2013-571-georgia perimeter college aud

8/10/2019 2013-571-Georgia Perimeter College AUD

1/57

Annual Financial Report For the Fiscal Year EndedJune 30, 2013

Including Independent

Auditors Report

GPC 2013


2/57

GEORGIA PERIMETER COLLEGE

- TABLE OF CONTENTS -

Page

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS

AND SUPPLEMENTARY INFORMATION

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS i

BASIC FINANCIAL STATEMENTS

EXHIBITS

A STATEMENT OF NET POSITION 2

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION 3

C STATEMENT OF CASH FLOWS 5

D NOTES TO THE FINANCIAL STATEMENTS 6

SUPPLEMENTARY INFORMATION

SCHEDULES

1 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND 26

2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT

(NON-GAAP BASIS) BUDGET FUND 27

3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET

BY PROGRAM AND FUNDING SOURCE


4 STATEMENT OF CHANGES TO FUND BALANCE

BY PROGRAM AND FUNDING SOURCE


5 RECONCILIATION OF BUDGET TO GAAP 33

6 RECONCILIATION OF SALARIES AND TRAVEL 34

SECTION II

COMPLIANCE AND INTERNAL CONTROL REPORTS

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL

STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS


3/57


- TABLE OF CONTENTS -

SECTION III

AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SECTION IV

CURRENT YEAR FINDINGS AND QUESTIONED COSTS

SCHEDULE OF FINDINGS AND QUESTIONED COSTS AND MANAGEMENT'S CORRECTIVE ACTION PLAN


4/57

SECTION I

FINANCIAL


5/57

DEPARTMENT OF AUDITS AND ACCOUNTS270 Washington Street, S.W., Suite 1-156

Atlanta, Georgia 30334-8400

Greg S. GriffinSTATE AUDITOR

(404) 656-2174

January 23, 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 Robert Watts, Interim President

Georgia Perimeter College

INDEPENDENT AUDITOR'S REPORT

Ladies and Gentlemen:

Report on the inancial Statements

We have audited the accompanying basic financial statements (Exhibits A through D) of Georgia

Perimeter College, a unit 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.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements inaccordance 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 and the standards applicable to financial audits contained in Government Auditing

Standards, issued by the Comptroller General of the United States. Those standards require that we

plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures 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 statements, whetherdue to fraud or error. In making those risk assessments, the auditor considers internal controlrelevant to Georgia Perimeter College's preparation and fair presentation of the financial statementsin order to design audit procedures that are appropriate in the circumstances, but not for the

13ARL-62


6/57

purpose of expressing an opinion on the effectiveness of Georgia Perimeter College's internalcontrol. Accordingly, we express no such opinion. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of significant accountingestimates made by management, as well as evaluating the overall presentation of the financialstatements.

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 materialrespects, the respective financial position of Georgia Perimeter College as of June 30, 2013, and therespective changes in financial position and cash flows thereof for the year then ended in conformitywith accounting principles generally accepted in the United States of America.

Emphasis of Matter

As discussed in Note 1, the financial statements of Georgia Perimeter College are intended topresent 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 GeorgiaPerimeter College. They do not purport to, and do not, present fairly the financial position of theState of Georgia as of June 30, 2013, the changes in its financial position or its cash flows for theyear then ended, in conformity with accounting principles generally accepted in the United States ofAmerica.

As described in Note 1 to the financial statements, in 2013, Georgia Perimeter College adopted newaccounting guidance, GASB Statement No. 63, Reporting Deferred Outflows, Deferred Inflows, and NetPosition. Our opinion is not modified with respect to this matter.

As discussed in Note 1 to the financial statements, the prior period financial statements have beenrestated to correct various misstatements. 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 theManagement's Discussion and Analysis on pages i through vi be presented to supplement the basic

financial statements. Such information, although not a part of the basic financial statements, isrequired by the Governmental Accounting Standards Board, who considers it to be an essential partof financial reporting for placing the basic financial statements in an appropriate operational,economic, or historical context. We have applied certain limited procedures to the requiredsupplementary information in accordance with auditing standards generally accepted in the UnitedStates 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 ourinquiries, the basic financial statements, and other knowledge we obtained during our audit of thebasic financial statements. We do not express an opinion or provide any assurance on theinformation because the limited procedures do not provide us with sufficient evidence to express an

opinion or provide any assurance.

13ARL-62


7/57


8/57

REQUIRED SUPPLEMENTARY INFORMATION


9/57i

GEORGIA PERIMETER COLLEGEManagement's Discussion and Analysis

Introduction

Georgia Perimeter College is one of the 31 institutions of higher education of the University Systemof Georgia. The College operates five campuses located along the major access corridors ofmetropolitan Atlanta. Georgia Perimeter College was founded by the DeKalb County Board ofEducation in 1964 and later became a state College in 1986. Georgia Perimeter College is thelargest two year college and the fourth largest institution in the University System of Georgia. GeorgiaPerimeter College enrolls more freshmen, provides more transferring students to other colleges anduniversities, and offers more online courses than any other institution in the state. The Institutionmaintains strong student demand as shown by the comparison figures that follow.

Students Students

Faculty (Headcount) (FTE)

Fiscal Year 2013 571 23,619 17,573

Fiscal Year 2012 665 26,996 20,466

Fiscal Year 2011 628 25,113 19,014

Overview of the Financial Statements and Financial Analysis

Georgia Perimeter College is pleased to present its financial statements for fiscal year 2013. Theemphasis of discussions about these statements will be on current year data. There are threefinancial statements presented: the Statement of Net Position; the Statement of Revenues,Expenses and Changes in Net Position; and the Statement of Cash Flows. This discussion andanalysis of the College's financial statements provides an overview of its financial activities for theyear. Comparative data is provided for fiscal year 2013 and fiscal year 2012.

Statement of Net Position

The Statement of Net Position presents the assets, deferred outflows, liabilities, deferred inflows,and net position of the College as of the end of the fiscal year. The Statement of Net Position is apoint-of-time financial statement. The Statement of Net Position presents a fiscal snapshot ofGeorgia Perimeter College. The Statement of Net Position presents end-of-year data concerningassets (current and noncurrent) plus deferred outflows, and liabilities (current and noncurrent) plusdeferred inflows, and net position (assets plus deferred outflows minus liabilities plus deferredinflows). The differences between current and noncurrent assets are discussed in the Notes to theFinancial Statements.

From the data presented, readers of the Statement of Net Position are able to determine the assetsavailable to continue the operations of the Institution and how much the Institution owes vendors.


10/57ii

Finally, the Statement of Net Position provides a picture of the net position (assets plus deferredoutflows of resources minus liabilities plus deferred inflows of resources) and their availability forexpenditure by the institution. Net position is divided into three major categories. The first category,net investment in capital assets, provides the institution's equity in property, plant and equipmentowned by the institution. The next category is restricted, which is divided into two categories,nonexpendable and expendable.

The corpus of nonexpendable, restricted resources is available only for investment purposes.Expendable, restricted resources are available for expenditure by the Institution but must be spentfor purposes as determined by donors and/or external entities that have placed time or purposerestrictions on the use of the assets. The final category is unrestricted. Unrestricted resources areavailable to the Institution for any lawful purpose.

Statement of Net Position, Condensed

June 30, 2013 June 30, 2012

ssets

Current Assets $ 14,627,060 $ 11,840,842Capital Assets, Net 157,330,188 163,963,710

Other Assets 119,291 44,705

Total ssets $ 172,076,539 $ 175,849,257

Liabilities

Current Liabilities $ 13,814,692 $ 17,722,299

Noncurrent Liabilities 78,145,487 79,434,517

Total Liabilities $ 91,960,179 $ 97,156,816

Net Position

Net Investment in Capital Assets $ 79,388,404 $ 84,838,082

Restricted

Nonexpendable 31,338 31,338

Expendable 493,268 121,906

Unrestricted 203,350 -6,298,885

Total Net Position $ 80,116,360 $ 78,692,441

Total assets decreased by $3,772,718 which was primarily due to a decrease of $6,633,522 in the

category of Capital Assets, Net, offset by an increase of $3,538,964 in Cash and Cash Equivalentswithin the Current Assets category. The net decrease in Capital Assets is due to scheduleddepreciation expense in excess of capital additions during the year.

