1,248,312) Georgia Perimeter College Foundation, Inc. Georgia Regents University Research Institute, Inc. Georgia Regents University, College of Dental Medicine Faculty Practice Group d/b/a GRU Dental Faculty Practice Group Georgia Southern University Athletic Foundation, Inc. Georgia Southern University Foundation, Inc. Georgia Southern University Housing Foundation, Inc. and Subsidiaries Georgia Southern University Research and Service Foundation, Inc. Georgia Southwestern Foundation, Inc. Georgia State University Foundation, Inc. Georgia State University Research Foundation, Inc. and Affiliates Georgia Tech Alumni Association Georgia Tech Athletic Association Georgia Tech Facilities, Inc. Georgia Tech Foundation, Inc. Georgia Tech Research Corporation Gordon College Foundation, Inc. and Subsidiaries Kennesaw State University Foundation, Inc. Macon State College Foundation, Inc. and Subsidiaries MCG Health Systems, Inc. d/b/a Georgia Regents Health System Medical College of Georgia Foundation, Inc. Middle Georgia State College Real Estate Foundation, Inc. and Subsidiaries Savannah State University Foundation, Inc. and Subsidiaries South Georgia College Foundation, Inc. and Subsidiaries Southern Polytechnic Applied Research Corporation Southern Polytechnic State University Foundation, Inc. The Medical College of Georgia Physicians Practice Group Foundation (d/b/a Georgia Regents Medical Associates & Subsidiaries) University of Georgia Athletic Assoc., Inc. University of Georgia Foundation University of Georgia Research Foundation, Inc. University of North Georgia Foundation - Dahlonega, Inc. University of North Georgia Real Estate Foundation, Inc. and Subsidiaries University of West Georgia Foundation, Inc. University of West Georgia Real Estate Foundation, Inc. University System of Georgia Foundation, Inc. and Affiliates Valdosta State University Foundation, Inc. VSU Auxiliary Services Real Estate Foundation, Inc. Walter & Emilie Spivey Foundation Waycross College Foundation, Inc. Total $ 470,053 57,178,890 166,980 5,017,280 2,893,975 6,371,890 631,716 10,782,606 55,149,182 4,450,010 31,740,000 619,855,171 266,838 4,530,803 1,200,403 10,690,828 18,805 77,689 93,706 883,122 1,497,465 121,901,937 145,225,538 11,808,118 2,582,271 2,099,375 3,148,400 82,978 648,026 45,807 1,136,046,643 $ 3,986,317 324,019 178,700 184,606 15,782,579 1,833,526 22,822,275 307,037 1,445,931 52,541,593 11,043,628 15,012,000 10,201,856 1,600,981 38,530,208 6,446,748 769,594 3,659,225 4,976,923 2,133,869 553,149 2,211,516 1,796,336 13,703,839 30,568,840 379,614 10,456,070 3,989,167 3,866,050 17,464,607 1,337,435 8,928,263 344,334,157 $ 9,717,286 491,692,466 124,832,526 626,242,278 $ 464,176 278,640 105 131,468 4,848,856 4,686,110 21,530 3,913,670 3,874 116,354 32,067 296,075 44,267 96,825,377 182,866 42,523 66,866 23,406 742,208 33,984 119,375,069 $ (1,131,833) (57,654,302) (10,091,985) (2,638,114) (4,092,294) (4,250,127) (6,260,167) (1,943,966) (23,691,241) (6,062,162) (58,184,136) (1,303,434) (119,464,700) (629,571,969) (222,783) (27,165,181) (1,135,302) (519,081,133) (19,497,473) (5,273,173) (545,357) (292,229) (1,077,198) (2,585,739) 3,324,537 (151,393) (207,719) 3,022,042 (735,073) 11,532,452 111,828 652,744 14,762,496 60,142,329 (144,691) (1,728,873) 9,740,194 (72,712,700) 485,058 1,648,910 15,895,830 181,455 (20,941,919) (8,004,984) (1,299,068) 4,509,255 1,935,346 403,340 1,123,242 (141,326,580) (90,351,260) (70,875,502) (159,357,781) (2,863,017) (14,697,718) 6,474,117 64,730,274 16,436,597 9,324,715 (691,614) (4,728,565) (355,929) (1,896,424) (3,909,658) (990,736) (270,241) (2,033,941,986) $ 9,947,322 1,842,873 3,552,644 17,734,424 599,583 8,762,713 377,785 79,791 192,056,161 University System of Georgia Annual Financial Report FY 2013 Page 76 UNIVERSITY SYSTEM OF GEORGIA Condensed Statements of Revenues, Expenses and Changes in Net Position by Affiliated Organization (Unaudited) For the Year Ended June 30, 2013 Non-Operating Net Position Affiliated Organization Abraham Baldwin Agricultural College Foundation, Inc. and Subsidiaries Albany State University Foundation, Inc. Armstrong Atlantic State University Educational Properties Foundation, Inc. and Subsidiaries Armstrong Atlantic State University Foundation, Inc. Atlanta Metropolitan College Foundation Augusta State University Foundation, Inc. and Subsidiaries Bainbridge College Foundation Clayton State University Foundation, Inc. College of Coastal Georgia Foundation, Inc. Columbus State University Alumni Association, Inc. Columbus State University Athletic Fund, Inc. Columbus State University Foundation, Inc. Dalton State Athletic Club Dalton State College Foundation, Inc. Darton