Baker County Board of Education, Newton, Georgia, annual financial report for the fiscal year ended 2015 June 30 (including independent auditor's reports)

BAKER COUNTY BOARD OF EDUCATION
REPORT ON EXAMINATION OF
FINANCIAL STATEMENTS
For the Fiscal Year Ended June 30, 2015

BAKER COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS-

SECTION I

FINANCIAL

Independent Auditor's Combined Report on Basic Financial Statements and Supplementary Information Schedule of Expenditures of Federal Awards

Exhibits

BASIC FINANCIAL STATEMENTS

District-Wide Financial Statements

A

Statement of Net Position

B

Statement of Activities

Fund Financial Statements

C

Balance Sheet

Governmental Funds

D

Reconciliation of the Governmental Funds Balance Sheet

to the Statement of Net Position

E

Statement of Revenues, Expenditures and Changes

in Fund Balances

Governmental Funds

F

Reconciliation of the Governmental Funds Statement

of Revenues, Expenditures and Changes in Fund

Balances to the Statement of Activities

G

Statement of Fiduciary Net Position

Fiduciary Funds

H

Notes to the Basic Financial Statements

Schedules

REQUIRED SUPPLEMENTARY INFORMATION

1

Schedule of Revenues, Expenditures and Changes

In Fund Balances - Budget and Actual

General Fund

2

Schedule of Proportionate Share of Net Pension Liability -

Teachers Retirement System

3

Schedule of Contributions - Teachers Retirement System

4

Schedule of Proportionate Share of Net Pension Liabilty -

Public School Employees Retirement System

Notes to Required Supplementary Information

SUPPLEMENTARY INFORMATION

6

Schedule of State Revenue

7

Schedule of Approved Local Option Sales Tax Projects

8

Allotments and Expenditures

General Fund - Quality Basic Education Programs (QBE)

By Program

Page
i-iii
1 2
3 4 5 6 7 8
29 30 31 32 33
34 35 36

BAKER COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS-

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 Program and on Internal Control Over Compliance Required by OMB Circular A-133 Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards
SECTION III FINDINGS AND QUESTIONED COSTS Schedule of Findings and Questioned Costs
SECTION IV AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS Schedule of Prior Year Findings

37-38 39-41
42 43
44-48
49

INDEPENDENT AUDITOR'S REPORT
To the Superintendent and Members of the Baker County Board of Education
Newton, Georgia
Report on the Financial Statements We were engaged to audit the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Baker County Board of Education as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the Baker County Board of Education's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements Management is responsible for the preparation and the fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on conducting the audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Because of the matter described in the Basis for Disclaimer of Opinions paragraph, however, we were not able to obtain sufficient appropriate evidence to provide a basis for audit opinions.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
300 MULBERRY STREET, SUITE 300 POST OFFICE BOX 1877 MACON, GEORGIA 31202-1877 478-464-8000 FAX 478-464-8051 www.mjcpa.com MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

Basis for Disclaimer of Opinions The internal control procedures of the Baker County Board of Education are deficient in regards to financial reporting and cannot be relied upon. Furthermore, the Baker County Board of Education was unable to provide adequate documentation to support the reported assets, liabilities, revenues and expenditures and, therefore, we were unable to apply the auditing procedures necessary to form a conclusion about whether the financial statements are fairly presented in accordance with accounting principles generally accepted in the United States of America. In addition, changes in management personnel precluded us from making the appropriate inquiries of these matters.
Disclaimer of Opinions Because of the significance of the matter described in the "Basis for Disclaimer of Opinions" paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for audit opinions on the financial statements of the governmental activities, each major fund and the aggregate remaining fund information of the Baker County Board of Education as of June 30, 2015, and the respective changes in financial position for the year then ended. Accordingly, we do not express opinions on these financial statements.
Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual, Schedule of Proportionate Share of the Net Pension Liability, and the Schedule of Contributions be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
ii