Total liabilities decreased for the year by $5,196,637. The combination of the decrease in totalassets of $3,772,718 and the decrease in total liabilities of $5,196,637 yields an increase in netposition of $1,056,136, exclusive of the prior year adjustment of $367,783. The increase in netposition is primarily comprised of an increase of $6,502,235 in the category of Unrestricted NetAssets, offset by a decrease of $5,449,678 in the category of Net Investment in Capital Assets.


11/57iii

Statement of Revenues, Expenses and Changes in Net Position

Changes in total net position as presented on the Statement of Net Position are based on the activitypresented in the Statement of Revenues, Expenses and Changes in Net Position. The purpose of thestatement is to present the revenues received by the institution, both operating and nonoperating,and the expenses paid by the institution, operating and nonoperating, and any other revenues,

expenses, gains and losses received or spent by the institution. Generally, operating revenues arereceived for providing goods and services to the various customers and constituencies of theinstitution. Operating expenses are those expenses paid to acquire or produce the goods andservices provided in return for the operating revenues, and to carry out the mission of the institution.Nonoperating revenues are revenues received for which goods and services are not provided. Forexample state appropriations are nonoperating because they are provided by the Legislature to theInstitution without the Legislature directly receiving commensurate goods and services for thoserevenues.

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

June 30, 2013 June 30, 2012

Operating Revenues $ 59,471,657 $ 63,462,523

Operating Expenses 147,068,688 184,948,597

Operating Loss $ -87,597,031 $ -121,486,074

Nonoperating Revenues and Expenses 88,629,070 115,769,063

Income (Loss) Before Other Revenues,

Expenses, Gains or Losses $ 1,032,039 $ -5,717,011

Other Revenues, Expenses, Gains or Losses 24,097 215,944

Increase (Decrease) in Net Position $ 1,056,136 $ -5,501,067

Net Position at Beginning of Year,

as Originally Reported $ 78,692,441 $ 86,697,218

Prior Year Adjustments 367,783 -2,503,710

Net Position at Beginning of Year, Restated $ 79,060,224 $ 84,193,508

Net Position at End of Year $ 80,116,360 $ 78,692,441

The Statement of Revenues, Expenses and Changes in Net Position reflect a positive year, which isrepresented by an increase in net position at the end of the year. Some highlights of the informationpresented on this statement are as follows:


12/57iv

Revenue by Source

For the Years Ended June 30, 2013 and June 30, 2012

June 30, 2013 June 30, 2012

Operating Revenue

Tuition and Fees $ 47,276,044 $ 50,644,209Grants and Contracts 3,005,443 3,158,887

Sales and Services of Educational Departments 477,701 473,718

Auxiliary 8,387,808 8,775,339

Other 324,661 410,370

Total Operating Revenue $ 59,471,657 $ 63,462,523

Nonoperating Revenue

State Appropriations $ 44,795,320 $ 59,707,745

Grants and Contracts 47,519,606 59,543,093

Gifts 186,725 633,779

Investment Income 25,585 8,828Other -11,302 -241,328

Total Nonoperating Revenue $ 92,515,934 $ 119,652,117

Capital Grants and Gifts

State $ 215,944

Other $ 24,097

Total Capital Grants and Gifts $ 24,097 $ 215,944

Total Revenues $ 152,011,688 $ 183,330,584

Expenses (By Functional Classification)

For the Years Ended June 30, 2013 and June 30, 2012

June 30, 2013 June 30, 2012

Operating Expenses

Instruction $ 54,728,941 $ 62,698,331

Research 40,000

Public Service 104,587 50,004

Academic Support 13,745,363 21,268,174

Student Services 13,675,417 18,266,359

Institutional Support 15,929,153 21,937,057

Plant Operations and Maintenance 14,753,047 20,488,881

Scholarships and Fellowships 28,794,614 35,102,559

Auxiliary Enterprises 5,337,566 5,097,232

Total Operating Expenses $ 147,068,688 $ 184,948,597

Nonoperating Expenses

Interest Expense (Capital Assets) 3,886,864 3,883,054

Total Expenses $ 150,955,552 $ 188,831,651


13/57v

Operating revenues decreased by $3,990,866 in fiscal year 2013 primarily in the Tuition and Feescategory. A decline in Tuition and Fees was anticipated and is largely the result of a change inlearning support requirements that were adopted by the Board of Regents in the Fall term of 2012.The Auxiliary revenue decrease of $387,531 is also the result of the decline in enrollment describedabove.

Nonoperating revenues decreased $27,136,183 for the year due primarily to decreases in StateAppropriations of $14,912,425 and Grants and Contracts of $12,023,487. The State Appropriationdecrease is the result of repayment of a supplemental appropriation provided by the Board ofRegents in fiscal year 2012. This repayment amount has been restored in the College's fiscal year2014 State appropriations budget. Nonoperating Grant and Contract revenue primarily representsFederal Pell Grant revenue. The decrease is partly due to the enrollment decline but was alsoimpacted by new legislation limiting the duration of Federal Pell Grant eligibility from 18 semesters to12 semesters, or its equivalent.

The compensation and employee benefits category decreased by $20,643,160 and primarilyaffected the Instruction, Academic Support, Student Services and Institutional Support categories.The decrease reflects a reduction in force at the end of fiscal year 2012 of 282 full and part-time

employees and other cost saving initiatives implemented by the College.

Supplies and Other Services decreased by $9,920,911 during the past year and enabled the Collegeto operate within its available resources. The decrease was across all expense categories, as well asacross most functional classifications.

Statement of Cash Flows

The final statement presented by the Georgia Perimeter College is the Statement of Cash Flows. TheStatement of Cash Flows presents detailed information about the cash activity of the Institutionduring the year. The statement is divided into five parts. The first part deals with operating cash flowsand shows the net cash used by the operating activities of the institution. The second sectionreflects cash flows from noncapital financing activities. This section reflects the cash received andspent for nonoperating, noninvesting, and noncapital financing purposes. The third section dealswith cash flows from capital and related financing activities. This section deals with the cash used forthe acquisition and construction of capital and related items. The fourth section reflects the cashflows from investing activities and shows the purchases, proceeds, and interest received frominvesting activities. The fifth section reconciles the net cash used to the operating income or lossreflected on the Statement of Revenues, Expenses and Changes in Net Position.

Cash Flows for the Years Ended June 30, 2013 and 2012, Condensed

June 30, 2013 June 30, 2012

Cash Provided (Used) By:

Operating Activities $ -83,061,035 $ -109,583,758

Noncapital Financing Activities 92,498,104 119,935,777

Capital and Related Financing Activities -5,849,104 -8,013,177

Investing Activities 25,585 8,827

Net Change in Cash $ 3,613,550 $ 2,347,669

Cash, Beginning of Year 7,237,417 4,889,748

Cash, End of Year $ 10,850,967 $ 7,237,417


14/57vi

Capital Assets

The College had $656,956 in Equipment and Library Collections capital asset additions during fiscalyear 2013. The Soccer Field renovation on the Clarkston campus is nearly complete and is projectedto reopen in August 2013. This renovation project is reflected as Construction Work-in-Progress inNote 5 to these financial statements.

The College is completing the design stages of a new academic building on the Decatur campus. Thedesign project is funded by the Georgia State Financing and Investment Commission (GSFIC) and willnot be reflected in the College's financial statements until the building itself is constructed, which isanticipated to be by fiscal year 2017. The building construction project, which is separate from thedesign phase, will be requested for approval in the College's fiscal year 2015 capital budget request.

For additional information concerning Capital Assets, see Notes 1, 5, 7, and 9 in the Notes to theFinancial Statements.

Long Term Liabilities

Georgia Perimeter College had Long-Term Liabilities (excluding Unearned Revenue, noncurrent) of$81,400,193 of which $3,554,706 was reflected as current liability at June 30, 2013.