Boosters, Inc. Darton College Foundation, Inc. East Georgia College Foundation, Inc. Fort Valley State University Foundation, Inc. Foundation Properties, Inc. Georgia Advanced Technology Ventures, Inc. Georgia College & State University Alumni Association, Inc. Georgia College & State University Foundation, Inc. and Subsidiaries Georgia Gwinnett College Foundation, Inc. and Subsidiaries Georgia Highlands College Foundation, Inc. Revenues Expenses Increase/ (Decrease) Net Position - in Net Position Beginning of Year Prior Year Adjustments Net Position Beginning of Year Restated Net Position - End of Year $ 1,249,928 $ (1,857,373) $ 3,616,332 (3,558,209) 2,626,286 $ 141,277 25,747,316 4,087,579 $ 25,747,316 $ 28,373,602 4,087,579 4,228,856 252,206 761,719 2,432,912 49,945 441,405 578,550 1,223 9,035 773,046 2,055,613 120 324,118 67,188 3,708,378 44,360 2,377 59,608 (5,376,485) (3,361,923) (4,272,872) (124,317) (2,779,270) (3,122,853) (7,367,138) (312,160) 593,095 49,372 772,658 248,109 104,382 2,387,314 (18,413) 410,240 1,133,158 4,736,770 1,310,048 828,664 41,053 86,804 3,834,906 (416,467) (3,939,245) 473,549 23,693,834 8,559,415 119,861 28,481,842 802,809 6,132,591 12,763,027 347,388 1,267,419 52,852,799 30,123,760 554,375 4,692,686 984,494 5,380,952 12,056,982 6,637,776 6,121,853 (528,246) 23,693,834 8,031,169 119,861 28,481,842 802,809 6,132,591 12,763,027 347,388 1,267,419 52,852,799 30,123,760 554,375 4,692,686 984,494 5,380,952 12,056,982 6,637,776 6,121,853 23,381,674 8,624,264 169,233 29,254,500 1,050,918 6,236,973 15,150,341 328,975 1,677,659 53,985,957 4,736,770 31,433,808 1,383,039 4,733,739 1,071,298 9,215,858 11,640,515 2,698,531 6,595,402 5,060,520 969,581 187,222 (4,781,532) (6,661,496) 7,323,468 1,374,543 (1,061,090) 5,068,008 (4,547,942) 2,581,367 613,848 5,068,008 (4,547,942) 3,195,215 12,391,476 (3,173,399) 2,134,125 Georgia Perimeter College Foundation, Inc. Georgia Regents University Research Institute, Inc. Georgia Regents University, College of Dental Medicine Faculty Practice Group d/b/a GRU Dental Faculty Practice Group Georgia Southern University Athletic Foundation, Inc. Georgia Southern University Foundation, Inc. Georgia Southern University Housing Foundation, Inc. and Subsidiaries Georgia Southern University Research and Service Foundation, Inc. Georgia Southwestern Foundation, Inc. Georgia State University Foundation, Inc. Georgia State University Research Foundation, Inc. and Affiliates Georgia Tech Alumni Association Georgia Tech Athletic Association Georgia Tech Facilities, Inc. Georgia Tech Foundation, Inc. Georgia Tech Research Corporation Gordon College Foundation, Inc. and Subsidiaries Kennesaw State University Foundation, Inc. Macon State College Foundation, Inc. and Subsidiaries MCG Health Systems, Inc. d/b/a Georgia Regents Health System Medical College of Georgia Foundation, Inc. Middle Georgia State College Real Estate Foundation, Inc. and Subsidiaries Savannah State University Foundation, Inc. and Subsidiaries South Georgia College Foundation, Inc. and Subsidiaries Southern Polytechnic Applied Research Corporation Southern Polytechnic State University Foundation, Inc. The Medical College of Georgia Physicians Practice Group Foundation (d/b/a Georgia Regents Medical Associates & Subsidiaries) University of Georgia Athletic Assoc., Inc. University of Georgia Foundation University of Georgia Research Foundation, Inc. University of North Georgia Foundation - Dahlonega, Inc. University of North Georgia Real Estate Foundation, Inc. and Subsidiaries University of West Georgia Foundation, Inc. University of West Georgia Real Estate Foundation, Inc. University System of Georgia Foundation, Inc. and Affiliates Valdosta State University Foundation, Inc. VSU Auxiliary Services Real Estate Foundation, Inc. Walter & Emilie Spivey Foundation Waycross College Foundation, Inc. Total $ 171,135 39,959 627,457 10,301 5,716,023 649,802 5,603 3,074,644 19,158,656 2,499,421 10,263,328 254,534 151,605,000 226,446 643,807 3,044,547 1,824,695 57,455,190 28,196,223 75 1,055,629 90,627 427,451 (3,565,689) (16,076) (11,336) (10,932,696) (1,938,917) (11,522,784) (60,865,163) (13,100,485) (14,049,532) (11,298,300) (1,462,807) (17,170,671) (12,633,404) (1,447,244) (2,179,555) 5,896,574 563,565 18,647,153 3,513,640 341,051 (1,295,580) (4,871,343) (342,301) (12,831,112) (6,004,779) 199,328 (6,974,918) 2,339,669 (2,568,298) 200,543 (4,797,528) 539,309 (14,976,859) 3,002,459 (294,079) 147,764 (8,773,702) 2 85,999 (63,051) 345,162,993 $ (269,251,675) $ (70,017) (111,434) 403,662 3,021,007 4,980,950 1,249,558 117,431 1,788,471 22,398,368 1,776,587 (144,691) (4,566,030) (4,054,804) 67,594,000 711,504 829,910 1,769,706 