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 opinion on the basic financial statements is not affected by this missing information.
Other Information We were engaged to conduct an audit for the purpose of forming opinions on the financial statements that collectively comprise the Baker County Board of Education's basic financial statements. The schedule of expenditures of federal awards, as required by the U.S Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, the schedule of state revenue, the schedule of approved local option sales tax projects, as required by the Official Code of Georgia 48-8-121, and the schedule of Quality Basic Education programs allotments and expenditures by program General Fund, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements.
Because of the significance of the matter described in the "Basis for Disclaimer of Opinions" paragraph above, it is inappropriate to and we do not express an opinion on the supplementary information referred to above.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated April 8, 2019, on our consideration of the Baker County Board of Education'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 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 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 Baker County Board of Education's internal control over financial reporting and compliance.
Macon, Georgia April 8, 2019
iii

SECTION I Financial

Baker County Board of Education Statement of Net Position June 30, 2015
ASSETS
Cash and Cash Equivalents Receivable (net, where applicable, of allowances for uncollectible):
Taxes State Grants Federal Grants Other Inventory, at cost Land and construction in progress Other capital assets, net of depreciation
Total Assets
DEFERRED OUTFLOWS OF RESOURCES
Related to Defined Benefit Pension Plan
LIABILITIES
Accounts payable and accrued expenses Salaries and Benefits Payable Net Pension Liability
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Related to Defined Benefit Pension Plan
NET POSITION
Net investment in capital assets Restricted for:
Continuation of Federal Programs Debt Service Unrestricted
Total Net Position

Governmental Activities
$ 2,660,799
66,312 150,722
46,427 74
4,929 82,372 6,584,440 9,596,075
110,774
24,242 356,074 2,085,568 2,465,884
906,537
6,666,812 4,929 67
(337,380) $ 6,334,428

Page 1 The notes to the basic financial statements are an intregral part of this statement.

Baker County Board of Education Statement of Activities For the Fiscal Year Ended June 30, 2015

Functions/Programs

Expenses

Program Revenues

Fees and Charges for
Services

Operating Grants and Contributions

Net (Expenses) Revenues and Changes in Net
Assets

Governmental:

Instructions Support Services:
Pupil Services

$ 2,340,183 $ 58,295

Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Service Other Support Services Operations of Non-instructional Services

80,076 33,263 280,864 296,738 70,556 331,716 365,379 31,761

Food Services Operation Interest on short-term & long-term debt

254,250 1,293

Total governmental activities

$ 4,144,374 $

- $ 1,290,062 $

-
1,230 -

60,556
129,572 45,074
299,771 119,555
92,413 100,638 97,737

10,877 -
12,107 $

238,079 -
2,473,458

(1,050,121)
2,261 49,496 11,811 18,907 (177,183) (70,556) (239,303) (263,511) 65,976
(5,294) (1,293)
(1,658,809)

General revenues: Taxes Property taxes, levied for general purposes Sales Taxes for Capital Projects Other Sales Taxes Investment earnings Miscellaneous Total general revenues and special items
Change in net position

Net assets - beginning - as previously reported

Prior period adjustment

Net position - beginning

Net position - ending

$

2,553,652 9
16,907 31
119,749 2,690,348
1,031,539
8,192,819 (2,889,930) 5,302,889 6,334,428

Page 2 The notes to the basic financial statements are an intregral part of this statement.

Baker County Board of Education Balance Sheet Governmental Funds June 30, 2015

ASSETS
Cash and cash equivalents Taxes receivable, net Accounts Receivable - State Accounts Receibable - Federal Other receivables Inventories
Total assets

General Fund
$ 2,660,716 66,312
150,722 46,427 74 4,929
$ 2,929,180

DistrictWide Capital
Projects Fund

$

16

-

-

-

-

-

$

16

Debt Service Fund

$

67

-

-

-

-

-

$

67

Total Governmental
Funds
$ 2,660,799 66,312
150,722 46,427 74 4,929
$ 2,929,263

LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES

Liabilities:
Accounts payable Salary and Benefits Payable
Total liabilities

$

24,242 $

356,074

380,316

Deferred inflows of resources:

Unavailable revenue
Total deferred inflows of resources

17,251 17,251

Fund balances:
Nonspendable: Inventories
Restricted for: Other Purposes
Unassigned
Total fund balances (deficit)

4,929
2,526,684 2,531,613

Total liabilities, deferred inflows or resources, and fund balances $ 2,929,180 $

-$ -
-
16 16
16 $

-$ -
-

24,242 356,074
380,316

-

17,251

-

17,251

-

4,929

67

67

-

2,526,700

67

2,531,696

67 $ 2,929,263

Page 3 The notes to the basic financial statements are an intregral part of this statement.

