Hancock County Board of Education, Sparta, Georgia, annual financial report for the fiscal year ended 2022 June 30 (including independent auditor's reports).

HANCOCK COUNTY BOARD OF EDUCATION
ANNUAL FINANCIAL REPORT (Including Independent Auditor's Report)
FOR THE FISCAL YEAR ENDED JUNE 30, 2022

Hancock County Board of Education

Table of Contents

Section I

Financial Independent Auditor's Report

Exhibits

Basic Financial Statements

Government-Wide Financial Statements

A

Statement of Net Position

1

B

Statement of Activities

2

Fund Financial Statements

C

Balance Sheet

Governmental Funds

3

D

Reconciliation of the Governmental Funds Balance Sheet

to the Statement of Net Position

4

E

Statement of Revenues, Expenditures and Changes in Fund Balances

Governmental Funds

5

F

Reconciliation of the Governmental Funds Statement of

Revenues, Expenditures and Changes in Fund Balances

to the Statement of Activities

6

G

Statement of Fiduciary Net Position

Fiduciary Fund

7

H

Statement of Changes in Fiduciary Net Position

Fiduciary Fund

8

I Notes to the Basic Financial Statements

10

Schedules

Required Supplementary Information

1 Schedule of Proportionate Share of the Net Pension Liability

Teachers' Retirement System of Georgia

39

2 Schedule of Contributions Teachers' Retirement System of Georgia

40

3 Schedule of Proportionate Share of the Net Pension Liability

Public School Employees' Retirement System of Georgia

41

4 Schedule of Proportionate Share of the Net OPEB Liability

School OPEB Fund

42

5 Schedule of Contributions School OPEB Fund

43

6 Notes to the Required Supplementary Information

44

7 Schedule of Revenues, Expenditures and Changes in Fund

Balances - Budget and Actual General Fund

45

Supplementary Information

8 Schedule of Expenditures of Federal Awards

46

9 Schedule of State Revenue

48

10 Schedule of Approved Local Option Sales Tax Projects

49

Section II
Compliance and Internal Control Reports
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
Independent Auditor's Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by the Uniform Guidance

Section III Auditee's Response to Prior Year Findings and Questioned Costs Summary Schedule of Prior Audit Findings

Section IV Findings and Questioned Costs Schedule of Findings and Questioned Costs

Section V Management's Corrective Action for Current Year Findings Schedule of Management's Corrective Action

Section I Financial

Greg S. Griffin State Auditor
INDEPENDENT AUDITOR'S REPORT
The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education
and Dr. Alma Harper, Superintendent and Members of the Hancock County Board of Education
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, each major fund, and fiduciary activities of the Hancock County Board of Education (School District) as of and for the year ended June 30, 2022, 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.
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 fiduciary activities of the School District as of June 30, 2022, 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.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.
We are required to be independent of the School District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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.
270 Washington Street, SW, Suite 4-101 Atlanta, Georgia 30334 | Phone (404) 656-2180

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the School District's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit 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 School District's internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the School District's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
Required Supplementary Information
Management has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing 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. Our opinions on the basic financial statements are not affected by this missing information.
Accounting principles generally accepted in the United States of America require that the required supplementary information listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, 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 GAAS, 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 appropriate evidence to express an opinion or provide any assurance.
Supplementary 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 accompanying supplementary information, as listed in the table of contents, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis 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, and is also not a required part of the basic financial statements.
The supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information 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 GAAS. In our opinion, the 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 February 26, 2024 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.

A copy of this report has been filed as a permanent record and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. Respectfully submitted,
Greg S. Griffin State Auditor
February 26, 2024

Hancock County Board of Education

HANCOCK COUNTY BOARD OF EDUCATION
STATEMENT OF NET POSITION JUNE 30, 2022

EXHIBIT "A"

ASSETS
Cash and cash equivalents Receivables:
Taxes State Federal Inventory Prepaid items Capital assets (nondepreciable) Capital assets (net of accumulated depreciation) Total assets
DEFERRED OUTFLOWS OF RESOURCES
Related to defined benefit OPEB plan Related to defined benefit pension plan
Total deferred outflows of resources
LIABILITIES
Accounts payable Salaries and benefits payable Unearned revenue Net OPEB liability Net pension liability
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Related to defined benefit OPEB plan Related to defined benefit pension plan
Total deferred inflows of resources
NET POSITION (DEFICIT)
Net investment in capital assets Restricted for:
Continuation of federal programs Capital projects Unrestricted (deficit)
Total net position (deficit)

Governmental Activities

$

4,307,530

987,942 533,993 2,034,931
27,522 216,989 189,698 7,118,743 15,417,348

2,705,411 3,137,509
5,842,920

1,395,840 943,031 58,070
9,660,881 4,367,420 16,425,242

6,513,484 7,027,079 13,540,563

7,308,441
116,144 2,261,603 (18,391,725) $ (8,705,537)

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

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HANCOCK COUNTY BOARD OF EDUCATION
STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2022

EXHIBIT "B"

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 Central support services Other support services Food service operations 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

$

6,280,496 $ 115,963 $ 5,456,569 $

- $

(707,964)

660,138

-

565,264

591,922

-

445,115

159,046

-

103,767

509,022

-

439,457

897,759

-

656,084

389,269

-

67,445

2,396,634

-

481,494

1,092,393

-

518,046

550,796

-

4,324

86,551

-

31,834

982,980

33,007

1,084,440

$

14,597,006 $ 148,970 $ 9,853,839 $

-

(94,874)

-

(146,807)

-

(55,279)

-

(69,565)

-

(241,675)

-

(321,824)

-

(1,915,140)

-

(574,347)

-

(546,472)

-

(54,717)

-

134,467

-

(4,594,197)

General revenues: Taxes: Property taxes, levied for maintenance and operations Sales taxes, for capital projects Intangible taxes Unrestricted investment earnings Miscellaneous Total general revenues Change in net position
Net deficit, beginning of year Net deficit, end of year

5,374,917 728,224 88,704 5,709 138,061
6,335,615 1,741,418 (10,446,955) $ (8,705,537)

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

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HANCOCK COUNTY BOARD OF EDUCATION
BALANCE SHEET GOVERNMENTAL FUNDS
JUNE 30, 2022

EXHIBIT "C"

ASSETS
Cash and cash equivalents Receivables:
Taxes Intergovernmental:
State Federal Due from other funds Prepaid items Inventory
Total assets
LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES
LIABILITIES Accounts payable Salaries and benefits payable Due to other funds Unearned revenue - grants
Total liabilities
DEFERRED INFLOWS Unavailable revenue - property taxes
FUND BALANCES Nonspendable:
Inventory Prepaid items Restricted: Federal programs Capital projects Assigned: Student activities Unassigned
Total fund balances
Total liabilities, deferred inflows and fund balances

General

Capital Projects

Total Governmental
Funds

$

2,617,227 $

1,690,303 $

4,307,530

850,472

137,470

987,942

533,993

-

533,993

2,034,931 -

433,830

2,034,931 433,830

216,989

-

216,989

27,522

-

27,522

$

6,281,134 $

2,261,603 $

8,542,737

$

1,395,840 $

943,031

433,830

58,070

2,830,771

658,966

- $ -

1,395,840 943,031 433,830 58,070
2,830,771

-

658,966

27,522 216,989
88,622 -
73,063 2,385,201
2,791,397

-
2,261,603
-
2,261,603

27,522 216,989
88,622 2,261,603
73,063 2,385,201
5,053,000

$

6,281,134 $

2,261,603 $

8,542,737

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

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HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "D"

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2022

Total fund balances - governmental funds

$

5,053,000

Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets used in governmental activities are not financial resources and are not reported in the funds.
Cost Less accumulated depreciation

$ 20,413,966 (13,105,525)

7,308,441

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

658,966

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

are not reported in the funds.