For additional information concerning Long-Term Liabilities, see Notes 1 and 7 in the Notes to theFinancial Statements.

Economic Outlook

Fiscal year 2013 was a challenging but successful year for the College as it significantly improved itsfinancial position while maintaining quality instruction, administration and student services. TheCollege's focus continues to be on maintaining enrollment, increasing retention and graduation ratesand further strengthening the College's reserves.

The College will continue to maintain a close watch over its resources and expenses and cautiouslyproceed to implement strategic investments that target student success and meet University Systemand State of Georgia education goals.

Mr. Robert Watts, Interim PresidentGeorgia Perimeter College


15/57

- 1 -

BASIC FINANCIAL STATEMENTS


16/57


STATEMENT OF NET POSITION

JUNE 30, 2013

EXHIBIT "A"

ASSETS

Current Assets

Cash and Cash Equivalents $ 10,749,970

Accounts Receivable, Net (Note 3)Receivables - Federal Financial Assistance 1,340,216

Receivables - Other 2,441,656

Due from Affiliated Organizations 28,966

Inventories (Note 4) 27,364

Prepaid Items 38,888

Total Current Assets $ 14,627,060

Noncurrent Assets

Noncurrent Cash $ 100,997

Short-Term Investments 18,294

Capital Assets, Net (Note 5) 157,330,188

Total Noncurrent Assets $ 157,449,479

Total Assets $ 172,076,539

LIABILITIES

Current Liabilities

Accounts Payable $ 4,487,898

Salaries Payable 238,251

Contracts Payable 5,156

Unearned Revenue (Note 6) 4,618,047

Other Liabilities 232,359

Deposits Held for Other Organizations 674,505

Lease Purchase Obligations 1,322,192

Compensated Absences 2,232,514

Due to Affiliated Organizations 3,770

Total Current Liabilities $ 13,814,692

Noncurrent Liabilities

Lease Purchase Obligations $ 76,619,592

Unearned Revenue 300,000

Compensated Absences 1,225,895

Total Noncurrent Liabilities $ 78,145,487

Total Liabilities $ 91,960,179

NET POSITION

Net Investment in Capital Assets $ 79,388,404

Restricted for:

Nonexpendable 31,338

Expendable 493,268

Unrestricted 203,350

Total Net Position $ 80,116,360

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

- 2 -


17/57


STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION

YEAR ENDED JUNE 30, 2013

EXHIBIT "B"

OPERATING REVENUES

Student Tuition and Fees $ 68,271,838

Less: Scholarship Allowances -20,995,794

Grants and Contracts

Federal 1,767,477State 978,637

Other 259,329

Sales and Services 477,701

Rents and Royalties 16,300

Auxiliary Enterprises

Bookstore 1,360,118

Food Services 75,683

Health Services 887,383

Intercollegiate Athletics 1,775,364

Other Organizations 4,289,260

Other Operating Revenues 308,361

Total Operating Revenues $ 59,471,657

OPERATING EXPENSES

Salaries

Faculty $ 32,745,297

Staff 39,077,486

Employee Benefits 20,646,705

Other Personal Services 702,950

Travel 237,461

Scholarships and Fellowships 29,999,215

Utilities 3,372,926

Supplies and Other Services 12,817,177

Depreciation 7,469,471

Total Operating Expenses $ 147,068,688

Operating Income (Loss) $ -87,597,031

NONOPERATING REVENUES (EXPENSES)

State Appropriations $ 44,795,320

Grants and Contracts

Federal 47,519,606

Gifts 186,725

Investment Income 25,585

Interest Expense -3,886,864

Other Nonoperating Revenues -11,302

Net Nonoperating Revenues $ 88,629,070

Income (Loss) Before Other Revenues, Expenses, Gains, or Losses $ 1,032,039

Capital Grants and Gifts

Other 24,097

Increase (Decrease) in Net Position $ 1,056,136

Net Position - Beginning of Year, Restated $ 79,060,224

Net Position - End of Year $ 80,116,360


- 3 -


18/57

(This page left intentionally blank)


19/57


STATEMENT OF CASH FLOWS


EXHIBIT "C"

CASH FLOWS FROM OPERATING ACTIVITIES

Tuition and Fees $ 47,052,835

Grants and Contracts 2,635,954

Sales and Services 477,701

Payments to Suppliers -38,509,162

Payments to Employees -73,462,577

Payments for Scholarships and Fellowships -29,999,215Auxiliary Enterprise Charges:

Bookstore 952,558

Food Services 101,246

Health Services 942,221

Intercollegiate Athletics 1,734,472

Other Organizations 4,453,403

Other Receipts (Payments) 559,529

Net Cash Provided (Used) by Operating Activities $ -83,061,035

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

State Appropriations $ 44,795,320

Agency Funds Transactions -3,447

Gifts and Grants Received for Other than Capital Purposes 47,706,231

Net Cash Flows Provided (Used) by Noncapital Financing Activities $ 92,498,104

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Capital Grants and Gifts Received $ 24,097

Proceeds from Sale of Capital Assets 7,500

Purchases of Capital Assets -918,888

Principal Paid on Capital Debt and Leases -1,183,844

Interest Paid on Capital Debt and Leases -3,777,969

Net Cash Provided (Used) by Capital and Related Financing Activities $ -5,849,104

CASH FLOWS FROM INVESTING ACTIVITIES

Interest on Investments $ 25,585

Net Increase (Decrease) in Cash $ 3,613,550

Cash and Cash Equivalents - Beginning of Year 7,237,417

Cash and Cash Equivalents - End of Year $ 10,850,967

RECONCILIATION OF OPERATING LOSS TO NET CASH

PROVIDED (USED) BY OPERATING ACTIVITIES:

Operating Income (Loss) $ -87,597,031

Adjustments to Reconcile Operating Income (loss) to Net Cash

Provided (Used) by Operating Activities

Depreciation 7,469,471

Change in Assets and Liabilities:

Receivables, Net 479,697

Inventories 114,748

Prepaid Items 168,362

Accounts Payable -3,371,461

Unearned Revenue -422,805

Other Liabilities 313,760

Compensated Absences -215,776

Net Cash Provided (Used) by Operating Activities $ -83,061,035

NONCASH ACTIVITY

Change in Accrued Interest Payable Affecting Interest Paid $ -108,895


- 5 -


20/57


21/57

GEORGIA PERIMETER COLLEGE EXHIBIT "D"

NOTES TO THE FINANCIAL STATEMENTS

JUNE 30, 2013

- 7 -

In fiscal year 2013, the College adopted the Governmental Accounting Standards Board (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 incorporatecertain accounting and financial reporting guidance into authoritative GASB literature.

In fiscal year 2013, the College adopted the Governmental Accounting Standards Board (GASB)Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resourcesand Net Position. The provisions of this Statement establish financial reporting standards for thepresentation of deferred outflows of resources and deferred inflows of resources and their effects ona government's net position. The College changed its presentation of net assets to net position forfiscal year 2013. There were no other applicable reporting changes for the College.

Cash and Cash Equivalents

Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorizedfinancial institutions, and cash management pools that have the general characteristics of demanddeposit accounts. This includes the State Investment Pool.

Short-Term Investments

Short-Term Investments consist of investments of 90 days - 13 months, which includes certificatesof deposits or other time-restricted investments with original maturities of six months or more whenpurchased. Funds are not readily available and there is a penalty for early withdrawal.

Accounts Receivable

Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise servicesprovided to students, faculty and staff, the majority of whom reside in the State of Georgia. Accountsreceivable also includes amounts due from the Federal government, state and local governments, orprivate sources, in connection with reimbursement of allowable expenditures made pursuant to theCollege's grants and contracts. Accounts receivable are recorded net of estimated uncollectibleamounts.

Inventories

Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis.