Baker County Board of Education Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2015

Total fund balance, governmental funds
Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital assets used in governmental activities are not current financial resources and therefore are not reported in the fund financial statement, but are reported in the governmental activities of the Statement of Net Position.
Some liabilities, including the net pension liability, are not due and payable in the current period and, therefore, are not reported in the funds.
Net Pension Liability
Deferred Outflows and Inflows of Resources related to pensions are applicable to future periods and, therefore, are not reported in the governmental funds.
Some of the School Districts property tax revenues will be collected after year end but are not available soon enough to pay for the current periods expenditures
Net Position of Governmental Activities in the Statement of Net Position

$

2,531,696

6,666,812

(2,085,568) (795,763) 17,251

$

6,334,428

Page 4 The notes to the basic financial statements are an intregral part of this statement.

Baker County Board of Education Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds For the Fiscal Year Ended June 30, 2015

REVENUES

General Fund

Property taxes Sales taxes State Funds Federal Funds Charges for services Investment earnings Miscellaneous

$ 2,556,558 16,907
1,912,739 557,858 12,107 24 119,749

Total Revenues

5,175,942

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 Service
Other Support Services Food Services Operation Debt Service: Interest and other charges

2,129,314
58,383 80,164 33,546 281,633 297,385 70,635 331,716 324,419 31,767 252,638
1,293

Total Expenditures

3,892,893

District Wide Capital Projects Fund

$

-

9

-

-

-

7

-

16

-
-
-
-

Debt Service Fund

Total Governmental
Funds

$

- $ 2,556,558

-

16,916

-

1,912,739

-

557,858

-

12,107

-

31

-

119,749

-

5,175,958

-

2,129,314

58,383

-

80,164

-

33,546

-

281,633

-

297,385

-

70,635

-

331,716

-

324,419

-

31,767

-

252,638

-

1,293

-

3,892,893

Excess (deficiency) of revenues over expenditures
OTHER FINANCING SOURCES (USES) Transfers in Transfers out
Total other financing sources (uses)

1,283,049
4,081 -
4,081

16

-

1,283,065

-

-

-

(4,081)

-

(4,081)

4,081 (4,081)
-

Net change in fund balances Fund balances (deficit) - beginning Fund balances (deficit) - ending

1,287,130 1,244,483 $ 2,531,613 $

16 -
16 $

(4,081) 4,148
67 $

1,283,065 1,248,631 2,531,696

Page 5 The notes to the basic financial statements are an intregral part of this statement.

Baker County Board of Education Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Net Activities For the Fiscal Year Ended June 30, 2015
Net change in fund balances - total governmental funds:
Amounts reported for governmental activities in the Statement of Activities are different because:
Governmental funds report outlays for capital assets as expenditures because such outlays use current financial resources. In contrast, the Statement of Activities reports only a portion of the outlay as an expense. The outlay is allocated over the assets useful life. This is the amount by which depreciation $257,220 exceeded capital outlays of $0 the current period.
Governmental funds do not present revenues that are not available to pay current obligations. In contrast, such revenues are reported in the Statement of Activities when earned.
Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore are not reported as expenditures in governmental funds.
Pension Expenses
Change in net position of governmental activities

$ 1,283,065
(257,220) (2,906) 8,600
$ 1,031,539

Page 6 The notes to the basic financial statements are an intregral part of this statement.

Baker County Board of Education Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2015
ASSETS Cash Total Assets
LIABILITIES
Due to others Total Liabilities

$

17,105

$

17,105

$

17,105

$

17,105

Page 7 The notes to the basic financial statements are an intregral part of this statement.

