2011-472-Board of Regents of The University System of GA Audit

BOARD OF REGENTS
OF THE UNIVERSITY
SYSTEM OF GEORGIA
UNIVERSITY SYSTEM
OFFICE (OVERSIGHT
UNIT)
REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED
JUNE 30, 2011
Georgia Department of
.Audits and .Accounts
Russell W. Hinton
State Auditor
BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA

UNIVERSITY SYSTEM OFFICE (OVERSIGHT UNIT)
-TABLE OF CONTENTS-
SECTION I
FINANCIAL
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS
AND SUPPLEMENTARY INFORMATION
REQUIRED SUPPLEMENTARY INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
BASIC FINANCIAL STATEMENTS
EXHIBITS
A
STATEMENT OF NET ASSETS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
STATEMENT OF CASH FLOWS
STATEMENT OF FIDUCIARY NET ASSETS

BOARD OF REGENTS RETIREE HEALTH BENEFIT FUND
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

NOTES TO THE FINANCIAL STATEMENTS
SCHEDULES
1
SCHEDULE OF FUNDING PROGRESS
34
SUPPLEMENTARY INFORMATION
2
3
4
5
BALANCE SHEET (NON-GMP BASIS) BUDGET FUND

SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT
(NON-GMP BASIS) BUDGET FUND
STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET
BY PROGRAM AND FUNDING SOURCE
STATEMENT OF CHANGES TO FUND BALANCE
BY PROGRAM AND FUNDING SOURCE
SCHEDULE OF APPROVED BUDGET
35
37
38
40
43

-TABLE OF CONTENTS-
SECTION I
FINANCIAL
SCHEDULES
7
8
9
10
SCHEDULE OF ALLOTMENTS TO UNITS OF THE UNIVERSITY SYSTEM OF

GEORGIA
ANALYSIS OF PRIOR YEAR'S SURPLUS FUNDS COLLECTED FROM
INSTITUTIONS
ANALYSIS OF EARLY REMITIANCE OF CURRENT YEAR SURPLUS FUNDS
COLLECTED FROM INSTITUTIONS
RECONCILIATION OF SALARIES AND TRAVEL
SECTION II
AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION Ill
CURRENT YEAR FINDINGS AND QUESTIONED COSTS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
44
46
47
49
SECTION I
FINANCIAL
DEPARTMENT OF AUDITS AND ACCOUNTS

270 Washington Street, S.W., Suite 1-156
Atlanta, Georgia 30334-8400
Russell W. Hinton
STATE AUDITOR
(404) 656-2174
December 20, 2011
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 COMBINED REPORT ON BASIC FINANCIAL STATEMENTS
AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying financial statements of the business-type activities and the
aggregate remaining fund information (Exhibits A through F) of the University System Office
(Oversight Unit) of the Board of Regents of the University System of Georgia, an organizational unit of
the State of Georgia, as of and for the year ended June 30, 2011. These financial statements are
the responsibility of the University System Office's management. 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 of material misstatement. An audit
includes consideration of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the University System Office's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a reasonable basis for our
opinion.
As discussed in Note 1, the financial statements of the University System Office are intended to
present the financial position and changes in financial position, and where applicable, 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 Office. They do not purport to, and do not, present fairly the
financial position and changes in financial position, and where applicable, cash flows of the State of
Georgia, in conformity with accounting principles generally accepted in the United States of America.
11ARL-62
In our opm1on, the basic financial statements referred to above present fairly, in all material
respects, the financial position of the business-type activities and aggregate remaining fund
information of the University System Office as of June 30, 2011, and the respective changes in
financial position, and where applicable, cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
Management's Discussion and Analysis and the Schedule of Funding Progress are not a part of the
basic financial statements but are required supplementary information required by accounting
principles generally accepted in the United States of America. We have applied certain limited
procedures, which consisted principally of inquiries of management regarding the methods of
measurement and presentation of this required supplementary information. However, we did not
audit this information and express no opinion on it.
Our audit was conducted for the purpose of forming an opinion on the basic financial statements of
the University System Office taken as a whole. The accompanying supplementary information
(Schedules 2 through 10) is presented for purposes of additional analysis and is not a required part
of the basic financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a whole.
Respectfully submitted,
~.J.~
ell W. Hinton, CPA, CGFM
e Auditor
RWH:as
11ARL-62
UNIVERSITY SYSTEM OFFICE

Management's Discussion and Analysis
Introduction
The University System Office of Georgia's Board of Regents was created in 1931 as part of a
reorganization of Georgia's state government. With this act, public higher education in Georgia was
unified for the first time under a single governing and management authority. The governor appoints
members to the Board, who each serve seven years. Today, the Board of Regents is composed of 18
members, five of whom are appointed from the state-at-large, and one from each of the 13
congressional districts. The Board elects a chancellor who serves as its chief executive officer and
the chief administrative officer of the University System.
The Board oversees 35 institutions: four research institutions, two regional universities, 13 state
universities, eight state colleges, and eight two-year colleges. In addition, one marine research
institute is governed by the Board. These institutions enroll more than 311,000 students and employ
approximately 13,000 faculty and 31,000 staff to provide teaching and related services to students
and the communities in which they are located.
The University System Office also serves as custodian of the Board of Regents Retiree Health Benefit
Fund, for University System of Georgia retiree health and life insurance benefits.
Overview of the Financial Statements and Financial Analysis
The University System Office is proud to present its financial statements for fiscal year 2011. The
emphasis of discussions about these statements will be on current year data. There are three
financial statements presented: the Statement of Net Assets; the Statement of Revenues, Expenses
and Changes in Net Assets; and the Statement of Cash Flows. This discussion and analysis of the
University System Office's financial statements provides an overview of its financial activities for the
year. Comparative data is provided for fiscal year 2011 and fiscal year 2010. As custodian of the
Board of Regents Retiree Health Benefit Fund, two additional statements are presented: the
Statement of Fiduciary Net Assets and the Statement of Changes in Fiduciary Net Assets.
Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the University System
Office as of the end of the fiscal year. The Statement of Net Assets is a point of time financial
statement. The purpose of the Statement of Net Assets is to present to the readers of the financial
statements a fiscal snapshot of the University System Office. The Statement of Net Assets presents
end-of-year data concerning Assets (current and noncurrent), Liabilities (current and noncurrent),
and Net Assets (assets minus liabilities). The difference between current and noncurrent assets will
be discussed in the Notes to the Financial Statements.
From the data presented, readers of the Statement of Net Assets are able to determine the assets
available to continue the operations of the University System Office. They are also able to determine
how much the University System Office owes vendors.
Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and
their availability for expenditure by the University System Office. Net assets are divided into three
major categories. The first category, invested in capital assets, net of debt, provides the University
System Office's equity in property, plant and equipment owned by the University System Office. The
next asset category is restricted net assets, which is divided into two categories, nonexpendable and
expendable. The corpus of nonexpendable restricted resources is only available for investment
purposes. Expendable restricted net assets are available for expenditure by the University System
Office but must be spent for purposes as determined by donors and/or external entities that have
placed time or purpose restrictions on the use of the assets. The final category is unrestricted net
assets. Unrestricted net assets are available to the University System Office for any lawful purpose of
the University System Office.
Statement of Net Assets, Condensed
June 30, 2011
Assets
Current Assets
Capital Assets, Net
Other Assets
June 30,2010
394,853,819
42,174,989
10,473,480
275,296,772
52,575,989
9,656,825
447,502,288
337,529,586
Liabilities
Current Liabilities
Noncurrent Liabilities
336,953,166
15,712,970
240,750,926
18,955,004
Total Liabilities
352,666,136
259,705,930
26,300,467
3,612,043
42,081,324
22,842,318
30,659,141
3,612,043
30,458,910
13,093,562
94,836,152
77,823,656
Total Assets
Net Assets
Invested in Capital Assets, Net of Debt
Restricted- Nonexpendable
Restricted - Expendable
Unrestricted
Total Net Assets
The total assets of the University System Office increased by $109,972,702. A review of the
Statement of Net Assets will reveal that the increase was primarily due to increases in Cash and
Cash Equivalents of $104,057,600 and Short-Term Investments of $17,734,363. These increases
are primarily related to the external portion of the Board of Regents investment pool funds. Capital
Assets, net decreased by $10,401,000 as depreciation expense and asset retirements outpaced
capital additions during fiscal year 2011.
The total liabilities for the year increased by $92,960,206. The combination of the increase in total
assets of $109,972,702 and the increase in total liabilities of $92,960,206 yields an increase in
total net assets of $17,012,496. The increase in total net assets is primarily in the category of
Unrestricted Net Assets, in the amount of $9,7 48,756.
ii
Statement ofRevenues, Expenses and Changes in Net Assets
Changes in total net assets as presented on the Statement of Net Assets are based on the activity
presented in the Statement of Revenues, Expenses and Changes in Net Assets. The purpose of the
statement is to present the revenues received by the University System Office, both operating and
nonoperating, and the expenses paid by the University System Office, operating and nonoperating,
and any other revenues, expenses, gains and losses received or spent by the University System
Office. Generally speaking operating revenues are received for providing goods and services to the
various customers and constituencies of the University System Office. 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 University System Office. Nonoperating revenues are
revenues received for which goods and services are not provided. For example state appropriations
are nonoperating because they are provided by the Legislature to the University System Office
without the Legislature directly receiving commensurate goods and services for those revenues.
Statement of Revenues, Expenses and Changes in Net Assets, Condensed
June 30, 2010
June 30, 2011

Operating Revenues
Operating Expenses
Operating Loss
289,723,663
410,155,840
245,694,038
370,473,530
-120,432,177
-124,779,492
137,363,195
Nonoperating Revenues and Expenses

Income (Loss) Before Other Revenues,
Expenses, Gains or Losses
16,931,018
Other Revenues, Expenses, Gains or Losses
138,371,177
81,478
13,591,685
5,591,885
Increase (Decrease) in Net Assets
17,012,496
19,183,570
Net Assets at Beginning of Year,

as Originally Reported
77,823,656
57,938,876
Prior Year Adjustments
701,210
Net Assets at Beginning of Year, Restated
77,823,656
58,640,086
Net Assets at End of Year
94,836,152
77,823,656
The Statement of Revenues, Expenses and Changes in Net Assets reflects a positive year with an
increase in the net assets at the end of the year. Some highlights of the information presented on
the Statement of Revenues, Expenses and Changes in Net Assets are as follows:
iii
Revenue by Source
For the Years Ended June 30, 2011 and June 30, 2010
June 30, 2011
June 30, 2010
Operating Revenue
$
Grants and Contracts
Sales and Services of Educational Departments
Other
9,242,521
33,268,749
247,212,393
8,382,332
30,665,389
206,646,317
289,723,663
245,694,038
140,436,697
9,595,523
1,591,416
150,891,111
2,251,405
1,228,354
151,623,636
154,370,870
81,478
5,591,885
441,428,777
405,656,793
Total Operating Revenue

Nonoperating Revenue
State Appropriations
Investment Inco me
Total Nonoperating Revenue
Capital Grants and Gifts
State
Total Revenues
Expenses (By Functional Classification)

For the Years Ended June 30, 2011 and June 30, 2010
June 30, 2010
June 30, 2011

Operating Expenses
Instruction
Research
Public Service
Academic Support
Student Services
Institutional Support
Scholarships and Fellowships
1,161,148
66,797
72,467,222
15,853,787
384,621
319,917,986
304,279
2,106,499
152,755
75,178,554
17,372,086
388,608
27 4,983,392
291,636
410,155,840
370,473,530
Nonoperating Expenses
Interest Expense (Capital Assets)
Other
799,065
13,461,376
965,135
15,034,558
Total Nonoperating Expenses
14,260,441
15,999,693
Total Expenses
424,416,281
386,4 73,223
Total Operating Expenses
iv
Operating revenues increased by $44,029,625 in fiscal year 2011. This was due primarily to an
increase in Other Operating Revenues.
Nonoperating revenues decreased by $2,747,234 for the year primarily due to a decrease of
$10,454,414 in State Appropriations and an increase of $6,433,041 in Federal Stimulus Revenues.
The compensation and employee benefits category decreased by $1,087,394 and primarily affected
the Institutional Support and Public Service categories. The decrease reflects the reduction in
workforce during fiscal year 2011.
Supplies and Services increased by $45,093,278 during the past year. The increase was primarily
associated with the increased health care claims due to a transition to self-funded programs during
fiscal year 2011.
Statement of Cash Flows
The final statement presented by the University System Office is the Statement of Cash Flows. The
Statement of Cash Flows presents detailed information about the cash activity of the University
System Office during the year. The statement is divided into five parts. The first part deals with
operating cash flows and shows the net cash used by the operating activities of the institution. The
second section reflects cash flows from noncapital financing activities. This section reflects the cash
received and spent for nonoperating, noninvesting, and noncapital financing purposes. The third
section deals with cash flows from capital and related financing activities. This section deals with the
cash used for the acquisition and construction of capital and related items. The fourth section
reflects the cash flows from investing activities and shows the purchases, proceeds, and interest
received from investing activities. The fifth section reconciles the net cash used to the operating
income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Assets.
Cash Flows for the Years Ended June 30, 2011 and 2010, Condensed
June 30, 2011
Cash Provided (Used) By:
Operating Activities
Noncapital Financing Activities
Capital and Related Financing Activities
Investing Activities
June 30, 2010
-99,807,500
211,209,319
-8,003,656
659,437
-137,912,646
198,671,246
-10,905,554
673,844
Net Change in Cash