Deferred outflows - pension plans

$

Deferred outflows - OPEB plans

Deferred inflows - pension plans

Deferred inflows - OPEB plans

Net pension liability

Net OPEB liability

3,137,509 2,705,411 (7,027,079) (6,513,484) (4,367,420) (9,660,881)

(21,725,944)

Net (deficit) of governmental activities

$

(8,705,537)

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

- 4 -

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "E"

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2022

REVENUES Property taxes Sales taxes State funds Federal funds Charges for services Investment earnings Miscellaneous Total revenues
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 Central support services Other support services Food services operation Debt service: Principal retirement Total expenditures
Net change in fund balances
FUND BALANCE, beginning of year
FUND BALANCE, end of year

General

Capital Projects

Total Governmental
Funds

$

5,967,913 $

88,704

4,887,953

4,999,314

148,970

3,655

138,061

16,234,570

- $ 728,224
2,054 730,278

5,967,913 816,928
4,887,953 4,999,314
148,970 5,709
138,061 16,964,848

7,107,693

733,737 717,617 195,728 554,072 1,060,738 447,548 2,512,994 1,092,122 587,860 102,572 1,094,964

17,091 16,224,736
9,834 2,781,563

$

2,791,397 $

-
-
-
730,278
1,531,325
2,261,603 $

7,107,693
733,737 717,617 195,728 554,072 1,060,738 447,548 2,512,994 1,092,122 587,860 102,572 1,094,964
17,091 16,224,736
740,112
4,312,888
5,053,000

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

- 5 -

HANCOCK COUNTY BOARD OF EDUCATION

EXHIBIT "F"

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, 2022

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 net effect of the amount by which depreciation exceeded capital outlay is to decrease net position.
Capital outlay Depreciation expense
Net effect of various miscellaneous transactions involving capital assets (sales, trade-ins, donations, etc.) is to decrease net position.
Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
Property taxes
Issuance of long-term debt provides current financial resources to governmental funds, while 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 net effect of these differences in the treatment of long-term debt and related items.

$
$ 338,300 (502,731)

740,112
(164,431) (114,280) (592,996)

Principal payments - financed purchases Change in net OPEB liability and deferred inflows
and outflows related to OPEB activity Change in net pension liability and deferred inflows
and outflows related to pension activity

$

17,091

480,510

1,375,412

1,873,013

Changes in net position of governmental activities

$

1,741,418

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

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HANCOCK COUNTY BOARD OF EDUCATION
STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUND JUNE 30, 2022

Cash and cash equivalents Accounts payable Restricted for program activities

ASSETS LIABILITIES NET POSITION

EXHIBIT "G"

Custodial Fund

$

-

$

-

$

-

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

- 7 -

HANCOCK COUNTY BOARD OF EDUCATION
STATEMENT OF CHANGE IN FIDUCIARY NET POSITION FIDUCIARY FUND JUNE 30, 2022

EXHIBIT "H"

Grants Program expenses Net Postion, beginning of year Net Position, end of year

ADDITIONS DEDUCTIONS CHANGE IN NET POSITION

Custodial Funds

$

87,796

87,796

-

$

-

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

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HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
Reporting Entity
The Hancock County Board of Education (the "School District") was established under the laws of the State of Georgia and operates under the guidance of a School Board (the "Board") elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of the School District have been prepared in conformity with generally accepted accounting principles ("GAAP") as prescribed by the Governmental Accounting Standards Board ("GASB"). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below.
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 Hancock County Board of Education. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness.
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 non-exchange transactions.

10

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Government-Wide Statements (Continued)
The Statement of Net Position presents the School District's non-fiduciary assets and liabilities, with the difference reported as net position. Net position is reported in three categories as follows:
1. Net investment in capital assets consists of the School District's total investment in capital assets, net of accumulated depreciation, and reduced by outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets.
2. Restricted net position consists of resources for which the School District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties or imposed by law through constitutional provisions or enabling legislation.
3. Unrestricted net position consists of resources not meeting the definition of the two preceding categories. Unrestricted net position often has constraints on resources imposed by management which can be removed or modified.
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.
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 are presented for governmental and fiduciary funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.

11

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fund Financial Statements
The School District reports the following major governmental funds:
The General Fund is the School District's primary operating fund. It accounts for and reports all financial resources of the School District, except those resources required to be accounted for in another fund.
The Capital Projects Fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax ("ESPLOST") and grants from the Georgia State Financing and Investment Commission that are restricted, committed, or assigned to expenditures for capital outlay, including the acquisition or construction of capital facilities and other capital assets.
Additionally, the School District reports the following fiduciary fund:
The Custodial Fund is used to report resources held by the School District in a purely custodial capacity.
Basis of Accounting
The basis of accounting determines when transactions are reported in the financial statements. The government-wide governmental activities is 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. Non-exchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. 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 and donations 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 tax revenues reported in the governmental funds to be available if they are collected within 60 days after year-end. All other revenues are considered to be available if they are collected within 120 days after year-end.

12

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of Accounting (Continued)
Property taxes, sales taxes, grants 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 general longterm 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 is both restricted and unrestricted net position 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, and then general revenues.
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 12-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 12-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 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
Composition of Deposits Cash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool ("Georgia Fund 1") 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.
Investments
Composition of Investments The School District can invest its funds as permitted by O.C.G.A. 36-83-4. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity.
13

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investments (Continued)
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.
Investments made by the School District in non-participating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. All other investments are reported at fair value.
For accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired.
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.
Due to other funds and due from other funds consist of activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year.
Inventories
Food 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 food inventories are reported at cost (first-in, first-out). 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.
Prepaid Items
Payments made to vendors for services that will benefit future accounting periods are recorded as prepaid items, in both the government-wide and governmental fund financial statements.
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 estimated 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.
14

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (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 method 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 Construction in Progress Land Improvements Buildings and Improvements Equipment Intangibles

Capitalization Policy
All $ 5,000
5,000 5,000 5,000 300,000

Estimated Useful Life
N/A N/A 50 Years 15 80 Years 3 20 Years 3 20 Years

Deferred Outflows/Inflows of Resources
In addition to assets, the Statement of Net Position and/or balance sheet will report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period(s) and, therefore, will not be recognized as an outflow of resources (expense/expenditure) until then.
In addition to liabilities, the Statement of Net Position and/or balance sheet will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and, therefore, will not be recognized as an inflow of resources (revenue) until that time.

Long-Term Liabilities and Bond Discounts/Premiums In the School District's government-wide financial statements, outstanding debt is reported as liabilities.

In the governmental fund financial statements, the School District recognizes the proceeds of debt and premiums as other financing sources of the current period.

15

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

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 pension plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the plan. 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.
Post-Employment Benefits Other Than Pensions ("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' Post-Employment Benefit Fund (the "School OPEB Fund") and additions to/deductions from the School OPEB Fund 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.
Fund Balance
Fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent.
The School District's fund balances are classified as follows:
Non-spendable Amounts that cannot be spent, either because they are in a non-spendable form or because they are legally or contractually required to be maintained intact.
Restricted Constraints that are placed on the use of resources are either: 1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments, or 2) imposed by law through constitutional provisions or enabling legislation.
Committed Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority; the formal action required to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board.

16

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fund Balance (Continued)
Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by: 1) the Board of Education, or 2) the budget or finance committee, the Superintendent, or designee, to assign amounts to be used for specific purposes.
Unassigned Amounts within the General Fund not meeting the definition of any aforementioned category. The General Fund is the only fund that reports positive unassigned fund balance. In other governmental funds, it may be necessary to report a negative unassigned fund balance.
The responsibility for designating funds to specific classification is as follows:
Committed Fund Balance The Board of Education is the School District's highest level of decisionmaking authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Funds should be committed prior to the end of the fiscal year, although the exact amount may be determined in the subsequent fiscal year.
Assigned Fund Balance The Board of Education has authorized the Superintendent and the Director of Finance as officials authorized to assign fund balance to a specific purpose in accordance with the School District's policy. The accounting records should reflect sufficient documentation to support an assignment of funds by administration.
When multiple categories of fund balances are available for expenditures, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

17

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property Taxes

The Hancock County Board of Commissioners (the "Board") adopted the property tax levy for the 2021 tax digest year (calendar year) on September 20, 2021 (levy date) based on property values as of January 1, 2021. Taxes were due on December 20, 2021 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2021 tax digest are reported as revenue in the governmental funds for fiscal year 2022. The Hancock County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection 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, 2022, for maintenance and operations amounted to $5,613,940.

The tax millage rate levied for the 2021 tax year (calendar year) for the Hancock County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

14.216 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $353,973 during the fiscal year ended June 30, 2022.
Sales Taxes
Education Special Purpose Local Option Sales Tax ("ESPLOST"), at the fund reporting level, during the year amounted to $728,224 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 reauthorized at least every five years.
NOTE 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds is prepared and adopted by fund. The legal level of budgetary control was established by the Board at the aggregate fund level. The budget for the general fund was prepared in accordance with GAAP.

