City of Buford Board of Education, a component unit of the city of Buford, Georgia, annual financial report for the fiscal year ended 2019 June 30 (including independent auditor's reports).

CITY OF BUFORD BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA
ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2019

CITY OF BUFORD BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2019
TABLE OF CONTENTS
FINANCIAL SECTION Independent Auditor's Report...............................................................................................................1-3 Management's Discussion and Analysis ...........................................................................................4-11 Basic Financial Statements: Government-wide Financial Statements Statement of Net Position.............................................................................................................. 12 Statement of Activities................................................................................................................... 13 Fund Financial Statements Balance Sheet Governmental Funds......................................................................................... 14 Reconciliation of the Governmental Funds Balance Sheet To the Statement of Net Position.............................................................................................. 15 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds ............................................................................................. 16 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ............................... 17 Statement of Fiduciary Assets and Liabilities Agency Fund.................................................. 18 Notes to Financial Statements ..................................................................................................... 19-43 Required Supplementary Information: General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual ............................................................................................ 44 Schedule of Proportionate Share of Net Pension Liability Teachers Retirement System of Georgia.......................................................................................................................... 45 Schedule of Contributions Teachers Retirement System of Georgia........................................ 46 Schedule of Proportionate Share of Net Pension Liability Public School Employees Retirement System of Georgia.................................................................................. 47 Schedule of Proportionate Share of Net OPEB Liability School OPEB Fund ........................... 48 Schedule of Contributions School OPEB Fund ........................................................................... 49 Notes to Required Supplementary Information .............................................................................. 50 Supplementary Information: Schedule of Expenditures of Special Purpose Local Option Sales Tax Proceeds ..................... 51
SINGLE AUDIT SECTION Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ................................................................................................................52 and 53 Independent Auditor's Report on Compliance For Each Major Federal Program and on Internal Control Over Compliance Required by The Uniform Guidance.............................................................................................................54-56

CITY OF BUFORD BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2019
TABLE OF CONTENTS
SINGLE AUDIT SECTION (CONTINUED) Schedule of Expenditures of Federal Awards ...................................................................................... 57 Schedule of Findings and Questioned Costs .................................................................................. 58-65 Schedule of Prior Audit Findings........................................................................................................... 66 Management's Corrective Action Plan ............................................................................................. 67-69

FINANCIAL SECTION

INDEPENDENT AUDITOR'S REPORT
To the Superintendent and Members of the City of Buford Board of Education
Buford, Georgia
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Buford City Schools (the "School District"), a component unit of the City of Buford, Georgia, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the School District, as of June 30, 2019, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual, Schedule of Proportionate Share of Net Pension Liability Teachers Retirement System of Georgia, Schedule of Contributions Teachers Retirement System of Georgia, Schedule of Proportionate Share of Net Pension Liability Public School Employees Retirement System of Georgia, Schedule of Proportionate Share of Net OPEB Liability School OPEB Fund, and Schedule of Contributions School OPEB Fund, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District's basic financial statements. The schedule of expenditures of special purpose local option sales tax proceeds, as required by the Official Code of Georgia 48-8-121, and the schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The schedule of expenditures of special purpose local option sales tax proceeds and the schedule of expenditures of federal awards (collectively "the supplementary information") are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated September 2, 2021 on our consideration of the School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control over financial reporting and compliance.
Atlanta, Georgia September 2, 2021
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BUFORD CITY SCHOOLS BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
INTRODUCTION
The discussion and analysis of the City of Buford Board of Education's (the "School District") financial performance provides an overview of the School District's financial activities for the fiscal years ended June 30, 2019 and June 30, 2018. The intent of this discussion and analysis is to look at the School District's financial performance as a whole. Readers should also review the financial statements and the notes to the basic financial statements to enhance their understanding of the School District's financial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for the fiscal years 2019 and 2018 are as follows:
Examples of financial highlights are included below:
On the government-wide financial statements, the assets and deferred outflow of resources of the School District exceeded liabilities and deferred inflow of resources by $22,392,431 and $9,918,414, respectively, for the fiscal years ended June 30, 2019 and 2018.
The School District had $61,997,274 and $60,496,608 million in expenses relating to governmental activities for the fiscal years ended June 30, 2019 and June 30, 2018, respectively. Only $48,767,725 and $29,774,445 of the above mentioned expenses for 2019 and 2018 were offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) of $25,703,566 and $33,882,143, respectively, for 2019 and 2018 were adequate to provide for these programs.
General revenues account for $25,703,566 in revenue or 34.5% of all revenues. Program specific revenues in the form of charges for services and sales, grants and contributions accounted for $48,767,725 or 65.5% of total revenues of $74,471,291.
The School District had $61,997,274 in expenses related to governmental activities; however, $48,767,725 of these expenses were offset by program specific charges for services, grants or contributions. General revenues (primarily taxes) of $25,703,566 were adequate to provide for these programs.
Long-term debt decreased by $15,479,162 for 2019 and increased by $37,716,981 for 2018. This decrease for 2019 was due primarily to the principal payments on outstanding debt.
The General Fund (the primary operating fund), presented on a current financial resource basis, ended the fiscal year with a fund balance of $7,180,843, an increase of $366,964 from the June 30, 2018 fund balance of $6,813,879.
Among major funds, the General Fund had $ 59,471,912 in revenues and $ 58,734,593 in expenditures. The fund balance for the General Fund increased from $ 6,813,879 to approximately $7,180,843. An increase in local revenue accounted for the increase.
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BUFORD CITY SCHOOLS BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts; management's discussion and analysis, the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the government-wide and fund financial statements.
The government-wide financial statements include the Statement of Net Position and Statement of Activities. These statements provide information about the activities of the School District presenting both short-term and long-term information about the overall financial status.
The fund financial statements focus on individual parts, reporting the School District's operation in more detail. The Governmental Funds statements disclose how basic services are financed in the short-term as well as what remains for future spending. The Fiduciary Funds statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others.
The fund financial statements reflect the School District's most significant funds. For the years ending June 30, 2019 and 2018, the General Fund, the Capital Projects Fund, and the Debt Service fund represent the major funds.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.
Government-wide Statements
The government-wide statements report information about the School District as a whole using accounting methods similar to those used by private-sector companies. The Statement of net position includes all of the School District's assets and liabilities. All of the current fiscal year's revenues and expenses are accounted for in the Statement of Activities regardless of when cash is received or paid.
The two government-wide statements report the School District's net position and how it has changed. Net position, the difference between the School District's assets and deferred outflows of resources, and liabilities and deferred inflows of resources, are one way to measure the School District's overall financial health or position. Over time, increases or decreases in net position are an indication of whether its financial health is improving or deteriorating. Changes may be the result of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs and other factors.
In the Statement of Net Position and the Statement of Activities, the School District has one distinct type of activity:
Governmental Activities All of the School District's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, student activity accounts and various others.
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BUFORD CITY SCHOOLS BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
Fund Financial Statements The School District's fund financial statements provide detailed information about the most significant funds, not the School District as a whole. Some funds are required by State law and some by bond requirements. The School District's major governmental funds are the general fund, the capital projects fund, and the debt service fund. Governmental Funds Most of the School District's activities are reported in governmental funds, which focus on the determination of financial position and change in financial position, not on income determination. These funds are reported using the modified accrual method of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds are reconciled to the financial statements. Fiduciary Funds The School District is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the government-wide financial statements because it cannot use these assets to finance its operations.
THE REMAINDER OF THE PAGE IS INTENTIONALLY BLANK
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BUFORD CITY SCHOOLS BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE

Recall that the Statement of Net Position provides the perspective of the School District as a whole. Table 1 provides a summary of the School District's net position for fiscal years 2019 and 2018.

Table I Statement of Net Position

Assets Current and other assets Capital assets, net Total Assets

Governmental Activities

June 30, 2019

June 30, 2018

$ 37,672,875 151,215,770 188,888,645

$ 63,661,975 123,391,580 187,053,555

Deferred Outflows of Resources

14,616,028

10,853,950

Liabilities Current and other liabilities Long-term liabilities Total Liabilities

23,159,357 150,133,016 173,292,373

17,985,309 166,585,235 184,570,544

Deferred Inflows of Resources

7,819,869

3,418,547

Net Position Net investment in capital assets Restricted Unrestricted Total Net Position

77,028,636 1,189,537
(55,825,742) $ 22,392,431

71,430,404 800,364
(62,312,354) $ 9,918,414

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BUFORD CITY SCHOOLS BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Table 2 shows the changes in net position for fiscal years ending June 30, 2019 and June 30, 2018.

Table 2 Change in Net Position

Revenues Program revenues Charges for services Operating grants and contributions Capital grants and contributions Total Program Revenues

Governmental Activities

June 30, 2019

June 30, 2018

$ 2,690,486 35,718,592 10,358,647 48,767,725

$ 3,385,210 26,188,828 200,407 29,774,445

General revenues Taxes Property taxes Sales taxes Interest earnings Miscellaneous Total General Revenues Total Revenues

17,666,565 4,187,690 3,176 3,846,135
25,703,566 74,471,291

14,726,590 7,410,367 554,039
11,191,147 33,882,143 63,656,588

Program Expenses Instruction Support services Pupil services Improvement of instructional services Education media services General administration School administration Business administration Maintenance and operation of plant Student transportation services Other support services Operations of non-instructional services Enterprise operations Food service operations Community service operations Interest expense Total Expenses

39,406,294
2,924,107 407,542 656,675
2,940,095 3,481,544
588,201 3,785,342 1,905,721
38,338
987,565 2,194,804
538,297 2,142,749 61,997,274

39,105,713
2,685,164 296,882 661,825
3,247,081 3,509,861 1,148,944 3,019,082 1,691,837
-
883,986 474,300 2,150,704 1,621,229 60,496,608

Change in Net Position

$ 12,474,017

$ 3,159,980

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BUFORD CITY SCHOOLS BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Program revenues, in the form of charges for services, operating grants and contributions and capital grants and contributions increased $18,993,280 for governmental activities. This increase is largely due to an increase in funds earned through the State Quality Basic Education (QBE) Fund Formula, capital grants received from the Georgia State Financing and Investment Commission (GSFIC) to offset certain construction projects, decrease in QBE Austerity Reduction from one fiscal period to the next.

Governmental Activities

The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows the total cost of services and the net cost of services. Net cost of services can be defined as the total cost less fees generated by the activities and intergovernmental revenue provided for specific programs. The net cost reflects the financial burden on the School District's taxpayers by each activity.