Noncurrent Cash and Investments

Cash and investments that are externally restricted and cannot be used to pay current liabilities areclassified as noncurrent 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 ofdonation in the case of gifts. For equipment, the College's capitalization policy includes all items witha 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 significantlyincrease the value or extend the useful life of the structure are capitalized. Routine repairs andmaintenance 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, andmineral rights, easements, patents, trademarks, and copyrights, as well as software, is computedusing the straight-line method over the estimated useful lives of the assets, generally 40 to 60 yearsfor buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books,and 3 to 20 years for equipment. Residual values generally are 10% of historical costs forinfrastructure, buildings and building improvements, and facilities and other improvements.


22/57



JUNE 30, 2013

- 8 -

To fully understand plant additions in the University System, it is necessary to look at the activities ofthe Georgia State Financing and Investment Commission (GSFIC) - an organization that is external tothe System. GSFIC issues bonds for and on behalf of the State of Georgia, pursuant to powersgranted to it in the Constitution of the State of Georgia and the Act creating the GSFIC. These bonds

constitute direct and general obligations of the State of Georgia, to the payment of which the fullfaith, credit and taxing power of the State are pledged.

For projects managed by GSFIC, GSFIC retains construction-in-progress on its books throughout theconstruction period and transfers the entire project to the College when complete. For projectsmanaged by the College, the College retains construction-in-progress on its books and is reimbursedby GSFIC. For the year ended June 30, 2013, GSFIC did not transfer any capital additions to GeorgiaPerimeter College.

Unearned Revenues

Unearned Revenues include amounts received for tuition and fees and certain auxiliary activitiesprior to the end of the fiscal year but related to the subsequent accounting period. UnearnedRevenues also include amounts received from grant and contract sponsors that have not yet been

earned.

Compensated Absences

Employee vacation pay is accrued at year-end for financial statement purposes. The liability andexpense incurred are recorded at year-end as compensated absences in the Statement of NetPosition, and as a component of compensation and benefit expense in the Statement of Revenues,Expenses and Changes in Net Position. Georgia Perimeter College had accrued liability forcompensated absences in the amount of $3,674,185 as of July 1, 2012. For fiscal year 2013,$2,608,701 was earned in compensated absences and employees were paid $2,824,477, for a netdecrease of $215,776. The ending balance as of June 30, 2013 in accrued liability forcompensated absences was $3,458,409.

Noncurrent Liabilities

Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capitallease obligations with contractual maturities greater than one year; and (3) other liabilities that,although payable within one year, are to be paid from funds that are classified as noncurrent assets.

Net Position

The College's net position is classified as follows:

Net Investment in Capital Assets: This represents the College's total investment in capital assets, netof outstanding debt obligations related to those capital assets. To the extent debt has been incurredbut not yet expended for capital assets, such amounts are not included as a component of the netinvestment in capital assets. The term "debt obligations" as used in this definition does not includedebt of the GSFIC as discussed previously in Note 1 - Capital Assets section.

Restricted - nonexpendable: includes endowment and similar type funds, in which donors or otheroutside sources have stipulated, as a condition of the gift instrument, that the principal is to bemaintained inviolate and in perpetuity, and invested for the purpose of producing present and futureincome, which may be either expended or added to principal. The College may accumulate as muchof the annual net income of an institutional fund as is prudent under the standard established byCode Section 44-15-7 of Annotated Code of Georgia.

Restricted - expendable: includes resources in which the College is legally or contractually obligatedto spend in accordance with restrictions imposed by external third parties.


23/57



JUNE 30, 2013

- 9 -

Expendable Restricted include the following at June 30, 2013:

Restricted - E&G and Other Organized Activities $ 407,265

Federal Loans 17,543

Institutional Loans 57,049

Quasi-Endowments 11,411

Total Restricted Expendable $ 493,268

Unrestricted: Unrestricted represents resources derived from student tuition and fees, stateappropriations, and sales and services of educational departments and auxiliary enterprises. Theseresources are used for transactions relating to the educational and general operations of theCollege, and may be used at the discretion of the governing board to meet current expenses forthose purposes, except for unexpended state appropriations (surplus) of $15,274.97. Unexpendedstate 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 servicesfor students, faculty and staff.

Unrestricted resources include the following items which are quasi-restricted by management atJune 30, 2013:

R & R Reserve $ 571,587

Reserve for Encumbrances 851,391

Reserve for Inventory 27,364

Other Unrestricted -1,246,992

Total Unrestricted Net Position $ 203,350

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

Income Taxes

Georgia Perimeter College, as a political subdivision of the State of Georgia, is excluded from Federalincome 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 classify fiscal year activity asoperating and nonoperating according to the following criteria:

Operating Revenue: includes activities that have the characteristics of exchange transactions, suchas (1) student tuition and fees, net of scholarship allowances, (2) certain Federal, state and localgrants and contracts, and (3) sales and services.

Nonoperating Revenue:

includes activities that have the characteristics of nonexchangetransactions, such as gifts and contributions, and other revenue sources that are defined asnonoperating revenue by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable TrustFunds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such asstate appropriations and investment income.


24/57



JUNE 30, 2013

- 10 -

Operating Expenses: Operating expense includes activities that have the characteristics of exchangetransactions.

Nonoperating Expense:

includes activities that have the characteristics of nonexchange

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 grosswith a contra revenue account of scholarship allowances in the Statement of Revenues, Expensesand Changes in Net Position.

Scholarship allowances are the difference between the stated charge for goods and servicesprovided by the College, and the amount that is paid by students and/or third parties makingpayments on the students' behalf.

Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental

programs are recorded as either operating or nonoperating revenues in the College's financialstatements. To the extent that revenues from such programs are used to satisfy tuition and fees andother student charges, the College has recorded contra revenue for scholarship allowances.

Restatement of Prior Year Net Position

Georgia Perimeter College has a restatement of prior year net position increasing beginning netposition by $367,783. This is due to the following activity determined to relate to the prior year andincludes:

Impact on

Beginning

Amount Description Net Position

$ 553,302 2012 grant revenue recognized in 2013 Increase

-362,516 2012 interest expense paid in 2013 Decrease

152,506 2012 restricted fund analysis Increase

-34,804 2012 supplies and other services paid in 2013 Decrease

26,441 2012 tuition and fee revenue recognized in 2013 Increase

22,794 capital asset corrections Increase

10,060 2013 insurance expensed in 2012 Increase

$ 367,783 Total Restatement Increase

Note 2. Deposits and Investments

Deposits

The custodial credit risk for deposits is the risk that in the event of a bank failure, the College'sdeposits may not be recovered. Funds belonging to the State of Georgia (and thus the College)cannot be placed in a depository paying interest longer than ten days without the depositoryproviding a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateralany one or more of the following securities as enumerated in the Official Code of Georgia AnnotatedSection 50-17-59:


25/57



JUNE 30, 2013

- 11 -

1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the UnitedStates 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 thestatute that created the authority authorized the use of the bonds for this purpose.

4. Industrial revenue bonds and bonds of development authorities created by the laws of theState of Georgia.

5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiarycorporation of the United States government, which are fully guaranteed by the United Statesgovernment both as to principal and interest and debt obligations issued by the Federal LandBank, 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 andthe 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 requireddepository protection for all units of the University System of Georgia.

At June 30, 2013, the carrying value of deposits was $10,077,468 and the bank balance was$11,078,981. Of the College's deposits, $11,064,150 were uninsured and collateralized withsecurities held by the financial institution, by its trust department or agency, but not in the College'sname.

Investments

At June 30, 2013, the carrying value of the College's investments were $757,293, which ismaterially the same as fair value. These investments were comprised entirely of funds invested inthe Office of the State Treasurer investment pool as follows:

Investment Pools

Office of the State Treasurer

Georgia Fund 1 $ 757,293

The Georgia Fund 1 Investment Pool, managed by the Office of the State Treasurer, is not registeredwith 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 investmentis valued at the pool's share price, $1.00 per share. The Georgia Fund 1 Investment Pool is an AAAfrated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 43days.

Interest Rate RiskInterest rate risk is the risk that changes in interest rates of debt investments will adversely affectthe fair value of an investment. The College does not have a formal policy for managing interest raterisk.


26/57



JUNE 30, 2013

- 12 -

Credit Quality RiskCredit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill itsobligations. The College does not have a formal policy for managing credit quality risk.