18

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 3: BUDGETARY DATA (Continued)
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of the O.C.G.A. 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
If expenditure of funds, in any fund, is anticipated to be more than the budgeted amount, the Superintendent shall request Board approval for the budget amendment. Any position or expenditure not previously approved in the annual budget that exceeds $5,000 shall require Board approval unless the Superintendent deems the position or purchase an emergency. In such case, the expenditure shall be reported to the Board at its regularly scheduled meeting. Under no circumstances is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board.
See the General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual in the Supplementary Information Section for a detail of any over/under expenditures during the fiscal year under review.
NOTE 4: DEPOSITS AND CASH EQUIVALENTS
Collateralization of Deposits O.C.G.A. 45-8-12, provides that there shall not be on deposit at any time in any depository for a time longer than ten 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 or 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 (O.C.G.A. 45-8-13.1), 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.
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,

19

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 4: DEPOSITS AND CASH EQUIVALENTS (Continued)
(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.
Categorization of Deposits Custodial credit risk is the risk that in the event of bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2022, the School District had deposits with a carrying value of $2,769,540 excluding cash equivalents, and bank balances of $2,494,581. The bank balances insured by Federal depository insurance were $654,436 and the bank balance collateralized with securities held by the pledging financial institution's agent in the School District's name were $1,088,568.
At June 30, 2022, $751,577 of the School District's bank balances were in the State's Secure Deposit Program. The School District participates in the State's Secure Deposit Program ("SDP"), a multi-bank pledging pool. The SDP requires participating banks that accept public deposits in Georgia to operate under the policy and procedures of the program. The Georgia Office of State Treasurer ("OST") sets the collateral requirements and pledging level for each covered depository. There are four tiers of collateralization levels specifying percentages of eligible securities to secure covered deposits: 25%, 50%, 75%, and 110%. The SDP also provides for collateral levels to be increased in the amount of up to 125% if economic or financial conditions warrant. The program lists the types of eligible criteria. The OST approves authorized custodians.
In accordance with the SDP, if a covered depository defaults, losses to public depositors are first satisfied with any applicable insurance, followed by demands of payment under any letters of credit or sale of the covered depository collateral. If necessary, any remaining losses are to be satisfied by assessments made against the other participating covered depositories. Therefore, for disclosure purposes, all deposits of the SDP are considered to be fully collateralized.

20

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 4: DEPOSITS AND CASH EQUIVALENTS (Continued)
Reconciliation of cash and cash equivalents to carrying value of deposits:
Reconciliation of cash and cash equivalents to carrying value of deposits:
Statement of Net Position Cash and cash equivalents
Less: Investment pool reported as cash and cash equivalents: Georgia Fund 1
Total carrying value of deposits - June 30, 2022

$ 4,307,530
(1,537,990) $ 2,769,540

Categorization of Cash Equivalents The School District reported cash equivalents of $1,537,990 in Georgia Fund 1, a local government investment pool, which is included in the cash balances above. Georgia Fund 1 is not registered with the Securities and Exchange Commission ("SEC") as an investment company and does not operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share, which approximates fair value.
The pool is an AAAf/S1+ rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2022 was 43 days.
The Georgia Fund 1, (a local government investment pool), is administered by the State of Georgia OST and is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia OST for the Georgia Fund 1, does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Annual Comprehensive Financial Report, which is publicly available at https://sao.georgia.gov/statewide-reporting/acfr.
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. See Note 2 - Inventories

21

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 6: CAPITAL ASSETS

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

Governmental activities:
Capital assets, not being depreciated: Land Total
Capital assets, being depreciated: Buildings and improvements Equipment Land improvements Total

Begi nni ng Bal ance
$ 189,698 189,698
16,192,804 4,484,924 336,875
21,014,603

Less accumulated depreciation for: Buildings and improvements Equipment Land improvements Total
Total capital assets, being depreciated, net

(9,940,783) (3,410,561)
(265,805) (13,617,149)
7,397,454

Governmental activities capital assets, net

$ 7,587,152

Increases

$

-

-

9,146 329,154
-
338,300

(315,860) (165,022)
(21,849)
(502,731)

(164,431)

$ (164,431)

Decreases

$

-

-

(946,433)
(1,370)
(947,803)

833,523
-
833,523

(114,280)

$ (114,280)

Transfers

$

-

-

(173,057)
(7,775)
(180,832)

8,233 173,057
(458)
180,832

-

$

-

Endi ng Bal ance
$ 189,698 189,698
16,201,950 3,694,588 327,730
20,224,268
(10,248,410) (2,569,003) (288,112)
(13,105,525)
7,118,743
$ 7,308,441

Current year depreciation expense by function is as follows:
Instruction Support services
General administration Maintenance and operations Student transportation Food services

$ 369,213

$ 6,602 34,619 83,023

124,244 9,274

Total depreciation expense

$ 502,731

22

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 7: INTERFUND ASSETS AND LIABILITIES

Due to and due from other funds are recorded for interfund receivables and payables which arise from interfund transactions. Interfund balances for the year ended June 30, 2022, consisted of the following:

Due To

Due From General
Fund

Capital Projects Fund

$ 433,830

Interfund balances were incurred to repay the capital projects fund for amounts receipted to the general fund in error in prior years.

NOTE 8: 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, acts of God and unemployment compensation.

The School District has obtained commercial insurance for risks of loss associated with torts, assets, errors or omissions, job related illness or injuries to employees, and acts of God. 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 a liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2022

$

-

$ 1,144

$ 1,144

$

-

2021

$

-

$ 4,668

$ 4,668

$

-

23

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 8: RISK MANAGEMENT (Continued)

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

Position Covered Superintendent Finance Director
NOTE 9: LONG-TERM LIABILITIES
Changes in Long-Term Liabilities

Amount $ 250,000 $ 100,000

The changes in long-term liabilities during the fiscal year ended June 30, 2022 for governmental activities were as follows:

Balance June 30, 2021

Additions

Deletions

Balance June 30, 2022

Due Within One Year

Financed Purchase $

17,091 $

- $

(17,091) $

- $

-

Net OPEB Liability

12,623,025

658,508

(3,620,652)

9,660,881

-

Net Pension Liability

12,030,322

760,563

(8,423,465)

4,367,420

-

Total

$ 24,670,438 $ 1,419,071 $ (12,061,208) $ 14,028,301 $

-

NOTE 10: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. Any disallowances resulting from the grantor audit may become a liability of the School District. However, the School District believes that such disallowances, if any, will be immaterial to its overall financial position.
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 have a material adverse effect on the financial condition of the School District.

24

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 11: OTHER POST-EMPLOYMENT BENEFITS
Georgia School Personnel Post-Employment Health Benefit Fund
Plan Description: Certified teachers and non-certified public school employees of the School District as defined in O.C.G.A. 20-2-875 are provided OPEB through the School OPEB Fund a cost-sharing multiple-employer defined benefit post-employment healthcare plan, reported as an employee trust fund and administered by a Board of Community Health (the "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 Board.
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 the 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. Medicare-eligible 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, the School OPEB Fund is substantially funded on a pay-asyou-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. Contributions to the School OPEB Fund from the School District were $272,964 for the year ended June 30, 2022. 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, 2022, the School District reported a liability of $9,660,881 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2021. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2020. An expected total OPEB liability as of June 30, 2021 was determined using standard roll-forward techniques. The School District's proportion of the net OPEB liability was actuarially determined based on employer contributions during the fiscal year ended June 30, 2021. At June 30, 2021, the School District's proportion was 0.089198%, which was an increase of 0.003255% from its proportion measured as of June 30, 2020.