2,006,150 23,879,867 20,191,239 (1,298,993) 5,564,884 578,729 403,340 (628,862) 4,351,645 6,888,428 477,140 5,866,337 45,687,972 8,898,470 1,098,307 26,422,092 173,358,788 23,780,540 48,607 73,048,526 (22,455,972) 1,129,473,000 45,018,915 9,374,933 27,817,023 7,696,160 254,795,399 134,306,087 11,112,656 95,003 3,922,862 261,340 7,023,450 8,339,636 (771,671) 2,285,624 (10,096,724) 2,166,339 83,035,126 7,119,125 3,660,987 88,907,177 186,790,727 725,207,303 78,395,600 31,217,092 3,171,732 1,614,244 (1,044,341) 3,296,874 3,307,963 136,775 377,787 102,739 267,967,479 $ 437,568 34,999,611 6,729,190 8,887,937 26,523,776 39,092,873 5,938,297 1,829,040 3,447,834,090 $ (412,857) (785,763) 8,740,571 $ 12,691,281 6,888,428 477,140 5,866,337 45,687,972 8,126,799 1,098,307 26,422,092 173,358,788 23,780,540 48,607 73,048,526 (22,455,972) 1,129,473,000 45,018,915 9,374,933 27,817,023 7,696,160 254,795,399 134,306,087 13,398,280 95,003 3,922,862 261,340 7,023,450 88,907,177 186,790,727 725,207,303 78,395,600 31,217,092 24,711 34,999,611 5,943,427 8,887,937 26,523,776 39,092,873 5,938,297 1,829,040 3,456,574,661 $ 12,621,264 6,776,994 880,802 8,887,344 50,668,922 9,376,357 1,215,738 28,210,563 195,757,156 25,557,127 (96,084) 68,482,496 (26,510,776) 1,197,067,000 45,730,419 10,204,843 29,586,729 9,702,310 278,675,266 154,497,326 12,099,287 5,659,887 4,501,591 664,680 6,394,588 78,810,453 188,957,066 808,242,429 85,514,725 34,878,079 3,196,443 36,613,855 4,899,086 12,184,811 29,831,739 39,229,648 6,316,084 1,931,779 3,724,542,140 University System of Georgia Annual Financial Report FY 2013 Page 77 (This page intentionally left blank University System of Georgia Annual Financial Report FY 2013 Page 78 UNIVERSITY SYSTEM OF GEORGIA BALANCE SHEET (NON-GAAP BASIS) BUDGET FUNDS June 30, 2013 UNAUDITED ASSETS Cash and Cash Equivalents Investments Accounts Receivable Federal Financial Assistance Other Margin Allocation Prepaid Expenditures Inventories Other Assets Total Assets LIABILITIES AND FUND EQUITY Liabilities Accrued Payroll 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 Office of Planning and Budget" Early Retirement Program Excess State Appropriations to be Remitted in Fiscal Year 2014 Unreserved Unreserved: Surplus Total Fund Balances Total Liabilities and Fund Balances $ 519,508,952.27 74,696,501.38 111,437,880.63 195,988,450.95 7,404,096.00 23,677,175.55 5,077,912.15 360,572.48 $ 938,151,541.41 $ 7,453,962.54 227,847,202.36 131,748,991.53 209,212,848.84 86,540.51 3,263,913.75 $ 579,613,459.53 $ 974,849.20 63,516,813.33 91,400,713.10 12,880,364.18 112,846,136.36 16,540,801.51 3,112,681.70 37,003,330.89 7,026,404.39 7,790,881.20 1,213,807.08 4,231,298.94 $ 358,538,081.88 $ 938,151,541.41 Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. A separately issued University System of Georgia Budgetary Compliance Report is available at http://www.audits.ga.gov/. University System of Georgia Annual Financial Report FY 2013 Page 79 UNIVERSITY SYSTEM OF GEORGIA BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS) BUDGET FUNDS Year Ended June 30, 2013 UNAUDITED REVENUES State Appropriations State General Funds Non-State Funds Total Revenue Mandatory and Non-Mandatory Transfers Prior Year Reserves Available for Expenditure FINAL BUDGET ACTUAL $ 1,747,463,827.00 5,161,041,433.00 $ 6,908,505,260.00 - $ 1,747,463,827.00 4,638,521,409.97 $ 6,385,985,236.97 36,927,971.32 300,816,411.48 Total Funds Available $ 6,908,505,260.00 $ 6,723,729,619.77 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 GT - Enterprise Innovation Institute GT - Georgia Tech Research Institute USO - Public Libraries USO - Regents Central Office USO - Medical Collge of Georgia Hospitals and Clinics USO - Georgia Public Telecommunications Commission USO - Georgia Radiation Therapy Center USO - Georgia Military College SKIO - Skidaway Institute of Oceanography-B Research Consortium Special Funding Initiative Teaching 14,301,734.00 105,974,176.00 6,578,443.00 70,099,782.00 1,326,190.00 1,495,203.00 3,299,176.00 2,470,069.00 15,917,009.00 20,582,077.00 329,209,589.00 36,445,836.00 8,102,099.00 28,297,463.00 13,370,145.00 3,625,810.00 2,269,752.00 5,902,426.00 6,104,447.00 18,278,598.00 6,214,855,236.00 12,538,182.51 78,767,155.36 5,890,286.79 60,074,648.17 932,787.52 1,312,836.15 2,889,779.83 2,470,069.00 13,237,340.43 19,079,638.79 301,727,716.61 35,317,841.83 8,096,356.70 28,297,463.00 13,370,145.00 3,625,810.00 2,269,752.00 5,982,399.67 6,104,447.00 18,053,952.72 5,772,118,513.59 Total Expenditures $ 6,908,505,260.00 $ 6,392,157,122.67 Excess of Funds Available over Expenditures $ 331,572,497.10 VARIANCE $ - (522,520,023.03) $ (522,520,023.03) 36,927,971.32 