Note 3. Accounts Receivable

Accounts receivable consisted of the following at June 30, 2013:

Student Tuition and Fees $ 3,772,321

Auxiliary Enterprises and Other Operating Activities 375,203

Federal Financial Assistance 1,340,216

Georgia State Financing and Investment Commission 136,804

Due from Affiliated Organizations 28,966

Other 705,117

$ 6,358,627

Less Allowance for Doubtful Accounts 2,547,789

Net Accounts Receivable $ 3,810,838

Note 4. Inventories

Inventories consisted of the following at June 30, 2013:

Physical Plant $ 27,364


27/57



JUNE 30, 2013

- 13 -

Note 5. Capital Assets

Following are the changes in capital assets for the year ended June 30, 2013:

BeginningBalance Ending

July 1, 2012 Balance

(Restated) Additions Reductions June 30, 2013

Capital Assets, Not Being Depreciated:

Land $ 5,022,603 $ 0 $ 5,022,603

Construction Work-In-Progress 370,222 $ 174,901 545,123

Total Capital Assets, Not Being Depreciated $ 5,392,825 $ 174,901 $ 0 $ 5,567,726

Capital Assets, Being Depreciated:

Infrastructure $ 3,312,198 $ 3,312,198Building and Building Improvements 118,992,639 118,992,639

Facilities and Other Improvements 9,110,724 9,110,724

Equipment 14,084,715 $ 377,261 $ 269,686 14,192,290

Capital Leases 79,993,008 79,993,008

Library Collections 13,921,679 279,695 154,491 14,046,883

Capitalized Collections 11,574 11,574

Total Assets Being Depreciated $ 239,426,537 $ 656,956 $ 424,177 $ 239,659,316

Less: Accumulated Depreciation:

Infrastructure $ 431,924 $ 115,429 $ 547,353

Building and Building Improvements 47,348,452 3,273,442 50,621,894Facilities and Other Improvements 3,210,791 367,423 3,578,214

Equipment 10,997,709 907,315 $ 250,984 11,654,040

Capital Leases 7,965,985 2,218,242 10,184,227

Library Collections 10,875,846 587,331 154,491 11,308,686

Capitalized Collections 2,151 289 2,440

Total Accumulated Depreciation $ 80,832,858 $ 7,469,471 $ 405,475 $ 87,896,854

Total Capital Assets, Being Depreciated, Net $ 158,593,679 $ -6,812,515 $ 18,702 $ 151,762,462

Capital Assets, Net $ 163,986,504 $ -6,637,614 $ 18,702 $ 157,330,188

Note 6. Unearned Revenue

Unearned Revenue (Current) consisted of the following at June 30, 2013:

Prepaid Tuition and Fees $ 4,408,195

Other Unearned Revenue 209,852

Total Unearned Revenue $ 4,618,047


28/57



JUNE 30, 2013

- 14 -

Note 7. Long-Term Liabilities

Long-Term liability activity for the year ended June 30, 2013 was as follows:

Beginning EndingBalance Balance Current

July 1, 2012 Additions Reductions June 30, 2013 Portion

Leases

Lease Obligations $ 79,125,628 $ 1,183,844 $ 77,941,784 $ 1,322,192

Other Liabilities

Compensated Absences 3,674,185 $ 2,608,701 2,824,477 3,458,409 2,232,514

Total Long-Term Obligations $ 82,799,813 $ 2,608,701 $ 4,008,321 $ 81,400,193 $ 3,554,706

Note 8. Significant Commitments

The College had significant unearned, outstanding, construction or renovation contracts executed inthe amount of $5,000 as of June 30, 2013. This amount is not reflected in the accompanying basicfinancial statements.

Note 9. Lease Obligations

Georgia Perimeter College is obligated under various operating leases for the use of real property(land, buildings, and office facilities) and equipment, and also is obligated under capital leases andinstallment purchase agreements for the acquisition of real property.

CAPITAL LEASES

Capital leases are generally payable in installments ranging from monthly to annually and haveterms expiring in various years between 2017 and 2035. Expenditures for fiscal year 2013 were$5,070,708 of which $3,886,864 represented interest. Total principal paid on capital leases was$1,183,844 for the fiscal year ended June 30, 2013. Interest rates range from 4.74 percent to5.80 percent. The following is a summary of the carrying values of assets held under capital lease atJune 30, 2013:

Held Under Balances per

Accumulated Capital Lease Lease Schedules

Description Gross Amount Depreciation at June 30, 2013 at June 30, 2013

(+) (-) (=)

Buildings - (PPV Only) $ 79,580,508 $ 10,080,586 $ 69,499,922 $ 77,710,138

Facilities and Improvements 412,500 103,641 308,859 231,646

Total Assets Held Under Capital Lease

at June30,2013 $ 79,993,008 $ 10,184,227 $ 69,808,781 $ 77,941,784


29/57



JUNE 30, 2013

- 15 -

Certain capital leases provide for renewal and/or purchase options. Generally purchase options atbargain prices of one dollar are exercisable at the expiration of the lease terms.

Georgia Perimeter College has eight capital leases with Georgia Perimeter College Foundation, Inc., a

related entity:

In June 2007, the College entered into a capital lease at $22,682,812 for an academic building onthe Newton campus. The lease expires in May 2035 and the outstanding principal balance as ofJune 30, 2013 is $20,487,452.

In August 2008, the College entered into two capital leases for parking decks at the Clarkston andDunwoody campuses at $8,281,580 and $8,436,012, respectively. The leases expire in May 2035and the outstanding principal balances as of June 30, 2013 are $8,557,225 and $8,716,797,respectively.

In March 2009, the College entered into a capital lease at $6,015,435 for a student success center

on the Clarkston campus. The lease expires in May 2035 and the outstanding principal balance as ofJune 30, 2013 is $6,045,574.

In April 2009, the College entered into a capital lease at $9,358,859 for a student success center onthe Dunwoody campus. The lease expires in May 2035 and the outstanding principal balance as ofJune 30, 2013 is $9,368,396.

In May 2009, the College entered into a capital lease at $9,002,865 for a student success center onthe Decatur campus. The lease expires in May 2035 and the outstanding principal balance as ofJune 30, 2013 is $8,976,107.

In August 2009, the College entered into a capital lease at $12,754,177 for a student learningcenter on the Newton campus. The lease expires in May 2035 and the outstanding principal balanceas of June 30, 2013 is $12,566,551.

In September 2009, the College entered into a capital lease at $3,048,768 for an internationalcenter on the Clarkston campus. The lease expires in May 2035 and the outstanding principalbalance as of June 30, 2013 is $2,992,036.

Georgia Perimeter College also has a facilities improvement capital lease with a third party thatexpires in July, 2017. The outstanding principal balance at June 30, 2013 is $231,646.

OPERATING LEASES

Georgia Perimeter College's noncancellable operating leases having remaining terms of more than

one year expire in various fiscal years from 2014 through 2017. Certain operating leases provide forrenewal 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 isconsidered a remote possibility. In the normal course of business, operating leases are generallyrenewed or replaced by other leases. Operating leases are generally payable on a monthly basis.Examples of property under operating leases are office space, copiers and other businessequipment.


30/57



JUNE 30, 2013

- 16 -

FUTURE COMMITMENTS

Future commitments for capital leases (which here and on the Statement of Net Position) includeother installment purchase agreements) and for noncancellable operating leases having remaining

terms in excess of one year as of June 30, 2013, were as follows:

Real Property and Equipment

Capital Operating

Leases Leases

Year Ending June 30:

2014 $ 5,233,539 $ 999,080

2015 5,317,750 1,028,872

2016 5,402,659 1,055,354

2017 5,493,087 1,086,913

2018 5,581,458

2019 - 2023 29,076,425

2024 - 2028 31,694,587

2029 - 2033 34,358,093

2034 - 2035 13,980,141

Total Minimum Lease Payments $ 136,137,739 $ 4,170,219

Less: Interest 52,475,679

Less: Executory Cost 5,720,276

Principal Outstanding $ 77,941,784

Georgia Perimeter College's fiscal year 2013 expense for rental of real property and equipmentunder operating leases was $1,149,200.