Table 3 Governmental Activities

Total Cost of Service

June 30, 2019

June 30, 2018

Net Cost of Service

June 30, 2019

June 30, 2018

Ins truction Support services
Pupil services Improvement of instructional services Education media services General administration School administration Business administration Maintenance and operation of plant Student transportation services Other support services Operations of non-instructional services Enterprise operations Food service operations Com m unity service operations Interest expense
Total Expenses

$ 39,406,294
2,924,107 407,542 656,675
2,940,095 3,481,544
588,201 3,785,342 1,905,721
38,338
987,565 2,194,804
538,297 2,142,749 $ 61,997,274

$ 39,105,713
2,685,164 296,882 661,825
3,247,081 3,509,861 1,148,944 3,019,082 1,691,837
-
883,986 474,300 2,150,704 1,621,229 $ 60,496,608

$ (3,131,151)
(651,834) (140,266)
49,313 (1,921,823) (2,312,633)
(588,201) (1,064,744)
(631,456) (35,732)
(984,468) 284,991
41,204 (2,142,749) $ (13,229,549)

$ (16,522,089)
(2,566,939) (27,075) (9,195)
(2,358,592) (2,436,733) (1,148,944) (1,334,221) (1,532,127)
-
(883,986) (155,799) (125,234) (1,621,229) $ (30,722,163)

Although program revenues make up a majority of the funding, the School District is still dependent upon tax revenues for governmental activities. For 2019, 34.5% of instruction and support activities were supplemented by taxes and other general revenues compared to 50.8% in 2018.
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS
The School District's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues and other financing sources of $88,303,274 and expenditures and other financing uses of $121,529,081. The Capital Projects Fund had an overall decrease of fund balance $32,091,376 due to the Buford High School Building Project. The General Fund had an overall increase of $366,964. The increase in the General Fund for the year is due mostly to a slight reduction in austerity.
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BUFORD CITY SCHOOLS BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

General Fund Budgeting Highlights

The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the general fund, funded primarily through state revenue and local property tax revenue. During the course of fiscal years 2019 and 2018, the School District amended its General Fund budget as needed.

During fiscal year 2019 the General Fund had final actual revenues and other financing sources totaling $60,844,164, which represented an increase from the original budgeted amount of $57,148,363 by $3,695,801. This difference (final actual vs. original budget) was due to an increase in state funds from the mid-term adjustment to QBE, an increase in tuition collected, and an increase in federal grants.

Final actual expenditures during fiscal year 2019 totaling $58,734,593 represented a decrease from the original budgeted amount of $59,157,293 by $422,700. The decrease in actual expenditures versus original budget expenditures was due primarily to cost of instructional services less than expected.
CAPITAL ASSETS
At the fiscal years ended June 30, 2019 and June 30, 2018, the School District had $151,215,770 and $123,391,580, respectively, invested in capital assets, net of accumulated depreciation. These assets are made up of a broad range of capital assets, including land; buildings; transportation, food service and maintenance equipment. Table 4 reflects a summary of these balances, by class, net of accumulated depreciation.

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

June 30, 2019

June 30, 2018

Land Construction in progress Buildings and improvements Equipment Land improvements
Total

$ 1,050,210 81,759,747 65,736,418 1,260,217 1,409,178
$ 151,215,770

$ 1,050,210 52,785,384 67,070,620 1,169,424 1,315,942
$ 123,391,580

The overall capital assets increased in fiscal year 2019 by $27,824,190 due to the New Buford High School building project nearing completion.

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BUFORD CITY SCHOOLS BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
DEBT ADMINISTRATION
At June 30, 2019, the School District had $74,429,203 in total debt outstanding with $4,416,557 due within one year. As of June 30, 2019 the School District reported all $74,429,203 in outstanding intergovernmental contracts payable as compared to $83,853,353 of outstanding intergovernmental contracts as of June 30, 2018,
CURRENT ISSUES
In fiscal year 2020, the cost of the employer portion of TRS pension will increase approximately $75,000. Salaries for all certified positions will increase $3,000 based on the governor's recommended budget at a district cost of $1,080,000. The district will increase the classified salaries by 2% for an approximate cost of $565,000. In addition, the district will add numerous teaching positions to maintain class sizes set forth by the Georgia Department of Education. The School District will open an upper elementary school and redistrict grades K-5. The new Buford High School will open its doors in August 2019 and the old Buford High School building rebranded as Buford Middle School will undergo a $1.3 million roof project in the Summer of 2020.
Approximately 87% of general fund expenses, the main operating fund for the School District, were related to salaries and employee benefits for the year ended June 30, 2019. More than a third of certified personnel in the School District have 21 years or more of experience resulting in salaries at the highest possible state pay level. With such personnel heavy expenses, it is difficult to offset mandated expense increases such as TRS. The School District consistently evaluates how funds can be spent smarter and more effectively to ensure that students receive a quality education from effective personnel.
The School District's millage rate for fiscal year 2019 was 12.75. The net digest has steadily increased. The City of Buford has grown the digest with new business and housing over the past few years. As shown in Table 3, property tax and sales tax are responsible for covering 21% of the School District's costs. It is anticipated that this pressure to provide local monies to meet mandated educational requirements and operational costs will continue.
The most significant challenge facing the School District is the relative uncertainty regarding how School Districts will be funded moving forward. The General Assembly is in the process of exploring new funding formulas that would likely cement the austerity reductions received annually and change the way personnel salaries are calculated. It is uncertain at this point what type of financial impact these changes might have on the School District's finances.
Another matter which is of concern to the School District is the impact of GASB 68 on the financial statements for fiscal year 2019 and beyond. At this time, the actual amount required to be reported is $32,449,753, and has a significant impact on net position in financial statements.
CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Angela Adams at the Buford City Board of Education, 2625 Sawnee Avenue, Buford, Georgia 30518. You may also email your questions to angela.adams@bufordcityschools.org.
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BASIC FINANCIAL STATEMENTS

CITY OF BUFORD BOARD OF EDUCATION
STATEMENT OF NET POSITION JUNE 30, 2019

ASSETS
Cash and cash equivalents Receivables:
Taxes Intergovernmental:
State Federal Other Inventory Prepaid items Restricted assets: Cash and investments with fiscal agent or trustee - bond funds Cash and investments with fiscal agent or trustee - SPLOST funds Capital assets (nondepreciable) Capital assets (depreciable, net of accumulated depreciation)
Total assets
DEFERRED OUTFLOWS OF RESOURCES Pension related items OPEB related items
Total deferred outflows of resources
LIABILITIES
Accounts payable Salaries and benefits payable Due to primary government Interest payable Contracts payable Retainage payable Unearned revenues Intergovernmental payable, due within one year Intergovernmental payable, due in more than one year Net pension liability Net OPEB liability
Total liabilities
DEFERRED INFLOWS OF RESOURCES Deferred credit on debt refunding Pension related items OPEB related items
Total deferred outflows of resources
NET POSITION
Net investment in capital assets Restricted for:
Federal programs Capital projects Debt service Unrestricted (deficit)
Total net position

Governmental Activities

$

11,073,096

1,453,141

3,846,590 907,443 11 11,720 213,714

8,804,338 11,362,822 82,809,957 68,405,813 188,888,645

11,941,645 2,674,383
14,616,028

2,723,416 6,506,219 6,199,970 1,209,772
388,454 5,971,070
160,456 4,416,557 70,012,646 43,254,060 32,449,753 173,292,373
312,822 1,271,798 6,235,249 7,819,869

77,028,636

115,950

753,863

319,724

(55,825,742)

$

22,392,431

The accompanying notes are an integral part of these financial statements.
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CITY OF BUFORD BOARD OF EDUCATION
STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Functions/Programs Governmental activities:
Instruction Support services:
Pupil services Improvement of instructional
services Educational media services General administration School administration Business administration Maintenance and operation of plant Student transportation services Other support services Operations of non-instructional services: Enterprise operation Food services operation Community service operation Interest on long-term debt Total governmental activities

Expenses

Charges for Services

Program Revenues

Operating

Capital

Grants and

Grants and

Contributions Contributions

Net (Expense) Revenue and
Changes in Net Position Governmental
Activities

$ 39,406,294 $ 1,284,989 $ 29,309,408 $ 5,680,746 $ (3,131,151)

2,924,107

-

110,391

2,161,882

(651,834)

407,542 656,675 2,940,095 3,481,544 588,201 3,785,342 1,905,721
38,338

-

267,276

-

705,988

-

1,015,280

-

1,137,063

-

-

-

1,537,864

-

158,522

-

2,482

2,992 31,848 1,182,734 1,115,743 124

(140,266) 49,313
(1,921,823) (2,312,633)
(588,201) (1,064,744)
(631,456) (35,732)

987,565

-

-

2,194,804

825,996

1,474,318

538,297

579,501

-

2,142,749

-

-

$ 61,997,274 $ 2,690,486 $ 35,718,592 $

3,097 179,481
10,358,647

(984,468) 284,991
41,204 (2,142,749) (13,229,549)

General revenues: Taxes: Property taxes, levied for general purposes Sales taxes Unrestricted investment earnings Miscellaneous Total general revenues Change in net position
Net position, beginning of year Net position, end of year

17,666,565 4,187,690 3,176 3,846,135
25,703,566 12,474,017
9,918,414 $ 22,392,431

The accompanying notes are an integral part of these financial statements.

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CITY OF BUFORD BOARD OF EDUCATION
BALANCE SHEET GOVERNMENTAL FUNDS
JUNE 30, 2019

ASSETS
Cash and cash equivalents Receivables:
Taxes Intergovernmental:
State Federal Other Prepaid items Inventory Restricted Cash and Investments with Fiscal Agent or Trustee - Bond Funds Cash and Investments with Fiscal Agent or Trustee - SPLOST Funds
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES
LIABILITIES Accounts payable Contracts payable Retainage payable Salaries and benefits payable Due to other governments Unearned revenue - charges for services
Total liabilities
DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes
Total deferred inflows of resources
FUND BALANCES Nonspendable:
Inventory Prepaid items Restricted for: Capital projects Continuation of federal programs Debt service Assigned for: Local school accounts Appropriation for next year's budget Unassigned
Total fund balances
Total liabilities, deferred inflows of resources, and fund balances

General

$

11,073,096 $

1,095,720

3,846,590 907,443 213,714 11,720

-

$

17,148,283 $

Capital Projects
Fund
- $
357,421
11 -
8,484,614 11,362,822
20,204,868 $

Debt Service
Fund

Total Governmental
Funds

- $

11,073,096

-

1,453,141

-

3,846,590

-

907,443

-

11

-

213,714

-

11,720

319,724 -

8,804,338 11,362,822

319,724 $

37,672,875

$

2,357,866 $

365,550 $

-

388,454

-

5,971,070

6,506,219

-

-

6,199,970

160,456

-

9,024,541

12,925,044

942,899

-

942,899

-

11,720 213,714
115,950
-
1,135,662 1,539,880 4,163,917
7,180,843

-
7,279,824 -
-
7,279,824

$

17,148,283 $

20,204,868 $

- $ -
-
-
-

2,723,416 388,454
5,971,070 6,506,219 6,199,970
160,456
21,949,585
942,899
942,899

-
319,724
-
319,724
319,724 $

11,720 213,714
7,279,824 115,950 319,724
1,135,662 1,539,880 4,163,917
14,780,391
37,672,875

The accompanying notes are an integral part of these financial statements.

14

CITY OF BUFORD BOARD OF EDUCATION
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION
JUNE 30, 2019

Total fund balances - governmental funds

$

Amounts reported for governmental activities in the statement of net position are different because:

Capital assets used in governmental activities are not current financial resources and,

therefore, are not reported in the governmental funds.