NOTES TO THE FINANCIAL STATEMENTS

Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015
Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Baker County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school 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
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Baker County Board of Education.
District-wide Statements:
The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements:
The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
Page |8

Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.
District-wide Capital Projects Fund accounts for and reports financial resources including Special Purpose Local Option Sales Tax (SPLOST) that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities.
Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds or individuals.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, 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 revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes, and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt and compensated absences, 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
Page |9

Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015

under capital leases are reported as other financing sources.

The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net position available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by costreimbursement grants, then general revenues.

RESTATEMENT OF PRIOR YEAR NET POSITION

For fiscal year 2015, the School District made several prior period adjustments due to the adoption of GASB Statement No. 68 and GASB Statement No. 71, as described in "New Accounting Pronouncements" below, which require the restatement of the June 30, 2014, Net Position in Governmental Activities. The result is a decrease in Net Position at July 1, 2014 of $2,889,930.

This change is in accordance with generally accepted accounting principles.

Net Position, July 1, 2014, as previously reported
Prior Period adjustment - Implementation of GASB 68: Net Pension Liability (measurement date)
TRS Deferred Outflows - School District's contribution made during fiscal year 2014
TRS
Net Position, July 1, 2014, as restated

$ 8,192,819
(3,096,750) 206,820
$ 5,302,889

NEW ACCOUNTING PRONOUNCEMENTS In fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. The adoption of this statement has a significant impact on the School District's financial statements. As noted above the School District restated beginning Net Position for the cumulative effect of this accounting change.
In fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 69, Government Combinations and Disposals of Government Operations. This statement provides specific accounting and financial reporting guidance for combinations in the governmental environment. This statement also requires that disclosures be made by governments about combination arrangements in which they engage and for disposals of government operations. The School District did not have any activities of this type during the fiscal year and the adoption of this statement does not have a significant impact on the School District's financial statements. In fiscal year 2015, the School District adopted Governmental
P a g e | 10

Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015

Accounting Standards Board (GASB) Statement 71, Pension Transition for Contributions Made Subsequent to the Measurement Date an amendment of GASB No. 68. The objective of this statement is to improve accounting and financial reporting by addressing an issue in Statement No. 68, Accounting and Financial Reporting for Pensions, concerning transition provisions related to certain pension contributions made to defined benefit pension plans prior to implementation of statement. This statement amends paragraph 137 of Statement No. 68 which limited recognition of pension-related deferred inflows of resources at the transition to circumstances in which it is practical to determine the amounts of all deferred outflows of resources and deferred inflows of resources related to pensions. The adoption of this statement has a significant impact on the School District's financial statements. As noted above the School District restated beginning Net Position for the cumulative effect of this accounting change.

CASH AND CASH EQUIVALENTS

Composition of Deposits

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

RECEIVABLES

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

PROPERTY TAXES

The Baker County Board of Commissioners fixed the property tax levy for the 2014 tax digest year (calendar year) on September 18, 2014 (levy date). Taxes were due on December 20, 2014 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2014 tax digest are reported as revenue in the governmental funds for fiscal year 2015. The Baker 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, 2015, for maintenance and operations amounted to $2,556,558.

Tax millage rate levied for the 2014 tax year (calendar year) for the Baker County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

14.856 mills

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Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $9 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

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 foods 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.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the Districtwide financial statements, all purchased capital assets are valued 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 fair market value on the date donated. Disposals are deleted at depreciated recorded cost. 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. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

Capitalization thresholds and estimated useful lives of capital assets reported in the District-

wide statements are as follows:

Capitalization Estimated

Policy

Useful Life

Land Buildings and Improvements Equipment

All

N/A

$ 5,000 15 to 80 years

$ 5,000 3 to 50 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.