Note 10. Retirement Plans

Georgia Perimeter College participates in various retirement plans administered by the State ofGeorgia under two major retirement systems: Employees' Retirement System of Georgia (ERSSystem) and Teachers Retirement System of Georgia. These two systems issue separate publiclyavailable financial reports that include the applicable financial statements and requiredsupplementary information. The reports may be obtained from the respective system offices. Thesignificant retirement plans that Georgia Perimeter College participates in are described below. More

detailed information can be found in the plan agreements and related legislation. Each plan,including benefit and contribution provisions, was established and can be amended by State law.

Employees Retirement System of Georgia

The ERS System is comprised of individual retirement systems and plans covering substantially allemployees of the State of Georgia except for teachers and other employees covered by the TeachersRetirement System of Georgia. One of the ERS System plans, the Employees' Retirement System ofGeorgia (ERS), is a cost-sharing multiple-employer defined benefit pension plan that was establishedby the Georgia General Assembly during the 1949 Legislative Session for the purpose of providingretirement allowances for employees of the State of Georgia and its political subdivisions. ERS is


31/57



JUNE 30, 2013

- 17 -

directed by a Board of Trustees and has the powers and privileges of a corporation. ERS actspursuant to statutory direction and guidelines, which may be amended prospectively for new hiresbut for existing members and beneficiaries may be amended in some aspects only subject topotential application of certain constitutional restraints against impairment of contract.

On November 20, 1997, the Board created the Supplemental Retirement Benefit Plan (SRBP-ERS) ofERS. SRBP-ERS was established as a qualified governmental excess benefit plan in accordance withSection 415 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of the SRBP-ERS isto provide retirement benefits to employees covered by ERS whose benefits are otherwise limited byIRC Section 415. Beginning January 1, 1998, all members and retired former members in ERS areeligible to participate in the SRBP-ERS whenever their benefits under ERS exceed the limitation onbenefits 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 ERSbased 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 toJanuary 1, 2009 are "new plan" members subject to the modified plan provisions. EffectiveJanuary 1, 2009, newly hired State employees, as well as rehired State employees who did notmaintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pensionand Savings Plan (GSEPS). ERS members hired prior to January 1, 2009 also have the option tochange their membership to the GSEPS plan.

Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirementbenefits after completion of 10 years of creditable service and attainment of age 60 or 30 years ofcreditable service regardless of age. Additionally, there are some provisions allowing for earlyretirement 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 Trusteesfor such purpose. The formula considers the monthly average of the member's highest 24consecutive calendar months of salary, the number of years of creditable service, and the member'sage at retirement. Post-retirement cost-of-living adjustments may be made to members' benefitsprovided the members were hired prior to July 1, 2009. The normal retirement pension is payablemonthly for life; however, options are available for distribution of the member's monthly pension, atreduced rates, to a designated beneficiary upon the member's death. Death and disability benefitsare also available through ERS.

Member contribution rates are set by law. Member contributions under the old plan are 4% of annualcompensation up to $4,200 plus 6% of annual compensation in excess of $4,200. Under the oldplan, Georgia Perimeter College pays member contributions in excess of 1.25% of annualcompensation. Under the old plan, these Georgia Perimeter College contributions are included in the

members' accounts for refund purposes and are used in the computation of the members' earnablecompensation for the purpose of computing retirement benefits. Member contributions under thenew plan and GSEPS are 1.25% of annual compensation. Georgia Perimeter College is required tocontribute at a specified percentage of active member payroll established by the Board of Trusteesdetermined annually in accordance with actuarial valuation and minimum funding standards asprovided by law. These Georgia Perimeter College contributions are not at any time refundable to themember or his/her beneficiary.


32/57



JUNE 30, 2013

- 18 -

Employer contributions required for fiscal year 2013 were based on the June 30, 2010 actuarialvaluation as follows:

Old Plan* 14.90%

New Plan 14.90%

GSEPS 11.54%

* 10.15% exclusive of contributions paid by the employer on behalf of old plan members

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

Teachers Retirement System of Georgia

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

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

TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structureof TRS is defined and may be amended by State statute. A member is eligible for normal serviceretirement after 30 years of creditable service, regardless of age, or after 10 years of service andattainment 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 themember's two highest paid consecutive years of service, multiplied by the number of years ofcreditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfthof 7% for each month the member is below age 60 or by 7% for each year or fraction thereof bywhich the member has less than 30 years of service. It is also assumed that certain cost-of-livingadjustments, 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 inaddition to a reduced monthly retirement benefit. Options are available for distribution of themember's monthly pension, at a reduced rate, to a designated beneficiary on the member's death.Death, disability and spousal benefits are also available.

TRS is funded by member and employer contributions as adopted and amended by the Board ofTrustees. Members become fully vested after 10 years of service. If a member terminates with lessthan 10 years of service, no vesting of employer contributions occurs, but the member'scontributions may be refunded with interest. Member contributions are limited by State law to notless than 5% or more than 6% of a member's earnable compensation. Member contributions as


33/57



JUNE 30, 2013

- 19 -

adopted by the Board of Trustees for the fiscal year ended June 30, 2013 were 6.00% of annualsalary. Employer contributions required for fiscal year 2013 were 11.41% of annual salary asrequired by the June 30, 2010 actuarial valuation.

The following table summarizes the Georgia Perimeter College contributions by defined benefit planfor the years ending June 30, 2013, June 30, 2012, and June 30, 2011 (dollars in thousands):

ERS TRS

Required Percentage Required Percentage

Fiscal Year Contribution Contributed Contribution Contributed

2013 $ 12,691 100% $ 4,615,425 100%

2012 $ 15,329 100% $ 5,151,893 100%

2011 $ 13,890 100% $ 4,769,633 100%

Regents Retirement Plan

Plan DescriptionThe Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirementplan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. andadministered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a)defines who may participate in the Regents Retirement Plan. An "eligible university systememployee" is a faculty member or a principal administrator, as designated by the regulations of theBoard of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuitycontracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for thepurpose of receiving retirement and death benefits. Benefits depend solely on amounts contributedto the plan plus investment earnings. Benefits are payable to participating employees or theirbeneficiaries in accordance with the terms of the annuity contracts.

Funding PolicyGeorgia Perimeter College makes monthly employer contributions for the Regents Retirement Plan atrates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance withState statute and as advised by their independent actuary. For fiscal year 2013, the employercontribution was 9.24% for the participating employee's earnable compensation. Employeescontributed 5% of their earnable compensation from July through December 2012 and 6% for theremainder of the fiscal year. Amounts attributable to all plan contributions are fully vested andnonforfeitable at all times.

Georgia Perimeter College and the covered employees made the required contributions of$2,060,416 (9.24%) and $1,225,813 (5%-6%), respectively.

AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports whichmay be obtained through their respective corporate offices.

Georgia Defined Contribution Plan

Plan DescriptionGeorgia Perimeter College participates in the Georgia Defined Contribution Plan (GDCP) which is asingle-employer defined contribution plan established by the General Assembly of Georgia for thepurpose of providing retirement coverage for State employees who are temporary, seasonal, andpart-time and are not members of a public retirement or pension system. GDCP is administered bythe Board of Trustees of the Employees' Retirement System of Georgia.


34/57



JUNE 30, 2013

- 20 -

BenefitsA member may retire and elect to receive periodic payments after attainment of age 65. Thepayment will be based upon mortality tables and interest assumptions to be adopted by the Board ofTrustees. If a member has less than $3,500 credited to his/her account, the Board of Trustees has

the option of requiring a lump sum distribution to the member in lieu of making periodic payments.Upon the death of a member, a lump sum distribution equaling the amount credited to his/heraccount will be paid to the member's designated beneficiary. Benefit provisions are established byState statute.

Contributions

Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employercontributions. Contribution rates are established by State statute. Earnings are credited to eachmember's account in a manner established by the Board of Trustees. Upon termination ofemployment, the amount of the member's account is refundable upon request by the member.