Cost

$

Less accumulated depreciation

172,957,598 (21,741,828)

Other long-term assets are not available to pay for current-period expenditures and, therefore, are unavailable in the governmental funds.
Property taxes

The net pension liability is not a financial liability in governmental fund activities and,

therefore, not reported in governmental funds.

Net pension liability

$

Pension related deferred outflows of resources Pension related deferred inflows of resources

(43,254,060) 11,941,645 (1,271,798)

Deferred charges or credits on debt refundings are applicable to future periods and are therefore not reported in governmental funds and are amortized of the life of the new debt.

The net OPEB liability is not a financial liability in governmental fund activities and,

therefore, not reported in governmental funds.

Total OPEB liability

$

(32,449,753)

OPEB related deferred outflows of resources

2,674,383

OPEB related deferred inflows of resources

(6,235,249)

14,780,391
151,215,770 942,899
(32,584,213) (312,822)
(36,010,619)

Long-term liabilities and related items are not due and payable in the current period and,

therefore, are not reported in the governmental funds.

Intergovernmental contracts

$

Accrued interest payable Unamortized bond premiums

(68,909,268) (1,209,772) (5,519,935)

(75,638,975)

Net position of governmental activities

$

22,392,431

The accompanying notes are an integral part of these financial statements.

15

CITY OF BUFORD BOARD OF EDUCATION
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2019

REVENUES Property taxes Sales taxes Local contribution State funds Federal funds Charges for services Investment earnings Miscellaneous Total revenues

General Fund

Capital Projects
Fund

Debt Service
Fund

Total Governmental
Funds

$ 17,607,897 $

- $

-

4,187,690

7,192,103

63,691

25,099,591

10,358,647

3,034,118

-

2,690,486

-

1,582

252,079

3,846,135

-

59,471,912

14,862,107

- $ 1,594 1,594

17,607,897 4,187,690 7,255,794
35,458,238 3,034,118 2,690,486 255,255 3,846,135
74,335,613

EXPENDITURES Current: Instruction Support services: Pupil services Improvement of instructional services Educational media services General administration School administration Business administration Maintenance and operation of plant Student transportation services Other support services Enterprise operations Food services operation Community services operation Capital outlay Debt service: Principal retirement Interest Total expenditures

38,493,132
2,540,725 409,795 660,304
2,949,759 3,501,896
591,452 3,889,619 1,946,766
9,915 993,023 2,206,935 541,272
-
58,734,593

-
30,924,699
4,174,085 -
35,098,784

-
-
10,770,000 2,958,043
13,728,043

38,493,132
2,540,725 409,795 660,304
2,949,759 3,501,896
591,452 3,889,619 1,946,766
9,915 993,023 2,206,935 541,272 30,924,699
14,944,085 2,958,043
107,561,420

Excess (deficiency) of revenues over (under) expenditures

737,319

(20,236,677)

(13,726,449)

(33,225,807)

OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses)

1,372,252 (1,742,607)
(370,355)

370,355 (12,225,054) (11,854,699)

12,225,054 -
12,225,054

13,967,661 (13,967,661)
-

Net change in fund balances

366,964

(32,091,376)

(1,501,395)

(33,225,807)

FUND BALANCE, beginning of fiscal year, as restated

6,813,879

39,371,200

1,821,119

48,006,198

FUND BALANCE, end of fiscal year

$

7,180,843 $ 7,279,824 $

319,724 $ 14,780,391

The accompanying notes are an integral part of these financial statements.

16

CITY OF BUFORD BOARD OF EDUCATION
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Amounts reported for governmental activities in the statement of activities are different because:

Net change in fund balances - total governmental funds

$

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. The amount by which capital outlays exceeded depreciation in the current period is as follows:

Capital outlay Depreciation expense

$ 31,465,553 (1,903,028)

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds.

Property taxes Intergovernmental revenues

$

58,668

(3,594)

The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. This amount is the effect of these differences in the treatment of long-term debt and related items.

Principal payments - intergovernmental note payable
In the governmental funds, current year expenditures related to pensions are comprised solely of amounts contributed to the plan for the current year. However, in the statement of activities, expenses related to pensions include amounts that do not require the use of current financial resources. This amount represents the difference in the required accounting treatment of pensions and related items.

In the governmental funds, current year expenditures related to OPEB are comprised solely of amounts contributed to the plan for the current year. However, in the statement of activities, expenses related to OPEB include amounts that do not require the use of current financial resources. This amount represents the difference in the required accounting treatment of pensions and related items.
Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.
Amortization of bond premium Amortization of gain on advance of bond refunding Change in accrued interest
Change in net position of governmental activities
The accompanying notes are an integral part of these financial statements.

$

535,077

10,967

269,250

$

(33,225,807) 29,562,525
55,074
14,944,085 565,345 (242,499)
815,294 12,474,017

17

CITY OF BUFORD BOARD OF EDUCATION
STATEMENT OF FIDUCIARY NET POSITION AGENCY FUND JUNE 30, 2019

Cash

ASSETS

Agency Fund

$

35,850

Funds held for others

LIABILITIES

$

35,850

The accompanying notes are an integral part of these financial statements.

18

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019
Note 1: DESCRIPTION OF THE SCHOOL DISTRICT AND REPORTING ENTITY
Reporting Entity
The City of Buford Board of Education (the "School District") was established under the laws of the State of Georgia and operates under the guidance of a five (5) member board, four (4) of which are elected by the voters of the City of Buford with the fifth member being the chairman of the board of commissioners of the City of Buford and a Superintendent appointed by the Board. The School District does not have the power to levy taxes or issue bonds. Its budget is subject to approval by the City of Buford, Georgia. Accordingly, the School District is determined to be a component unit of the City of Buford, Georgia (City).
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements and notes to the basic financial statements of the School District.
Government-wide Statements: The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
In the Statement of Net Position, equity is reported as net position and consists of net investment in capital assets, amounts restricted by outside parties for specific purposes and unrestricted amounts.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.
19

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of Presentation (Continued)
Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (ESPLOST) and intergovernmental contract proceeds that are restricted, committed or assigned for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets.
Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest.
The School District reports the following fiduciary fund type:
Agency Funds are used to report resources held by the School District in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations.
Measurement Focus and Basis of Accounting
The basis of accounting determines when transactions are reported on the financial statements. The government-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
Revenue from grants and donations are recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, or matching requirements, in which the School District must provide local resources to be used for a specified purpose.
20

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education (QBE) Formula Earnings program. State of Georgia law defines the formula driven grant that determines the cost of an academic school year and the State of Georgia's share in this cost. Generally teachers are contracted for the school year (July 1 June 30) and paid over a twelve month contract period, generally September 1 through August 31. In accordance with the requirements of the enabling legislation of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid, funding the academic school year expenditures. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued as the State of Georgia has only postponed the final payment of their share of the cost until the subsequent appropriations for cash management purposes. By June 30 of each year, the State of Georgia has a signed appropriation that includes this final amount, which represents the State of Georgia's intent to fund this final payment. Based on guidance in Government Accounting Standards Board (GASB) Statement No. 33, paragraph 74, the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, and the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated (O.C.G.A.) 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.

Receivables

Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

Property Taxes

The City of Buford fixed the 2018 tax digest, for fiscal year 2019, on August 7, 2018. Taxes were due on November 20, 2018. Taxes collected within the current fiscal year or within 60 days after year-end are reported as revenue in the governmental funds for fiscal year 2019. The City of Buford City Clerk bills and collects the property taxes for the School District and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2019, for maintenance and operations amounted to $17,607,897.

The Georgia Constitution, Article VIII, Section VI, Paragraph I requires the board of education of each school system to annually certify to its fiscal authority or authorities a school tax not greater than 20 mills per dollar for the support and maintenance of education. The School District is in compliance with this law. Tax millage rates levied for the 2018 tax year for the City of Buford Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Maintenance & Operations

12.75 mills

21

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Sales Taxes Education Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $4,187,690 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. The current sales tax rate is effective through fiscal year 2019. Inventories On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (calculated on the first-in first-out basis). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. Interfund Receivables and Payables During the course of its operations, the School District makes transfers between funds to finance operations, provide services, acquire assets and service debt. To the extent that certain transfers between funds had not been received as of year end, balances of interfund amounts receivable or payable have been recorded. Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "Interfund loan receivables/payables" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). Prepaid Items Payments made to vendors for services that will benefit periods subsequent to June 30, 2019, are recorded as prepaid items. The School District accounts for the prepaid items on the consumption basis. Capital Assets On the government-wide financial statements, capital assets are recorded at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at the acquisition value on the date donated. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. The School District does not capitalize book collections or works of art.
22

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Capital Assets (Continued)

Capital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities' column in the government-wide financial statements.

Depreciation is computed using the straight-line for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives.

Capitalization thresholds and estimated useful lives of capital assets reported in the government-wide statements are as follows:

Land Land improvements Buildings and improvements Equipment Intangible assets

Capitalization

Policy

All

$

5,000

5,000

5,000

5,000

Estimated Useful Life
N/A 15 years 15-60 years 5-12 years Individually Determined

Compensated Absences

Annual employees earn vacation leave at the rate of 10 days per year for the first four years up to a maximum of 15 days after fifteen years being employed at the City of Buford Board of Education. The maximum possible accumulation is 30 days. The School District does not permit employees to carry forward unused vacation days. As such, the School District does not report a liability for unused vacation days or compensated absences.

Long-Term Debt Liabilities and Premiums

In the School District's government-wide financial statements, outstanding debt is reported as liabilities. Bond premiums and discounts and the difference between the reacquisition price and the net carrying value of refunded debt are deferred and amortized over the life of the bonds using the straight-line method. To conform to generally accepted accounting principles, premiums and discounts should be amortized using the effective interest method. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the intergovernmental contract bonds are issued.