Cash, Beginning of Year
104,057,600
162,737,393
50,526,890
112,210,503
Cash, End of Year
266,794,993
$ ==1=6=2=,7=3=7=,3=9=3
==========
Capital Assets
Since fiscal year 2006, the Georgia Public Telecommunications Commission ("the Commission")
transfers property and equipment to the University System Office through an intergovernmental
agreement. These assets are located at its tower sites throughout the State. In fiscal 2011,
additional equipment was transferred to the University System Office under this arrangement. The
value of the equipment transferred in fiscal 2011 was $81,478. The total value of the land, building
and equipment transferred to date is $44,490,058, and the accumulated depreciation is
$29,519,581, for a net book value of $14,970,477.
The transfer was required for the Commission to obtain the use of five-year, general obligation bonds
sold in the University System Office's name on behalf of the Commission. The Commission, an
authority created after 1967, cannot have bonds sold on its behalf. An intergovernmental agreement
has been executed between the Commission and the University System Office that allows the
Commission to utilize these funds for the digital conversion of the towers and antennae. The bonds
were sold September 7, 2005, and the agreement with the University System Office expires at the
end of the five-year period when the bonds are paid in full. All equipment will be transferred back to
the ownership of the Commission at the expiration of the intergovernmental agreement.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 10 in the Notes to the
Financial Statements.
Long-Term Liabilities
The University System Office had Long-Term Liabilities of $18,900,738 which $3,187,768 was
reflected as current liability at June 30, 2011.
For additional information concerning Long-Term Liabilities, see Notes 1 and 8 in the Notes to the
Financial Statements.
Health and Dental Insurance
The University System Office is the fiscal agent for health and dental insurance for all of the
institutions in the University System of Georgia. The financial information for all related health and
dental insurance transactions is included on the face of the statement in the Annual Financial
Report, including the liability for claims incurred but not reported. The summary information
regarding revenues, expenditures and the related liability for fiscal year 2011 is provided below:
vi
June 30, 2010
June 30, 2011

Employees;
Unpaid Claims and Claim Adjustments (Prior Year IBNR)
15,654,000
21,827,567
Incurred Claims and Claim Adjustments Expenses Provisions for Insured Events of the Current Year
239,141,227
181,684,842
Payments- Claims and Claim Adjustments Attributable

To Insured Events of the Current Year and Prior Years
231,506,052
187,858,409
Unpaid Claims and Claim Adjustments (Current Year IBNR)
23,289,175
15,654,000
Retirees:
6,756,000
6,626,917
Incurred Claims and Claim Adjustments ExpensesProvisions for Insured Events of the Current Year
103,337,394
93,786,415

102,553,611
93,657,332
7,539,783
6,756,000
=====
Retiree Health Benefit Fund
The University System Office is the custodian for the Board of Regents Retiree Health Benefit Fund.
This fund was authorized pursuant to Official Code of Georgia Annotated Section 47-21-21 for the
purpose of accumulating funds necessary to meet employer costs of retiree post-employment health
insurance benefits. Please see Note 14 for additional information.
Economic Outlook
The University System Office is not aware of any currently known facts, decisions, or conditions that
are expected to have a significant effect on the financial position or results of operations during this
fiscal year beyond those unknown variations having a global effect on virtually all types of business
operations. The University System Office's overall financial position is strong. Even with a relatively
flat funded year, the University was able to generate a modest increase in Net Assets. The University
anticipates the current fiscal year will be much like last and will maintain a close watch over
resources to maintain the University's ability to react to unknown internal and external issues.
John E. Brown, Vice Chancellor for Fiscal Affairs/Treasurer

The Board of Regents University System Office
vii
BASIC FINANCIAL STATEMENTS
-1-

STATEMENT OF NET ASSETS
EXHIBIT"A"
JUNE 30, 2011
ASS.EIS
Current Assets
cash and Cash Equivalents
266,794,993
99,957,909
Short-Term Investments
Accounts Receivable, Net (Note 3)
2,114,872
Receivables- Federal Financial Assistance

Receivables- Other
24,658,119
315,514
Due From Affiliated Organizations

Inventories (Note 4)
238,260
Prepaid Items
774,152
Total Current Assets
394,853,819
8,534,953
Noncurrent Assets
Investments (Externally Restricted)
Notes Receivable, Net
1,938,527
Capital Assets, Net (Note 6)
42,174,989
Total Noncurrent Assets
52,648,469
Total Assets
447,502,288
2,565,884
LIABILITIES
Current Liabilities
Accounts Payable
Salaries Payable
17,629
Benefits Payable
Deferred Revenue (Note 7)
23,289,175
163,967
Deposits Held for Other Organizations
307,728,743
Lease Purchase Obligations
1,234,184
Compensated Absences
1,953,584
Tota I Current Liabilities
336,953,166
14,640,338
Lease Purchase Obligations
1,072,632
Total Noncurrent Liabilities
15,712,970
Total Liabilities
352,666,136
26,300,467
NET ASSETS
Invested in Capital Assets, Net of Related Debt
Restricted for.
Non expendable
3,612,043
Expendable
42,081,324
Unrestricted
22,842,318
$ =....;;.94,;,;,,8;;,;3;.;;6,;,;;;,1;,;.5~2
Total Net Assets
The notes to the financial statements are an integral part of this statement.
-2-
EXHIBIT"B"

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 2011
OPERATING REVENUES
Federal
Sales and Services
9,242,521
33,268,749
Other Operating Revenues
247,212,393
Total Operating Revenues
$ _ _.:2=.:8:..:9..:..:,7..::2.::;3,~6=63=-
OPERATING EXPENSES
Salaries
Staff
Employee Benefits
27,158,180
7,378,684
Travel
387,054
304,279
Utilities
5,109,432
Supplies and Other Services
358,173,468
Depreciation
11,644,743
410,155,840
Operating Income (Loss)
-120,432,177
140,436,697
NONOPERATING REVENUES CEXPENSESl

Federal
730,663
Federal Stimulus
6,855,631
State
12,032
Other
1,997,197
Investment Income
1,591,416
Interest Expense
-799,065
Other Nonoperating Expenses
-13,461,376
Net Nonoperating Revenues
137,363,195
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
16,931,018
Capital Grants and Gifts

State
81,478
Increase in Net Assets
Net Assets- Beginning of Year
17,012,496
77,823,656
$ =~9~4~,8~3;,;;,6;;;;1;;;;52;;.
Net Assets - End of Year
The notes to the financial statements are an integral part of this statement
-3-
EXHIBIT"C"

STATEMENT OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
7,885,502
33,268,748
Sales and Services
-362,176,531
Payments to Suppliers
-27,690,195
Payments to Employees
-304,279
Payments for Scholarships and Fellowships
249,209,255
Other Receipts (Payments)

Net Cash Provided (Used) by Operating Activities
-99,807,500
140.436,697
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

74,638.475
Agency Funds Transactions
9,596,777
Gifts and Grants Received for Other than Capital Purposes
-13.462,630
Other Nonoperating Receipts
Net Cash Flows Provided (Used) by Noncapital Financing Activities
211,209.319
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Purchases of Capital Assets
-1,162,265
-6,189,074
Principal Paid on Capital Debt and Leases
-652.317
Interest Paid on Capital Debt and Leases

Net Cash Provided (Used) by Capital and Related Financing Activities
-8,003,656
-194,805
CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from Sales and Maturities of Investments
854,242
Interest on Investments
Net Cash Provided (Used) by Investing Activities
659.437
Net Increase (Decrease) in Cash
104,057,600
Cash and Cash Equivalents- Beginning of Year
162,737,393
Cash and Cash Equivalents- End of Year
266,794,993
-120.432,177
RECONCILIATION OF OPERATING LOSS TO NET CASH

PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss)
Adjustments to Reconcile Operating Income (Loss) to Net Cash
Provided (Used) by Operating Activities
Depreciation
11,644,743
Change in Assets and Liabilities:

Accounts Receivable, Net
823,607
-40,807
Inventories
1,378,173
Prepaid Items
Notes Receivable, Net
94,774
Accounts Payable
7,183,611
Deferred Revenue
-278,540
-180,884
Net Cash Provided (Used) by Operating Activities
NONCASH ACTIVITY
Change in Fair Value of Investments Recognized as a Component of Interest Income
Change in Accrued Interest Payable Affecting Interest Paid
Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts
-4-
-99,807,500
$ ====;7i=l3F;i;7~,1...
7 4;;=
$
146,748
$ ====;;8~1'7.4~78i'F
EXHIBIT"D"
UNIVERSITY SYSTEM OFFICE (OVERSIGHT UN In

STATEMENT OF FIDUCIARY NET ASSETS
JUNE 30, 2011
Cash and Cash Equivalents
3,534,978
Receivables
4,233,927
Employer
Total Assets
7,768,905
LIABILITIES
Accounts Payable
Benefits Payable
105,892
7,539,783
Total Liabilities
7,645,675
123,230
NET ASSETS
Net Assets Held in Trust for Other Post-Employment Benefits
-5-

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
EXHIBIT "E"
ADDITIONS
Contributions
Employer
80,261,907
Plan Member
25,770,842
Other
13,592,614
Total Contributions
119,625,363
Investment Income
386,488
lnteresVDividends
Total Additions
120,011,851
108,809,029
DEDUCTIONS
Benefits
Life Insurance Premium Expense
6,611,811
Administrative Expense
4,590,319
Total Deductions
120,011,159
Net Increase/Decrease
692
122,538
Beginning Net Assets
Net Assets Held in Trust for Other Post-Employment Benefits
-6-
123,230
=====

NOTES TO THE FINANOAL STATEMENTS
JUNE 30, 2011
EXHIBIT "F"
Note 1.. Summary ofSignificant Accounting Polides