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Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015
DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of net position and/or the 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. Under the full accrual method of accounting, the School District has reported deferred outflows of resources related to a defined benefit pension plan, as discussed in Note 14 Retirement Plans.
In addition to liabilities, the statement of net position and/or the 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. Under the full accrual method of accounting, the School District has reported deferred inflows of resources related to a defined benefit pension plan, as discussed in Note 11 Retirement Plans. This item is reported only in the District-wide Statement of Net Position. Additionally, the School District has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available.
COMPENSATED ABSENCES
Members of the Teachers Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School District's financial statements.
Vacation leave of 15 days is awarded on a fiscal year basis to certain full time personnel employed on a twelve month basis. No other employees are eligible to earn vacation leave. Vacation leave not utilized during the fiscal year may be carried over to the next fiscal year, providing such vacation leave does not exceed 60 days.

Beginning

End

of Year

of Year

Year

Liability

Increases

Decreases

Liability

2013 2014 2015

$ 9,894 $ 16,430 $ 13,584 $ 12,740

$ 12,740 $

- $ 12,740 $

-

$

-$

-$

-$

-

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
P a g e | 13

Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015
the fiduciary net position of the Teachers' Retirement System of Georgia (TRS) and the Public School Employees Retirement System (PSERS) and additions to/deductions from TRS/PSERS's fiduciary net position have been determined on the same basis as they are reported by TRS/PSERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. See Note 11 Retirement Plans.
NET POSITION
The School District's net position in the District-wide Statements is classified as follows:
Net investment in capital assets - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets.
Restricted net position - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net position - Unrestricted net position represents resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
FUND BALANCES
The School District's fund balances are classified as follows:
Nonspendable Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.
Restricted Constraints 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, 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. 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.
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Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015
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, or the Superintendent, or designee, to assign amounts to be used for specific purposes.
Unassigned The residual classification for the General Fund. This classification represents fund balances that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund.
Fund Balances of the Governmental Funds at June 30, 2015, are as follows:
FUND BALANCES

Nonspendable Inventories
Restricted Unassigned

$

4,929

67

2,526,700

Fund Balance, June 30, 2015

$

2,531,696

It is the goal of the School District to achieve and maintain a committed, assigned, and unassigned fund balance in the general fund at fiscal year-end of not less than 11.5% of total annual revenues, not to exceed 15% of the total budget of the subsequent fiscal year, in compliance with Official Code of Georgia Annotated Section 20-2-167(a)5. If the unassigned fund balance at fiscal year-end falls below the goal, the School District shall develop a restoration plan to achieve and maintain the minimum fund balance. When multiple categories of fund balance are available for expenditure, 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 accounting principles generally accepted in the United States 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.
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, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function and object. 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
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Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015
accordance with accounting principles generally accepted in the United States of America.
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 Official Code of Georgia Annotated section 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.
The Superintendent is authorized by the Board to approve adjustments of no more than 25 percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than 25 percent of 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 $50,000 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 circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board.
See Schedule 1 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year under review.
Note 4: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) Section 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 not less than 110 percent 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. Section 458-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent 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,
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Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed 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 a 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, 2014, the bank balances were $2,833,134. The amounts exposed to custodial credit risk are classified into three categories as follows:
Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution,
or Category 3 - Cash collateralized with securities held by the pledging financial institution's
trust department or agent but not in the School District's name.
The School District's deposits by custodial credit risk category at June 30, 2015, are as follows:

Custodial Credit Risk Category
1 2 3 Total

Bank Balance

$

-

-

2,580,381

$ 2,580,381

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Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015

Note 4: 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

Note 5: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

Balances 7/1/2014

Increases

Decreases

Balances June 30, 2015

Governmental Activities

Capital Assets, Not Being Depreciated:

Land

$

82,372 $

- $

- $

82,372

Capital Assets Being Depreciated: Buildings and Improvements Equipment

8,927,386

-

-

8,927,386

978,611

-

-

978,611

Less: Accumulated Depreciation: Buildings and Improvements Equipment

2,335,540 728,796

213,866 43,355

-

2,549,406

-

772,151

Total Capital Assets, Being Depreciated, Net

6,841,661

(257,220)

-

6,584,441

Governmental Activity Capital Assets - Net

$ 6,924,033 $ (257,220) $

- $ 6,666,813

Current year depreciation expense by function is as follows:

Instruction Support Services:
Maintenance and Operation of Plant Student Transportation Services Food Services

$
714 40,960

$

213,866
41,674 1,681
257,220

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Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015

Note 6: 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 risk of loss associated with torts, assets, errors or omissions 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 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 three fiscal years are as follows:

Beginning

of Year

Year

Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2013 $ 2014 $ 2015 $

-$

-$

-$

-

-$

-$

-$

-

-$

7,246 $ 7,246 $

-

The School District participates in the Georgia Education Workers' Compensation Trust, a public entity risk pool organized on December 1, 1991, to develop, implement and administer a program of workers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Trust for its general workers' compensation insurance coverage. Specific excess of loss insurance coverage is provided through an agreement by the Trust with the Safety National Casualty Company to provide coverage for potential losses sustained by the Trust in excess of $1 million loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided with limits of $2 million. The Trust covers the first $1 million of each Employers Liability claim with Safety National providing additional Employers Liability limits up to a $2 million per occurrence maximum. Safety National Casualty Company also provides aggregate cover to the Trust with a loss fund percentage of 100%, based on the Fund's annual normal premium, up to a maximum limit of indemnity of aggregate limit of $2 million.

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Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015

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

Position Covered Amount

Superintendent Principal

$ 25,000.00 $ 10,000.00

Note 7: SHORT-TERM DEBT
The School District obtains temporary loans in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred.
Short-term debt activity for the fiscal year is as follows:

Description

Beginning Balance

Issued

Redeemed

Ending Balance

Temporary Loans

$ 86,118 $

- $ 86,118 $

-

The loan was paid in full on December 19, 2014.
Note 8: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $9,578 for retirement contributions paid on the School District's behalf by the following State Agencies.
Office of the State Treasurer Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $8,099
Office of the State Treasurer Paid to the Teachers Retirement System For Teachers Retirement System (TRS) Employer's Cost In the amount of $1,479

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Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015
Note 9: 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. 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 be material to the basic financial statements.
Note 10: POST-EMPLOYMENT BENEFITS
Georgia School Personnel Post-employment Health Benefit Fund
Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.
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Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015

Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.

The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2015:

For certificated teachers, librarians and regional educational service agencies and certain other eligible participants:

Period

Contribution Rate

July 2014 June 2015

$945 per member per month

For non-certificated school personnel:

Period

Contribution Rate

July 2014 - 2015

$596.20 per member per month

No additional contribution was required by the Board for fiscal year 2015 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other postemployment benefits and are subject to appropriation.

The School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows:

Fiscal Year
2015 2014 2013

Percentage Contributed
100% 100% 100%

Required Contribution
499,151 379,860 360,199

This space intentionally left blank.
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Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015

Note 11: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

Plan Description: All teachers of the School District as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple- employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers' Retirement System of Georgia 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 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.

Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. [Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia.] Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2015. The school district's contractually required contribution rate for the year ended June 30, 2015 was 13.15% of annual school district payroll.

Employer contributions for the current fiscal year and the preceding two fiscal years are as

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2015 2014 2013

100% 100% 100%

$237,955 $206,820 $203,947

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Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015
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 Teachers' Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend t h e b e n e f i t p r o v i s i o n s t o t h e State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.
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 $14.75, 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. 47-429(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension
Effective July 1, 2014, the School System implemented the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions an amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB Statement No.68, which significantly changed the School System's accounting for pension amounts. The information disclosed below is presented in accordance with the new standard.
At June 30, 2015, the School District reported a liability of $2,085,568 for its proportionate share of the Net Pension Liability for TRS.
The Net Pension Liability was measured as of June 30, 2014. The total pension liability used to calculate the Net Pension Liability was based on an actuarial valuation as of June 30, 2013. An expected total pension liability as of June 30, 2014 was determined using standard
P a g e | 24

Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015

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, 2014.

At June 30, 2014, the School District's TRS proportion was 0.016508%, which was a decrease of 0.001264% from its proportion measured as of June 30, 2013.