In the governmental fund financial statements, the School District recognizes the proceeds of debt and premiums as other financing sources of the current period. Issuance costs are reported as debt service expenditures.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, deferred inflows of resources and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

23

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fund Equity
Fund equity at the governmental fund financial reporting level is classified as "fund balance." Fund equity for all other reporting is classified as "net position."
Fund Balance Generally, fund balance represents the difference between the assets, liabilities, and deferred inflows and outflows of resources under the current financial resources measurement focus of accounting. In the fund balance statements, governmental funds are reported in fund balance classifications that comprise a hierarchy based primarily on the extent to which the School District is bound to honor constraints on the specific purposes to which amounts in those funds can be spent. The School District's fund balances are classified as follows:
Nonspendable Fund balances are reported as nonspendable when amounts cannot be spent because they are either (a) not in spendable form (i.e., items that are not expected to be converted to cash) or (b) legally or contractually required to be maintained intact.
Restricted Fund balances are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the School District or through external restrictions imposed by creditors, grantors or laws or regulations of other governments.
Committed Fund balances are reported as committed when they can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education through the adoption of a resolution. Only the Board of Education may modify or rescind the commitment through the adoption of a resolution.
Assigned Fund balances are reported as assigned when amounts are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. Through resolution, the Board of Education has authorized the (1) Board of Education, (2) the budget or finance committee, (3) the Superintendent, or (4) a designee made by the Superintendent to assign fund balances.
Unassigned Fund balances are reported as unassigned as the residual amount when the balances do not meet any of the above criteria. The School District reports positive unassigned fund balance only in the general fund. Negative unassigned fund balances may be reported in all funds.
It is the goal of the School District to achieve and maintain a committed, assigned, and unassigned fund balance in the general fund at the end of the fiscal year of not less than 8.3% and not to exceed 15% of expenditures of the total subsequent fiscal year's budget. If the unassigned fund balance at the fiscal yearend falls below the goal, the School District shall develop a restoration plan to achieve and maintain the minimum fund balance. As of June 30, 2019, the School District's general fund was reporting a committed, assigned, and unassigned fund balance of $6,839,459 or 11.6% of the School District's general fund budgeted expenditures for the year ended June 30, 2019.
Flow Assumptions When both restricted and unrestricted amounts of fund balance are available for use for expenditures incurred, it is the School District's policy to use restricted amounts first and then unrestricted amounts as they are needed. For unrestricted amounts of fund balance, it is the School District's policy to use fund balance in the following order:
Committed Assigned Unassigned
24

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net Position Net position represents the difference between assets, deferred outflows of resources, liabilities, and deferred inflows of resources for activities and funds which use the accrual basis of accounting. Amounts shown as net investment in capital assets are made up of capital asset costs, net of accumulated depreciation, reduced by contract and retainage payable and the outstanding balances of any borrowing used (i.e., the amount that the School District has spent) for the acquisition, construction or improvement of those assets. Net position is reported as restricted using the same definition as used for restricted fund balance as described in the section above. All other net position is reported as unrestricted.
The School District applies restricted resources first when an expense is incurred for purposes for which both restricted and unrestricted net position is available.
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense) until then. The District has seven (7) items that qualify for reporting in this category which occurs only in the governmental activities. Governmental Activities report (1) a deferred outflow of resources for the District's actual contributions to the pension plan during the fiscal year ended June 30, 2019 which are subsequent to the measurement date of the net pension liability and will be recognized in fiscal year 2020; (2) a deferred outflow of resources for experience gains or losses related to the pension plan which will be amortized over the remaining service period; (3) a deferred outflow of resources for the changes in actuarial assumptions which will be amortized over the remaining service period; (4) a deferred outflow of resources for difference between School District's contributions and the proportionate share of contributions, which adjust the net pension liability and net OPEB liability, (5) a deferred outflow of resources for the District's actual contributions to the OPEB plan during the fiscal year ended June 30, 2019 which are subsequent to the measurement date of the net OPEB liability and will be recognized in fiscal year 2020; (6) a deferred outflow of resources for the net difference between projected and actual investment earnings on the OPEB assets, which will be amortized over a five year period; and (7) a deferred outflow of resources for difference between School District's contributions and the proportionate share of contributions, which adjust the net pension liability and net OPEB liability.
In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District has one type of deferred inflow under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available. The District has five (5) items that qualify for reporting in this category which occurs only in the governmental activities. Governmental Activities report (1) a deferred inflow of resources for the net difference between projected and actual investment earnings on the pension assets, which will be amortized over a five year period; (2) a deferred inflow of resources for experience gains or losses from periodic studies by the pension and OPEB actuary, which will be amortized over the remaining service period; (3) a deferred inflow of resources for resources for experience gains or losses related to the OPEB assets which will be amortized over the remaining service period; (4) a deferred inflow of resources for the changes in actuarial assumptions in relation to the OPEB plan which will be amortized over the remaining service period; and (5) deferred charges from debt refunding which will be amortized over the remaining life of the debt.
25

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers Retirement System of Georgia (TRS) and the Public School Employees Retirement System (PSERS) and additions to/deductions from TRS's and PSERS's fiduciary net position have been determined on the same basis as they are reported by TRS and PSERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Georgia School Employees Postemployment Benefit Fund (School OPEB Fund) and additions to/deductions from the School OPEB Fund's fiduciary net position have been determined on the same basis as they are reported by the School OPEB Fund. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Note 3: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

The School District adopts an annual budget for its General Fund. The budget is prepared in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167. After the City of Buford Board of Education has tentatively adopted the budgets, such budgets are advertised at least one time in a local newspaper of general circulation. At the next regular meeting of the Board after advertisement, the budgets are revised as necessary and adopted as the final budgets.

The following functions had excesses of actual expenditures over appropriations in the amount shown for the fiscal year ended June 30, 2019:

General Fund:

Support services:

Pupil services

$

348,838

Improvement of instructional services

141,775

School administration

108,071

Business administration

43,900

Maintenance and operation of plant

11,668

Student transportation services

224,833

Other support services

9,915

Enterprise operations

237,354

Food and service operation

198,474

These over expended functions were offset by other functions of the District.

26

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019
Note 4: DEPOSITS AND INVESTMENTS
Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than 10 days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110% of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (OCGA 45-813.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110% of the daily pool balance.
Custodial credit risk. Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the School District will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. State statutes require all deposits and investments (other than federal or state government instruments) to be collateralized by depository insurance, obligations of the U.S. Government, or bonds of public authorities, counties, or municipalities. As of June 30, 2019, the School District had deposits at a local financial institution in the amount of $9,292,241 that were under-collateralized. The collateral pledged to secure these deposits was insufficient by $286,906 as defined by State statutes.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) 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,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, 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 or 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.
Note 5: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their federally assigned value of $163,972.
27

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019

Note 6: RESTRICTED ASSETS

The restricted assets represent the cash balance and investment totaling $20,167,160 for the funds held by the City to be used for capital outlay projects and pay debt requirements.

Note 7: CAPITAL ASSETS

The following is a summary of changes in the capital assets during the fiscal year:

Governmental activities: Capital assets, not being depreciated:
Land Construction in Progress
Total non-depreciable assets
Capital assets, being depreciated: Buildings and improvements Equipment Land improvements Total depreciable assets
Less accumulated depreciation for: Buildings and improvements Equipment Land improvements Total accumulated depreciation
Total capital assets, being depreciated, net
Governmental activities capital assets, net

Restated Beginning
Balance

Increases

Decreases and transfers

Ending Balance

$

1,050,210 $

- $

51,047,049

30,945,321

52,097,259

30,945,321

- $ (232,623) (232,623)

1,050,210 81,759,747 82,809,957

82,091,066 4,868,203 2,475,421
89,434,690

115,086 387,171 250,598 752,855

(32,436)
(7,468) (39,904)

82,206,152 5,222,938 2,718,551
90,147,641

15,020,446 3,698,779 1,159,479
19,878,704

1,449,288 296,378 157,362
1,903,028

69,555,986

(1,150,173)

$ 121,653,245 $ 29,795,148 $

(32,436)
(7,468) (39,904)
-
(232,623) $

16,469,734 3,962,721 1,309,373
21,741,828
68,405,813
151,215,770

Beginning construction in progress balances were restated by $1,738,335 due to the overstatement of capital asset addition in a prior fiscal year. See Note 15.

Depreciation expense was charged to the functions as follows:

Instruction

$

Support services:

Pupil services

General administration

Maintenance and operation

Student transportation

Central support services

School food services

Total

$

1,086,705
397,348 6,404
216,522 162,492
569 32,988 1,903,028

28

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019

Note 8: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2019, consisted of the following:

Transfers In

Transfers Out

General Fund

Capital Projects Fund $

Capital Projects Fund General Fund

Debt Service Fund

General Fund

Debt Service Fund

Capital Projects Fund

$

Amount 1,372,252 370,355 1,372,252
10,852,802 13,967,661

Note 9: RISK MANAGEMENT

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; and natural disasters.

The School District has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions and job related illness or injuries to employees. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the general fund with expenses/expenditures and liabilities being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. The School District did not have an unemployment compensations claims liability during the last two fiscal years.

The School District purchased surety bonds to provide additional insurance coverage as follows:

Position Covered Superintendent
Assistant Superintendent Principals

Amount

$

50,000

50,000

3,000

Note 10: LONGTERM LIABILITIES AND OBLIGATIONS

The changes in long-term debt during the fiscal year ended June 30, 2019, were as follows:

Balance July 1, 2018

Additions

Deductions

Balance June 30, 2019

Intergovernmental contracts Unamortized premium Net pension liability Net OPEB Liability

$ 83,853,353 $

- $ (14,944,085) $

6,055,012

-

(535,077)

41,898,161

7,181,538

(5,825,639)

34,778,709

2,581,252

(4,910,208)

$ 166,585,235 $ 9,762,790 $ (26,215,009) $

68,909,268 5,519,935 43,254,060 32,449,753 150,133,016

Due Within One Year
$ 4,416,557 -
$ 4,416,557

The net pension liability and net OPEB liability are liquidated by the General Fund.

29

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019
Note 10: LONGTERM LIABILITIES AND OBLIGATIONS (CONTINUED)
Intergovernmental contracts
In fiscal year 2018, the City, on behalf of the School District, issued $54,270,000, (Series 2017A, $20,000,000), (Series 2017B, $10,000,000), and (Refunding Series 2017C, $24,270,000) in general obligation bonds, with a premium of $5,116,695 and principal and interest payments beginning January 1, 2018 through January 1, 2048 at interest rates varying from 3.00% to 5.00%. The School District entered into an intergovernmental contract with the City in regard to the issuance, use of proceeds, and payment of the bonds as of November 6, 2017. The contract stipulates that the School District's payment obligations consist of the payments of all amounts coming due as principal and interest on the bonds. The School District will fund the bonds with Special Local Option Sales Tax (SPLOST) revenues and thus the School District has an intergovernmental payable to the City for the outstanding bonds. The bonds were issued to provide funds, together with other available funds of the School District to finance the costs of acquiring, constructing, and equipping certain capital outlay projects of the School District and the costs of issuance of the bonds including capitalized interest. The proceeds of the bonds are retained by the City and will be used to pay capital outlay expenditures as needed.
During fiscal year 2018, Gwinnett County Board of Education advanced $22,325,000 to the School District. The School District used $2,035,896 of the proceeds to pay off their portion of the remaining advanced funds from the Series 2012A General Obligation Sales Tax Bonds through an intergovernmental contract. This agreement also requires the School District to remit the monthly sales tax proceeds received from the Georgia Department of Revenue to Gwinnett County Board of Education until the advanced SPLOST funds are repaid. At the conclusion of the sales tax collection, if there is a remaining balance, the School District is ultimately responsible for any shortage in sales tax collections.
During fiscal year 2015, the City, on behalf of the School District, issued $33,050,000 in general obligation bonds, with a premium of $4,720,016 and principal and interest payments beginning January 1, 2016 through January 1, 2029 at interest rates varying from 3.625% to 5.250%. The School District entered into an intergovernmental contract with the City in regards to the issuance, use of proceeds, and payment of the bonds as of June 1, 2015. The contract stipulates that the School District's payment obligations consist of the payments of all amounts coming due as principal and interest on the bonds. The School District will fund the bonds with Special Local Option Sales Tax (SPLOST) revenues and thus the School District has an intergovernmental payable to the City for the outstanding bonds. The bonds were issued to provide funds, together with other available funds of the School District to finance the costs of acquiring, constructing, and equipping certain capital outlay projects of the School District and the costs of issuance of the bonds including capitalized interest. The proceeds of the bonds were retained by the City and will be used to pay capital outlay expenditures as needed.
The 2017C series proceeds, reported above, were used to pay for the cost of issuance and for the advance refunding of a portion of the 2015 Series general obligation bonds in the amount of $22,350,000. The reacquisition price exceeded the net carrying amount of the old debt by $1,920,000. The refunding of the old notes created a debt service savings of $323,789 and an economic loss (difference between the present values of the debt service payments on the old and new debt) of $1,208,414.
30