Nature of Operations
The University System Office of Georgia's Board of Regents was created in 1931 as part of a
reorganization of Georgia's state government. With this act, public higher education in Georgia was
unified for the first time under a single governing and management authority. The governor appoints
members to the Board, who each serve seven years. Today, the Board of Regents is composed of 18
members, five of whom are appointed from the state-at-large, and one from each of the 13
congressional districts. The Board elects a Chancellor who serves as its chief executive officer and
the chief administrative officer of the University System.
The Board oversees 35 institutions: four research institutions, two regional universities, 13 state
universities, eight state colleges, and eight two-year colleges. In addition, one marine research
institute is governed by the Board. These institutions enroll more than 311,000 students and employ
approximately 13,000 faculty and 31,000 staff to provide teaching and related services to students
and the communities in which they are located.
The University System Office also serves as custodian of the Board of Regents Retiree Health Benefit
Fund, for University System of Georgia retiree health and life insurance benefits.
Reporting Entity
The University System Office is the administrative central office for the thirty-five (35) State
supported member institutions of higher education in Georgia and one marine research institute,
which comprise the University System of Georgia, an organizational unit of the State of Georgia. The
University System Office also is the custodian of a Fiduciary Fund for retiree health and life insurance
benefits. The accompanying financial statements reflect the operations of University System Office
as a separate reporting entity and as custodian of the Board of Regents Retiree Health Benefit Fund.
The Board of Regents has constitutional authority to govern, control and manage the University
System of Georgia. This authority includes but is not limited to the power to designate management,
the ability to significantly influence operations, the authority to control institutions' budgets, the
power to determine allotments of State funds to member institutions and the authority to prescribe
accounting systems and administrative policies for member institutions. The University System Office
does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year.
Accordingly, the University System Office is considered an organizational unit of the Board of Regents
of the University System of Georgia reporting entity for financial reporting purposes because of the
significance of its legal, operational, and financial relationships with the Board of Regents as defined
in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of
Governmental Accounting and Financial Reporting Standards.
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.
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 Office's assets, liabilities,
net assets, revenues, expenses, changes in net assets and cash flows.
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UNIVERSITY SYSfEM OFFICE (OVERSIGHT UNIT)
NOTES TO THE FINANOAL SfATEMENTS
JUNE 30, 2011
EXHIBIT "F"
Basis of Accounting
For financial reporting purposes, the University System Office is considered a special-purpose
government engaged in business-type and fiduciary activities. Accordingly, the University System
Office's financial statements have been presented using the economic resources measurement
focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when
earned, and expenses are recorded when an obligation has been incurred. All significant intrasystem transactions have been eliminated.
The University System Office has the option to apply all Financial Accounting Standards Board (FASB)
pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University
System Office has elected to not apply FASB pronouncements issued after the applicable date.
Cash and cash Equivalents
Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized
financial institutions, and cash management pools that have the general characteristics of demand
deposit accounts. This includes the Board of Regents Short-Term Investment Pool.
Short-Term Investments
Short-Term Investments consist of investments of 90 days - 13 months. This would include
certificates of deposits or other time restricted investments with original maturities of six months or
more when purchased. Funds are not readily available and there is a penalty for early withdrawal.
The Board of Regents Balanced Income Fund, the Board of Regents Total Return Fund, the Georgia
Extended Asset Pool, and portions of the Board of Regents Legal Fund and the Board of Regents
Diversified Fund, are included under Short-Term Investments.
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 Office accounts for its investments at fair value. Changes in
unrealized gain (loss) on the carrying value of investments are reported as a component of
investment income in the Statement of Revenues, Expenses and Changes in Net Assets. Portions of
the Board of Regents Legal Fund and the Board of Regents Diversified Fund are included under
Investments.
Accounts Receivable
Accounts receivable consists of amounts due from other institutions within the University System of
Georgia, primarily for health insurance premiums. Accounts receivable also includes amounts due
from the Federal government, state and local governments, or private sources, in connection with
reimbursement of allowable expenditures made pursuant to the University System Office's grants
and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories
Resale Inventories are valued at cost using the "first in, first out" (FIFO) basis.
Noncurrent Investments
Investments that are externally restricted and cannot be used to pay current liabilities are classified
as noncurrent assets in the Statement of Net Assets.
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JUNE 30, 2011
EXHIBIT "F"
Capital Assets
Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of
donation in the case of gifts. For equipment, the University System Office's capitalization policy
includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than
one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000
and/or significantly increase the value or extend the useful life of the structure are capitalized.
Routine repairs and maintenance are charged to operating expense in the year in which the expense
was incurred. Depreciation, which also includes amortization of intangible assets such as water,
timber, and mineral rights, easements, patents, trademarks, and copyrights, as well as software is
computed using the straight-line method over the estimated useful lives of the assets, generally 40
to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for
library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical
costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the
activities of the Georgia State Financing and Investment Commission (GSFIC) - an organization that
is external to the System. GSFIC issues bonds for and on behalf of the State of Georgia, pursuant to
powers granted to it in the Constitution of the State of Georgia and the Act creating the GSFIC. The
bonds so issued constitute direct and general obligations of the State of Georgia, to the payment of
which the full faith, credit and taxing power of the State are pledged.
For projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout
the construction period and transfers the entire project to the University System Office when
complete. For the year ended June 30, 2011, GSFIC transferred equipment for the Georgia Public
Telecommunications Commission to the University System Office valued at $81,4 78.
Deposits
The University System Office had $307,728,7 43 in Deposits Held for Other Organizations as of June
30, 2011. Deposits held for others consist of the external portion of the University System of
Georgia's Pooled Investment Fund program and other funds held by the University System Office as
an agent for various governments or individuals.
Deferred Revenues
Deferred revenues also include amounts received from grant and contract sponsors that have not
yet been earned.
Employee vacation pay is accrued at year-end for financial statement purposes. The liability and
expense incurred are recorded at year-end as compensated absences in the Statement of Net
Assets, and as a component of compensation and benefit expense in the Statement of Revenues,
Expenses and Changes in Net Assets. University System Office had accrued liability for compensated
absences in the amount of $3,207,100 as of July 1, 2010. For fiscal year 2011, $1,828,561 was
earned in compensated absences and employees were paid $2,009,445, for a net decrease of
$180,884. The ending balance as of June 30, 2011 in accrued liability for compensated absences
was $3,026,216.
Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital
lease obligations with contractual maturities greater than one year; and (3) other liabilities that,
although payable within one year, are to be paid from funds that are classified as noncurrent assets.
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JUNE 30, 2011
EXHIBIT "F"
Net Assets
The University System Office's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University System Office's total
investment in capital assets, net of outstanding debt obligations related to those capital assets. To
the extent debt has been incurred but not yet expended for capital assets, such amounts are not
included as a component of invested in capital assets, net of related debt. The term "debt
obligations" as used in this definition does not include debt of the GSFIC as discussed previously in
Note 1 - Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment
and similar type funds in which donors or other outside sources have stipulated, as a condition of
the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for
the purpose of producing present and future income, which may either be expended or added to
principal. The University System Office may accumulate as much of the annual net income of an
institutional fund as is prudent under the standard established by Code Section 44-15-7 of
Annotated Code of Georgia.
Restricted net assets- expendable: Restricted expendable net assets include resources in which the
University System Office is legally or contractually obligated to spend resources in accordance with
restrictions imposed by external third parties.
Expendable Restricted Net Assets include the following:

Restricted - E&G and Other Organized Activities
Health Insurance Reserve (USO only)
14,190,983
27,890,341
42,081,324
Total Restricted Expendable
======
Unrestricted net assets: Unrestricted net assets represent resources derived from state
appropriations, and sales and services of educational departments. These resources are used for
transactions relating to the educational and general operations of the University System Office, and
may be used at the discretion of the governing board to meet current expenses for those purposes,
except for unexpended state appropriations (surplus). Unexpended state appropriations must be
remitted to the Office of the State Treasurer. At June 30, 2011, there was a surplus balance of
$24,596.58 to be refunded.
Unrestricted Net Assets includes the following items which are quasi-restricted by management.
Reserve for Encumbrances
Other Unrestricted
Total Unrestricted Net Assets
10,006,087
12,836,231
$ ===2=2==,8=4=2=,3=1=8
When an expense is incurred that can be paid using either restricted or unrestricted resources, the
University System Office's policy is to first apply the expense towards unrestricted resources, and
then towards restricted resources.
Income Taxes
The University System Office, as a political subdivision of the State of Georgia, is excluded from
Federal income taxes under Section 115(1) of the Internal Revenue Code, as amended.
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JUNE 30, 2011
EXHIBIT "F"
Classification of Revenues and Expenses

The Statement of Revenues, Expenses and Changes in Net Assets classify fiscal year activity as
operating and nonoperating according to the following criteria:
Operating Revenues. Operating revenue includes activities that have the characteristics of exchange
transactions, such as (1) certain Federal, state and local grants and contracts, (2) sales and
services, and (3) health insurance premiums received from institutions within the University System
of Georgia for self-insured health plans offered.
Nonoperating Revenues. Nonoperating revenue includes activities that have the characteristics of
nonexchange transactions, such as gifts and contributions, and other revenue sources that are
defined as nonoperating 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 Expenses. Operating expense includes activities that have the characteristics of exchange
transactions.
Nonoperating Expenses. Nonoperating expense includes activities that have the characteristics of
nonexchange transactions, such as capital financing costs and costs related to investment activity.
Note 2. Deposits and Investments

Deposits
The custodial credit risk for deposits is the risk that in the event of a bank failure, the University
System Office's deposits may not be recovered. Funds belonging to the State of Georgia (and thus
the University System Office) cannot be placed in a depository paying interest longer than ten days
without the depository providing a surety bond to the State. In lieu of a surety bond, the depository
may pledge as collateral any one or more of the following securities as enumerated in the Official
Code of Georgia Annotated Section 50-17-59:
1.
Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United
States or of the State of Georgia.
2.
Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or

municipalities of the State of Georgia.
3.
Bonds of any public authority created by the laws of the State of Georgia, providing that the
statute that created the authority authorized the use of the bonds for this purpose.
4.
Industrial revenue bonds and bonds of development authorities created by the laws of the
State of Georgia.
5.
Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary

corporation of the United States government, which are fully guaranteed by the United States
government both as to principal and interest and debt obligations issued by the Federal Land
Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank
for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and
the Federal National Mortgage Association.
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JUNE 30, 2011
6.
EXHIBIT "F"
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, 2011, the carrying value of deposits was $44,390,926 and the bank balance was
$46,637,143. Of the University System Office's deposits, $46,582,286 was uninsured. Of these
uninsured deposits, $46,582,286 were collateralized with securities held by the financial institution,
by its trust department or agency, but not in the University System Office's name.
Investments
The University System Office serves as fiscal agent for various units of the University System of
Georgia and cooperative organizations. The University System Office pools the monies of these
organizations with the University System Office's monies for investment purposes. The University
System Office cannot allocate pool investments between the internal (University System) and
external (cooperative organizations) investment pool portions. The investment pool is not registered
with the SEC as an investment company. The fair value of the investments is determined daily. The
pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair
value along with a pro rata share of the interest that it earns.
The University System Office maintains investment policy guidelines for each pooled investment fund
that is offered to qualified University System participants. These policies are intended to foster sound
and prudent responsibility each institution has to the citizens of Georgia and which conforms to the
Board of Regents investment policy. All investments must be consistent with donor intent, Board of
Regents policy, and applicable Federal and state laws.
Units of the University System of Georgia and their affiliated organizations may participate in the
Pooled Investment Fund program. The overall character of the pooled fund portfolio should be one of
above average quality, possessing at most an average degree of investment risk.
Short-Term Fund
The Short-Term fund provides a current return and stability of principal while affording a means of
overnight liquidity for projected cash needs. The investment maturities of the fund will range
between daily and two years.
Legal Fund
The Legal fund provides an opportunity for greater income and modest principal growth to the extent
possible with the securities allowed under Georgia Code 50-17-59 and 50-17-63. The average
maturity of this fund will typically range between five and ten years, with a maximum of thirty years
for any individual investment. The overall character of the portfolio should be one of treasury and
agency quality, possessing virtually no degree of financial risk.
Balanced Income Fund
The Balanced Income fund is designed to be a vehicle to invest funds that are not subject to the
state regulations concerning investing in equities. This fund is comprised of fixed income, equity and
cash equivalent instruments.
The equity allocation range shall be between 30% and 40%, with a target of 35% of the total
portfolio. The fixed income (bond) portion of the portfolio shall be between 60% and 70%, with a
target of 65% of the total portfolio. Reserves for contingencies and stock and bond purchases are
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JUNE 30, 2011
EXHIBIT "F"
expected to comprise the balance of the fund. Reserves and excess income should be invested at all
times in practical amounts. Reserves can be invested in high quality institutional money market
mutual funds or other high quality, short-term instruments.
Total Return Fund
The Total Return fund is another pool designed to be a vehicle to invest funds that are not subject to
state regulations concerning investing in equities. This pool offers the greatest percentage of overall
equity exposure, with well over half of the funds typically invested in equities.
The equity allocation range shall be between 60% and 70%, with a target of 65% of the total
portfolio. The fixed income (bond) portion of the portfolio shall be between 30% and 40%, with a
target of 35% of the total portfolio. Reserves for contingencies and stock and bond purchases are
expected to comprise the balance of the fund. Reserves and excess income should be invested at all
times in practical amounts. Reserves can be invested in high quality institutional money market
mutual funds or other high quality, short-term instruments.
Diversified Fund
The Diversified fund is designed to gain further diversification and increase exposures to assets that
have lower correlation to equity and bond markets by utilizing alternative asset classes. In addition,
this fund is constructed to build an optimal portfolio where return is increased and risk is reduced.
The equity allocation range shall be between 50% and 75% of the portfolio. The fixed income (bond)
portion of the portfolio shall be between 20% and 40%. The portfolio may also consist of Hedge
Funds, Real Estate and Venture Capital/Private Equity/Post Venture Capital.
Hedge Funds- The investment approach to this asset class is to use a multi-strategy, multi-manager
fund of hedge funds. The Board of Regents believes that a fund of fund strategy will provide the best
access to a highly diversified pool of hedge fund strategies and managers.
Real Estate - The Board of Regents' approach to investing in this asset class is to use real estate
investment trusts (REITs). REITs are more liquid than owning commercial real estate and
diversification can be achieved by purchasing a mutual fund.
Venture Capital/Private Equity/Post Venture Capital - This asset class is the riskiest and most
volatile permitted investment opportunity. This asset should be considered as an additional
diversification investment strategy due to the low correlation with stock and bonds.
Reserves for contingencies and stock and bond purchases are expected to comprise the balance of
the fund. Reserves and excess income should be invested at all times in practical amounts.
Reserves can be invested in high quality, institutional money market mutual funds or other high
quality, short-term instruments.
-13-