The PSERS Net Pension Liability was measured as of June 30, 2014. The total pension liability used to calculate the Net Pension Liability was based on an actuarial valuation as of June 30, 2013. An expected total pension liability as of June 30, 2014 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, 2014.

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

$

-

32,949

$ 32,949

For the year ended June 30, 2015, the School District recognized pension expense of $102,174 for TRS and $2,861 for PSERS and revenue of $2,861 for PSERS was recognized. The revenue is support provided by the State of Georgia.

At June 30, 2015, the School District reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:
TRS

Deferred Outflows of Resources

Deferred Inflows of Resources

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

237,955

$

237,955

$

727,073
179,464 -
906,537

Baker County Board of Education contributions subsequent to the measurement date of June 30, 2014 for TRS are reported as deferred outflows of resources and will be recognized as a reduction of the Net Pension Liability in the year ended June 30, 2016. Other amounts reported
P a g e | 25

Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015

as deferred outflows of resources and deferred inflows of resources related to pensions will be

recognized in pension expense as follows:

Year Ended June 30:

TRS

Thereafter

2016 2017 2018 2019 2020

(222,555) (222,555) (222,555) (222,556)
(16,316) -

Actuarial assumptions: The total pension liability as of June 30, 2014 was determined by an actuarial valuation as of June 30, 2013, using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers' Retirement Syestem:

Inflation

3.00%

Salary Increases

3.75-7.00%. Average, including inflation

Investment Rate of Return 7.50%, net of pension plan investment expense, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females set back two years for males and set back three years for females.

The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

Public School Employees Retirement System:

Inflation

3.00%

Salary Increases

N/A

Investment rate of return

7.5%, net of pension plan investment expenses, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table set forward one year for males for the period after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back two years for males and set forward one year for females for the period after disability retirement.
The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.
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
P a g e | 26

Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015

the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class

Target allocation

Long-term expected real rate of return*

Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks

30.00% 39.70%
3.70% 1.60% 18.90% 6.10%

3.00% 6.50% 10.00% 13.00% 6.50% 11.00%

Total

100.00%

* Rates shown are net of the 3.00% assumed rate of inflation.

Discount rate: The discount rate used to measure the total TRS and PSERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and 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 plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

This space intentionally left blank.
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Baker County Board of Education Notes to the Basic Financial Statements June 30, 2015
Sensitivity of the Baker County Board of Education'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 7.50%, 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 (6.50%) or 1-percentage-point higher (8.50%) than the current rate:

Teachers' Retirement System:

1% Decrease (6.50%)

Current Discount Rate
(7.50)

1% Increase (8.50%)

School District's proportionate share of the Net Pension Liability

$

3,843,422 $ 2,085,568 $

638,012

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 report which is publically available at www.trsga.com/publications and www.ers.ga.gov/formspubs/formspubs.
Bus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employees' Retirement System of Georgia. The System is funded by contributions by the employees and by the State of Georgia. The School District makes no contribution to this plan.
Note 12: INTERFUND TRANSFERS
Interfund transfers for the year ended June 30, 2015, consisted of the following:

Transfer From

Transfer To General Fund Totals

Debt Service Fund

$

4,081

$

4,081

Funds moved to the Debt Service fund in prior years are no longer needed as all debt has been repaid. $4,081 is now being transferred back to the general fund.

P a g e | 28

REQUIRED SUPPLEMENTARY INFORMATION

Baker County Board of Education Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Year Ended June 30, 2015

REVENUES
Property taxes Sales taxes State funds Federal funds Charges for services Investment earnings Miscellaneous
TOTAL REVENUES
EXPENDITURES
Current

Nonappropriated Budgets

Original (1)

Final (1)

Actual Amounts

Variance Over/Under

$ 1,741,500 $ -
1,915,717 716,825 9,800 18,000
4,401,842

1,741,500 $ -
1,920,480 716,825 9,800 18,000
4,406,605

2,556,558 $ 16,907
1,912,739 557,858 12,107 24 119,749
5,175,942

815,058 16,907 (7,741)
(158,967) 2,307 24
101,749
769,337

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 Service Other Support Services Food Services Operation Debt Services Interest Redemption of Principal