300,816,411.48 $ (184,775,640.23) 1,763,551.49 27,207,020.64 688,156.21 10,025,133.83 393,402.48 182,366.85 409,396.17 2,679,668.57 1,502,438.21 27,481,872.39 1,127,994.17 5,742.30 - (79,973.67) - 224,645.28 442,736,722.41 $ 516,348,137.33 University System of Georgia Annual Financial Report FY 2013 Page 80 UNIVERSITY SYSTEM OF GEORGIA BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS) BUDGET FUNDS Year Ended June 30, 2013 UNAUDITED Beginning Fund Balance July 1, 2012 Reserved $ 324,682,611.95 Unreserved, Undesignated Fund Balance (Surplus) for fiscal year 2012 Unreserved, Unreserved Fund Balance (Surplus) Adjustments Prior Year Payables/Expenditures Prior Year Receivables/Revenues Reserved Fund Balance Carried Over from Prior Year as Funds Available Ending Fund Balance - June 30, 2013 2,977,784.38 (2,977,784.38) 5,705,739.29 (2,606,354.98) (300,816,411.48) $ 358,538,081.88 Summary of Fund Balance Reserved Capital Outlay Department Sales and Services Early Retirement Program Indirect Cost Recovery Inventories Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry - Forward Carry-Over "Per Office of Planning and Budget" Excess State Appropriations to be Remitted in Fiscal Year 2014 Total Reserved Unreserved Surplus Total Fund Balance - June 30, 2013 $ 974,849.20 63,516,813.33 7,790,881.20 91,400,713.10 3,112,681.70 12,880,364.18 112,846,136.36 16,540,801.51 37,003,330.89 7,026,404.39 1,213,807.08 $ 354,306,782.94 4,231,298.94 $ 358,538,081.88 Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. A separately issued University System of Georgia Budgetary Compliance Report is available at http://www.audits.ga.gov/. University System of Georgia Annual Financial Report FY 2013 Page 81 UNIVERSITY SYSTEM OF GEORGIA Statement of Funds Available and Expenditures Compared to Budget by Program and Funding Source BUDGET FUNDS Year Ended June 30, 2013 UNAUDITED Agricultural Experiment Station State Appropriation State General Funds Other Funds Total Agricultural Experiment Station Original Appropriation Amended Appropriation Final Budget $ 35,107,005.00 $ 34,053,795.00 $ 34,053,795.00 37,552,919.00 37,552,919.00 71,920,381.00 $ 72,659,924.00 $ 71,606,714.00 $ 105,974,176.00 Funds Available Compared to Current Year Revenues $ 34,053,795.00 44,877,738.73 $ 78,931,533.73 Athens and Tifton Veterinary Laboratories Other Funds $ 4,944,522.00 $ 4,944,522.00 $ 6,578,443.00 $ 6,094,529.80 Cooperative Extension Service State Appropriation State General Funds Other Funds Total Cooperative Extension Service $ 29,467,851.00 $ 28,583,815.00 $ 28,583,815.00 $ 28,583,815.00 25,083,929.00 25,083,929.00 41,515,967.00 32,783,339.46 $ 54,551,780.00 $ 53,667,744.00 $ 70,099,782.00 $ 61,367,154.46 Enterprise Innovation Institute (EII) State Appropriation State General Funds Other Funds Total Enterprise Innovation Institute (EII) $ 7,375,440.00 $ 7,154,177.00 $ 7,154,177.00 $ 7,154,177.00 10,475,000.00 10,475,000.00 13,427,900.00 11,925,040.24 $ 17,850,440.00 $ 17,629,177.00 $ 20,582,077.00 $ 19,079,217.24 Forestry Cooperative Extension State Appropriation State General Funds Other Funds Total Forestry Cooperative Extension $ 502,786.00 $ 487,702.00 $ 487,702.00 $ 500,000.00 575,988.00 838,488.00 $ 1,002,786.00 $ 1,063,690.00 $ 1,326,190.00 $ 487,702.00 454,283.91 941,985.91 Forestry Research State Appropriation State General Funds Other Funds Total Forestry Research $ 2,579,928.00 $ 2,502,530.00 $ 2,502,530.00 $ 2,502,530.00 8,950,426.00 10,250,426.00 11,799,204.00 9,972,521.23 $ 11,530,354.00 $ 12,752,956.00 $ 14,301,734.00 $ 12,475,051.23 Georgia Radiation Therapy Center Other Funds $ 3,625,810.00 $ 3,625,810.00 $ 3,625,810.00 $ 3,625,810.00 Georgia Tech Research Institute State Appropriation State General Funds Other Funds Total Georgia Tech Research Institute $ 5,791,631.00 $ 5,569,382.00 $ 5,569,382.00 $ 5,569,382.00 223,917,958.00 223,917,958.00 323,640,207.00 295,862,013.47 $ 229,709,589.00 $ 229,487,340.00 $ 329,209,589.00 $ 301,431,395.47 Marine Institute State Appropriation State General Funds Other Funds Total Marine Institute $ 729,450.00 $ 707,566.00 $ 707,566.00 $ 707,566.00 486,281.00 486,281.00 787,637.00 628,870.08 $ 1,215,731.00 $ 1,193,847.00 $ 1,495,203.00 $ 1,336,436.08 Marine Resources Extension Center State Appropriation State General Funds Other Funds Total Marine Resources Extension Center $ 1,199,121.00 $ 1,163,147.00 $ 1,163,147.00 $ 1,163,147.00 1,345,529.00 1,345,529.00 2,136,029.00 1,726,783.51 2,544,650.00 2,508,676.00 3,299,176.00 2,889,930.51 Medical College of Georgia Hospital and Clinics State Appropriation State General Funds $ 29,172,642.00 $ 28,297,463.00 $ 28,297,463.00 $ 28,297,463.00 Public Libraries State