UNIVERSITY SYSTEM OFFICE (OVERSIGHT UNm
JUNE 30, 2011
EXHIBIT "F"
The University System Office's investments as of June 30, 2011 are presented below. All
investments are presented by investment type and debt securities are presented by maturity.
Investment Maturity
Investment Type
Fair
Less Than
Value
1 Year
More than
1-5 Years
6 -10years
10Years
Debt Securities
U. S. Treasuries
1,761,396
1,761,396
U. S. Agencies
Explicitly Guaranteed
22,637,078
Implicitly Guaranteed
186,342,567
Mutual Bond Fund
14,680,558
Repurchase Agreements
33,179,642
258,601,241
17,617,012
7,075,202
19,959,431
5,020,066
14,568,314
144,739,620
14,323,778
356,780
48,270,500
$ 150,116,466
33,179,642
40,254,844
19,959,431
Other Investments
Bond/Equity Mutual Funds
16,902,856
Equity Mutual Funds
3,833,718
Equity Securities- Domestic
52,726,233
Real Estate Investment Fund

Total Investments
2,367,859
334,431,907
Interest Rate Risk

Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect
the fair value of an investment. The University System Office's 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.
1. In all the other pooled funds, the average maturity of the fixed income portfolio shall not
exceed ten years.
2. 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.
3. 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.
Credit Quality Risk
Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. The University System Office's policy for managing credit quality risk is contained in the
investment policy guidelines for the various pooled investment funds:
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JUNE 30, 2011
EXHIBIT "F"
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.
Custodial Credit Risk
Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a
transaction, the college/university will not be able to recover the value of the investment or collateral
securities that are in the possession of an outside party. The University System Office's policy for
managing custodial credit risk for investments is:
1. The University System Office has appointed a Federally regulated banking institution as
custodian. The custodian performs its duties to the standards of a professional custodian
and is liable to the University System Office for claims, losses, liabilities and expenses
arising from its failure to exercise ordinary care, its willful misconduct, or its failure to
otherwise act in accordance with the contract.
2. All securities transactions are to be settled on a delivery vs. payment basis through an
approved depository institution such as the Depository Trust Company or the Federal
Reserve.
3. Repurchase agreements are to be collateralized by United States Treasury securities at
102% of the market value of the investment at all times.
At June 30, 2011, $316,981,858 of the University System Office's applicable investments were
uninsured and held by the investment's counterparty in the University System Office's name.
Credit Quality Risk
Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. The University System Office's policy for managing credit quality risk is contained in the
investment policy guidelines for the various pooled investment funds:
1. In all pooled funds except the Diversified Fund, all debt issues must be eligible investments
under Georgia Code 50-17-63. Portfolios of debt security funds also must meet the eligible
investment criteria under the same code section.
2. The Diversified Fund is permitted to invest in noninvestment grade debt issues up to a limit
of 15% of the entire portfolio.
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EXHIBIT "F"

JUNE 30, 2011
The investments subject to credit quality risk are reflected below:

Fair Value
Related Debt Investments
U. S. Agencies
$
Mutual Bond Fund
Repurchase Agreements- Underlying
U. S. Agency Securities
186,342,567 $
14,680,558
33,179,642
234,202,767 $
Unrated
186,342,567
14,680,558
33,179,642
234,202,767
Concentration of Credit Risk

Concentration of credit risk is the risk of loss attributed to the magnitude of a government's
investment in a single issuer. The University System Office's policy for managing concentration of
credit risk is to diversify investments to the extent that any single issuer shall be limited to 5% of the
market value in a particular investment fund. The following U.S. Agency investments exceeded 5% of
the total reported investment amount as of June 30, 2011:
Investment:
%of Total
Amount:
Federal National Mortgage Association

Federal Home Loan Mortgage Corporation
Repurchase Agreements
!Shares Equity Securities
$
$
$
$
127,429,943
57,387,491
33,179,642
26,636,415
38%
17%
10%
8%
Condensed financial information for the investment pool is as follows:

Statement of Net Assets -June 30. 2011
Assets
Investments
Accrued Interest and Other Receivables
$ 331,263,633
709,287
$ 331,972,920
Net Assets Held in Trust for Pool Participants

Internal Portion
External Portion
24,542,581
307,430,339
$ 331,972,920
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EXHIBIT "F"

JUNE 30, 2011
Statement of Changes in Net Assets- For the Year Ended June 30. 2011
Revenues
Interest Income
Net Increase in Fair Value of Investments
8,621,379
10,663,752
Total Revenues
19,285,131
Expenses
Operating Expenses
Administrative Expenses
-517,600
18,767,531
Net Increase in Assets Resulting from Operations
-37,124,890
101,215,266
Distribution to Participants
Capital Transactions
82,857,907
Total Increase in Assets Resulting from Operations
249,115,013
Net Assets July 1, 2010

Net Assets June 30, 2011
331,972,920
Note 3. Accounts Receivable

Accounts receivable consisted of the following at June 30, 2011:
Federal Financial Assistance
Other
2,114,872
25,013,350
27,128,222
39,717
27,088,505
238,260
Less Allowance for Doubtful Accounts

Net Accounts Receivable
Note 4. Inventories
Inventories consisted of the following at June 30, 2011:
Other
Note 5. Notes/Loans Receivable

The Georgia Education Authority (University), (GEA (U)), was authorized to acquire, construct and
operate housing accommodations for students of any institution under the control of the Board of
Regents of the University System of Georgia. The GEA (U) constructed a dormitory on the campus of
Georgia Southern University (GSOU) and financed the construction by obtaining a loan in 1994 from
the U.S. Department of Education in the amount of $3,000,000 at an interest rate of 5.5% for a term
of thirty years. In July 2007, GEA (U) met and resolved to no longer conduct business as a state
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NOTES TO THE ANANOAL STATEMENTS
JUNE 30, 2011
EXHIBIT "F"
authority and dispose of all its assets and liabilities. As a result of that decision, a Note Receivable
that is payable from GSOU was transferred by Resolution from GEA (U) to the University System
Office (USO) in fiscal year 2008. GSOU has an obligation to send the USO annual payments of
$205,320 through the year 2025. In fiscal year 2011, the University System Office collected
$205,320, $110,546 of which represented interest. Total principal collected on the Note Receivable
was $94,774. At June 30, 2011, the Notes Receivable balance was $1,938,527. There is no
allowance for doubtful collection.
Note 6. Capital Assets
Following are the changes in capital assets for the year ended June 30, 2011:
Beginning
Ending
Balance
Balance
July 1, 2010
Additions
June 30, 2011
Reductions
capital Assets, Not Being Depreciated:

Land
capitalized Collections
Total capital Assets, Not Being Depreciated
2,427,424 $
0 $
0 $
10,000
2,437,424 $
2,427,424
10,000
0 $
0 $
2,437,424
Capital Assets, Being Depreciated:

Building and Building Improvements
217,978
Equipment
61,084,125 $
capital Leases
50,940,061
Software
13,995,316
Total Assets Being Depreciated
126,237,480 $
$
1,243,743 $
217,978
741,281
61,586,587
148,452
50,791,609
13,995,316
1,243,743 $
889,733 $
126,591,490
Less: Accumulated Depreciation:

Building and Building Improvements
4,905 $
4,905
9,810
Equipment
39,352,521
5,762,158 $
615,162
44,499,517
Capital Leases
30,298,870
4,859,852
274,571
34,884,151
6,442,619
1,017,828
Software
Total Accumulated Depreciation
7,460,447
76,098,915 $
11,644,743 $
889,733 $
86,853,925
Total capital Assets, Being Depreciated, Net
50,138,565 $
-10,401,000 $
0 $
39,737,565
capital Assets, Net
52,575,989 $
-10,401,000 $
0 $
42,174,989
Since fiscal year 2006, the Georgia Public Telecommunications Commission ("the Commission")
transfers property and equipment to the University System Office through an intergovernmental
agreement. These assets are located at its tower sites throughout the State. In fiscal year 2011,
additional equipment was transferred to the University System Office under this arrangement. The
value of the equipment transferred in fiscal year 2011 was $81,478. The total value of the land,
building and equipment transferred to date is $44,490,058, and the accumulated depreciation is
$29,519,581, for a net book value of $14,970,477.
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NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2011
EXHIBIT "F"
Note 7. Deferred Revenue
Deferred revenue consisted of the following at June 30, 2011:

$
Other Deferred Revenue
163,967
--===="""'==
Note B. Long-Term Uabilities
Long-Term liability activity for the year ended June 30, 2011 was as follows:
Beginning
Ending
Balance
Balance
Current
June 30, 2011
Portion
July 1, 2010
Additions
Reductions
Leases
Lease Obligations
21,916,848 $
146,748 $
6,189,074 $
15,874,522 $
1,234,184
Other Uabilities
Total Long-Term Obligations
3,207,100
25,123,948 $
1,828,561
2,009,445
1,975,309 $
8,198,519 $
3,026,216
18,900,738 $
1,953,584
3,187,768
Note 9. Significant Commitments
The University System Office had no significant unearned, outstanding, construction or renovation
contracts as of June 30, 2011.
Note ~0. Lease Obligations
The University System Office is obligated under various capital leases for the acquisition of real
property and equipment
CAPITAL LEASES
Capital leases are generally payable in installments ranging from monthly to annually and have
terms expiring in various years between 2012 and 2030. Expenditures for fiscal year 2011 were
$6,841,391 of which $652,317 represented interest. Total principal paid on capital leases was
$6,189,07 4 for the fiscal year ended June 30, 2011. Interest rates range from 2.62 percent to
14.02 percent. The following is a summary of the carrying values of assets held under capital lease
at June 30, 2011:
Land
Buildings
Equipment
Total Assets Held Under Capital Lease
-19-
50,600
9,827,752
3,343,983
13,222,335
============

JUNE 30, 2011
EXHIBIT "F"
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.
In April 2010, the University System Office entered into a capital lease with a third party for the
Shared Services Center in the amount of $3,578,343. The leased assets include land and a building
located in Sandersville, Georgia. The lease expires in January, 2030, with an interest rate of 4%.
Payments on the lease do not begin until the sixth year of the twenty year lease term. The
outstanding principal balance as of June 30, 2011 was $3,760,874 due to the addition of
$146,748 in capitalized interest to the principal balance.
The University System Office also has various capital leases for equipment and a capital lease for
one building with outstanding balances at June 30, 2011 in the amount of $1,085,919 and
$11,027,729, respectively.
OPERATING LEASES
The University System Office has one operating lease for office space used by the Georgia Public
Library System. The lease term begins in fiscal year 2011 and is annually renewable through fiscal
year 2020.
FUTURE COMMITMENTS
Future commitments for capital leases and for noncancellable operating leases having remaining
terms in excess of one year as of June 30, 2011, were as follows:
Real Property and Equipment
Capital
Operating
Leases
Leases
Year Ending June 30:
2012
2013
2014
2015
2016
2017-2021
2022-2026
2027-2030
Total Minimum Lease Payments
1,789,225 $
1,385,257
1,122,054
1,187,038
1,494,761
7,727,750
5,942,326
1,456,875
183,540
183,540
183,540
189,060
194,800
839,660
22,105,286 $
1,774,140
Less: Interest
Principal Outstanding
6,230,764
$
15,874,522
======
The University System Office's fiscal year 2011 expense for rental of real property and equipment
under operating leases was $1,452,772.
-20-