Total contributions made by employees during fiscal year 2013 amounted to $537,173 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 beobtained from the ERS offices.

Note 11. Risk Management

The University System of Georgia offers its employees and retirees access to four different self-insured healthcare plan options. For the University System of Georgia's Plan Year 2013, the followinghealth care options were available:

Blue Choice HMO plan

(Blue Cross Blue Shield) HSA Open Access POS plan (Blue Cross Blue Shield) Open Access POS plan

Kaiser Permanente HMO plan

Georgia Perimeter College and participating employees and retirees pay premiums to either of theself-insured healthcare plan options to access benefits coverage. The respective self-insuredhealthcare plan options are included in the financial statements of the Board of Regents of theUniversity System of Georgia - University System Office. All units of the University System of Georgiashare the risk of loss for claims associated with these plans. The reserves for these plans areconsidered to be a self-sustaining risk fund. The Board of Regents has contracted with Blue CrossBlue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administratorfor the self-insured healthcare plan products. In addition to the self-insured healthcare plan optionsoffered to the employees of the University System of Georgia, a fully insured HMO healthcare planoption is also offered to System employees through Kaiser.

The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia ofmaking and carrying out decisions that will minimize the adverse effects of accidental losses thatinvolve State government assets. The State believes it is more economical to manage its risksinternally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk ofloss to which the State is exposed, including general liability, property and casualty, workers'compensation, unemployment compensation, and law enforcement officers' indemnification. Limitedamounts of commercial insurance are purchased applicable to property, employee and automobileliability, fidelity and certain other risks. Georgia Perimeter College, as an organizational unit of the


35/57



JUNE 30, 2013

- 21 -

Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity,and as such, is covered by the State of Georgia risk management program administered by DOAS.Premiums for the risk management program are charged to the various state organizations by DOASto provide claims servicing and claims payment.

A self-insured program of professional liability for its employees was established by the Board ofRegents of the University System of Georgia under powers authorized by the Official Code of GeorgiaAnnotated Section 45-9-1. The program insures the employees to the extent that they are notimmune from liability against personal liability for damages arising out of the performance of theirduties or in any way connected therewith. The program is administered by DOAS as a Self-InsuranceFund.

Note 12. Contingencies

Amounts received or receivable from grantor agencies are subject to audit and adjustment bygrantor agencies. This could result in refunds to the grantor agency for any expenditure disallowed

under grant terms. The amount of expenditures which may be disallowed by the grantor cannot bedetermined at this time although Georgia Perimeter College expects such amounts, if any, to beimmaterial to its overall financial position.

Litigation, claims and assessments filed against Georgia Perimeter College (an organizational unit ofthe Board of Regents of the University System of Georgia), if any, are generally considered to beactions against the State of Georgia. Accordingly, significant litigation, claims and assessmentspending against the State of Georgia are disclosed in the State of Georgia Comprehensive AnnualFinancial Report for the fiscal year ended June 30, 2013.

Note 13. Post-Employment Benefits Other Than Pension Benefits

Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31,the Board of Regents of the University System of Georgia has established group health and lifeinsurance programs for regular employees of the University System of Georgia. It is the policy of theBoard of Regents to permit employees of the University System of Georgia eligible for retirement orthat become permanently and totally disabled to continue as members of the group health and lifeinsurance programs. The policies of the Board of Regents of the University System of Georgia defineand delineate who is eligible for these post-employment health and life insurance benefits.Organizational units of the Board of Regents of the University System of Georgia pay the employerportion for group insurance for affected individuals. With regard to life insurance, the employercovers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental,and/or, dependent life insurance coverage, such costs are borne entirely by the employee.

The Board of Regents Retiree Health Benefit Plan is a single-employer, defined benefit plan.

Financial statements and required supplementary information for the Plan are included in thepublicly available Consolidated Annual Financial Report of the University System of Georgia. TheCollege pays the employer portion of health insurance for its eligible retirees based on rates that areestablished annually by the Board of Regents for the upcoming plan year. For the 2013 plan year,the employer rate was between 70-75% of the total health insurance cost for eligible retirees and theretiree rate was between 25-30%.


36/57



JUNE 30, 2013

- 22 -

As of June 30, 2013, there were 389 employees who had retired or were disabled that werereceiving these post-employment health and life insurance benefits. For the year endedJune 30, 2013, Georgia Perimeter College recognized as incurred $1,691,527 of expenditures,which was net of $674,065 of participant contributions.

Note 14. Natural Classifications with Functional Classifications

The College's operating expenses by functional classification for fiscal year 2013 are shown below:

Functional Classification

Public Academic Student Institutional

Natural Classification Instruction Service Support Services Support

Salaries

Faculty $ 31,516,585 $ 1,098,605 $ 79,494

Staff 8,849,881 $ 96,990 6,731,478 9,181,274 $ 6,475,492

Employee Benefits 9,922,463 2,001,362 2,675,423 3,431,145

Other Personal Services 702,950

Travel 48,774 2,688 27,416 78,822 38,831

Scholarships and Fellowships 372,231 129,935

Utilities 14,615 2,120 2,812 677,950

Supplies and Other Services 1,942,540 4,909 3,056,918 1,506,136 3,450,760

Depreciation 2,061,852 827,464 21,521 1,152,025

Total Operating Expenses $ 54,728,941 $ 104,587 $ 13,745,363 $ 13,675,417 $ 15,929,153

Functional Classification

Plant Operations Scholarships Total

and and Auxiliary Operating

Natural Classification Maintenance Fellowships Enterprises Expenses

Salaries

Faculty $ 50,613 $ 32,745,297

Staff $ 6,825,005 917,366 39,077,486

Employee Benefits 2,371,121 245,191 20,646,705

Other Personal Services -209,476 209,476 702,950

Travel 4,576 36,354 237,461

Scholarships and Fellowships $ 28,794,614 702,435 29,999,215

Utilities 2,671,847 3,582 3,372,926

Supplies and Other Services 1,708,676 1,147,238 12,817,177

Depreciation 1,381,298 2,025,311 7,469,471

Total Operating Expenses $ 14,753,047 $ 28,794,614 $ 5,337,566 $ 147,068,688


37/57



JUNE 30, 2013

- 23 -

Note 15. Affiliated Organizations

The Georgia Perimeter College Foundation, Inc. is a legally separate, tax exempt organization whoseactivities primarily support Georgia Perimeter College. This affiliated organization is considered a

potential component unit of the State of Georgia in accordance with GASB Statement No. 61, TheFinancial Reporting Entity: Omnibus - an amendment of GASB Statements No. 14 and No. 34, andGASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore,the financial statements of the affiliated organization are not included in these financial statements.Copies of the financial statements for the affiliated organization may be obtained from GeorgiaPerimeter College.


38/57



39/57

- 25 -

SUPPLEMENTARY INFORMATION


40/57


BALANCE SHEET (NON-GAAP BASIS)

BUDGET FUND

JUNE 30, 2013

SCHEDULE "1"

ASSETS

Cash and Cash Equivalents $ 3,704,720.85

Accounts Receivable

Federal Financial Assistance 883,204.27

Other 4,157,226.98

Prepaid Expenditures 24,593.29

Inventories 27,363.55

Total Assets $ 8,797,108.94

LIABILITIES AND FUND EQUITY

Liabilities

Accrued Payroll $ 217,990.86

Encumbrances Payable 873,052.83

Accounts Payable 1,414,339.19

Unearned Revenue 899,084.50

Other Liabilities 6,242.93

Total Liabilities $ 3,410,710.31

Fund Balances

Reserved

Department Sales and Services $ 560,724.59

Indirect Cost Recoveries 507,360.98

Technology Fees 617,359.12

Restricted/Sponsored Funds 402,015.09

Uncollectible Accounts Receivable 2,276,797.59

Tuition Carry-Over 979,502.74


Unreserved

Surplus 15,274.97

Total Fund Balances $ 5,386,398.63

Total Liabilities and Fund Balances $ 8,797,108.94

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.