Appropriation State General Funds Other Funds Total Public Libraries $ 32,189,109.00 $ 31,223,436.00 $ 31,223,436.00 $ 31,223,436.00 5,222,400.00 5,222,400.00 5,222,400.00 4,095,599.71 37,411,509.00 36,445,836.00 36,445,836.00 35,319,035.71 University System of Georgia Annual Financial Report FY 2013 Page 82 Prior Year Carry-Over UNIVERSITY SYSTEM OF GEORGIA Statement of Funds Available and Expenditures Compared to Budget by Program and Funding Source BUDGET FUNDS Year Ended June 30, 2013 UNAUDITED Funds Available Compared to Budget Adjustments and Total Program Transfers Funds Available Variance Positive (Negative) Expenditures Compared to Budget Variance Actual Positive (Negative) Excess (Deficiency) of Funds Available Over/(Under) Expenditures $ -$ 17,140,049.31 $ 17,140,049.31 $ - $ 34,053,795.00 $ - $ 34,053,795.00 $ -$ - 62,017,788.04 (9,902,592.96) 44,713,360.36 27,207,020.64 - $ 96,071,583.04 $ (9,902,592.96) $ 78,767,155.36 $ 27,207,020.64 $ 17,304,427.68 17,304,427.68 $ 384,259.14 $ - $ 6,478,788.94 $ (99,654.06) $ 5,890,286.79 $ 688,156.21 $ 588,502.15 $ -$ 3,172,052.77 $ 3,172,052.77 $ - $ 28,583,815.00 $ - $ 28,583,815.00 $ -$ - 35,955,392.23 (5,560,574.77) 31,490,833.17 10,025,133.83 - $ 64,539,207.23 $ (5,560,574.77) $ 60,074,648.17 $ 10,025,133.83 $ 4,464,559.06 4,464,559.06 $ -$ - $ 7,154,177.00 $ - $ 7,154,176.98 $ 0.02 $ 0.02 421.57 - 11,925,461.81 (1,502,438.19) 11,925,461.81 1,502,438.19 - $ 421.57 $ - $ 19,079,638.81 $ (1,502,438.19) $ 19,079,638.79 $ 1,502,438.21 $ 0.02 $ -$ 114,005.84 $ 114,005.84 $ -$ -$ 487,702.00 $ 568,289.75 1,055,991.75 $ -$ (270,198.25) (270,198.25) $ 487,702.00 $ 445,085.52 932,787.52 $ -$ 393,402.48 393,402.48 $ 123,204.23 123,204.23 $ -$ 2,543,151.99 $ 2,543,151.99 $ $ -$ - $ 2,502,530.00 $ - 12,515,673.22 - $ 15,018,203.22 $ -$ 716,469.22 716,469.22 $ 2,502,530.00 $ 10,035,652.51 12,538,182.51 $ -$ 1,763,551.49 1,763,551.49 $ - $ 3,625,810.00 $ - $ 3,625,810.00 $ -$ 2,480,020.71 2,480,020.71 - $ -$ - $ 5,569,382.00 $ - $ 5,569,382.00 $ -$ - 296,321.14 - 296,158,334.61 (27,481,872.39) 296,158,334.61 27,481,872.39 - $ 296,321.14 $ - $ 301,727,716.61 $ (27,481,872.39) $ 301,727,716.61 $ 27,481,872.39 $ - $ -$ 340,204.78 $ 340,204.78 $ -$ -$ 707,566.00 $ 969,074.86 1,676,640.86 $ -$ 181,437.86 181,437.86 $ 707,566.00 $ 605,270.15 1,312,836.15 $ -$ 182,366.85 182,366.85 $ 363,804.71 363,804.71 $ -$ 157,031.17 157,031.17 -$ - 1,163,147.00 $ 1,883,814.68 3,046,961.68 -$ (252,214.32) (252,214.32) 1,163,147.00 $ 1,726,632.83 2,889,779.83 -$ 409,396.17 409,396.17 157,181.85 157,181.85 $ -$ - $ 28,297,463.00 $ - $ 28,297,463.00 $ -$ - $ -$ - - - $ 31,223,436.00 $ - $ 31,222,242.12 $ - 4,095,599.71 (1,126,800.29) 4,095,599.71 - 35,319,035.71 (1,126,800.29) 35,317,841.83 1,193.88 $ 1,126,800.29 1,127,994.17 University System of Georgia Annual Financial Report FY 2013 1,193.88 - 1,193.88 Page 83 UNIVERSITY SYSTEM OF GEORGIA Statement of Funds Available and Expenditures Compared to Budget by Program and Funding Source BUDGET FUNDS Year Ended June 30, 2013 UNAUDITED Funds Available Compared to Original Amended Final Current Year Appropriation Appropriation Budget Revenues Public Service / Special Funding Initiatives State Appropriation State General Funds $ 18,843,915.00 $ 18,278,598.00 $ 18,278,598.00 $ 18,278,598.00 Regents Central Office State Appropriation State General Funds $ 8,231,266.00 $ 8,102,099.00 $ 8,102,099.00 $ 8,102,099.00 Research Consortium State Appropriation State General Funds $ 6,293,244.00 $ 6,104,447.00 $ 6,104,447.00 $ 6,104,447.00 Skidaway Institute of Oceanography State Appropriation State General Funds Other Funds Total Skidaway Institute of Oceanography $ 1,229,305.00 $ 1,192,426.00 $ 1,192,426.00 $ 1,192,426.00 3,550,000.00 3,650,620.00 4,710,000.00 4,512,153.43 $ 4,779,305.00 $ 4,843,046.00 $ 5,902,426.00 $ 5,704,579.43 Teaching State Appropriation State General Funds Other Funds Total Teaching $ 1,631,690,795.00 $ 1,555,517,110.00 $ 1,555,517,110.00 $ 1,555,517,110.00 4,018,392,206.00 4,183,908,853.00 4,659,338,126.00 4,210,498,414.42 $ 5,650,083,001.00 $ 5,739,425,963.00 $ 6,214,855,236.00 $ 5,766,015,524.42 Veterinary Medicine Experiment Station State Appropriation State General Funds $ 2,546,463.00 $ 2,470,069.00 $ 2,470,069.00 $ 2,470,069.00 Veterinary Medicine Teaching Hospital State Appropriation State General Funds Other Funds Total Veterinary Medicine Teaching Hospital $ 429,039.00 $ 416,168.00 $ 416,168.00 $ 416,168.00 9,621,951.00 9,621,951.00 15,500,841.00 11,464,311.98 $ 10,050,990.00 $ 10,038,119.00 $ 15,917,009.00 $ 11,880,479.98 Payments to Georgia Military College State Appropriation State General Funds $ 2,339,951.00 $ 2,269,752.00 $ 