JUNE 30, 2011
EXHIBIT "F"
Note 11. Retirement Plans

The University System Office 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 Office participates in are described below.
More detailed information can be found in the plan agreements and related legislation. Each plan,
including benefit and contribution provisions, was established and can be amended by State law.
Employees' Retirement System of Georgia

The ERS System is comprised of individual retirement systems and plans covering substantially all
employees of the State of Georgia except for teachers and other employees covered by the Teachers
Retirement System of Georgia. One of the ERS System plans, the Employees' Retirement System of
Georgia (ERS), is a cost-sharing multiple-employer defined benefit pension plan that was established
by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing
retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is
directed by a Board of Trustees and has the powers and privileges of a corporation. ERS acts
pursuant to statutory direction and guidelines, which may be amended prospectively for new hires
but for existing members and beneficiaries may be amended in some aspects only subject to
potential application of certain constitutional restraints against impairment of contract.
On November 20, 1997, the Board created the Supplemental Retirement Benefit Plan (SRBP-ERS) of
ERS. SRBP-ERS was established as a qualified governmental excess benefit plan in accordance with
Section 415 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of the SRBP-ERS is
to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by
IRC Section 415. Beginning January 1, 1998, all members and retired former members in ERS are
eligible to participate in the SRBP-ERS whenever their benefits under ERS exceed the limitation on
benefits imposed by IRC Section 415.
The benefit structure of ERS is established by the Board of Trustees under statutory guidelines.
Unless the employee elects otherwise, an employee who currently maintains membership with ERS
based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to
the plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to
January 1, 2009 are "new plan" members subject to the modified plan provisions. Effective January
1, 2009, newly hired State employees, as well as rehired State employees who did not maintain
eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and
Savings Plan (GSEPS). ERS members hired prior to January 1, 2009 also have the option to change
their membership to the GSEPS plan.
Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirement
benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of
creditable service regardless of age. Additionally, there are some provisions allowing for early
retirement after 25 years of creditable service for members under age 60.
-21-

JUNE 30, 2011
EXHIBIT "F"
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 Office pays member contributions in excess of 1.25% of annual
compensation. Under the old plan, these University System Office 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 Office 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 Office contributions are not at any time refundable to the
member or his/her beneficiary.
Employer contributions required for fiscal year 2011 were based on the June 30, 2008 actuarial
valuation for the old and new plans and were set by the Board of Trustees on September 18, 2008
for GSEPS as follows:
Old Plan*
New Plan
GSEPS
10.41%
10.41%
6.54%
* 5.66% 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, 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.
-22-

JUNE 30, 2011
EXHIBIT "F"
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 are also
available.
TRS is funded by member and employer contributions as adopted and amended by the Board of
Trustees. Members become fully vested after 10 years of service. If a member terminates with less
than 10 years of service, no vesting of employer contributions occurs, but the member's
contributions may be refunded with interest. Member contributions are limited by State law to not
less than 5% or more than 6% of a member's earnable compensation. Member contributions as
adopted by the Board of Trustees for the fiscal year ended June 30, 2011 were 5.25% of annual
salary. The member contribution rate will increase to 5.53% effective July 1, 2011. Employer
contributions required for fiscal year 2011 were 9. 7 4% of annual salary as required by the June 30,
2008 actuarial valuation. The employer contribution rate increased to 10.28% effective July 1, 2011.
The following table summarizes the University System Office contributions by defined benefit plan for
the years ending June 30, 2011, June 30, 2010, and June 30, 2009 (dollars in thousands):
ERS
Fiscal Year
2011
2010
2009
TRS
Required
Percentage
Required
Percentage
Contribution
Contributed
Contribution
Contributed
$
$
$
72,484
55,733
62,341
100%
100%
100%
$
$
$
2,083,786
2,235,964
2,085,313
100%
100%
100%
Regents Retirement Plan

Plan Description
The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement
plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. and
administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a)
defines who may participate in the Regents Retirement Plan. An "eligible university system
employee" is a faculty member or a principal administrator, as designated by the regulations of the
Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity
contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the
purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed
to the plan plus investment earnings. Benefits are payable to participating employees or their
beneficiaries in accordance with the terms of the annuity contracts.
-23-

JUNE 30, 2011
EXHIBIT "F"
Funding Policy
The University System Office makes monthly employer contributions for the Regents Retirement Plan
at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance
with State statute and as advised by their independent actuary. For fiscal year 2011, the employer
contribution was 9.24% for the participating employee's earnable compensation. Employees
contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully
vested and nonforfeitable at all times.
The University System Office and the covered employees made the required contributions of
$323,952 (9.24%) and $173,900 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which
may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description
The University System Office participates in the Georgia Defined Contribution Plan (GDCP) which is a
single-employer defined contribution plan established by the General Assembly of Georgia for the
purpose of providing retirement coverage for State employees who are temporary, seasonal, and
part-time and are not members of a public retirement or pension system. GDCP is administered by
the Board of Trustees of the Employees' Retirement System of Georgia.
Benefits
A member may retire and elect to receive periodic payments after attainment of age 65. The
payment will be based upon mortality tables and interest assumptions to be adopted by the Board of
Trustees. If a member has less than $3,500 credited to his/her account, the Board of Trustees has
the option of requiring a lump sum distribution to the member in lieu of making periodic payments.
Upon the death of a member, a lump sum distribution equaling the amount credited to his/her
account will be paid to the member's designated beneficiary. Benefit provisions are established by
State statute.
Contributions
Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer
contributions. Contribution rates are established by State statute. Earnings are credited to each
member's account in a manner established by the Board of Trustees. Upon termination of
employment, the amount of the member's account is refundable upon request by the member.
Total contributions made by employees during fiscal year 2011 amounted to $29,890 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 selfinsured healthcare plan options. A PPO/PPO Consumer healthcare plan was offered for the entire
reporting period, and effective 01/01/2011, a HSA/High Deductible PPO and a HMO are also
-24-

JUNE 30, 2011
EXHIBIT "F"
offered on a self-insured basis. The HSA/High Deductible PPO and HMO were previously insured
through Blue Cross Blue Shield of Georgia. The University System Office and participating employees
and retirees pay premiums to either of the self-insured healthcare plan options to access benefits
coverage. The respective self-insured healthcare plan options are included in the financial
statements of the Board of Regents of the University System of Georgia - University System Office.
All units of the University System of Georgia share the risk of loss for claims associated with these
plans. The reserves for these 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
WeiiPoint, to serve as the claims administrator for the self-insured healthcare plan products. In
addition to the self-insured healthcare plan options offered to the employees of the University
System of Georgia, a fully insured HMO healthcare plan option is also offered to System employees
through Kaiser.
The prescription drug plan is administered through Medea 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 Medea
Health Solutions for verification, processing and payment. Medea Health Solutions maintains an
eligibility file based on information furnished by Blue Cross - Blue Shield on behalf of the various
organizational units of the University System of Georgia.
A reconciliation of total estimated claims liabilities for employees and retirees for the fiscal years
ended June 30, 2011 and June 30, 2010 is shown below:
June 30, 2011
Employees;
15,654,000
June 30, 2010

$
21,827,567
239,141,227
181,684,842

231,506,052
187,858,409
23,289,175
15,654,000
Retirees:
6,756,000
6,626,917
103,337,394
93,786,415

102,553,611
93,657,332
-25-
7,539,783
6,756,000
=====

JUNE 30, 2011
EXHIBIT "F"
The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of
making and carrying out decisions that will minimize the adverse effects of accidental losses that
involve State government assets. The State believes it is more economical to manage its risks
internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of
loss to which the State is exposed, including general liability, property and casualty, workers'
compensation, unemployment compensation, and law enforcement officers' indemnification. Limited
amounts of commercial insurance are purchased applicable to property, employee and automobile
liability, fidelity and certain other risks. The University System Office, as an organizational unit of the
Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity,
and as such, is covered by the State of Georgia risk management program administered by DOAS.
Premiums for the risk management program are charged to the various state organizations by DOAS
to provide claims servicing and claims payment.
A self-insured program of professional liability for its employees was established by the Board of
Regents of the University System of Georgia under powers authorized by the Official Code of Georgia
Annotated Section 45-9-1. The program insures the employees to the extent that they are not
immune from liability against personal liability for damages arising out of the performance of their
duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance
Fund.
Note 13. Contingendes
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 disallowed
under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be
determined at this time although the University System Office expects such amounts, if any, to be
immaterial to its overall financial position.
Litigation, claims and assessments filed against the University System Office (an organizational unit
of the Board of Regents of the University System of Georgia), if any, are generally considered to be
actions against the State of Georgia. Accordingly, significant litigation, claims and assessments
pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual
Financial Report for the fiscal year ended June 30, 2011.
Note 14. Post-Employment Benefits Other Than Pension Benefits
The Board of Regents Retiree Health Benefit Fund (the "Plan") is a single-employer, defined benefit,
healthcare plan administered by the University System Office. The plan was authorized pursuant to
Official Code of Georgia Annotated Section 47-21-21 for the purpose of accumulating funds
necessary to meet employer costs of retiree post-employment health insurance benefits.
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31,
the Board of Regents of the University System of Georgia has established group health and life
insurance programs for regular employees of the University System of Georgia. It is the policy of the
Board of Regents to permit employees of the University System of Georgia eligible for retirement or
that become permanently and totally disabled to continue as members of the group health and life
insurance programs. The policies of the Board of Regents of the University System of Georgia define
and delineate who is eligible for these post-employment health and life insurance benefits.
-26-

JUNE 30, 2011
EXHIBIT "F"
The Board of Regents of the University System of Georgia issues a publicly available financial report
that includes financial statements and required supplementary information for the Plan within its
Consolidated Annual Financial Report. This report may be obtained at the following website address:
http://www.usg.edu/fiscal affairs/reporting/annual fin rep/.
Membership of the plan consisted of the following at June 30, 2011:
Retirees and Beneficiaries Receiving Benefits
Terminated Plan Members Entitled To But Not Yet Receiving Benefits
Active Plan Members
18,840
0
41,779
Total
60,619
=====
Summary of Significant Accounting Policies

The financial statements of the Plan are prepared using the accrual basis of accounting. Employer
contributions are recognized in the period in which they are due. Benefits and refunds are
recognized when due and payable in accordance with the terms of the plan.
Funding Policy
The contribution requirements of plan members and the University System of Georgia, as employer,
are established and may be amended by the Board of Regents. The Plan is substantially funded on a
"pay-as-you-go" basis; however, amounts above the pay-as-you-go basis may be contributed annually,
either by specific appropriation or by Board designation.
Organizational units of the Board of Regents of the University System of Georgia pay the employer
portion for group insurance for eligible retirees. The employer portion of health insurance for its
eligible retirees is based on rates that are established annually by the Board of Regents for the
upcoming plan year. For the 2011 plan year, the employer rate was between 70-75% of the total
health insurance cost for eligible retirees and the retiree rate was between 25-30%. With regard to
life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual
elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne
entirely by the retiree.
For fiscal year 2011, the University System of Georgia contributed $80,261,907 to the plan, for
current premiums or claims. Plan members receiving benefits contributed $25,770,842 for current
premiums or claims.
As of June 30, 2011, there were 90 employees who had retired or were disabled that were receiving
these post-employment health and life insurance benefits. For the year ended June 30, 2011, the
University System Office recognized as incurred $437,835 of expenditures, which was net of
$157,621 of participant contributions.
Annual OPEB Cost and Net OPEB Obligation
The University System of Georgia's annual other post-employment benefit (OPEB) cost (expense) is
calculated based on the annual required contribution of the employer (ARC), an amount actuarially
determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of
funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize
any unfunded actuarial liabilities over a period not to exceed thirty years.
-27-

JUNE 30, 2011
EXHIBIT "F"
The following table shows the components of the University System's annual OPEB cost for fiscal
year 2011, the amount actually contributed to the plan, and changes in the University System's net
OPEB obligation to the Retiree Health Benefit Fund (dollar amounts in millions):
$
Annual Required Contribution