25

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 11: OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued)

For the year ended June 30, 2022, the School District recognized OPEB expense of ($207,546). At June 30, 2022, the School District reported deferred outflows of resources and deferred inflows of resources related to OPEB 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
School District contributions subsequent to the measurement date

OPEB

Deferred Outflows of Resources

Deferred Inflows of Resources

$

-

1,769,056

$ 4,411,128 788,322

-

15,319

663,391 272,964

1,298,715 -

Total

$ 2,705,411

$ 6,513,484

School District contributions subsequent to the measurement date of $272,964 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, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Fiscal Year Ending June 30,
2023 2024 2025 2026 2027 2028

OPEB $ (1,041,472)
(978,902) (819,688) (587,077) (512,616) (141,282)

26

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 11: OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued)
Actuarial Assumptions: The total OPEB liability as of June 30, 2021, was determined by an actuarial valuation as of June 30, 2020 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, 2021:

OPEB: Inflation Salary increases Long-term expected rate

2.50% 3.00% 8.75%, including inflation 7.00% compounded annually, net of investment
expense, and including inflation

Healthcare cost trend rate Pre-Medicare Eligible 6.75%

Medicare Eligible

5.13%

Ultimate trend rate

Pre-Medicare Eligible 4.50%

Medicare Eligible

4.50%

Year of Ultimate trend rate

Pre-Medicare Eligible Medicare Eligible

2029 2023

Mortality rates were based on the Pub-2010 Mortality Tables for Males or Females, as appropriate, as follows:

For TRS members: The Pub-2010 Teachers Headcount Weighted Below Median Healthy Retiree Mortality Table projected generationally with MP-2019 projection scale (set forward one year and adjusted 106%) is used for death after service retirement and beneficiaries. The Pub-2010 Teachers Mortality Table for Disabled Retirees projected generally with MP-2019 Projection scale (set forward one year and adjusted 106%) is used for death prior to retirement. For both, rates of improvement were reduced by 20% for all years prior to the ultimate rate.

27

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 11: OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued)
For PSERS members: Pre-retirement mortality rates were based on the Pub-2010 General Employee Mortality Table, with no adjustment, with the MP-2019 projection scale applied generationally. Post-retirement mortality rates for service retirements were based on the Pub-2010 General Healthy Annuitant Mortality Table (ages set forward one year and adjusted 105% for males and 108% for females) with the MP-2019 Projection scale applied generationally. Postretirement mortality rates for disability retirements were based on the Pub-2010 General Disabled Mortality Table (ages set back three years for males and adjusted 103% for males and 106% for females) with the MP-2019 projection scaled applied generationally. Post-retirement mortality rates for beneficiaries were based on the Pub-2010 General Contingent Survivor Mortality Table (ages set forward two years and adjust 106% for males and 158% for females) with the MP-2019 projection scale applied generationally.
The actuarial assumptions used in the June 30, 2020 valuation were based on the results of an actuarial experience study for the pension systems, which covered the five-year period ended June 30, 2018, with the exception of the assumed annual rate of inflation changed from 2.75% to 2.50%, effective with the June 30, 2018 valuation.
The remaining actuarial assumptions (e.g., initial per capita costs, health care cost trends, rate of plan participation, rates of plan election, etc.) used in the June 30, 2020 valuation were based on a review of recent plan experience done concurrently with the June 30, 2020 valuation.
Projection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer 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.
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.

28

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 11: OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued)
The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Fixed income Equities

Asset class Total

*Net of Inflation

Target allocation 30.00% 70.00% 100.00%

Long-Term Expected Real Rate of Return*
0.14% 9.20%

Discount Rate: In order to measure the total OPEB liability for the School OPEB, a single equivalent interest rate of 2.20% was used as the discount rate, as compared with last year's rate of 2.22%. This is comprised mainly of the yield or index rate for 20 year tax-exempt general obligation bonds with an average rating of AA or higher (2.16% per the Municipal Bond Index Rate). The projection of cash flows used to determine the discount rate assumed that contributions from members and from the employers 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 2145.

Sensitivity of the District's Proportionate Share of the Net OPEB Liability to Changes in the Discount Rate: The following presents the School District's proportionate share of the net OPEB liability calculated using the discount rate of 2.20%, as well as what the School 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 (1.20%) or 1percentage-point higher (3.20%) than the current discount rate:

School OPEB Fund- Discount Rate
School District's proportionate share of the OPEB liablity

1% Decrease (1.20% )

Current Discount Rate
(2.20% )

1% Increase (3.20% )

$

11,044,554 $

9,660,881 $

8,502,616

29

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 11: OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued)
Sensitivity of the District's Proportionate Share of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rates: 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 cost trend rates:

School OPEB Fund- Healthcare Cost Trend Rate

Current

1%

Healthcare Cost

1%

Decrease

Trend Rate

Increase

School District's proportionate share

of the OPEB liablity

$

8,197,632 $

9,660,881 $

11,490,058

OPEB Plan Fiduciary Net Position: Detailed information about the OPEB plan's fiduciary net position is available in the Annual Comprehensive Financial Report which is publicly available at https://sao.georgia.gov/statewide-reporting/acfr.

NOTE 12: RETIREMENT PLANS

The School District participates in various retirement plans administered by the State of Georgia as further explained below.

Teachers' Retirement System of Georgia ("TRS")
Plan Description: All teachers of the School District as defined in O.C.G.A. 47-3-60 and certain other support personnel as defined by O.C.G.A. 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. The TRS issues a publicly available separate financial audit 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 ten 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.
30

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 12: RETIREMENT PLANS
Teachers' Retirement System of Georgia ("TRS") (Continued)
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. 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 2022. The School District's contractually required contribution rate for the year ended June 30, 2022, was 19.81% of annual School District payroll. For the current fiscal year, employer contributions to the pension plan were $1,250,004 from the School District.
Public School Employees' Retirement System ("PSERS")
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 TRS of Georgia. The ERS Board of Trustees, plus two additional trustees, administer 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 https://www.ers.ga.gov/post/annual-financial-reports.
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.
Upon retirement, the member will receive a monthly benefit of $15.50, 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. The current fiscal year contribution was $33,764.
31

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 12: RETIREMENT PLANS (CONTINUED)
Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
At June 30, 2022, the School District reported a liability of $4,367,420 for its proportionate share of the Net Pension Liability for TRS.
The Net Pension Liability for TRS was measured as of June 30, 2021. The total pension liability used to calculate the Net Pension Liability was based on an actuarial valuation as of June 30, 2020. An expected total pension liability as of June 30, 2021, was determined using standard roll-forward techniques. The School District's proportion of the Net Pension Liability was based on contributions to TRS during the fiscal year ended June 30, 2021.
At June 30, 2021, the School District's TRS proportion was 0.049381%, which was a decrease of 0.000282% from its proportion measured as of June 30, 2020.
At June 30, 2022, the School District did not have a PSERS liability for a proportionate share of the Net Pension Liability because of a Special Funding Situation with the State of Georgia, which is responsible for the Net Pension Liability of the plan. The amount of the State's proportionate share of the Net Pension Liability associated with the School District is $31,929.
The PSERS Net Pension Liability was measured as of June 30, 2021. The total pension liability used to calculate the Net Pension Liability was based on an actuarial valuation as of June 30, 2020. An expected total pension liability as of June 30, 2021, was determined using standard roll-forward techniques. The State's proportion of the Net Pension Liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2021.
For the year ended June 30, 2022, the School District recognized pension expense of ($125,408) for TRS and $336 for PSERS and revenue of $336 for PSERS. The revenue is support provided by the State of Georgia.

32

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 12: RETIREMENT PLANS (CONTINUED)

Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued)

At June 30, 2022, the School District reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:

TRS

De fe rre d

De fe rre d

Outflows of Inflows of

Resources Resources

Differences between expected and actual experience $ 1,042,205 $

-

Changes of assumptions

845,300

-

Net difference between projected and actual earnings on pension plan investments

-

6,388,302

Changes in proportion and differences between School District contributions and proportionate share of contributions

-

638,777

School District contributions subsequent to the

measurement date

1,250,004

-

Total

$ 3,137,509 $ 7,027,079

School District contributions subsequent to the measurement date of $1,250,004 for TRS 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, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of

resources related to pensions will be recognized in pension expense as follows:

Fiscal Year

Ending June 30,

TRS

2023

$ (1,117,655)

2024

(1,072,801)

2025

(1,365,591)

2026

(1,583,527)

33

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 12: RETIREMENT PLANS (CONTINUED)

Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued)

Actuarial Assumptions: The total pension liability as of June 30, 2021 was determined by an actuarial valuation as of June 30, 2020, using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers' Retirement System

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

2.50% 3.00 8.75%, average, including inflation 7.25%, net of pension plan investment expense, including inflation
1.50% semi-annually

Post-retirement mortality rates for service retirements and beneficiaries were based on the Pub-2010 Teachers Headcount Weighted Below Median Healthy Retiree mortality table (ages set forward one year and adjusted 106%) with the MP-2019 projection scale applied generationally. The rates of improvement were reduced by 20% for all years prior to the ultimate rate. Post-retirement mortality rates for disability retirements were based on the Pub-2010 Teachers Mortality Table for Disabled Retirees (ages set forward one year and adjusted 106%) with the MP-2019 projection scale applied generationally. The rates of improvement were reduced by 20% for all years prior to the ultimate rate. The Pub-2010 Teachers Headcount Weighted Below Median Employee mortality table with ages set forward one year and adjusted 106% as used for death prior to retirement. Future improvement in mortality rates was assumed using the MP-2019 projection scale generationally. These rates of improvement were reduced by 20% for all years prior to the ultimate rate.