2,269,752.00 $ 2,269,752.00 Payments to Public Telecommunications Commission, Georgia State Appropriation State General Funds $ 12,850,843.00 $ 13,370,145.00 $ 13,370,145.00 $ 13,370,145.00 Total Operating Activity $ 6,182,238,715.00 $ 6,268,126,013.00 $ 6,908,505,260.00 $ 6,385,985,236.97 University System of Georgia Annual Financial Report FY 2013 Page 84 Prior Year Carry-Over UNIVERSITY SYSTEM OF GEORGIA Statement of Funds Available and Expenditures Compared to Budget by Program and Funding Source BUDGET FUNDS Year Ended June 30, 2013 UNAUDITED Funds Available Compared to Budget Adjustments and Total Program Transfers Funds Available Variance Positive (Negative) Expenditures Compared to Budget Variance Actual Positive (Negative) Excess (Deficiency) of Funds Available Over/(Under) Expenditures $ -$ - $ 18,278,598.00 $ - $ 18,053,952.72 $ 224,645.28 $ 224,645.28 $ -$ - $ 8,102,099.00 $ - $ 8,096,356.70 $ 5,742.30 $ 5,742.30 $ -$ - $ 6,104,447.00 $ - $ 6,104,447.00 $ -$ - $ -$ 433,089.02 $ 433,089.02 $ -$ -$ 1,192,426.00 $ 4,945,242.45 6,137,668.45 $ -$ 235,242.45 235,242.45 $ 1,192,425.68 $ 4,789,973.99 5,982,399.67 $ 0.32 $ (79,973.99) (79,973.67) $ 0.32 155,268.46 155,268.78 $ 12,405.55 $ 273,181,390.61 $ 273,193,796.16 $ 69,463.21 $ 1,555,598,978.76 $ 81,868.76 $ 1,555,209,622.63 $ 36,858,508.11 4,520,538,313.14 (138,799,812.86) 4,216,908,890.96 36,927,971.32 $ 6,076,137,291.90 $ (138,717,944.10) $ 5,772,118,513.59 $ 307,487.37 $ 442,429,235.04 442,736,722.41 $ 389,356.13 303,629,422.18 304,018,778.31 $ -$ - $ 2,470,069.00 $ - $ 2,470,069.00 $ -$ - $ -$ 3,042,028.59 $ 3,042,028.59 $ -$ 416,168.00 $ - 14,506,340.57 - $ 14,922,508.57 $ -$ (994,500.43) (994,500.43) $ 415,924.79 $ 12,821,415.64 13,237,340.43 $ 243.21 $ 2,679,425.36 2,679,668.57 $ 243.21 1,684,924.93 1,685,168.14 $ -$ - $ 2,269,752.00 $ - $ 2,269,752.00 $ -$ - $ -$ - $ 13,370,145.00 $ - $ 13,370,145.00 $ -$ - $ 300,816,411.48 $ 36,927,971.32 $ 6,723,729,619.77 $ (184,775,640.23) $ 6,392,157,122.67 $ 516,348,137.33 $ 331,572,497.10 University System of Georgia Annual Financial Report FY 2013 Page 85 Agricultural Experiment Station State Appropriation State General Funds Other Funds Total Agricultural Experiment Station UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE BUDGET FUNDS Year Ended June 30, 2013 UNAUDITED Fund Balance Beginning Fund Carried Over from Balance/(Deficit) Prior Period July 1 as Funds Available Return of Fiscal Year 2012 Surplus Prior Period Adjustments $ 28,814.60 $ 17,140,049.31 $ 17,168,863.91 $ -$ (17,140,049.31) (17,140,049.31) $ (28,814.60) $ - (28,814.60) $ 46,558.28 19,123.88 65,682.16 Athens and Tifton Veterinary Laboratories Other Funds $ 384,259.14 $ (384,259.14) $ -$ 138.03 Cooperative Extension Service State Appropriation State General Funds Other Funds Total Cooperative Extension Service $ 8,523.42 $ 3,172,052.77 $ 3,180,576.19 $ -$ (3,172,052.77) (3,172,052.77) $ (8,523.42) $ - (8,523.42) $ 4,595.59 135,677.95 140,273.54 Enterprise Innovation Institute (EII) Development Institute State Appropriation State General Funds Other Funds Total Enterprise Innovation Institute (EII) Development Institute $ 8.60 $ -$ (8.60) $ - 421.57 (421.57) - - $ 430.17 $ (421.57) $ (8.60) $ - Forestry Cooperative Extension State Appropriation State General Funds Other Funds Total Forestry Cooperative Extension $ -$ 114,005.84 $ 114,005.84 $ -$ (114,005.84) (114,005.84) $ -$ -$ 495.62 495.62 Forestry Research State Appropriation State General Funds Other Funds Total Forestry Research $ 8,415.15 $ 2,543,151.99 $ 2,551,567.14 $ -$ (2,543,151.99) (2,543,151.99) $ (8,415.15) $ - (8,415.15) $ 382.13 5,947.48 6,329.61 Georgia Radiation Therapy Center Other Funds $ -$ -$ -$ - Georgia Tech Research Institute State Appropriation State General Funds Other Funds Total Georgia Tech Research Institute $ 3,069.00 $ 296,321.14 $ 299,390.14 $ -$ (296,321.14) (296,321.14) $ (3,069.00) $ - (3,069.00) $ 1,369.71 - 1,369.71 Marine Institute State Appropriation State General Funds Other Funds Total Marine Institute $ -$ -$ -$ - 340,204.78 (340,204.78) - 0.01 $ 340,204.78 $ (340,204.78) $ -$ 0.01 Marine Resources Extension Center State Appropriation State General Funds Other Funds Total Marine Resources Extension Center $ 2,421.33 $ 157,031.17 $ 159,452.50 $ -$ (157,031.17) (157,031.17) $ (2,421.33) $ - (2,421.33) $ 933.56 1,928.46 2,862.02 Medical College of Georgia Hospital and Clinics State Appropriation State General Funds $ -$ -$ -$ - Public Libraries State Appropriation State General Funds Other Funds Total Public Libraries $ 595.43 $ -$ (595.43) $ - - - - - $ 595.43 $ -$ (595.43) $ - University System of Georgia Annual Financial Report FY 2013 Page 