- 26 -


41/57


SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)

BUDGET FUND


SCHEDULE "2"

VARIANCE -

FAVORABLE

BUDGET ACTUAL (UNFAVORABLE)

REVENUES

State Appropriation

State General Funds $ 45,018,238.00 $ 45,018,238.00 $ 0.00

Other Funds 122,274,503.00 115,944,963.34 -6,329,539.66

Total Revenues $ 167,292,741.00 $ 160,963,201.34 $ -6,329,539.66

ADJUSTMENTS AND PROGRAM TRANSFERS 0.00 11,277.62 11,277.62

CARRY-OVER FROM PRIOR YEARS

Transfers from Reserved Fund Balance 0.00 1,291,858.33 1,291,858.33

Total Funds Available $ 167,292,741.00 $ 162,266,337.29 $ -5,026,403.71

EXPENDITURES

Teaching $ 167,292,741.00 $ 158,107,942.54 $ 9,184,798.46

Excess of Funds Available over Expenditures $ 0.00 $ 4,158,394.75 $ 4,158,394.75

FUND BALANCE JULY 1

Reserved 2,683,278.53

Unreserved 222,917.50

ADJUSTMENTS

Prior Year Receivables/Revenues -163,416.32

Unreserved Fund Balance (Surplus) Returned

to Board of Regents - University System Office

Year Ended June 30, 2012 -222,917.50

Prior Year Reserved Fund Balance Included in Funds Available -1,291,858.33

FUND BALANCE JUNE 30 $ 5,386,398.63

SUMMARY OF FUND BALANCE

Reserved

Department Sales and Services $ 560,724.59

Indirect Cost Recoveries 507,360.98

Technology Fees 617,359.12

Restricted/Sponsored Funds 402,015.09

Uncollectible Accounts Receivable 2,276,797.59

Tuition Carry-Over 979,502.74


Total Reserved $ 5,371,123.66

Unreserved

Surplus 15,274.97

Total Fund Balance $ 5,386,398.63




- 27 -


42/57


STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE

(NON-GAAP BASIS) BUDGET FUND


Original Amended Final Current Year

Appropriation Appropriation Budget Revenues

Special unding Initiative

State AppropriationState General Funds $ 0.00 $ 0.00 $ 0.00 $ 0.00

Teaching

State Appropriation

State General Funds $ 54,432,172.00 $ 54,432,172.00 $ 45,018,238.00 $ 45,018,238.00

Other Funds 131,384,402.00 131,384,402.00 122,274,503.00 115,944,963.34

Total Teaching $ 185,816,574.00 $ 185,816,574.00 $ 167,292,741.00 $ 160,963,201.34

Total Operating Activity $ 185,816,574.00 $ 185,816,574.00 $ 167,292,741.00 $ 160,963,201.34




- 28 -


43/57

SCHEDULE "3"

Excess (Deficiency)

of Funds Available

Prior Year Adjustments and Total Variance Variance Over/(Under)

Carry-Over Program Transfers Funds Available Positive (Negative) Actual Positive (Negative) Expenditures

$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

$ 0.00 $ 0.00 $ 45,018,238.00 $ 0.00 $ 45,018,238.00 $ 0.00 $ 0.00

1,291,858.33 11,277.62 117,248,099.29 -5,026,403.71 113,089,704.54 9,184,798.46 4,158,394.75

$ 1,291,858.33 $ 11,277.62 $ 162,266,337.29 $ -5,026,403.71 $ 158,107,942.54 $ 9,184,798.46 $ 4,158,394.75

$ 1,291,858.33 $ 11,277.62 $ 162,266,337.29 $ -5,026,403.71 $ 158,107,942.54 $ 9,184,798.46 $ 4,158,394.75

Funds Available Compared to Budget Expenditures Compared to Budget

- 29 -


44/57


45/57

SCHEDULE "4"

Excess (Deficiency)

Early Return of Funds Available Ending Fund

Other Fiscal Year 2013 Over/(Under) Balance/(Deficit)

Adjustments Surplus Expenditures June 30 Reserved Surplus/(Deficit) Total

$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

-912,740.94 0.00 4,158,394.75 3,082,237.49 3,066,962.52 15,274.97 3,082,237.49

$ -912,740.94 $ 0.00 $ 4,158,394.75 $ 3,082,237.49 $ 3,066,962.52 $ 15,274.97 $ 3,082,237.49

$ -912,740.94 $ 0.00 $ 4,158,394.75 $ 3,082,237.49 $ 3,066,962.52 $ 15,274.97 $ 3,082,237.49

-111,487.56 0.00 0.00 27,363.55 27,363.55 0.00 27,363.55

1,024,228.50 0.00 0.00 2,276,797.59 2,276,797.59 0.00 2,276,797.59

$ 0.00 $ 0.00 $ 4,158,394.75 $ 5,386,398.63 $ 5,371,123.66 $ 15,274.97 $ 5,386,398.63

Summary of Ending Fund Balance

Reserved

Department Sales and Services $ 560,724.59 $ 560,724.59

Indirect Cost Recoveries 507,360.98 507,360.98

Technology Fees 617,359.12 617,359.12

Restricted/Sponsored Funds 402,015.09 402,015.09

Uncollectible Accounts Receivable 2,276,797.59 2,276,797.59

Tuition Carry-Over 979,502.74 979,502.74

Inventories 27,363.55 27,363.55

Unreserved

Surplus $ 15,274.97 15,274.97

Total Ending Fund Balance - June 30 $ 5,371,123.66 $ 15,274.97 $ 5,386,398.63

Analysis of Ending Fund Balance

- 31 -


46/57



47/57


RECONCILIATION OF BUDGET TO GAAP


SCHEDULE "5"

Presented below is a reconciliation of the fund balance of the Budget Fund, as reported on Schedule 1, to Net Position

of business-type activities, as reported on Exhibit A.

Total Fund Balances - Budget Fund - Non-GAAP Basis (Schedule "1") $ 5,386,398.63

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

different because:

Capital Assets used in Business-Type Activities are not reported in the Budget Fund. 157,330,187.96

Uncollectible accounts receivable are reported as an asset and reserved

fund balance in the Budget Fund and as a contra-asset account on

the Statement of Net Position. -2,276,797.59

Certain summer tuition and fees are reported as Unearned Revenues on the Statement

of Net Position but are not recognized as expenditures in the Budget Fund. -3,121,670.22

Agency Fund activities are not reported as a component of the Budget Fund.

Assets $ 3,076,200.85

Liabilities -3,076,200.85

Total Net Effect of Agency Fund Activity 0.00

Auxiliary Enterprises Fund activities are not reported as a component of the Budget Fund.

Assets $ 4,147,293.97

Liabilities -1,027,057.27

Total Net Effect of Auxiliary Enterprises Fund Activity 3,120,236.70

Endowment Fund activities are not reported as a component of the Budget Fund.

Assets $ 42,748.98

Liabilities 0.00

Total Net Effect of Endowment Fund Activity 42,748.98

Loan Fund activities are not reported as a component of the Budget Fund.

Assets $ 74,591.85

Liabilities 0.00

Total Net Effect of Loan Fund Activity 74,591.85

Student Activities Fund activities are not reported as a component of the Budget Fund.

Assets $ 1,081,862.89

Liabilities -163,231.42

Total Net Effect of Student Activity Fund Activity 918,631.47

The budgetary basis of accounting implemented by the State of Georgia

recognizes expenditures when encumbered. The following adjustments weremade to eliminate this activity for reporting on the Statement of Net Position.

Payables reported in the Budget Fund that are based on encumbrances

are eliminated for GAAP reporting. $ 873,052.83

Payables for goods and services provided in the current fiscal year reported

in the Budget Fund as encumbrances payable are reported as accounts

payable for GAAP reporting. -148,168.94

Reimbursement from grantors reported as revenues in the Budget Fund that are for

expenditures based on encumbrances are deferred for GAAP reporting. -206,092.53

Total Net Effect of Encumbrance Activity 518,791.36

Certain Liabilities are not due and payable in the current period and therefore are not

reported as liabilities in the Budget Fund.

Capital Leases Payable $ -77,941,783.14

2013-571-georgia perimeter college aud

Documents