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019

Note 10: LONGTERM LIABILITIES AND OBLIGATIONS (CONTINUED)

Intergovernmental contracts (Continued)

The intergovernmental payable pertaining to this agreement as follows:

Fiscal Year Ended June 30:
2020 2021 2022 2023 2024 2025-2029 2030-2034 2035-2039 2040-2044 2045-2048

Principal

$

4,416,557 $

4,747,798

5,103,883

441,030

9,420,000

20,510,000

4,825,000

5,845,000

7,010,000

6,590,000

$

68,909,268 $

Interest
2,419,544 $ 2,419,544 2,419,544 2,419,544 2,419,544 9,742,719 4,110,869 3,100,469 1,927,919
565,313
31,545,009 $

Total
6,836,101 7,167,342 7,523,427 2,860,574 11,839,544 30,252,719 8,935,869 8,945,469 8,937,919 7,155,313
100,454,277

Note 11: ON-BEHALF PAYMENTS

The School District has recognized revenues and expenditures in the amount of $58,277 for retirement contributions paid on the School District's behalf by the following State Agency:

Office of the State Treasurer of the State of Georgia Paid to Public School Employee Retirement System For Public School Employees Retirement (PSERS) In the amount of

$58,277

The remainder of this page is intentionally left blank

31

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019
Note 12: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
General Information about the Teachers Retirement System
Plan Description. All teachers of the District as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. TRS issues a publicly available financial report that can be obtained at www.trsga.com/publications.
Benefits Provided. TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee 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. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.
Contributions. Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6.00% of their annual pay during fiscal year 2019. The School District's contractually required contribution rate for the year ended June 30, 2019 was 20.90% of annual school district payroll, excluding payroll attributable to those personnel funded on behalf of the District by the State. District contributions to TRS, excluding contributions funded by the State on behalf of the District were $6,043,035 for the year ended June 30, 2019.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions
At June 30, 2019, the School District reported a liability of $43,254,060 for its proportionate share of the net pension liability for TRS.
The net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2017. An expected total pension liability as of June 30, 2018 was determined using standard roll-forward techniques. The District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2018. At June 30 2018, the District's proportion was 0.233023%, which was a decrease of 0.007586% from its proportion measured as of June 30, 2017.
32

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019
Note 12: RETIREMENT PLANS (CONTINUED)
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) (Continued)
For the year ended June 30, 2019, the District recognized pension expense of $5,477,690 and expense of $21 for support provided by the State of Georgia for certain support personnel. At June 30, 2019, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Differences between expected and actual experience
Changes in assumptions
Net difference between projected and actual earnings on pension plan investments
Changes in proportion and differences between School District contributions and proportionate share of contributions
Board contributions subsequent to the measurement date
Total

Deferred Outflows of Resources

Deferred Inflows of Resources

$ 2,863,480 $ 652,688

89,148 -

-

1,182,650

2,382,442

-

6,043,035 $ 11,941,645 $

1,271,798

District contributions subsequent to the measurement date of $6,043,035 are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ending June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year ending June 30: 2020 2021 2022 2023 2024
Total

$ 3,156,175 1,812,686 (671,109) 261,887 67,173
$ 4,626,812

33

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019

Note 12: RETIREMENT PLANS (CONTINUED)

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) (Continued)

Actuarial Assumptions. The total pension liability as of June 30, 2018 was determined by an actuarial valuation as of June 30, 2017 using the following actuarial assumptions, applied to all periods included in the
measurement:

Inflation Salary increases Investment rate of return
Post-retirement benefit increases

2.75%
3.25 9.00%, average, including inflation 7.50%, net of pension plan investment expense, including inflation 1.50% semi-annually

Postretirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service requirements and dependent beneficiaries. The RP-2000 Disabled Mortality table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used for the death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.

The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class
Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities
Total
* Rates shown are net of the 2.75% assumed rate of inflation

Target allocation
30.00% 39.80
3.70 1.50 19.40 5.60
100.00%

Long-term expected real rate of return*
(0.50)% 9.00 12.00 13.50 8.00 12.00

34

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019
Note 12: RETIREMENT PLANS (CONTINUED)
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) (Continued)

Discount rate: The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that Plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current Plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the School District's Proportionate Share of the Net Pension Liability to Changes in the Discount Rate. The following presents the District's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the District's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentagepoint higher (8.50%) than the current rate:

School District's proportionate share of the net pension liability

1% Decrease
(6.50%)
$ 72,203,412

Current Discount Rate
(7.50%)

1% Increase (8.50%)

$ 43,254,060 $ 19,398,321

Pension Plan Fiduciary Net Position. Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS financial report which is publicly available at www.trsga.com/publications.
PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA (PSERS)
General Information about the Public School Employees Retirement System
Plan Description. PSERS is a cost sharing multiple employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/financials.
Benefits Provided. A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service.

35

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019

Note 12: RETIREMENT PLANS (CONTINUED)

PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA (PSERS) (Continued)

Upon retirement, the member will receive a monthly benefit of $15.25, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost of living adjustments to the monthly benefits. 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 contribution, the member forfeits all rights to retirement benefits.

Contributions. The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.

Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees.

Pension Liabilities and Pension Expense
At June 30, 2019, the District did not have a liability for a proportionate share of the net pension liability because of the related State of Georgia support. The amount of the State's proportionate share of the net pension liability associated with the District is as follows:

State of Georgia's proportionate share of the Net Pension Liability associated with the School District

$

348,127

The net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2017. An expected total pension liability as of June 30, 2018 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2018.

For the year ended June 30, 2019, the District recognized pension expense of $80,604 and revenue of $80,604 for support provided by the State of Georgia.

Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation Salary increase Investment rate of return

2.75% N/A 7.30%, net of pension plan
investment expense, including inflation

36

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019

Note 12: RETIREMENT PLANS (CONTINUED)
PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA (PSERS) (Continued)
Postretirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) for the period after service retirements and for dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 9-11% less than expected under the selected table for disabled retirees. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.
The long term expected rate of return on pension plan investments was determined using a log normal distribution analysis in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class
Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives
Total
* Rates shown are net of the 2.75% assumed rate of inflation

Target allocation
30.00% 37.20
3.40 1.40 17.80 5.20 5.00
100.00%

Long-term expected real rate of return*
(0.50)% 9.00 12.00 13.50 8.00 12.00 11.00

Discount Rate. The discount rate used to measure the total pension liability was 7.30%. This was a decrease from the prior year's discount rate, which was 7.5%. The projection of cash flows used to determine the discount rate assumed that Plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current Plan members. Therefore, the long term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

37

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019
Note 13: COMMITMENTS AND CONTINGENCIES
Litigation. The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable but is not believed to be material to the basic financial statements.
Grant Contingencies. The School District participates in numerous State and Federal grant programs, which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the School District has not complied with the rules and regulations governing the grants, refunds of any amounts received may be required and the collectability of any related receivable at year end may be impaired. In the opinion of the School District, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies.
State of Georgia Intercept Program. In November 2017, the City issued $20,000,000 of General Obligation Bonds, Series 2017A, $10,000,000 of General Obligation Bonds, Series 2017B, and $24,270,000 of General Obligation Refunding Bonds, Series 2017C to provide funds, together with other available funds of the School District, to finance the costs of acquiring, constructing, and equipping certain capital outlay projects of the School District and the costs of issuing the bonds. The obligation to pay the principal of and interest on the bonds is a general obligation debt of the City and constitutes a pledge of the full faith and credit and taxing power of the City. Debt service on the bonds will be paid from the general fund of the City from ad valorem taxes to be levied upon all property in the City which is subject to taxation for bond purposes.
In May 2015, the City issued $33,050,000 of General Obligation Bonds, Series 2015 to provide funds, together with other available funds of the School District, to finance the costs of acquiring, constructing, and equipping certain capital outlay projects of the School District and the costs of issuing the bonds. The obligation to pay the principal of and interest on the bonds is a general obligation debt of the City and constitutes a pledge of the full faith and credit and taxing power of the City. Debt service on the bonds will be paid from the general fund of the City from ad valorem taxes to be levied upon all property in the City which is subject to taxation for bond purposes. A portion of these bonds were refunded, $22,350,000, with General Obligation Bonds Series 2017C as mentioned above.
As additional security for the bonds, the School District is a participant in the State of Georgia Intercept Program. Under the terms of the program, the sinking fund custodian is required to transfer to the paying agent for the bonds such amount of moneys as are necessary to provide for the payment of the interest, or principal and interest, on the bonds coming due each interest payment date. If, on the 15th day of the calendar month preceding each interest payment date there is not on deposit in the sinking fund an amount sufficient to pay in full the interest, or principal and interest, coming due on the bonds on the payment date, and the City or the School District do not immediately remedy the deficiency, the sinking fund custodian shall notify the Georgia Department of Education of the amount of any such deficiency. Upon notification, the Georgia Department of Education will withhold such amount from any State appropriation to which the School District may be entitled and thereafter transfer the amount withheld to the sinking fund custodian for immediate deposit into the sinking fund.
For the fiscal year ended June 30, 2019, no such amounts were required to be paid by the Georgia Department of Education for debt service related to the bonds.
Contractual Commitments. The School District has executed contracts with third parties for various construction projects. As of June 30, 2019, the balance of those contracts representing commitments made by the School District for work not yet completed is $2,973,320.
38

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019
Note 14: POSTEMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL POSTEMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The District participates in the State of Georgia School Employees Postemployment Benefit Fund (School OPEB Fund), which is an other postemployment benefit (OPEB) plan administered by the State of Georgia Department of Community Health (DCH). Certified teachers and non-certified employees of the District as defined in 20-2-875 of the Official Code of Georgia Annotated (O.C.G.A.) are provided OPEB through the School OPEB Fund - a cost-sharing multiple-employer defined benefit postemployment healthcare plan, reported as an employee trust fund of the State of Georgia and administered by a Board of Community Health (DCH Board). Title 20 of the O.C.G.A. assigns the authority to establish and amend the benefit terms of the group health plan to the DCH Board. The School OPEB Fund is included in the State of Georgia Comprehensive Annual Financial Report which is publicly available and can be obtained at https://sao.georgia.gov/comprehensive-annual-financial-reports.
Benefits Provided. The School OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for public school teachers, including librarians, other certified employees of public schools, regional educational service agencies, and non-certified public school employees. Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from Employees' Retirement System (ERS), Georgia Judicial Retirement System (JRS), Legislative Retirement System (LRS), Teachers Retirement System (TRS) or Public School Employees Retirement System (PSERS). If elected, dependent coverage starts on the same day as retiree coverage. Medicareeligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The School OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the School OPEB Fund is permitted.
Contributions. As established by the Board of Community Health, the School OPEB Fund is substantially funded on a pay-as-you-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. Contributions required and made to the School OPEB Fund from the District were $1,367,774 for the year ended June 30, 2019. Active employees are not required to contribute to the School OPEB Fund.
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
At June 30, 2019, the District reported a liability of $32,449,753 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2018. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2017. An expected total OPEB liability as of June 30, 2018 was determined using standard roll-forward techniques. The District's proportion of the net OPEB liability was actuarially determined based on employer contributions to the School OPEB Fund during the fiscal year ended June 30, 2018. At June 30, 2018, the District's proportion was 0.255315%, which was an increase of 0.007779% from its proportion measured as of June 30, 2017.
39