Interest on Net 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
411.5
31.5
-45.3
397.7
-80.2
317.5
699.9
Net OPEB Obligation - End of Year
1,017.4
=====
Since the net OPEB obligation to the Retiree Health Benefit Fund is a liability of the entire University
System and not only the University System Office, the annual OPEB cost and net OPEB obligation are
reported in the Consolidated Annual Financial Report of the University System of Georgia.
The University System's annual OPEB cost, the percentage of annual OPEB cost contributed to the
plan, and the net OPEB obligation for the Retiree Health Benefit Plan for the current and past two
fiscal years were as follows (dollar amounts in millions):
Annual OPEB Cost and Net OPEB Obligation
Fiscal
Year
Ended
Percentage
of Annual
OPEB Cost
Contributed
Annual
OPEB
Cost*
$
$
$
2009
2010
2011
346.9
374.3
397.7
Net
OPEB
Obligation
25.7%
18.7%
20.2%
$
$
$
395.5
699.9
1,017.4
Funded Status and Funding Progress

Actuarial
Actuarial
Actuarial
Value of
Accrued
Unfunded AAL
Funded
Annual
Percentage
Valuation
Assets
Liability
(UAAL)
Ratio
Covered Payroll
Payroll
Date
(a)
(b)
(b-a)
(a/b)
(c)
((b-a)/c)
of Covered
$
$
0.0%
137.3%
3,118,942,000
0.3%
$
$
2,372,385,000
3,129,508,000
$
$
3,257,910,000
10,566,000
$
$
3,258,200,000
7/1/2009
2,399,532,000
130.0%
7/1/2010
122,538
3,384,099,942
3,383,977,404
0.0%
2,432,366, 796
139.1%
7/1/2008
290,000
-28-

JUNE 30, 2011
EXHIBIT "F"
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts
determined regarding the funded status of the plan and the annual required contributions of the
employer are subject to continual revision as actual results are compared with past expectations and
new estimates are made about the future. The schedule of funding progress, presented as required
supplementary information following the notes to the financial statements, presents multiyear trend
information about whether the actuarial value of plan assets is increasing or decreasing over time
relative to the actuarial accrued liabilities for benefits.
Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan
as understood by the employer and the plan members) and include the types of benefits provided at
the time of each valuation and the historical pattern of sharing of benefit costs between the
employer and plan members to that point. The actuarial methods and assumptions used include
techniques that are designed to reduce the effects of short-term volatility in actuarial accrued
liabilities and the actuarial value of assets, consistent with the long-term perspective of the
calculations. Additional information as of the latest actuarial valuation follows:
Valuation date
Actuarial cost method
Amortization method
Asset Valuation method
Remaining amortization period
Actuarial assumptions:
Investment rate of return*
Healthcare cost trend rate*
Ultimate trend rate
Year of Ultimate trend rate
July 1, 2010
Projected Unit Credit
Level Dollar, Closed, 30 year
Market Value of Assets
27 years
4.50%
8.25%
4.50%
2027
* Includes an inflation assumption of 2.5%

Please note that the Investment Rate of Return percentage can change.
-29-
EXHIBIT "F"

JUNE 30, 2011
Note 15. Natural Classifications with Functional Classifications

The University System Office's operating expenses by functional classification for fiscal year 2011
are shown below:
Functional Classification
Natural Classification
Instruction
Research
Public
Academic
Service
Support
Salaries
Staff
46,176
13,619
Employee Benefits
Travel
2,150,399 $
1,032,626
564,890
287,148
49,811
17,874

Utilities
1,100,296 $
1,057
Depreciation
66,797
1,161,148 $
66,797 $
1,103,495
7,228
68,486,584
13,929,040
112,043
579,871
72,467,222 $
====
15,853,787
Functional Classification
Natural Classification
Scholarships
Total
Student
Institutional
and
Operating
Services
Support
Fellowships
Expenses
Salaries
Staff
316,598 $
68,023
Employee Benefits
23,612,381
387,054
$

Utilities
Depreciation
304,279
304,279
3,998,709
5,109.432
274,590,751
358,173.468
10,951,772
11,644,743
384,621 $ 319,917,986 $
====
27,158,180
7,378,684
319,369
Travel
6,445,004
304,279 $
410,155,840
Note 16. Affiliated Organizations

In accordance with GASB Statement No. 39, Determining Whether Certain Organizations are
Component Units, the University System of Georgia Foundation, Inc. has been determined to be a
legally separate, tax exempt organization whose activities primarily support the University System
Office of the Board of Regents of the University System of Georgia (an organizational unit of the State
of Georgia). The State Accounting Office has determined Component Units of the State of Georgia,
as required by GASB Statement No. 39, should be assessed in relation to their significance to the
State of Georgia. Accordingly, the University System Office has not included financial activity for the
University System of Georgia Foundation, Inc., in these financial statements.
-30-

JUNE 30, 2011
EXHIBIT "F"
The University System of Georgia Foundation, Inc. has been determined significant to the State of
Georgia for the year ended June 30, 2011, and as such, is reported as a discretely presented
component unit in the Comprehensive Annual Financial Report of the State of Georgia (CAFR). The
significant discretely presented component units issue separate audited financial statements that
can be obtained from the Board of Regents of the University System of Georgia.
-31-
(This page left intentionally blank)
-33-

SCHEDULE '1'

Actuarial
Value of
Assets
(a)
Actuarial
Valuation
Date
July 1, 2008
July 1, 2009
July 1, 2010
Actuarial
Accrued
Liability (AAL)
Projected Unit
Credit
(b)
$
$
$
290,000
10,566,000
122,538
$
$
$
3,258,200,000
3,129,508,000
3,384,099,942
Unfunded AAL
(UAAL)
(b-a)
$
$
$
3,257,910,000
3,118,942,000
3,383,977,404
Funded
Ratio
(a/b)
0.0%
0.3%
0.0%

SCHEDULE OF EMPLOYER CONTRIBUTIONS
Required
Contribution
Fiscal Year
2009
2010
2011
$
$
$
349,500,000
381,678,000
411,575,899
-34-
Percentage
Contributed
25.5%
18.3%
19.5%
Covered Payroll
(C)
$
$
$
2,372,385,000
2,399,532,000
2,432,366, 796
UAALas a
Percentage
of Covered
Payroll
((b-8)/C)
137.3%
130.0%
139.1%

SCHEDULE "2"
BALANCE SHEET (NON-GAAP BASIS)

BUDGET FUND
JUNE 30, 2011
Cash and Cash Equivalents
25,698,738.10
3,597,992.86
Investments
Accounts Receivable
Federal Financial Assistance
2,114,872.43
Other
1,629,134.87
Prepaid Expenditures
158,449.33
Inventories
238,260.16
$ =~3;.;3;,;.,4;.;3.;,7;.;,4,;,4,;.;7.;,75;;,.
Total Assets
LIABILITIES AND FUND EQUITY

Liabilities
Encumbrances Payable
9,892, 767.92
444,820.08
Accounts Payable
17,629.37
Accrued Payroll
163,966.63
Deferred Revenue
Total Liabilities
10,519,184.00
6,691,739.30
Fund Balances
Reserved
Departmental Sales and Services
639,729.60
Indirect Cost Recoveries
8,490,587.97
Restricted/Sponsored Funds
39,716.59
Uncollectible Accounts Receivable
238,260.16
Inventories
6, 793,633.55
Property Sale
Unreserved
24,596.58
Surplus
Total Fund Balances
Total Liabilities and Fund Balances
$ =~3;:;;;3;:.,4;,;;3;,;,7,;.;,4;.;4,;,7;,;,7;,5
Actual amounts were prepared on a prescribed basis of accounting that demonstrates

compliance with budgetary statutes and regulations of the State of Georgia, which is a
comprehensive basis of accounting other than generally accepted accounting principles.
-35-
22,918,263.75

UNIVERSITY SYSTEM OFFICE (OVERSIGHT UNID
SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND
ORIGINAL
BUDGET
State Appropriation
State General Funds
Tobacco Funds
Federal Funds
Other Funds
Total Revenues
AQJUSTMENTS ANP PROGRAM TRANSFERS
SCHEDULE "3"
FINAL
BUDGET
VARIANCEFAVORABLE
(UNFAVORABLE)
ACTUAL
14B,173,520.00 $
750,000.00
169,566.00
35,751,599.00
140,793,499.00 $
0.00
7,479,155.00
55,344,016.00
140,793,499.00 $
0.00
7,477,292.13
46,237,675.49
0.00
0.00
-1,862.87
-9,106,340.51
184,844,685.00
203,616,670.00
194,508,466.62 $
-9,108,203.38
0.00
0.00
0.00
0.00
0.00
1,500,000.00
22,625,160.17
21,125,160.17
205,116,670.00 $
217,133,626.79
12,016,956.79
CARRY-OVER FRoM PRIOR YEARS

Transfers from Reserved Fund Balance
184,844,685.00 $
Total Funds Available

EXPENDITURES
Georgia Health Sciences University Hospital and Clinics
Georgia Military College
Georgia Public Telecommunications
Public Libraries
Regents Central Office
Research Consortium
Special Funding Initiative
Teaching
Total
31,709,393.00
2.424,555.00
14,130,921.00
39,573,819.00
5,998, 764.00
1.500,000.00
3,490,270.00
86.016,963.00
Expend~ures
Excess of Funds Available over Expenditures
30.441,017.00 $
2,393,133.00
13,462,630.00
39,559,037.11
5, 775,270.98
750,000.00
4,576,141.93
97,445,230.65
30,441,017.00
2,393,133.00
13,467.718.00
40,149,362.00
5,783,997.00
750,000.00
4, 736,915.00
107,394,528.00
184,844,685.00
205,116,670.00 $
0.00
0.00 $
194,402,460.67
22,731.166.12 $
FUND BALANCE JULY 1

Reserved
Unreserved
22,862,329.91
187,870.38
ADJUSTMENTS
Prior Year Payables/Expend~ures
Prior Year Receivables/Revenues
Unreserved Fund Balance (Surplus) Returned
to Office of the State Treasurer
Year Ended June 30. 2010
Unreserved Fund Balance (Surplus) Returned
to Board of Regents- University System Office
Year Ended June 30, 2010
Early Remittance of Surplus Returned to
Office of the State Treasurer
Early Rem~nce of SUrplus Returned to
Board of Regents - University System Office
Prior Year Reserved Fund Balance Included in Funds Available
84,139.58
34,719.58
-3,041,609.43
2,853, 739.05
-1,094,608.16
925,676.89
-22,625,160.17
FUNP 8ALANCE JUNE 30
22,916,263.75
SUMMARY OF FUND BALANCE
Reserved
6,691, 739.30
639,729.60
8,490,587.97
39,716.59
238,260.16
6, 793,633.55
Inventories
Property Sale
Total Reserved
22,893,667.17
Unreserved
Surplus
24,596.58
Total Fund Balance

-37-
22,918,263.75
0.00
0.00
5,088.00
590,324.89
8,726.02
0.00
160,773.07
9,949,297.35
10,714,209.33
22,731,166.12

STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(NON-GAAP BASIS) BUDGET FUND
Original
Appropriation
Amended
Appropriation
Final
Budget
Current Year
Revenues

State Appropriation
State General Funds
31,709,393.00 $
30,441,017.00 $
30,441,017.00 $
30,441,017.00

State Appropriation
State General Funds
2,424,555.00 $
2,393,133.00 $
2,393,133.00 $
2,393,133.00

State Appropriation
State General Funds
14,125,833.00 $
5,088.00
13,462,630.00 $
5,088.00
13,462,630.00 $
5,088.00
13,462,630.00
0.00
14,130,921.00 $
13,467,718.00 $
13,467,718.00 $
13,462,630.00
35,051,419.00 $
4,522,400.00
33,649,362.00 $
7 ,334, 708.00
33,649,362.00 $
6,500,000.00
33,649,362.00
5,911,770.93
Total Public Libraries
39,573,819.00 $
40,984,070.00 $
40,149,362.00 $
39,561,132.93

State Appropriation
State General Funds
5,998,764.00 $
5,783,997.00 $
5,783,997.00 $
5, 783,997.00
750,000.00 $
750,000.00
750,000.00 $
750,000.00 $
750,000.00
Other Funds
Total Georgia Public Telecommunications
Public Libraries
State Appropriation
State General Funds
Other Funds
Research Consortium
State Appropriation
State General Funds
Tobacco Funds
0.00
0.00
0.00
Total Research Consortium
1,500,000.00 $
750,000.00 $
750,000.00 $
750,000.00