86 Other Adjustments UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE BUDGET FUNDS Year Ended June 30, 2013 UNAUDITED Excess (Deficiency) of Funds Available Ending Fund Over/(Under) Balance/(Deficit) Analysis of Ending Fund Balance Expenditures June 30 Reserved Surplus/(Deficit) Total $ -$ -$ 46,558.28 $ -$ 46,558.28 $ 46,558.28 (3,828.90) 17,304,427.68 $ 17,319,722.66 17,319,722.66 - 17,319,722.66 $ (3,828.90) $ 17,304,427.68 $ 17,366,280.94 $ 17,319,722.66 $ 46,558.28 $ 17,366,280.94 $ -$ 588,502.15 $ 588,640.18 $ 588,640.18 $ -$ 588,640.18 $ -$ -$ 4,595.59 $ -$ 4,595.59 $ 4,595.59 (484.29) 4,464,559.06 $ 4,599,752.72 4,599,752.72 - 4,599,752.72 $ (484.29) $ 4,464,559.06 $ 4,604,348.31 $ 4,599,752.72 $ 4,595.59 $ 4,604,348.31 $ -$ 0.02 $ - -$ $ -$ 0.02 $ 0.02 $ 0.02 $ -$ -$ 0.02 $ 0.02 - - 0.02 $ 0.02 $ -$ -$ -$ -$ -$ - - 123,204.23 $ 123,699.85 123,699.85 - 123,699.85 $ -$ 123,204.23 $ 123,699.85 $ 123,699.85 $ -$ 123,699.85 $ -$ -$ 382.13 $ -$ 382.13 $ 382.13 - 2,480,020.71 $ 2,485,968.19 2,485,968.19 - 2,485,968.19 $ -$ 2,480,020.71 $ 2,486,350.32 $ 2,485,968.19 $ 382.13 $ 2,486,350.32 $ -$ -$ -$ -$ -$ - $ -$ -$ 1,369.71 $ - -$ - $ -$ -$ 1,369.71 $ -$ -$ 1,369.71 $ - 1,369.71 $ 1,369.71 - 1,369.71 $ -$ -$ -$ -$ -$ - - 363,804.71 $ 363,804.72 363,804.72 - 363,804.72 $ -$ 363,804.71 $ 363,804.72 $ 363,804.72 $ -$ 363,804.72 $ -$ -$ 933.56 $ -$ 933.56 $ 933.56 155.00 157,181.85 $ 159,265.31 159,265.31 - 159,265.31 $ 155.00 $ 157,181.85 $ 160,198.87 $ 159,265.31 $ 933.56 $ 160,198.87 $ -$ -$ -$ -$ -$ - $ -$ 1,193.88 $ 1,193.88 $ - -$ - $ -$ 1,193.88 $ 1,193.88 $ University System of Georgia Annual Financial Report FY 2013 -$ -$ 1,193.88 $ - 1,193.88 $ 1,193.88 - 1,193.88 Page 87 Public Service / Special Funding Initiatives State Appropriation State General Funds UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE BUDGET FUNDS Year Ended June 30, 2013 UNAUDITED Fund Balance Beginning Fund Carried Over from Balance/(Deficit) Prior Period July 1 as Funds Available Return of Fiscal Year 2012 Surplus Prior Period Adjustments $ 83,267.31 $ -$ (83,267.31) $ 19,220.70 Regents Central Office State Appropriation State General Funds $ -$ -$ -$ - Research Consortium State Appropriation State General Funds $ 28,560.65 $ -$ (28,560.65) $ - Skidaway Institute of Oceanography State Appropriation State General Funds Other Funds Total Skidaway Institute of Oceanography $ 0.32 $ -$ (0.32) $ - 440,524.58 (433,089.02) (7,435.56) - $ 440,524.90 $ (433,089.02) $ (7,435.88) $ - Teaching State Appropriation State General Funds Other Funds Total Teaching $ 979,622.75 $ 275,015,412.96 $ 275,995,035.71 $ (12,405.55) $ (273,181,390.61) (273,193,796.16) $ (967,217.20) $ (1,834,022.35) (2,801,239.55) $ 1,712,822.78 1,162,029.95 2,874,852.73 Veterinary Medicine Experiment Station State Appropriation State General Funds $ 847.22 $ -$ (847.22) $ 668.60 Veterinary Medicine Teaching Hospital State Appropriation State General Funds Other Funds Total Veterinary Medicine Teaching Hospital $ 4,586.24 $ 3,042,028.59 $ 3,046,614.83 $ -$ (3,042,028.59) (3,042,028.59) $ (4,586.24) $ - (4,586.24) $ (243.21) (12,265.21) (12,508.42) Payments to Georgia Military College State Appropriation State General Funds $ -$ -$ -$ - Payments to Public Telecommunications Commission, Georgia State Appropriation State General Funds $ -$ -$ -$ - Total Operating Activity $ 303,794,195.86 $ (300,816,411.48) $ (2,977,784.38) $ 3,099,384.31 Prior Year Reserves Not Available for Expenditure Inventories Uncollectible Accounts Receivable Early Retirement Program (Georgia Regents University) 3,063,613.25 13,028,150.69 7,774,436.53 Budget Unit Totals $ 327,660,396.33 $ (300,816,411.48) $ (2,977,784.38) $ 3,099,384.31 University System of Georgia Annual Financial Report FY 2013 Page 88 Other Adjustments UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE BUDGET FUNDS Year Ended June 30, 2013 UNAUDITED Excess (Deficiency) of Funds Available Ending Fund Over/(Under) Balance/(Deficit) Analysis of Ending Fund Balance Expenditures June 30 Reserved Surplus/(Deficit) Total $ -$ 224,645.28 $ 243,865.98 $ -$ 243,865.98 $ 243,865.98 $ -$ 5,742.30 $ 5,742.30 $ -$ 5,742.30 $ 5,742.30 $ -$ -$ -$ -$ -$ - $ -$ 0.32 $ 0.32 $ -$ 0.32 $ 0.32 - 155,268.46 $ 155,268.46 147,832.90 7,435.56 155,268.46 $ -$ 155,268.78 $ 155,268.78 $ 147,832.90 $ 7,435.88 $ 155,268.78 $ 12,842.84 $ 389,356.13 $ 2,115,021.75 $ 107,621.92 $ 2,007,399.83 $ 2,115,021.75 (3,556,272.94) 303,629,422.18 301,235,179.19 299,324,026.01 1,911,153.18 301,235,179.19 $ (3,543,430.10) $ 304,018,778.31 $ 303,350,200.94 $ 299,431,647.93 $ 3,918,553.01 $ 303,350,200.94 $ -$ -$ 668.60 $ -$ 668.60 $ 668.60 $ -$ 243.21 $ -$ -$ (30,575.65) 