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019
Note 14: POSTEMPLOYMENT BENEFITS (CONTINUED)
For the year ended June 30, 2019, the District recognized OPEB expense of $1,610,273. At June 30, 2019, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows

of Resources

of Resources

Differences between expected and actual experience

$

Changes in plan assumptions

Net difference between projected and actual earnings on

OPEB plan investments

-$ -
43,905

738,105 5,497,144
-

Changes in proportion and differences between District contributions and proportionate share of contributions District contributions subsequent to the measurement date

Total

$

1,262,704
1,367,774 2,674,383 $

-
6,235,249

District contributions subsequent to the measurement date of $1,367,774 are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ending June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year ending June 30: 2020 2021 2022 2023 2024 Thereafter Total

$ (963,469) (963,469) (963,469) (966,092) (784,694) (287,447)
$ (4,928,640)

40

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019

Note 14: POSTEMPLOYMENT BENEFITS (CONTINUED)

Actuarial assumptions:

The total OPEB liability as of June 30, 2018 was determined by an actuarial valuation as of June 30, 2017 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2018:

Inflation Salary Increases

2.75% 3.25-9.00%, including inflation

Long-term expected rate of return
Healthcare cost trend rate: Pre-Medicare eligible Medicare eligible
Ultimate trend rate Pre-Medicare eligible Medicare eligible

7.3%, compounded annually, net of investment expense, and including inflation
7.50% 5.50%
4.75% 4.75%

Year of ultimate trend rate
Pre-Medicare eligible Medicare eligible

2028 2022

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows:

For TRS Members: The RP-2000 White Collar Mortality Table projected to 2025 with projection scale BB (set forward 1 year for males) was used for death after service retirement and beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 2 years for males and 4 years for females) was used for death after disability retirement.

For PSERS Members: The RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) was used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for the period after disability retirement.

The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the pension system, which covered the five-year period ending June 30, 2014.

Projection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the District and 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 calculation.

41

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019
Note 14: POSTEMPLOYMENT BENEFITS (CONTINUED)
Actuarial assumptions (Continued):
Additionally, there was a change that affected measurement of the total OPEB liability since the prior measurement date. The methodology used to determine employee and retiree participation in the School OPEB Fund is based on their current or last employer payroll location. Current and former employees of public school districts, libraries, regional educational service agencies, and community colleges are allocated to the School OPEB Fund irrespective of retirement system affiliation.
The long-term expected rate of return on OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. During fiscal year 2018, the School OPEB fund update their investment strategy to a more long-term approach. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class Fixed Income Domestic Stocks -- Large Cap Domestic Stocks -- Mid Cap Domestic Stocks -- Small Cap Int'l Stocks - Developed Mkt Int'l Stocks - Emerging Mkt Alternatives

Target allocation
30.00% 37.20%
3.40% 1.40% 17.80% 5.20% 5.00%

Long-term expected real rate of return
(0.50)% 9.00% 12.00% 13.50% 8.00% 12.00% 10.50%

Total

100.00%

Discount rate:
The discount rate has changed since the prior measurement date from 3.58% to 3.87%. In order to measure the total OPEB liability for the School OPEB Fund, a single equivalent interest rate of 3.87% was used as the discount rate. This is comprised mainly of the yield or index rate for 20 year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.87% per the Bond Buyer Index). The projection of cash flows used to determine the discount rate assumed that the current sharing of costs between the employer and the member will continue and that contributions from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2118. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2018. Therefore, the long-term expected rate of return on OPEB plan investments was applied to discount projected benefit payments until 2018. Therefore, the calculated discount rate of 3.87% was applied to all periods of projected benefit payments to determine the total OPEB liability.

42

CITY OF BUFORD BOARD OF EDUCATION A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA

NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2019

Note 14: POSTEMPLOYMENT BENEFITS (CONTINUED)
Sensitivity of the District's proportionate share of the net OPEB liability to changes in the discount rate:
The following presents the District's proportionate share of the net OPEB liability calculated using the discount rate of 3.87%, as well as what the District's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.87%) or 1-percentage-point higher (4.87%) than the current rate:

District's proportionate share of the

net OPEB liability

$

1% Decrease
(2.87%)

Current discount rate
(3.87%)

37,891,137 $

32,449,753 $

1% Increase (4.87%)
28,061,846

Sensitivity of the District's proportionate share of the net OPEB liability to changes in the healthcare cost trend rate:
The following presents the School District's proportionate share of the net OPEB liability, as well as what the School District's proportionate share of the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current healthcare trend rates:

District's proportionate share of the net OPEB liability

1% Decrease

Current healthcare cost
trend rate

$

27,280,768 $

32,449,753 $

1% Increase
39,055,525

OPEB Plan Fiduciary Net Position: Detailed information about the OPEB plan's fiduciary net position is available in the Annual Comprehensive Financial Report (ACFR) which is publicly available at https://sao.georgia.gov/comprehensive-annual-financial-reports.
Note 15: PRIOR PERIOD RESTATEMENT
During the fiscal year ended June 30, 2018, the School District erroneously over-accrued $1,738,335 of expenditures. The error overstated fund expenditures, and the School District is restating beginning fund balance in the Capital Projects Fund as shown below:

Fund balance, Capital Projects Fund, as previously reported
To restate opening balances for expenditures as of June 30, 2018 improperly accrued
Fund balance, beginning of year, as restated

Capital

Projects

Fund

$

37,632,865

1,738,335

$

39,371,200

43

REQUIRED SUPPLEMENTARY INFORMATION

CITY OF BUFORD BOARD OF EDUCATION
GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2019

REVENUES Property taxes Local contribution State funds Federal funds Charges for services Investment earnings Miscellaneous
Total revenues

Budget Original

$

- $

23,900,000

24,485,253

1,989,690

2,324,820

8

3,648,803

56,348,574

EXPENDITURES Current:
Instruction Support services: Pupil services Improvement of instructional services Educational media services General administration School administration Business administration Maintenance and operation of plant Student transportation services Other support services Enterprise operations Community service Food service operation
Total expenditures

39,962,503
2,187,887 270,864 670,749
3,162,007 3,395,825
547,552 3,877,951 1,721,933
755,669 596,207 2,008,461 59,157,608

Excess (deficiency) of revenues over expenditures

(2,809,034)

OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses)

799,789 (775,209)
24,580

Net change in fund balances

(2,784,454)

FUND BALANCE, beginning of fiscal year

6,813,879

FUND BALANCE, end of fiscal year

$

4,029,425 $

Final
- $ 23,900,000 24,485,253
2,802,245 2,324,820
8 3,673,803 57,186,129
39,960,502
2,191,887 268,020 673,594
3,161,692 3,393,825
547,552 3,877,951 1,721,933
755,669 596,207 2,008,461 59,157,293
(1,971,164)
774,789 (774,789)
-
(1,971,164)
6,813,879
4,842,715 $

Actual

Variance With Final Budget

17,607,897 $ 7,192,103
25,099,591 3,034,118 2,690,486 1,582 3,846,135
59,471,912

17,607,897 (16,707,897)
614,338 231,873 365,666
1,574 172,332 2,285,783

38,493,132
2,540,725 409,795 660,304
2,949,759 3,501,896
591,452 3,889,619 1,946,766
9,915 993,023 541,272 2,206,935 58,734,593
737,319
1,372,252 (1,742,607)
(370,355)
366,964
6,813,879
7,180,843 $

1,467,370
(348,838) (141,775)
13,290 211,933 (108,071) (43,900) (11,668) (224,833)
(9,915) (237,354)
54,935 (198,474) 422,700
2,708,483
597,463 (967,818) (370,355)
2,338,128
-
2,338,128

44

CITY OF BUFORD BOARD OF EDUCATION

REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY
TEACHERS RETIREMENT SYSTEM OF GEORGIA FOR THE FISCAL YEAR ENDED JUNE 30

District's proportion of the net pension liability District's proportionate share of the net pension liability State of Georgia's proportionate share of the net pension liability associated with the District Total District's covered payroll District's proportionate share of the net pension liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability

2019 0.233023% $ 43,254,060
$ 43,254,060 $ 27,740,075
155.93% 80.27%

2018 0.225437% $ 41,898,161
$ 41,898,161 $ 25,897,057
161.79% 79.33%

2017 0.220221% $ 45,434,048
$ 45,434,048 $ 24,159,790
188.06% 76.06%

2016 0.213863% $ 32,558,518
$ 32,558,518 $ 22,577,922
144.21% 81.44%

2015 0.207611% $ 26,228,911
$ 26,228,911 $ 21,180,488
123.84% 84.03%

Note: Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available.

45

CITY OF BUFORD BOARD OF EDUCATION
REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS
TEACHERS RETIREMENT SYSTEM OF GEORGIA FOR THE FISCAL YEAR ENDED JUNE 30

Contractually required contributions
Contributions in relation to the contractually required contributions
Contribution deficiency (excess)
School District's covered payroll
Contributions as a percentage of covered payroll

2019

2018

2017

2016

2015

$

6,043,035 $ 4,663,109 $ 3,695,510 $ 3,447,602 $

2,968,999

6,043,035

4,663,109

3,695,510

3,447,602

2,968,999

$

- $

- $

- $

- $

-

28,914,043

27,740,075

25,897,057

24,159,790

22,577,922

20.90%

16.81%

14.27%

14.27%

13.15%

Contractually required contributions
Contributions in relation to the contractually required contributions
Contribution deficiency (excess)
School District's covered payroll
Contributions as a percentage of covered payroll

2014

2013

2012

2011

2010

$

2,600,961 $ 2,335,428 $ 2,005,680 $ 1,926,521 $

1,846,138

2,600,961

2,335,428

2,005,680

1,926,521

1,846,138

$

- $

- $

- $

- $

-

21,180,448

20,468,257

19,510,499

18,740,469

18,954,179

12.28%

11.41%

10.28%

10.28%

9.74%

Note: Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available.