The actuarial assumptions used in the June 30, 2020 valuation were based on the results of an actuarial experience study for the period July 1, 2013 June 30, 2018.

34

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 12: RETIREMENT PLANS (CONTINUED)

Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued)

Public School Employees' Retirement System

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

2.50% N/A 7.00%, net of pension plan investment expense, including inflation
1.50% semi-annually

Mortality rates are as follows:

The Pub-2010 General Employee Table, with no adjustments, projected generationally with the MP-2019 scale is used for both males and females while in active service.
The Pub-2010 Family of Tables projected generationally with the MP-2019 Scale and with further adjustments are used for post-retirement mortality assumptions as follows:

Participant Type Membership Table

Set Forward (+)/ Setback (-) Adjustment to Rates

Service Retirees
Disability Retirees Beneficiaries

General Healthy BelowMedian Annuitant General Disabled General Below-Median Contingent Survivors

Male: +2; Female: +2
Male: -3; Female: 0 Male: +2; Female: +2

Male: 101%; Female: 103%
Male: 103%; Female: 106% Male: 104%; Female: 99%

The actuarial assumptions used in the June 30, 2020 valuation were based on the results of an actuarial experience study for the period July 1, 2014 June 30, 2019.

35

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 12: RETIREMENT PLANS (CONTINUED)

Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued)

The long-term expected rate of return on TRS and PSERS 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:

TRS

PSERS

Long-term

Target

Target

expected real rate

Asset class

allocation (%) allocation (%) of return (%)*

Fixed income Domestic large equities Domestic small equities International developed market equities International emerging market equities Alternative
Total

30.00% 46.30
1.20 11.50
6.00 5.00 100.00%

30.00% 46.40
1.10 11.70
5.80 5.00 100.00%

(1.50)% 9.20 13.40 9.20 10.40 10.60

* Rates shown are net of inflation.
Discount Rate: The discount rate used to measure the total TRS pension liability was 7.25%. The discount rate used to measure the total PSERS pension liability was 7.00%. 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 non-employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and PSERS pension plans' fiduciary net position were 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.

36

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2022

EXHIBIT "I"

NOTE 12: RETIREMENT PLANS (CONTINUED)

Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued)

Sensitivity of the School District's Proportionate Share of the Net Pension Liability to Changes in the Discount Rate: The following presents the School District's proportionate share of the net pension liability calculated using the discount rate of 7.25%, as well as what the School 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 (6.25%) or 1-percentage-point higher (8.25%) than the current rate:

School District's proportionate share

of the net pension liability

$

1% Decrease (6.25%)
11,764,673

Current Discount Rate
(7.25%)

1% Increase (8.25%)

$ 4,367,420 $ (1,694,118)

Pension Plan Fiduciary Net Position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS and PSERS financial reports which are publicly available at www.trsga.com/publications and https://www.ers.ga.gov/post/annual-financial-reports.

37

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HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS' RETIREMENT SYSTEM OF GEORGIA FOR THE FISCAL YEAR ENDED JUNE 30,

2022

2021

2020

2019

2018

2017

SCHEDULE "1"

2016

2015

School District's proportion of the net pension liability

0.049381% 0.049663% 0.053760% 0.055375% 0.056396%

0.056501%

0.060825%

0.064599%

School District's proportionate share of the net pension liability

$ 4,367,420 $ 12,030,322 $ 11,559,854 $ 10,278,786 $ 10,481,370 $ 11,656,786 $ 9,260,002 $ 8,161,232

School District's covered payroll

$ 6,433,190 $ 6,394,484 $ 6,575,173 $ 6,600,880 $ 6,486,342 $ 6,204,324 $ 6,418,380 $ 6,590,342

School District's proportionate share of the net pension liability as a percentage of its covered payroll

67.89%

188.14%

175.81%

155.72%

161.59%

187.88%

144.27%

123.84%

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

92.03%

77.01%

78.56%

80.27%

79.33%

76.06%

81.44%

84.03%

Note: The measurement date for the year ended June 30, 2022 is June 30, 2021. The schedule above is intended to show information for the last ten fiscal years. Additional years will be displayed as they become available.
- 39 -

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

HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF CONTRIBUTIONS TEACHERS' RETIREMENT SYSTEM OF GEORGIA
FOR THE FISCAL YEAR ENDED JUNE 30,

SCHEDULE "2"

2022

2021

2020

2019

2018

2017

2016

2015

$

1,250,004 $ 1,226,166 $

1,351,794 $

1,373,741 $

1,109,608 $

925,601 $

885,357 $

844,017

1,250,004

1,226,166

1,351,794

$

- $

- $

- $

$

6,309,965 $

6,433,190 $

6,394,484 $

19.81%

19.06%

21.14%

1,373,741 - $
6,575,173 $ 20.89%

1,109,608 - $
6,600,880 $ 16.81%

925,601 - $
6,486,342 $ 14.27%

885,357 - $
6,204,324 $ 14.27%

844,017 -
6,418,380 13.15%

Note: The schedule above is intended to show information for the last ten fiscal years. Additional years will be displayed as they become available.

- 40 -

HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA FOR THE FISCAL YEAR ENDED JUNE 30,

SCHEDULE "3"

2022

2021

2020

2019

2018

2017

2016

2015

School District's proportion of the net pension liability

0.000000%

0.000000%

0.000000% 0.000000% 0.000000% 0.000000% 0.000000%

0.000000%

School District's proportionate share of the net pension liability

$

-

State of Georgia's proportionate share of the net pension liability associated with the School District

31,929

Total

$

31,929

School District's covered payroll

$ 733,494

School District's proportionate share of the net pension liability as a percentage of its covered payroll

0.00%

$

- $

- $

- $

- $

- $

- $

208,300

181,336

203,450

200,130

275,751

187,254

$ 208,300 $ 181,336 $ 203,450 $ 200,130 $ 275,751 $ 187,254 $

$ 601,882 $ 513,191 $ 578,942 $ 601,630 $ 637,023 $ 667,351 $

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

-
170,734 170,734 695,089
0.00%

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

98.00%

84.45%

85.02%

85.26%

85.69%

81.00%

87.00%

88.29%

Note: The measurement date for the year ended June 30, 2022 is June 30, 2021. The schedule above is intended to show information for the last ten fiscal years. Additional years will be displayed as they become available.

- 41 -

HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF PROPORTIONATE SHARE OF THE NET OTHER POST-EMPLOYMENT BENEFIT LIABILITY SCHOOL OPEB FUND FOR THE FISCAL YEAR ENDED JUNE 30,

SCHEDULE "4"

School District's proportion of the net OPEB liability

School District's proportionate share of the net

OPEB liability

$

School District's covered-employee payroll

$

2022

2021

2020

0.089198%

0.085943%

0.092712%

9,660,881 $ 6,861,929 $

12,623,025 $ 6,611,898 $

11,377,751 $ 6,387,706 $

2019 0.100230% 12,738,926 $ 6,374,147 $

2018 0.096562% 13,566,922 6,459,307

School District's proportionate share of the net OPEB liabilityas a percentage of its coveredemployee payroll
Plan fiduciary net position as a percentage of the total OPEB liability

140.79% 6.14%

190.91% 3.99%

178.12% 4.63%

199.85% 2.93%

210.04% 1.61%

Note: The schedule above is intended to show information for the last ten fiscal years. Additional years will be displayed as they become available.