1,684,924.93 $ 1,642,084.07 1,642,084.07 $ (30,575.65) $ 1,685,168.14 $ 1,642,084.07 $ 1,642,084.07 $ -$ -$ 1,642,084.07 1,642,084.07 $ -$ -$ -$ -$ -$ - $ -$ -$ -$ -$ -$ - $ (3,578,163.94) $ 331,572,497.10 $ 331,093,717.47 $ 326,862,418.53 $ 4,231,298.94 $ 331,093,717.47 49,068.45 3,512,650.82 16,444.67 3,112,681.70 16,540,801.51 7,790,881.20 3,112,681.70 16,540,801.51 7,790,881.20 3,112,681.70 16,540,801.51 7,790,881.20 $ 0.00 $ 331,572,497.10 $ 358,538,081.88 $ 354,306,782.94 $ 4,231,298.94 $ 358,538,081.88 University System of Georgia Annual Financial Report FY 2013 Page 89 UNIVERSITY SYSTEM OF GEORGIA STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE BUDGET FUNDS Year Ended June 30, 2013 UNAUDITED Summary of Ending Fund Balance Reserved Capital Outlay Departmental Sales and Services Indirect Cost Recovery Technology Fees Restricted/Sponsored Funds Property Reserves Tuition Carry-Forward Uncollectible Accounts Receivable Inventories Early Retirement Program Excess State Appropriations to be Remitted in FY 2014 Unreserved Surplus Total Ending Fund Balance - June 30, 2013 Reserved Surplus Total Fund Balance $ 974,849.20 $ 63,516,813.33 91,400,713.10 12,880,364.18 112,846,136.36 7,026,404.39 37,003,330.89 16,540,801.51 3,112,681.70 7,790,881.20 1,213,807.08 $ 354,306,782.94 $ - 4,213,298.94 4,213,298.94 $ 974,849.20 63,516,813.33 91,400,713.10 12,880,364.18 112,846,136.36 7,026,404.39 37,003,330.89 16,540,801.51 3,112,681.70 7,790,881.20 1,213,807.08 - 4,213,298.94 $ 358,520,081.88 Actual amounts were prepared based on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. This report was prepared using a comprehensive basis of accounting other than generally accepted accounting principles. A separately issued University System of Georgia Budgetary Compliance Report is available at http://www.audits.ga.gov/. University System of Georgia Annual Financial Report FY 2013 Page 90 University System of Georgia Financial Statement Findings June 30, 2013 The auditor is required to communicate to management and those charged with governance deficiencies in internal controls identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the University System of Georgia's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Any identified deficiencies in internal controls that the auditors did not consider to be significant deficiencies and/or material weaknesses have been communicated to management and those charged with governance within separate management letters for each applicable individual college or university. Internal control deficiencies that were considered to be significant deficiencies and/or material weaknesses are presented below: Southern Polytechnic State University FS-550-13-01 FS-550-13-02 FS-550-13-03 Valdosta State University FS-551-13-01 Detailed information on these findings is available in the individual college or university report for the fiscal year ended June 30, 2013 located at http://www.audits.ga.gov. University System of Georgia Annual Financial Report FY 2013 Page 91 Acknowledgements Published by Office of Fiscal Affairs: John E. Brown Vice Chancellor, Fiscal Affairs Vikki L. Williamson Theresa L. Jackson Ben M. Riden, Jr. Bruce Jackson 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 State College Shawn McGee, Bainbridge State College Corlis Cummings, Clayton State University Jeffrey Preston, College of Coastal Georgia J. Thomas Helton, Columbus State University Scott Bailey, Dalton State College Ronnie A. Henry, Darton State College Cliff Gay, East Georgia State College Julie Peterson, Fort Valley State University Paul Jones, Georgia College & State University Laura Maxwell, Georgia Gwinnett College Jeff Davis, Georgia Highlands College Steve Swant, Georgia Institute of Technology Ron Stark, Georgia Perimeter College Anthony Wagner, Georgia Regents University Robert Whitaker, Georgia Southern University Cody King, Georgia Southwestern State University Jerry Rackliffe, Georgia State University Lee Fruitticher, Gordon State College Randy Hinds, Kennesaw State University Nancy Stroud, Middle Georgia State College Edward Jolley, Savannah State University Marcus J. Latham, South Georgia State College Bill Prigge, Southern Polytechnic State University Ryan Nesbit, University of Georgia Mac McConnell, University of North Georgia Jim Sutherland, University of West Georgia Sue Mitchell Fuciarelli, Valdosta State University Kristi Fuss, University System Office Photography: Courtesy of University System of Georgia Institutions University System of Georgia Annual Financial Report FY 2013 Page 92 Published by the Office of Fiscal Affairs 270 Washington Street, SW Atlanta, Georgia 30334 www.usg.edu