46

CITY OF BUFORD BOARD OF EDUCATION
REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY
PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA FOR THE FISCAL YEAR ENDED JUNE 30

School District's proportion of the net pension liability School District's proportionate share of the net pension liability

2019 0.000000%

2018 0.000000%

2017 0.000000%

2016 0.000000%

2015 0.000000%

$

-

$

-

$

-

$

-

$

-

State of Georgia's proportionate share of the net pension liability associated with the School District Total School District's covered-employee payroll

348,127

298,154

405,517

256,607

188,706

$

348,127

$

298,154

$

405,517

$

256,607

$

188,706

$

639,086

$

572,740

$

548,875

$

475,587

$

487,730

School District's proportionate share of the net pension liability as a percentage of its covered-employee payroll Plan fiduciary net position as a percentage of the total pension liability

N/A 85.26%

N/A 85.69%

N/A 81.00%

N/A 87.00%

N/A 88.29%

Note: Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available.

47

CITY OF BUFORD BOARD OF EDUCATION
REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET OPEB LIABILITY
SCHOOL OPEB FUND FOR THE FISCAL YEAR ENDED JUNE 30

District's proportion of the net OPEB liability

2019 0.255315%

2018 0.247536%

District's proportionate share of the net OPEB liability

$

32,449,753 $

34,778,709

Total

$

32,449,753 $

34,778,709

District's covered-employee payroll

$

25,623,822 $

23,906,164

District's proportionate share of the net OPEB liability as a percentage of its covered-employee payroll

126.64%

145.48%

Plan fiduciary net position as a percentage of the total OPEB liability

2.93%

1.61%

Note: Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available.

48

CITY OF BUFORD BOARD OF EDUCATION
REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS SCHOOL OPEB FUND
FOR THE FISCAL YEAR ENDED JUNE 30

Contractually required contributions Contributions in relation to the contractually required contributions Contribution deficiency (excess) District's covered-employee payroll Contributions as a percentage of covered-employee payroll

2019 $ 1,367,774

1,367,774

$

-

$ 26,816,640

5.10%

2018 $ 1,323,269

1,323,269

$

-

$ 25,623,822

5.16%

2017 $ 1,290,673

1,290,673

$

-

$ 23,906,164

5.40%

Note: Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available.

49

CITY OF BUFORD BOARD OF EDUCATION
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE FISCAL YEAR ENDED JUNE 30, 2019
Teachers Retirement System of Georgia: Changes of assumptions : Postretirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service retirements and dependent beneficiaries. The RP-2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on November 18, 2015, the numbers of expected future deaths are 8-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 911% less than expected under the selected table for disabled retirees. Rates of mortality in active service were based on the RP2000 Employee Mortality Table projected to 2025 with projection scale BB.
Public Schools Employees Retirement System of Georgia:
Changes of assumptions : In 2010 and later, the expectation of retired life mortality was changed to the RP 2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. On December 17, 2015, the Board adopted -recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement and withdrawal. The expectation of retired life mortality was changed to the RP 2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females). On March 15, 2018, the Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for June 30, 2017 actuarial valuation. In addition, based on the Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date.
School System OPEB Fund:
Changes of benefit terms : In the June 30, 2010 actuarial valuation, there was a change of benefit terms to require Medicareeligible recipients to enroll in a Medicare Advantage plan to receive the State subsidy.
Changes in assumptions: In the revised June 30, 2017 actuarial valuation, there was a change relating to employee allocation. Employees were previously allocated based on their Retirement System membership, and currently employees are allocated based on their current employer payroll location.
In the June 30, 2015 actuarial valuation, decremental and underlying inflation assumptions were changed to reflect the Retirement Systems' experience studies.
In the June 30, 2012 actuarial valuation, a data audit was performed and data collection procedures and assumptions were changed.
50

SUPPLEMENTARY INFORMATION

CITY OF BUFORD BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF SPECIAL PURPOSE LOCAL OPTION SALES TAX PROCEEDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2019

PROJECT

SPLOST V - HALL COUNTY

(i) Acquiring, constructing and equipping new

$

schools, fine arts facilities, physical education

facilities, student activity facilities and other school

system facilities, acquiring and conducting site

preparation of real estate for school district

purposes, constructing and equipping additional

classrooms, instructional and support space, and

other school district facilities at existing school

system facilities, and acquiring furnishings,

equipment and fixtures for new and existing facilities

system-wide, including technology

equipment, textbooks, library books and school

buses; and (ii) paying expenses incident thereto.

SPLOST V - GWINNETT COUNTY

(i) acquiring new sites for the construction of new schools, support facilities and athletic facilities and the expansion of existing schools and support facilities; (ii) developing sites for and constructing and equipping new schools, support facilities and athletic facilities; (iii) making additions to, acquiring or renovating and equipping existing schools, support facilities and athletic facilities; (iv) purchasing and refurbishing school buses and other transportation vehicles; (v) making existing or new lease/purchase payments or payments with respect to the acquisition of new and existing schools and support facilities along with buses and other transportation vehicles, textbooks, library books and other media; (vi) modernizing technology and making system-wide technology improvements in the Buford School District; and (vii) paying principal and interest of previously issued indebtedness

Total SPLOST V Expenditures

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

TOTAL COMPLETION
COST

ESTIMATED COMPLETION
DATE

3,200,000 $

5,916,065 $

- $

5,916,065 $

5,916,065 $

Completed

22,325,000

37,123,079

2,396,293

34,726,786

37,123,079

2/1/2020

25,525,000

43,039,144

2,396,293

40,642,851

43,039,144

$

25,525,000 $

43,039,144 $

2,396,293 $

40,642,851 $

43,039,144

Reconciliation of the Schedule of Approved Local Option Sales Tax Projects expenditures to the Capital Projects Fund total expenditures on the Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds:

Expenditures from above paid by SPLOST funding

$

2,396,293

Principal payments on SPLOST projects

10,770,000

Expenditures not reflected above that were paid from other local sources of the School System

34,157,545

Total Capital Projects Expenditures

$

47,323,838

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.
(3) The voters of Hall and Gwinnett Counties approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

51

SINGLE AUDIT SECTION

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Superintendent and Members of the City of Buford Board of Education
Buford, Georgia
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Buford City Schools (the "School District"), as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements, and have issued our report thereon dated September 2, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the School District's internal control over financial reporting (internal control) as a basis for designing the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies, and therefore, material weaknesses or significant deficiencies may exist that have not been identified. We did identify certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as items 2019-001, 2019-002, 2019-003, 2019-004, and 2019-005 that we consider to be material weaknesses.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants RSM International

Compliance and Other Matters As part of obtaining reasonable assurance about whether the School District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed an instance of noncompliance or other matters that are required to be reported under Government Auditing Standards and which is described in the accompanying schedule of findings and questioned costs as item 2019-006. The City of Buford Board of Education's Responses to Findings The School District's responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs and management's corrective action plan. The School District's responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Atlanta, Georgia September 2, 2021
53

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE
To the Superintendent and Members of the City of Buford Board of Education
Buford, Georgia
Report on Compliance for Each Major Federal Program
We have audited the School District's compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the School District's major federal programs for the year ended June 30, 2019. The School District's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the School District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the School District's compliance.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants RSM International

Opinion on Each Major Federal Program
In our opinion, the School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2019.
Report on Internal Control Over Compliance
Management of the School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
55

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Atlanta, Georgia September 2, 2021
56

CITY OF BUFORD BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Funding Agency Program/Grant

CFDA Number

PassThrough
Entity ID
Number

U. S. Department of Agriculture Pass-Through From Georgia Department of Education Child Nutrition Cluster Food services National School Breakfast Program National School Lunch Program USDA-Food Distribution
SNP Warehouse
Total Child Nutrition Cluster Total U. S. Department of Agriculture

10.553 10.555 10.560
10.560

195GA324N1099 $ 195GA324N1099 195GA904N2533
195GA904N2533

U. S. Department of Education Pass-Through From Georgia Department of Education Special Education Cluster Title VI-B Flow Through Total Special Education Cluster

84.027

H027A190073

Pass-Through From Georgia Department of Education Other Programs Career and Technical Education - Basic Grants to States English Language Acquisition State Grants English Language Acquisition State Grants Student Support and Academic Enrichment Program Student Support and Academic Enrichment Program Supporting Effective Instruction State Grants Supporting Effective Instruction State Grants Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies Total Other Programs Total U.S. Department of Education
Total Expenditures of Federal Awards

84.048 84.365 84.365 84.424A 84.424A 84.367 84.367 84.010 84.010

V048A190010 S365A180010 S365A190010 S424A180011 S424A19001 S367A180001 S367A190001 S010A180010 S010A190010

$

Notes to the Schedule of Expenditures of Federal Awards

Note 1. Basis of Presentation

Expenditures In Period
293,491 952,597 163,972
2,834 1,412,894 1,412,894
762,591 762,591
23,683 14,496 43,604
25 25,356 11,514 75,050 138,054 526,851 858,633 1,621,224
3,034,118

The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of the City of Buford Board of Education (the "Board") under programs of the federal government for the year ended June 30, 2019. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position or changes in net position of the Board.
Note 2. Summary of Significant Accounting Policies

Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following, as applicable, either the cost principles in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments , or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards , wherein certain types of expenditures are not allowable or are limited as to reimbursement.
Note 3. Indirect Cost Rate
The Board has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance.
57

CITY OF BUFORD BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

SECTION I SUMMARY OF AUDITOR'S RESULTS

Financial Statements Type of report the auditor issued on whether the financial
statements were prepared in accordance with GAAP

Unmodified

Internal control over financial reporting: Material weaknesses identified?
Significant deficiencies identified? Noncompliance material to financial statements noted?
Federal Awards Internal control over major programs: Material weaknesses identified?
Significant deficiencies identified?
Type of auditor's report issued on compliance for major programs:
Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)?
Identification of major program:
CFDA Number 84.010 84.027
Dollar threshold used to distinguish between Type A and Type B programs:
Auditee qualified as low-risk auditee?

X yes

no

yes X yes

X none reported no

yes X no yes X none reported Unmodified yes X no

Name of Federal Program or Cluster Title I, Part A Special Education Cluster
$750,000
yes X no

58

CITY OF BUFORD BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
SECTION II FINANCIAL STATEMENT FINDINGS AND RESPONSES
2019-001 Maintenance of Long-term Debt Ledger Criteria: Internal controls should be in place to ensure that financial statements of the School District are properly presented in accordance with accounting principles generally accepted in the United States of America. Condition: Certain internal controls at fiscal year-end were not in place to ensure the activity noted below was properly and timely reported within the financial statements. Context/Cause: During the audit for the fiscal year ended June 30, 2019, we noted that the long-term debt schedule provided for the audit omitted the advance between the School Distinct and Gwinnett County with a balance of approximately $14,709,000 as of and for the fiscal year ended June 30, 2019. Effects: The errors discussed above created the need for adjustments to the line items noted above. The total value of these adjustments was approximately $110,936,000. Recommendations: We recommend the School District reexamine its fiscal year-end close out procedures to ensure controls are in place to correctly record activity that occurred during the fiscal year and that such activity is properly reflected in the School District's accounting records as of the end of the fiscal year. Auditee's Response: We concur with the finding and will reexamine our fiscal year-end closeout procedures to ensure controls are in place to properly reflect activity and balances for the fiscal year.
59

CITY OF BUFORD BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
SECTION II FINANCIAL STATEMENT FINDINGS AND RESPONSES (CONTINUED) 2019-002 Payroll Reversal Criteria: Payroll accrual reversals should be adjusted against the expenditure functions they were accrued for and not revenues. Condition: The School District erroneously recorded a payroll accrual reversal as revenue in its accounting records as of and for the fiscal year ended June 30, 2019. Context/Cause: The error noted above occurred due to management oversight. Effects: The effects of the oversight noted above caused the School District's revenues and expenditures to be overstated by approximately $819,000. Recommendation: We recommend the School District implement a procedure to ensure that payroll activity for the year is correctly recorded in its accounting records as of fiscal year-end. Auditee's Response: We concur with the finding. We will implement a procedure to ensure payroll activity for the year is correctly recorded in our accounting records as of fiscal year-end.
60

CITY OF BUFORD BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

SECTION II FINANCIAL STATEMENT FINDINGS AND RESPONSES (CONTINUED)

2019-003

Cash
Criteria: Accounting records at fiscal year-end should reflect all cash balances as of June 30, 2019. Monthly reconciliations of the District's cash balances should be timely performed to reconcile activity to the general ledger.