- 42 -

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

SCHEDULE "5"

2022

Contractually required contributions
Contributions in relation to the contractually required contributions
Contribution deficiency (excess)

$

272,964

272,964

$

-

School District's covered-employee payroll

$ 7,124,630

Contributions as a percentage of covered-employee payroll

3.83%

2021

$

331,801

2020

2019

2018

$

290,639 $

499,315 $

519,482 $

331,801

$

-

$

290,639

-

$

499,315 - $

519,482 - $

$ 6,861,929

$ 6,611,898

$ 6,387,706 $ 6,374,147 $

4.84%

4.40%

7.82%

8.15%

2017 503,484
503,484 -
6,459,307 7.79%

Note: The schedule above is intended to show information for the last ten fiscal years. Additional years will be displayed as they become available. - 43 -

HANCOCK COUNTY BOARD OF EDUCATION
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION FOR THE FISCAL YEAR ENDED JUNE 30, 2022

SCHEDULE "6"

Teachers' Retirement System
Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP2000 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. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience.
On November 18, 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, disability, withdrawal and salary increases. The expectation of retired life mortality was changed to 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).
On May 15, 2019, the Board adopted recommended changes from the smoothed valuation interest rate methodology that has been in effect since June 30, 2009, to a constant interest rate method. In conjunction with the methodology, the long-term assumed rate of return in assets (discount rate) has been changed from 7.50% to 7.25%, and the assumed annual rate of inflation has been reduced from 2.75% to 2.50%.
In 2019 and later, the expectation of retired life mortality was changed to the Pub-2010 Teacher Headcount Weighted Below Median Healthy Retiree mortality table from the RP-2000 Mortality Tables. In 2019, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience.
Public School Employees Retirement System
Changes of benefit terms: There have been no changes in benefit terms.
Changes of assumptions: 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).
A new funding policy was initially adopted by the Board on March 15, 2018, and most recently amended on December 17, 2020. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation and further reduced from 7.40% to 7.30% for the June 30, 2018 actuarial valuation.
On December 17, 2020, the Board adopted recommended changes to the economic and demographic assumption utilized by the System based on the experience study prepared for the five-year period ending June 30, 2019. Primary among the changes were the updates to rates or mortality, retirement, disability, and withdrawal. This also included a change to the long-term assumed investment rate of return to 7.00%. These assumption changes are reflected in the calculation of the June 30, 2021 Total Pension Liability.
School OPEB Fund Changes of benefit terms: There have been no changes in benefit terms.
Changes in assumptions: June 30, 2020 valuation: Decremental assumptions were changed to reflect the Employees Retirement Systems experience study. Approximately 0.10% of employees are members of the Employees Retirement System.
June 30, 2019 valuation: Decremental assumptions were changed to reflect the Teachers Retirement Systems experience study.
June 30, 2018 valuation: The inflation assumption was lowered from 2.75% to 2.50%.
June 30, 2017 valuation: The participation assumption, tobacco use assumption and morbidity factors were revised.
June 30, 2015 valuation: Decremental and underlying inflation assumptions were changed to reflect to Retirement Systems' experience studies.
June 30, 2012 valuation: A data audit was performed and data collection procedures and assumptions were changed.
The discount rate was updated from 3.07% as of June 30, 2016 to 3.58% as of June 30, 2017, to 3.87% as of June 30, 2018, back to 3.58% of June 30, 2019, and to 2.22% as of June 30, 2020.

- 44 -

HANCOCK COUNTY BOARD OF EDUCATION
GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2022

SCHEDULE "7"

REVENUES Property taxes Sales taxes State funds Federal funds Charges for services Investment earnings Miscellaneous
Total revenues
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 Central support services Other support services Food services operations Debt service: Principal retirement Total expenditures
Net change in fund balances
FUND BALANCE, beginning of year
FUND BALANCE, end of year

Budget

Original (1)

Final (1)

Actual

Variance With Final Budget

$ 5,416,999 $ 5,416,999 $ 5,967,913 $

-

-

88,704

4,540,287

4,539,869

4,887,953

6,356,940

6,522,651

4,999,314

170,600

170,600

148,970

2,500

2,500

3,655

189,400

189,400

138,061

16,676,726

16,842,019

16,234,570

550,914 88,704
348,084 (1,523,337)
(21,630) 1,155
(51,339) (607,449)

7,441,523

7,547,923

7,107,693

864,061 1,133,933
197,171 549,051 1,132,257 495,201 2,123,610 1,078,396 503,318 231,919 1,192,258

914,709 1,056,587
197,171 544,868 1,154,257 495,201 2,135,393 1,092,075 503,318 254,419 1,398,371

733,737 717,617 195,728 554,072 1,060,738 447,548 2,512,994 1,092,122 587,860 102,572 1,094,964

16,942,698
(265,972) 2,781,563

17,294,292
(452,273) 2,781,563

17,091 16,224,736
9,834 2,781,563

$ 2,515,591 $ 2,329,290 $ 2,791,397 $

440,230
180,972 338,970
1,443 (9,204) 93,519 47,653 (377,601)
(47) (84,542) 151,847 303,407
(17,091) 1,069,556
462,107 -
462,107

Note to the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
(1) The accompanying Schedule of Revenues, Expenditures and Changes in Fund Balances, Budget and Actual, is presented on the modified accrual basis of accounting, which is the basis of accounting used in the presentation of the fund financial statements.

- 45 -

HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2022

SCHEDULE "8"

Funding Agency Program/Grant
Agriculture, U.S. Department of Pass-Through From Georgia Department of Education Child Nutrition Cluster Food Services: School Breakfast Program National School Lunch Program COVID-19 Supply Chain Assistance Grant COVID-19 Emergency Operations Grant Total Child Nutrition Cluster
Child Nutrition Discretionary Grants - Limited Availability
State Administrative Expenses
Total U.S. Department of Agriculture
Education, U.S. Department of Pass-Through From Georgia Department of Education Special Education Cluster: Grants to States COVID-19 Grants to States COVID-19 Preschool Grants Preschool Grants
Total Special Education Cluster
Other Programs: Title I Grants to Local Education Agencies Title I Grants to Local Education Agencies Supporting Effective Instruction State Grants Rural Education Career and Technical Education - Basic Grants to States Career and Technical Education - Basic Grants to States Student Support and Academic Enrichment COVID-19 Education Stabilization Fund Total other programs
Total U.S. Department of Education
Health and Human Services, U.S. Department of Direct Head Start Cluster COVID-19 - Headstart Head Start Total U.S. Department of Health and Human Services
Defense, U.S. Department of Direct Department of the Air Force R.O.T.C. Program
Total U.S. Department of Defense
Total Expenditures of Federal Awards
N/A = Not Available

Asssitance Listing Number

Pass-Through Entity Idnetifying
Number

Federal Expenditures

10.553 10.555 10.555 10.555
10.579
10.560

215GA324N1199

$

215GA324N1199

225GA324N1099

225GA324N1099

215GA350N8103 20205GA904N2533

296,465 614,837
19,970 56,113 987,385
5,000
1,774 994,159

84.027A 84.027X 84.173X 84.173A

H027A210073 H027X210073 H173A210081 H173A210081

84.010A 84.010A 84.367A 84.358B 84.048A 84.048A 84.424A 84.425D

S010A200010 S010A210010-21A
S367A200001 S358B210010 V048A200010 V048A210010 S424A210011 S425D200012

93.600 93.600

04CH4743-04-00 04CH4743-04-00

282,991 31,044 2,762 6,523
323,320
71,403 956,563
34,626 17,820
1,699 16,476 47,259 296,153 1,441,999 1,765,319
92,343 2,116,676 2,209,019

12.unknown

N/A

37,931

37,931

$

5,006,428

- 46 -

HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2022

SCHEDULE "8"

Notes to the Schedule of Expenditures of Federal Awards
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal award activity of the Hancock County Board of Education (the "School District") under programs of the federal government for the year ended June 30, 2022. 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).
Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles 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. The Board has elected not to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance.