State Appropriation
State General Funds
3,490,270.00 $
3,249,524.00 $
4,736,915.00 $
3,236,915.00
54,623,286.00 $
42,618,045.00 $
51,076,445.00 $
51,076,445.00
169,566.00
31,224,111.00
27,867,968.00
53,788,420.00
7,479,155.00
48,838,928.00
40,325,904.56
Teaching
State Appropriation
State General Funds
Federal Funds
American Recovery and Reinvestment Act
Federal Stabilization Funds
Other Funds
7,477,292.13
Total Teaching
86,016,963.00 $
124,274,433.00 $
107,394,528.00 $
98,879,641.69
Total Operating Activity
184,844,685.00 $
221,343,892.00 $
205,116,670.00 $
194,508,466.62

-38-
SCHEDULE "4"
Funds Available Compared to Budget

Adjustments and
Prior Year
Total
Carry-{)ver
Program Transfers
Funds Available
Variance
Positive (Negative)
Expenditures Compared to Budget

Variance
Positive (Negative)
Actual
Excess (Deficiency)
of Funds Available
Over/(Under)
Expenditures
0.00$
0.00$
30,441,017.00 $
0.00$
30,441,017.00 $
0.00 $
0.00
0.00$
0.00$
2,393,133.00 $
0.00$
2,393,133.00 $
0.00 $
0.00
0.00$
0.00
0.00$
0.00
13,462,630.00 $
0.00
0.00$
-5,088.00
13,462,630.00 $
0.00
0.00 $
5,088.00
0.00
0.00
0.00$
0.00$
13,462,630.00 $
-5,088.00$
13,462,630.00 $
5,088.00 $
0.00
0.00 $
0.00
0.00$
0.00
33,649,362.00 $
5,911, 770.93
0.00$
-588,229.07
33,647,266.18 $
5,911,770.93
2,095.82 $
588,229.07
2,095.82
0.00
0.00$
0.00$
39,561,132.93 $
-588,229.07 $
39,559,037.11 $
590,324.89 $
2,095.82
0.00$
0.00$
5,783,997.00 $
0.00$
5, 775,270.98 $
8,726.02 $
8,726.02
0.00$
0.00
0.00$
0.00
750,000.00 $
0.00
0.00$
0.00
750,000.00 $
0.00
0.00 $
0.00
0.00
0.00
0.00$
0.00$
750,000.00 $
0.00$
750,000.00 $
0.00 $
0.00
1,500,000.00 $
0.00$
4,736,915.00 $
0.00$
4,576,141.93 $
160,773.07 $
160,773.07
0.00$
69,620.33 $
51,146,065.33 $
69,620.33$
51,076,228.44 $
216.56 $
69,836.89
0.00
21,125,160.17
0.00
-69,620.33
7,477,292.13
61,381,444.40
-1,862.87
12,542,516.40
7,477,292.13
38,891,710.08
1,862.87
9,94 7,217.92
0.00
22,489,734.32
21,125,160.17 $
0.00$
120,004,801.86 $
12,610,273.86 $
97,445,230.65 $
9,949,297.35 $
22,559,571.21
22,625,160.17 $
0.00$
217,133,626.79 $
12,016,956.79 $
194,402,460.67 $
10,714,209.33 $
22,731,166.12
-39-

STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(NON-GAAP BASIS) BUDGET FUND
Fund Balance
Beginning Fund
Balance/(Deficlt)
July 1
Carried Over from

Prior Period
as Funds Available
Return of
Fiscal Year 2010
Surplus
Prior Period
Adjustments
Geor&la Health Sciences University Hospital and Clinics

State Appropriation
State General Funds
0.00 $
0.00$
0.00$
0.00

State Appropriation
State General Funds
0.00 $
0.00$
0.00$
0.00
0.00 $
0.00
0.00 $
0.00
0.00 $
0.00
0.00
0.00
0.00 $
0.00$
0.00$
0.00
7,733.01 $
0.00
0.00$
0.00
-7,733.01 $
0.00
1,746.86
Total Public Libraries
7,733.01 $
0.00$
-7,733.01 $
1,746.86
Re&ents Central Office

State Appropriation
State General Funds
7,165.00 $
0.00 $
-7,165.00 $
0.00
Research Consortium
State Appropriation
State General Funds
Tobacco Funds
0.00 $
0.00
0.00$
0.00 $
0.00
0.00
0.00
0.00
Total Research Consortium
0.00 $ --------~0~.00~$ ________~0.~00~$ ____~0.=00~
Geor&la Public Telecommunications

State Appropriation
State General Funds
Other Funds
Total Georgia Public Telecommunications

Public Libraries
State Appropriation
State General Funds
Other Funds
0.00
Special Fundln& lnltletlve

State Appropriation
State General Funds
1,500,317.62 $
-1,500,000.00 $ -------=3:.:1:;,;7:::;62~$
17,186.81
Teach In&
State Appropriation
State General Funds
Federal Funds
172,654.75 $
0.00$
172,654.75 $
92,800.16
American Recovery and Reinvestment Act

Federal Stabilization Funds
0.00
21,125,160.17
Other Funds
0.00
21,125,160.17
Total Teaching
21,297,814.92 $
21,125,160.17 $
Total Operating Activity
22,813,030.55 $
22,625,160.17 $
0.00
0.00
0.00
7,125.33
-172,654.75 $
99,925.49
-187,870.38 $
118,859.16
Prior Year Reserves

Not Available for Expenditure
Inventories
197,453.15
39,716.59
Budget Unit Totals
23,050,200.29 $

compliance with budgetary statutes and regulations of the State of Georgia, which Is a
40
0.00
0.00
-22,625,160.17 $
0.00
0.00
-187,870.38 $
0.00
0.00
118,859.16
SCHEDULE "5"
Excess (Deficiency)
Fiscal Year 2011
of Funds Available
Over/(Under)
Surplus
Expenditures
Early Return
Other
Adjustments
Ending Fund
Balance/(Deficit)
June 30
Analysis of Ending Fund Balance
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
0.00 $
0.00
0.00 $
0.00
0.00 $
0.00
0.00 $
0.00
0.00 $
0.00
0.00 $
0.00
0.00
0.00
0.00 $
0.00 $
0.00$
0.00 $
0.00 $
0.00 $
0.00
0.00 $
0.00
0.00 $
0.00
2,095.82 $
0.00
3,842.68 $
0.00
0.00 $
0.00
3,842.68 $
0.00
3,842.68
0.00
0.00 $
0.00$
2,095.82 $
3,842.68 $
0.00 $
3,842.68 $
3,842.68
0.00 $
-8,726.02 $
8.726.02 $
0.00 $
0.00 $
0.00 $
0.00
0.00 $
0.00
0.00$
0.00
0.00 $
0.00
0.00 $
0.00
0.00 $
0.00
0.00 $
0.00
0.00
0.00
0.00 $
0.00 $
0.00 $
0.00 $
0.00 $
0.00 $
0.00
0.00 $
-17,186.81 $
160,773.07 $
160,773.07 $
159,637.78 $
1,135.29 $
160,773.07
0.00 $
-143,018.44 $
69,836.89 $
19,618.61 $
0.00 $
19,618.61 $
19,618.61
0.00
-40,807.01
0.00
0.00
0.00
22,489,734.32
0.00
22,456,052.64
0.00
22.456,052.64
0.00
0.00
0.00
22.456,052.64
-40,807.01 $
-143,018.44 $
22,559,571.21 $
22.475,671.25 $
22,456,052.64 $
19,618.61 $
22.475,671.25
-40,807.01 $
-168,931.27 $
22.731,166.12 $
22,640,287.00 $
22,615,690.42 $
24,596.58 $
22,640,287.00
238,260.16
39.716.59
238,260.16
39.716.59
22,918,263.75 $
22,893.667.17 $
40,807.01
0.00
0.00$
0.00
0.00
0.00
0.00
-168,931.27 $
22,731,166.12 $
0.00
0.00
24,596.58 $
238,260.16
39.716.59
22,918,263.75
Summary of Ending Fund Balance

Reserved
Inventories
Property Sale
6,691,739.30
639,729.60
8,490,587.97
39,716.59
238,260.16
6, 793,633.55
Unreserved
Surplus
Total Ending Fund Balance -June 30
6,691.739.30
639,729.60
8,490,587.97
39.716.59
238,260.16
6, 793,633.55
24,596.58
22,893,667.17 $
-41-
24,596.58 $
24,596.58
22,918,263.75

SCHEDULE OF APPROVED BUDGET
ORIGINAL
APPROPRIATION
FINAL
APPROVED
BUDGET
SCHEDULE "6"
LESS:
BUDGET
TRANSFERS
TO OTHER UNITS
TOTAL
REVENUES
State Appropriation
Federal Funds
Other Funds
Total Revenues
1,923,161,990.00 $
23,186,142.00
3,319,119,332.00
1,811,374,050.00 $
0.00
4,683, 740,258.00
1,670,580,551.00 $
0.00
4,620,917,087.00
140,793,499.00
0.00
62,823,171.00
5,265,467,464.00 $
6,495,114,308.00 $
6,291,497,638.00 $
203,616,670.00
CABBY-OVEB EBQM PRIQB YEMlS

Transfers from Reserved Fund Balance
Total Funds Available
0.00
1,500,000.00
0.00
1,500,000.00
5,265,467,464.00 $
6,496,614,308.00 $
6,291,497,638.00 $
205,116,670.00
21,109,317.00 $
73,920,508.00
4,944,522.00
55,724,403.00
963,721.00
6,693,471.00
31,709,393.00
2,424,555.00
14,130,921.00
3,625,810.00
155,029,215.00
1,267,266.00
2,628,939.00
10,354,093.00
39,573,819.00
5,998,764.00
16,740,062.00
5,44 7,212.00
16,854,211.00
4, 783,469,826.00
2,763,992.00
10,093,444.00
19,884,886.00 $
90,319,893.00
7,633,077.00
63,4 77,863.00
1,158,134.00
12,704,265.00
30,441,017.00
2,393,133.00
13,467,718.00
3,625,810.00
231,784,765.00
1,539,577.00
3,054, 733.00
9,652,634.00
40,149,362.00
5, 783,997.00
15,140,552.00
19,884,886.00 $
90,319,893.00
7,633,077.00
63,477,863.00
1,158,134.00
12,704,265.00
0.00
0.00
0.00
0.00
0.00
0.00
EXPENDITUBES
Advanced Technology Development
Center/Economic Development Institute
Agricultural Experiment Station
Athens and Tifton Veterinary Laboratories
Cooperative Extension Service
Forestry Cooperative Extension
Forestry Research
Georgia Radiation Therapy Center
Georgia Tech Research Institute
Marine Institute
Marine Resources Extension Center
Payments to Georgia Cancer Coalition
Public Libraries
Research Consortium
Skidaway Institute of Oceanography
Teaching
Veterinary Medicine Experiment Station
Veterinary Medicine Teaching Hospital
Total Expenditures
5,265,467,464.00 $
See Notes to the financial statements

-43-
6,106,116.00
17,572,084.00
5,906,637,486.00
2,653,432.00
11,433,774.00
6,496,614,308.00 $
0.00
0.00
30,441,017.00
2,393,133.00
0.00
3,625,810.00
231,784,765.00
1,539,577.00
3,054, 733.00
9,652,634.00
0.00
0.00
14,390,552.00
6,106,116.00
12,835,169.00
5, 799,242,958.00
2,653,432.00
11,433,774.00
13,467,718.00
0.00
0.00
0.00
0.00
0.00
40,149,362.00
5, 783,997.00
750,000.00
0.00
4,736,915.00
107,394,528.00
0.00
0.00
6,291,497,638.00 $
205,116,670.00
BOARD Of REGENTS OF THE UNIVERSilY SYSTEM OF GEORGIA