Condition: The School District failed to record all of its cash activity as of and for the fiscal year-ended June 30, 2019.
Context/Cause: During our testing of cash, audit adjustments were required to properly report the School District's cash and revenue balances resulting from omissions of cash and revenues due to management oversight.

Effects: As a result of the errors noted above, the School District's cash and revenues were understated by approximately $267,000. An audit adjustment was required to correct these misstatements.

Recommendations: We recommend the School District carefully review all cash and related revenues to ensure that transactions are recorded in its accounting records.

Auditee's Response: We concur with the finding and are currently implementing controls to properly reflect all transactions in our accounting records.

61

CITY OF BUFORD BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
SECTION II FINANCIAL STATEMENT FINDINGS AND RESPONSES (CONTINUED)
2019-004 Prior Period Adjustment Criteria: Internal controls should be in place to correctly record expenditure activity that is transacted by the City of Buford on behalf of the School District. The activity resulting from the various capital accounts of the District which are maintained by the City should be reported in the District's general ledger on a monthly basis and reconciled to the City's records. Condition: During our testing, the School District had erroneously recorded approximately $1,700,000 of overaccrued expenditures related to construction in progress in the prior fiscal year as donation revenue from the City of Buford for the fiscal year ended June 30, 2019. Context/Cause: The above error occurred due to a failure of management to accurately track and record activity and adjustments that occurred on behalf of the School District at the City of Buford. Effects: Failure to properly track and record activity, including all year-end adjustments, noted above resulted in an overstatement of revenues and understated opening fund balance of approximately $1,738,000 in the School District's Capital Projects Fund. An audit adjustment was required to correct these misstatements. Recommendation: We recommend the School District work with the City of Buford in order to accurately understand and record activity that occurs on the School District's behalf to ensure that this activity is properly recorded in its accounting records at the end of the fiscal year. Auditee's Response: We concur with the finding. The School District will take the necessary steps to work with the City of Buford to ensure that activity that occurs on behalf of the School District is properly recorded in our accounting records.
62

CITY OF BUFORD BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
SECTION II FINANCIAL STATEMENT FINDINGS AND RESPONSES (CONTINUED)
2019-005 Segregation of Duties Criteria: Internal controls should be in place which provide reasonable assurance that an individual cannot misappropriate funds without such actions being detected during the normal course of business and the financial information is accurately reported.
Condition: During our walkthrough procedures, we noted the School District does not have adequate controls to properly segregate all responsibilities related to the following:
The individual responsible for reconciling the bank statements also has the ability to edit the receivables master file;
The individual who deposits cash also posts receipts to the receivables ledger; The individual who mails checks and issues debit memos can also edit the vendor master
file; The individual who maintains access to and custody of inventory also maintains the chart
of accounts; and All members of the Finance staff are able to print checks with the Superintendent's
electronic signature.
Context/Cause: The School District finance department runs on a relatively small staff with multiple responsibilities and it is easy to assign too many functions to one individual.
Effects: Failure to properly segregate duties may allow for errors or irregularities to occur and not be detected in a timely manner by employees in the normal course of performing their assigned functions.
Recommendation: We recommend the School District properly segregate duties relative to the areas we noted above. In particular, we specifically recommend that only select members of the finance staff have the ability to print the Superintendent's signature on checks.
Auditee's Response: We concur with the finding. The School District will take the necessary steps to address the segregation of duties deficiency noted above with compensating controls.
63

CITY OF BUFORD BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
SECTION II FINANCIAL STATEMENT FINDINGS AND RESPONSES (CONTINUED)
2019-006 Collateralization of Deposits Criteria: Policies should be in place requiring all financial institutions holding cash deposits to be properly insured and, or collateralized at all times throughout the fiscal year. State statutes require deposits of public funds to be insured or collateralized at a rate of at least 110 percent of the deposit amount. Condition: As of June 30, 2019, deposits of the School District held at a financial institution totaling approximately $9.3 million were not fully collateralized or insured in accordance with the Official Code of Georgia Annotated (OCGA) Section 45-8-12(c). The pledged collateral for these accounts was less than the required amount by approximately $287,000. Context/Cause: The School District's deposits were not properly monitored by management of the School District and therefore, were not adequately collateralized at the financial institution as of June 30, 2019. Effects: The failure of a financial institution to fully collateralize or insure the School District's deposits could result in financial loss to the School District should the financial institution fail. Recommendation: We recommend the School District ensure that all deposits are properly categorized as public funds by the financial institution and that the deposits are adequately insured and, or collateralized throughout the fiscal year. Auditee's Response: We concur with the finding. We have discussed the matter with the financial institution and have implemented a process whereby monthly collateral statements will be remitted to the School District to ensure the adequacy of collateral pledged to secure the School District's deposits.
64

CITY OF BUFORD BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

None noted

SECTION III FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

65

CITY OF BUFORD BOARD OF EDUCATION
A COMPONENT UNIT OF THE CITY OF BUFORD, GEORGIA STATUS OF PRIOR FISCAL YEAR FINDINGS AND QUESTIONED COSTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2019
FS2018-001 Internal Controls over Cash and Cash Equivalents Condition and Context: The prior fiscal year's auditors observed deficiencies following control deficiencies related to cash and investments. Status: Corrected for the current fiscal year's audit.
FS2018-002 Controls over Financial Reporting Condition and Context: The prior fiscal year's auditors noted numerous deficiencies in the School District's controls over preparation of financial information used in the financial statements. Status: Not corrected in the current fiscal year's audit. See finding 2019-001.
FS2018-003 Accounting for Special Purpose Local Option Sales Tax Activity Condition and Context: The School District did not adequately account for the activity of the Special Purpose Local Option Sales Tax (SPLOST). Status: Not corrected in the current fiscal year's audit. See finding 2019-004.
FA2018-001 Excessive Cash Balances (CFDA #84.010) Condition and Context: Upon review of cash drawdowns and disbursements related to the Title I program, cash balances in excess of Title I program materiality were observed throughout the majority of the fiscal year. Status: Corrected for the current fiscal year's audit.
66

Robert L. Downs, Ed.D. Superintendent
Melanie Reed, Ed. S. Deputy Superintendent
Amy Chafin, Ed.D. Assistant Superintendent

2625 Sawnee Avenue Buford, Georgia 30518 Phone: 770-945-5035
Fax: 770-945-4629

CORRECTIVE ACTION PLANS - FINANCIAL STATEMENT FINDINGS

Finding 2019-001: Maintenance of Long-term Debt Ledger

The financial statement reporting process of the School District was insufficient to ensure all required activity was correctly included in the financial statement information presented for audit.

Corrective Action Plans: Buford City Schools administrative finance team will utilize the suggested end of the year checklist from Georgia Department of Education FMGULA and the suggested end of the year checklist from the Georgia Department of Audits and Accounts. The finance team will work with the vendor contracted to provide financial statements to ensure that the statements are completed in compliance with GAAP.

Estimated Completion Date: 09/30/2021

Contact Person: Angela Adams, Director of Finance Telephone: 770-945-5035 ext 308; E-mail:angela.adams@bufordcityschools.org

Finding 2019-002: Payroll Reversal
Payroll accrual reversals should be adjusted against the expenditure functions they were accrued for and not revenue.
Corrective Action Plans: Buford City Schools administrative finance team will implement procedures to ensure that payroll activity for the year is correctly recorded in its accounting records as of the fiscal year-end.
Estimated Completion Date: 09/30/2021
Contact Person: Angela Adams, Director of Finance Telephone: 770-945-5035 ext 308; E-mail:angela.adams@bufordcityschools.org

Buford City Schools is an equal opportunity employer
67

Finding 2019-003: Cash The school district failed to record all of its cash activity as of and for the fiscal year ended June 30, 2019. Corrective Action Plans: Buford City Schools administrative finance team will carefully review all cash and related revenues to ensure that transactions are recorded in the accounting records. Estimated Completion Date: 09/30/2021 Contact Person: Angela Adams, Director of Finance Telephone: 770-945-5035 ext 308; E-mail:angela.adams@bufordcityschools.org Finding 2019-004: Prior Period Adjustment The School District erroneously recorded approximately $1,700,000 of overaccrued expenditures related to construction in progress in the prior fiscal year as donation revenue from the City of Buford for the fiscal year ended June 30, 2019. Corrective Action Plans: Buford City Schools administrative finance team will work closely with the City of Buford in order to accurately record the activity that occurs at the City Government on behalf of the school district. Estimated Completion Date: 09/30/2021 Contact Person: Angela Adams, Director of Finance Telephone: 770-945-5035 ext 308; E-mail:angela.adams@bufordcityschools.org
Buford City Schools is an equal opportunity employer
68

Finding 2019-005: Segregation of Duties
The School District does not have adequate controls to properly segregate all responsibilities related to the following:
The individual responsible for reconciling the bank statements also has the ability to edit the receivables master file;
The individual who deposits cash also posts receipts to the receivables ledger; The individual who mails checks and issues debit memos can also edit the vendor master
file; The individual who maintains access to and custody of inventory also maintains the chart
of accounts; All members of the Finance staff are able to print checks with the Superintendent's; and Electronic signature.
Corrective Action Plan: The School District will take the necessary steps to address the segregation of duties deficiency noted above with compensating controls.
Estimated Completion Date: 09/30/2021
Contact Person: Angela Adams, Director of Finance Telephone: 770-945-5035 ext 308; E-mail:angela.adams@bufordcityschools.org
Finding 2019-006: Collateralization of Deposits
Deposits of the School District held at a financial institution totaling approximately $9.3 million were not fully collateralized or insured in accordance with the Official Code of Georgia Annotated (OCGA) Section 45-8-12(c). The pledged collateral for these accounts was less than the required amount by approximately $287,000.
Corrective Action Plans: The School District will take the necessary steps to ensure that all deposits are properly categorized as public funds by the financial institution and that the deposits are adequately insured and, or collateralized throughout the fiscal year.
Estimated Completion Date: 09/30/2021
Contact Person: Angela Adams, Director of Finance Telephone: 770-945-5035 ext 308; E-mail:angela.adams@bufordcityschools.org
Buford City Schools is an equal opportunity employer
69