- 47 -

HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF STATE REVENUE FOR THE FISCAL YEAR ENDED JUNE 30, 2022
Agency/Funding
Grants Bright from the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education: Direct Instructional Cost: Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Program for Intellectually Gifted Students - Category VI Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost: Central Administration School Administration Facility Maintenance and Operations Vocational Supervisors Categorical Grants: Pupil Transportation Sparsity Nursing Services Mid-term Adjustment Hold-Harmless One Time QBE Adjustment Food Services Amended Formula Adjustment Other State Programs: Preschool Handicapped Program Math and Science Supplements Hygiene Products in Georgia Schools
Office of the State Treasurer Public School Employees' Retirement System

SCHEDULE "9"

Governmental Fund Type General Fund

$

260,891

5,389 236,685 317,155 249,415 148,215 301,439 409,421 421,103 109,316 478,199
(722) 153,838
31,016 71,863 23,953 12,505
694

276,491 278,800 146,051
5,835

317,615 201,711
45,000 70,847 177,517 43,886 24,556

30,160 4,929 416

33,764

$

4,887,953

- 48 -

HANCOCK COUNTY BOARD OF EDUCATION
SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS FOR THE FISCAL YEAR ENDED JUNE 30, 2022

SCHEDULE "10"

Project
2017 SPLOST
Acquiring, adding to, renovating, repairing, reroofing, improving and demolishing, furnishing and equipping existing school buildings and other buildings and facilities useful and desirable in connection therewith, including, but not limited to: (i) agricultural and band buildings, additional classrooms, administrative facilities, gymnasiums and physical education/athletic facilities; (ii) acquiring technology improvements, including safety and security improvements and computer technology; (iii) acquiring new school equipment, including new buses and maintenance vehicles; (iv) acquiring real property; (v) acquiring, constructing, and equipping new school buildings and other facilities; (vi) acquiring any necessary or desirable property, both real and personal, including textbooks and band instruments, the maximum amount of the projects to be paid with sales and use tax proceeds will be $3,000,000; and (vii) payment of expenses incident to accomplishing the foregoing.

Original Estimated
Cost (1)

Current Estimated
Costs (2)

Amount Expended In Current Year (3) (4)

Amount Expended In Prior Years (3) (4)

Total Completion
Cost

Estimated Completion
Date

Project #1 Reroofing of Hancock Central
High/Middle School
Project #2 Cameras
Project #3 Purchase/Repair of School Buses
Project #4 Purchase of Instructional Technology
Project #5 Textbooks
Project #6 Renovations

$ 1,000,000 $ 647,163 $

500,000

159,012

600,000

218,207

300,000

67,725

400,000

283,877

200,000

491,078

$ 3,000,000 $ 1,867,062 $

2021 SPLOST
Acquiring, adding to, renovating, repairing, modifying, improving, reroofing, improving and demolishing, furnishing and equipping existing school buildings and other buildings and facilities useful and desirable in connection therewith, including, but not limited to: (i) HVAC, restrooms, additional classrooms, administrative facilities, gymnasiums and physical education/athletic facilities; (ii) acquiring technology improvements, including safety and security improvements and computer technology; (iii) acquiring new school equipment, including new buses, maintenance vehicles and maintenance equipment; (iv) acquiring textbooks nad other instructional materials and band instruments; (v) clearing and grading of real property; (vi) destruction of existing buildings and facilities; (vii) acquiring any necessary or desirable property, both real and personal, including textbooks and band instruments, the maximum amount of the projects to be paid with sales and use tax proceeds will be $3,500,000; and (viii) payment of expenses incident to accomplishing the foregoing.

- $ 647,163 $ 647,163 Complete

-

159,012

159,012 Complete

-

218,207

218,207 Complete

-

67,725

67,725 Complete

-

283,877

283,877 Complete

-

491,078

491,078 Complete

- $ 1,867,062 $ 1,867,062

Project #1 Physical Education/Athletic Facilities, HVAC, Restrooms
Project #2 Technology Improvement, safety and security improvements
Project #3 Purchase/Repair of School Buses, Maintenance Vehicles/Equipment
Project #4 Purchase of Instructional Materials, textbooks
Project #5 Clearing and grading of real property
Project #6 Paving and renovation of properties

$ 2,000,000 $ 2,000,000 $

300,000

300,000

500,000

500,000

300,000

300,000

200,000

200,000

200,000

200,000

$ 3,500,000 $ 3,500,000 $

-$ -$

-$ -$

- June 30, 2025 - June 30, 2025 - June 30, 2025 - June 30, 2025 - June 30, 2025 - June 30, 2025 -

(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 costs for the projects. Includes all costs from project inception to completion. (3) The voters of Hancock County approved the imposition of a 1% sales tax to fund the above projects. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. (4) The School District does not have any excess proceeds on hand not yet expended.

- 49 -

Section II Compliance and Internal Control Reports

Greg S. Griffin State Auditor
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
The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education
and Dr. Alma Harper, Superintendent and Members of the Hancock County Board of Education
We have audited the financial statements of the governmental activities, each major fund, and fiduciary activities of the Hancock County Board of Education (School District) as of and for the year ended June 30, 2022, 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 February 26, 2024. We conducted our audit in accordance with the auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States.
Report on 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 audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the basic 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 School District'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 were not identified. Given these limitations, during our audit we did not identify any
270 Washington Street, SW, Suite 4-101 Atlanta, Georgia 30334 | Phone (404) 656-2180

deficiencies in internal control that we consider to be material weaknesses. We did identify a certain deficiency in internal control, described in the accompanying Schedule of Findings and Questioned Costs in finding FS 2022-001 that we consider to be a significant deficiency.
Report on 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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
School District's Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the School District's response to the finding identified in our audit and described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.
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 School District'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 School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,
Greg S. Griffin State Auditor
February 26, 2024

Greg S. Griffin State Auditor
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE
The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education
and Dr. Alma Harper, Superintendent and Members of the Hancock County Board of Education
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the Hancock County Board of Education's (School District) compliance with the types of compliance requirements identified as subject to audit 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, 2022. 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.
In our opinion, the School District complied, in all material respects, with the 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, 2022.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); 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). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor's Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the School District and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the School District's compliance with the compliance requirements referred to above.
270 Washington Street, SW, Suite 4-101 Atlanta, Georgia 30334 | Phone (404) 656-2180

Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the School District's federal programs.
Auditor's Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the School District's compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the School District's compliance with the requirements of each major federal program as a whole.
In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the School District's compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
Obtain an understanding of the School District's internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances 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 the School District's internal control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Other Matters
The results of our auditing procedures disclosed other instances of noncompliance, which are required to be reported in accordance with the Uniform Guidance and which are described in the accompanying Schedule of Findings and Questioned Costs in findings FA 2022-001 and FA 2022-002. Our opinion on each major federal program is not modified with respect to these matters.

Government Auditing Standards requires the auditor to perform limited procedures on the School District's response to the noncompliance findings identified in our compliance audit and described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
Report on Internal Control over Compliance
Our consideration of internal control over compliance was for the limited purpose described in the Auditor's Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we did identify certain deficiencies in internal control over compliance that we consider to be significant deficiencies.
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 a 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. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs in findings FA 2022-001 and FA 2022-002 to be significant deficiencies.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
Government Auditing Standards requires the auditor to perform limited procedures on the School District's response to the internal control over compliance findings identified in our audit and described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.

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. Respectfully submitted,
Greg S. Griffin State Auditor
February 26, 2024

Section III Auditee's Response to Prior Year Findings and Questioned Costs

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED JUNE 30, 2022

PRIOR YEAR FINANCIAL STATEMENT FINDINGS

FS 2021-001 Internal Controls over Capital Assets

Repeat of Prior Year Finding:

FS 2020-001, FS 2019-002, FS 2018-003,

FS 2017-006, FS 2016-005, FS 2015-005,

FS 2014-008, FS-6701-13-08, FS-6701-12-09

Finding Status:

Partially Resolved

The School District will reassess internal control procedures related to capital assets to ensure that they are in place and operating effectively. An administrative review will be conducted to make sure that the capital assets listing is accurate, and to make sure that the listing conforms to generally accepted accounting principles. We are updating and inputting the fixed assets into our accounting system so we can correct this finding. Also, additional staff will help with fixed asset duties. This finding should be resolved by the end of fiscal year 2024.
FS 2020-001 Internal Controls over Capital Assets Repeat of Prior Year Finding: FS 2019-002, FS 2018-003, FS 2017-006,
FS 2016-005, FS 2015-005, FS 2014-008, FS-6701-13-08, FS-6701-12-09

Finding Status:

Partially Resolved

See response to finding number FS 2021-001.