UNNERSilY SVSTEM OFFICE (OVERSIGHT UNIT)
SCHEDULE OF ALLOTMENTS TO UNITS OF THE UNIVEASilY SVSTEM OF GEORGIA
ADVANCED
TECHNOLOGY
DEVELOPMENT
CENTER/
ECONOMIC
DEVELOPMENT
INSTITUTE
AGRICULTURAL
EXPERIMENT
STATION
COOPERATIVE
EXTENSION
SERVICE
FORESTRY
COOPERATIVE
EXTENSION
FORESTRY
RESEARCH
GEORGIA
HEALTH
SCIENCES
UNNERSilY
HOSPITAL
AND
CLINICS
GEORGIA
TECH
RESEARCH
INSTITUTE
RESEARCH INSJITUTIONS
Georgia Health Science University
Georgia lnatitute of Technology
Georgia State University
University of Georgia
30,441,017.00
7,808,944.00
5,866,807.00
35,212,885.00 $
29,614,855.00 $
535,535.00 $
2,633,323.00
35,212,885.00 $
29.614,855.00 $
535,535.00 $
2,633,323.00 $
REGIONAl. UNIVERSITIES
Georgia Southern University
Valdoata State University
SJAIE UNIVERSITIES
Albany State University
Armatrong Atlantic State Univeraity
Augusta State University
Clayton State University
Columbus State University
Fort Valley State University
Georgia College and State University
Georgia Southwestern State University
Kennesaw State University
North Georgia College and State University
Savannah State University
Southern Polytechnic State University
University of West Georgia
STATE COLLEGE$
Abraham Baldwin Agricultural College
College of Coastal Georgia
Dalton State College
Gainesville State College
Georgia Gwinnett College
Gordon Col~ge
Macon State College
Middle Georgia College
TWO-YEAR COli EGE$
Atlanta Metropolitan College
Bainbridge College
Darton College
Eut Georgia College
Georgia Highlands Col~ge
Georgia Perimeter College
South Georgia College
Waycross College
QIIIEI!
Skidaway Institute of Oceanography
7,808,944.00 $
See notes to the financial atatements

-44-
30,441,017.00 $
5,866,807.00
SCHEDULE "7"
PAYMENTS
MARINE
INSTITUTE
MARINE
RESOURCS
EXTENSION
CENTER
TO
GEORGIA
CANCER
COALITION
9,652,834.00
$
749,746.00 $
1,218,204.00
RESEARCH
OONSORTIUM
SKIDAWAY
INSTIME OF
OCEANOGRAPHY
SPECIAL
FUNDING
INITIATIVE
8,943,223.00 $
275,000.00
10,802,452.00
2,550,665.00
538,875.00
1,502,026.00
296,584.00
162,493.00
1,225,247.00
157,748.00
223,560.00
296,564.00
123,304.00
128,000.00
1,302,592.00
749,748.00 $
1.218,204.00 $
9,652,634.00 $
14,390,552.00 $
1.302,592.00 $
12,835,169.00 $
45
VETERINARY
MEDICINE
EXPERIMENT
TEACHING
130,923,884.00
197,706,901.00
177,233,877.00
308,749,084.00
STATION
2,653,432.00 $
VETERINARY
MEDICINE
TEACHING
HOSPITAL
433,774.00
TOTAL
170,583,124.00
222,185,104.00
189,437,176.00
383,841,739.00
76,676,117.00
45,940.783.00
76,676,117.00
45,940,783.00
18,634,103.00
27.780,646.00
24,203,315.00
22,481,482.00
31,662,207.00
19,744,930.00
28,703,565.00
11,389,599.00
73,543,695.00
21,739,968.00
17,366,945.00
20,284,279.00
42,993,711.00
16,930,667.00
27,780,846.00
24,203,315.00
22,843,975.00
31,662,207.00
20,970,177.00
28,703,565.00
11,547,347.00
73,767,255.00
21,739,968.00
17,663,509.00
20,284,279.00
42,993,711.00
12,679,541.00
12,738,935.00
13,094,814.00
19,347,681.00
31,908,828.00
10,682,968.00
27,595,389.00
15,305,356.00
12,802,845.00
12,738,935.00
13,094,814.00
19,347,681.00
31,908,828.00
10,682,968.00
27,595,389.00
15,305,356.00
7. 778,657.00
8,447,534.00
14,035,772.00
6,180,471.00
13,569,415.00
52,783,645.00
6, 705,246.00
3,450,157.00
7,778,657.00
8,447,534.00
14,035,772.00
6,180,471.00
13,569,415.00
52,911,845.00
6, 705,246.00
3,450,157.00
898,749.00
2,201,341.00
1,554,962,249.00 $
2,653,432.00 $
433,774.00 $
1. 710,311,718.00

ANALYSIS OF PRIOR YEAR'S SURPLUS FUNDS COLLECTED FROM INSTITUTIONS
SCHEDULE '8'
COLLECTED
RESEARCH INSTITUTIONS
Georgia Health Sciences University
Georgia Institute ofTechnology
31,768.83
122,528.11
612,816.79
227,085.58
REGIONAL UNIVERSITIES
Valdosta State University
45,968.40
541,279.33
STATE UNIVERSITIES
Albany State University
Armstrong Atlantic State University
Fort Valley State University
Georgia Southwestern State University
57,714.75
438.00
3,725.16
9,580.01
66.64
10,973.55
1,674.70
6,231.12
112,922.69
26,055.35
39,861.96
STATE COLLEGES
Abraham Baldwin Agricultural College
College of Coastal Georgia
Gordon College
Macon State College
31,958.33
7,354.88
7,491.52
2,952.38
18,298.09
11,427.12
2,008.41
136,215.64
TWO-YEAR COLLEGES
Bainbridge College
Darton College
East Georgia College
Georgia Highlands College
South Georgia College
Waycross College
95,660.64
48,373.17
12,926.09
9,529.79
13,993.97
582,866.81
19,451.58
1,707.91
Skid away Institute of Oceanography
831.75
$ ==2;;;;;;;85;,;3;,;;,7;.:;3;;,9;;,.0,;.5
See notes to the financial statements

-46-

SCHEDULE '9'
ANALYSIS OF EARLY REMITIANCE OF CURRENT YEAR SURPLUS FUNDS COLLECTED FROM INSTITUTIONS
COLLECTED
RESEARCH INSTITUTIONS
Georgia Health Sciences University
161,645.91
Georgia Institute of Technology
207,774.73
169,106.70
45,948.74
REGIONAL UNIVERSITIES
4,638.13
Valdosta State University
800.00
STATE UNIVERSITIES
Augusta State University
18,315.91
4,891.54
13,879.92
46,578.97
534.32
Kennesaw State University

3,350.70
3,387.43
1,250.01
13,271.00
STATE COLLEGES
4,630.89
11,302.74
131.57
Gordon College
2,077.28
Macon State College
23,405.03
7,713.14
TWO-YEAR COLLEGES
32,806.18
Bainbridge College
1,048.81
East Georgia College
416.00
Georgia Highlands College
3,109.85
137,857.39
Waycross College
5,804.00
$ ===9=2=5=,6=7=6.=8=9
See notes to the financial statements

-47-

RECONCILIATION OF SALARIES AND TRAVEL
SALARIES
Totals per Annual Supplement
27,668,926.75 $
SCHEDULE "10"
TRAVEL
387,054.44
Accruals
June 30, 2011
June 30, 2010
17,629.37
-81,933.00
June 30, 2011
June 30, 2010
2,811,161. 77
-2,979,192.00
Adjustments
Shared Services on Jointly Staffed Personnel
-279,7 45.68
1,332.79
Unidentified Variance
-49-
27,158,180.00 $
387,054.44
=========
SECTION II
AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
FINDING CONTROL NUMBER AND STATUS

FS-472-10-01
FS-472-10-02
Partially Resolved -See Corrective Action/Responses

Previously Reported Corrective Action Implemented
CORRECTIVE ACTION/RESPONSES
ACCOUNTING CONTROLS (OVERALL)
Inadequate Internal Controls over Payroll Consolidation and Outsourcing Project
Finding Control Number: FS-472-10-01
Fiscal Affairs Division of the Board of Regents initiated a remediation plan to specifically
address payroll accounting and reconciliation. The plan is comprised of 4 phases that
focus on completing the payroll accounting model and delivering tools to rapidly reconcile
payroll. The first three phases of the plan have been deployed. Eight hands-on and four
web based workshops have also been provided to institution personnel.
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.
SECTION Ill
CURRENT YEAR FINDINGS AND QUESTIONED COSTS

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES
The auditor is required to communicate to management and those charged with governance control
deficiencies identified during the course of the financial statement audit that, in the auditor's
judgment, constitute significant deficiencies or material weakness.
A control deficiency 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
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affect the University System Office's ability to initiate, authorize,
record, process, or report financial data reliability in accordance with generally accepted accounting
principles such that there is more than a remote likelihood that a misstatement of the University
System Office's financial statements that is more than inconsequential will not be prevented or
detected by the University System Office's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the financial statements will
not be prevented or detected by the University System Office's internal control.
Any identified deficiencies in internal controls that we did not consider to be significant deficiencies
and/or material weaknesses have been communicated to management and those charged with
governance within a separate management letter dated December 20, 2011. Internal control
deficiencies identified during the course of this engagement that were considered to be significant
deficiencies and/or material weaknesses are presented below:
EMPLOYEE COMPENSATION
Inadequate Internal Controls
Significant Deficiency
Condition:
The University System Office did not maintain adequate internal controls to
ensure the accuracy of employee compensation (salaries).
Criteria:
The University System Office's management is responsible for designing and

maintaining internal controls that ensure employee compensation payments
are properly calculated, disbursed and documented.
Questioned Cost:
N/A
Information:
A review of internal control procedures over the employee compensation

process revealed that individuals responsible for ensuring the accuracy of
payroll amounts did not adequately monitor the payroll wages disbursed
during the entire fiscal year.
Cause:
The deficiency was the result of the weaknesses in the design of the internal
controls over employee compensation.
-1-

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EMPLOYEE COMPENSATION
Inadequate Internal Controls
Significant Deficiency
Effect:
This deficiency could result in errors in financial reporting and increase the
risk of material misstatement in the financial statements including
misstatements due to fraud.
Recommendation:
The University System Office should implement appropriate procedures to

strengthen internal controls to properly monitor employee compensation.
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.
-2-

2011-472-Board of Regents of The University System of GA Audit

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BOARD OF REGENTS

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA

STATEMENT OF NET ASSETS

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

STATEMENT OF CASH FLOWS

STATEMENT OF FIDUCIARY NET ASSETS

STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

NOTES TO THE FINANCIAL STATEMENTS

SCHEDULE OF FUNDING PROGRESS

BALANCE SHEET (NON-GMP BASIS) BUDGET FUND

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA

SCHEDULE OF ALLOTMENTS TO UNITS OF THE UNIVERSITY SYSTEM OF

DEPARTMENT OF AUDITS AND ACCOUNTS

December 20, 2011

Honorable Nathan Deal, Governor

REQUIRED SUPPLEMENTARY INFORMATION

UNIVERSITY SYSTEM OFFICE

Statement ofRevenues, Expenses and Changes in Net Assets

June 30, 2011

Nonoperating Revenues and Expenses

Other Revenues, Expenses, Gains or Losses

Increase (Decrease) in Net Assets

Net Assets at Beginning of Year,

Prior Year Adjustments

Net Assets at Beginning of Year, Restated

Net Assets at End of Year

June 30, 2010

Total Operating Revenue

Expenses (By Functional Classification)

June 30, 2011

Total Nonoperating Expenses

Total Operating Expenses

June 30, 2010

Net Change in Cash

Cash, End of Year

June 30, 2010

June 30, 2011

Payments- Claims and Claim Adjustments Attributable

Unpaid Claims and Claim Adjustments (Current Year IBNR)

Payments- Claims and Claim Adjustments Attributable

Unpaid Claims and Claim Adjustments (Current Year IBNR)

Retiree Health Benefit Fund

John E. Brown, Vice Chancellor for Fiscal Affairs/Treasurer

BASIC FINANCIAL STATEMENTS

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA

JUNE 30, 2011

cash and Cash Equivalents

Receivables- Federal Financial Assistance

Due From Affiliated Organizations

Total Current Assets

Capital Assets, Net (Note 6)

Total Noncurrent Assets

Deposits Held for Other Organizations

Lease Purchase Obligations

Tota I Current Liabilities

Total Noncurrent Liabilities

Total Net Assets

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA

UNIVERSITY SYSTEM OFFICE (OVERSIGHT UNIT)

Sales and Services

Other Operating Revenues

Total Operating Revenues

Scholarships and Fellowships