FS 2019-002 Internal Controls over Capital Assets Repeat of Prior Year Finding: FS 2018-003, FS 2017-006, FS 2016-005,
FS 2015-005, FS 2014-008, FS-6701-13-08, FS-6701-12-09

Finding Status:

Partially Resolved

See response to finding number FS 2021-001.

FS 2018-003 Internal Controls over Capital Assets Repeat of Prior Year Finding: FS 2017-006, FS 2016-005, FS 2015-005,
FS 2014-008, FS-6701-13-08, FS-6701-12-09

Finding Status:

Partially Resolved

See response to finding number FS 2021-001. - 1 -

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED JUNE 30, 2022

PRIOR YEAR FINANCIAL STATEMENT FINDINGS
FS 2017-006 Internal Controls over Capital Assets Repeat of Prior Year Finding: FS 2016-005, FS 2015-005, FS 2014-008,
FS-6701-13-08, FS-6701-12-09

Finding Status:

Partially Resolved

See response to finding number FS 2021-001.
FS 2016-005 Internal Controls over Capital Assets Repeat of Prior Year Finding: FS 2015-005, FS 2014-008, FS-6701-13-08,
FS-6701-12-09

Finding Status:

Partially Resolved

See response to finding number FS 2021-001.
FS 2015-005 Internal Controls over Capital Assets Repeat of Prior Year Finding: FS 2014-008, FS-6701-13-08, FS-6701-12-09

Finding Status:

Partially Resolved

See response to finding number FS 2021-001.
FS 2014-008 Internal Controls over Capital Assets Repeat of Prior Year Finding: FS-6701-13-08, FS-6701-12-09

Finding Status:

Partially Resolved

See response to finding number FS 2021-001.
FS-6701-13-08 Internal Controls over Capital Assets Repeat of Prior Year Finding: FS-6701-12-09

Finding Status:

Partially Resolved

See response to finding number FS 2021-001.

- 2 -

HANCOCK COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED JUNE 30, 2022

PRIOR YEAR FINANCIAL STATEMENT FINDINGS FS-6701-12-09 Internal Controls over Capital Assets

Finding Status:

Partially Resolved

See response to finding number FS 2021-001.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.

- 3 -

Section IV Findings and Questioned Costs

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2022

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issued: Governmental Activities, Each Major Fund, and Fiduciary Activities
Internal control over financial reporting: Material weakness(es) identified? Significant deficiency(ies) identified?
Noncompliance material to financial statements noted:

Federal Awards

Internal control over major programs: Material weakness(es) identified? Significant deficiency(ies) identified?

Type of auditor's report issued on compliance for major programs:

All major programs

Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)?

Identification of major programs:

Assistance Listing Number Assistance Listing Program or Cluster Title

10.553, 10.555 93.600

Child Nutrition Cluster Head Start Cluster

Dollar threshold used to distinguish between Type A and Type B programs:

Auditee qualified as low-risk auditee?

Unmodified No Yes No
No Yes Unmodified Yes
$750,000 No

1

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2022

II FINANCIAL STATEMENT FINDINGS

FS 2022-001 Internal Controls over Capital Assets

Internal Control Impact:

Significant Deficiency

Repeat of Prior Year Finding:

FS 2021-001, FS 2020-001, FS 2019-002,

FS 2018-003, FS 2017-006, FS 2016-005,

FS 2015-005, FS 2014-008, FS-6701-13-08,

FS-6701-12-09

Description: The School District did not adequately maintain the capital assets records.

Criteria:
Chapter IV-7 Implementing a Capital Asset Management System of the Financial Management for Georgia Local Units of Administration indicates that School Districts must establish fixed asset policies, define system requirements, implement a fixed asset system, and maintain fixed asset records.

Condition:
A review of the School District's capital asset records revealed the following deficiencies: The capital asset listing as presented, failed to provide elements of information as required such as asset identifiers and location for all assets. Depreciation expense for four assets acquired in the fiscal year was not calculated in accordance with the capital asset policy in place resulting in an overstatement of expense in the amount of $15,727. The entity was not able to provide adequate documentation of deletions for four of five assets tested in the year under review. Three of the fifteen fully depreciated assets tested were determined to be in an unusable state.

Cause:
In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of time and resources to ensure adequate procedures are in place to process, record and report capital assets.

Effect:
The failure of the School District to maintain a complete and accurate capital asset listing can lead to inaccurate internal and external reporting as well as noncompliance with generally accepted accounting principles.

Recommendation:
The School District should strengthen internal control procedures over capital assets to ensure that capital assets are recorded in accordance with the board's policy, all required elements are included on the listing and adjustments are properly documented. Unusable assets should be impaired or removed from the capital assets listing.

Views of Responsible Officials: We concur with this finding.

2

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2022

Ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA 2022-001 Improve Controls over Employee Compensation

Compliance Requirements:
Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: AL Numbers and Titles:
Federal Award Number: Questioned Costs:

Activities Allowed or Unallowed Allowable Costs/Cost Principles Significant Deficiency Nonmaterial Noncompliance U.S. Department of Agriculture Georgia Department of Education 10.553 School Breakfast Program 10.555 National School Lunch Program 225GA324N1199 (Year: 2022) $41,310

Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Child Nutrition Cluster.

Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities.
CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $987,385.00 were expended and reported on the Hancock County Board of Education's Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022.
Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 Internal Controls.
Additionally, provisions included in the Uniform Guidance, Section 200.403 Factors Affecting Allowability of Costs state that "costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the nonFederal entity... (g) Be adequately documented..."

3

HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2022
Furthermore, provisions included in the Uniform Guidance, Section 200.430 Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that "(a) ... Costs for compensation are allowable to the extent that they satisfy... specific requirements..., and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)..., [as follows:] (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity..."
Condition: Auditors reviewed salaries for a randomly selected sample of employees and those employees who were paid over the individually significant item threshold for CNC. These employees were reviewed to determine if internal controls were properly functioning and applicable compliance requirements were met. Testing of these salaries revealed that the former School Food Service Director's salary was paid from Child Nutrition Cluster funds while the employee had moved to another position within the School District and did not perform Child Nutrition Cluster services.
Questioned Costs: Known questioned costs of $41,310 were identified for salaries charged to the Child Nutrition Cluster in error. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555.
Cause: The former Child Nutrition Director changed to a different position and was not correctly removed from the Child Nutrition Cluster payroll for the year under review.
Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees associated with the Child Nutrition Cluster the appropriate amount and/or maintain documentation supporting these payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the Child Nutrition Cluster fund as ED or GaDOE may require the School District to return funds associated with improperly documented expenditures.
Recommendation: The School District should evaluate their internal control processes regarding the retention of documentation to support employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are appropriately documented and to ensure that Child Nutrition Cluster employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly.
Views of Responsible Officials: We concur with this finding.
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2022

FA 2022-002 Strengthen Controls over Procurement

Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: AL Numbers and Titles:
Federal Award Numbers: Questioned Costs:

Procurement and Suspension and Debarment Significant Deficiency Nonmaterial Noncompliance U.S. Department of Agriculture Georgia Department of Education 10.553 School Breakfast Program 10.555 National School Lunch Program 225GA324N1199 (Year: 2022) None Identified

Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District's internal control procedures were not operating appropriately to ensure that the School District's procurement procedures were followed.
Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities.
CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $987,385.00 were expended and reported on the Hancock County Board of Education's Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022.
Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 Internal Controls.
Additionally, provisions included in the Uniform Guidance, Section 200.318 General Procurement Standards state in part that "(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and... (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders." In addition, provisions included in the Uniform Guidance, Section 200.320 Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state "If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources."
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HANCOCK COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2022
Condition: A sample of 60 procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted:
The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 21 small purchase transactions reviewed.
The School District could not provide evidence that bids or proposals were sought and received from an adequate number of qualified sources for 28 simplified acquisition transactions reviewed.
Cause: The School District did not obtain updated quotes from vendors associated with small purchase transactions. For simplified acquisition transactions, the School District stated that when invitations to bid were sent in fiscal years 2019 and 2020, the vendors selected were either the only ones that submitted a bid or submitted the lowest bid; however, no documentation was maintained to evidence that additional bids were sought or received. Further, based on these vendors' performance, the School District extended the contracts without issuing new invitations to bid in the current fiscal year.
Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures.
Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately.
Views of Responsible Officials: We concur with this finding.
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Section V Management's Corrective Action