2,670,655
85,595
137,747 54,583
282,779 309,618
80,906 258,331 348,959
38,145 301,445
86,118 1,360

2,784,477
106,765
130,044 59,083
275,528 309,618
80,906 258,331 348,959
39,755 306,445
86,118 1,360

2,129,314
58,383
80,164 33,546 281,633 297,385 70,635 331,716 324,419 31,767 252,638
1,293 -

655,163
48,382
49,880 25,537 (6,105) 12,233 10,271 (73,385) 24,540
7,988 53,807
84,825 1,360

Total Expenditures
Excess of Revenues over (under) Expenditures

4,656,241 (254,399)

4,787,388 (380,783)

3,892,893 1,283,049

894,495 1,663,832

OTHER FINANCING SOURCES (USES)

Operating Transfers To Other funds

(40,000)

(40,000)

4,081

44,081

Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning
Grand Total Fund Balances - Ending

(40,000) (294,399) 1,475,486
6,350 $ 1,187,437 $

(40,000) (420,783) 1,506,880
(2,119) 1,083,978 $

4,081 1,287,130 1,244,483
2,531,613 $

44,081 1,707,913
(262,397) 2,119
1,447,635

Page 29 See note to basic financial statements.

Baker County Board of Education Required Supplementary Information Schedule of Proportionate Share of the Net Pension Liability Teachers' Retirement System of Georgia For the Year Ended June 30, 2015
School District's proportion of the Net Pension Liability School District's proportionate share of the Net Pension Liability School District's covered-employee payroll School District's proportionate share of the Net Pension Liability
as a percentage of its covered employee payroll Plan fiduciary net position as a percentage of the total pension liability

2015 0.016508% $ 2,085,568.00 $ 1,806,775.05
115.43% 84.0300%

30 See notes to the basic financial statements.

Baker County Board of Education Required Supplementary Information Schedule of Contributions Teachers' Retirement of the Net Pension Liability For the Year Ended June 30, 2015
Contractually required contribution Contributions in relation to the contractually required contribution Contribution deficiency (excess) School District's covered-employee payroll Contributions as a percentage of covered-employee payroll

2015 237,955 237,955 -
1,825,338 13.04%

2014 206,820 206,820 -
1,806,775 11.45%

2013 203,947 203,947 -
1,806,772 11.29%

31 See notes to the basic financial statements.

Baker County Board of Education Required Supplementary Information Schedule of Proportionate Share of the Net Pension Liability Public School Employees' Retirement System For the Year Ended June 30, 2015

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

2015

0.00%

$

-

$

32,949

$

32,949

$

102,904

N/A 88.29%

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

32 See notes to the basic financial statements.

Baker County Board of Education Notes to Required Supplementary Information For the Year Ended June 30, 2015

Teachers' Retirement System
Changes of assumptions : In 2010 and later, the expectation of retired life mortality was changed to the RP-2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience.
Method and assumptions used in calculations of actuarially determined contributions : The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2015 reported in that schedule:

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation rate Salary increases Investment rate of return

June 30, 2012 Entry age Level percentage of payroll, open 30 years Seven-year smoothed market 3.00% 3.75 7.00%, including inflation 7.50%, net of pension plan investment expense, including

33 See notes to the basic financial statements.

Baker County Board of Education Schedule of State Revenue Year Ended June 30, 2015
Agency/Funding
Grants Education, Georgia Department of
Quailty Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Progarm Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Progarm Upper Elementary Grades (4-5) Progarm Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Catefory Vi, QBE Remedial Education Program Alternative Education Program Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Mid-term Adjustment Hold-Harmless Amended Formula Adjustment
Categorical Grants Pupil Transportation Regular Sparsity
Food Services Nursing Services Other State Programs
Preschool Handicapped Program Teacher Retirement Vocational Supervisors
Total Grants from Georgia Department of Education
Office Of Treasury And Fiscal Services Public School Employees Retirement
Total
Total Quality Basic Education Formula Earnings (State And Local Funds) Principal Staff & Professional Development Special Education Programs Total
Qbe Contra Account (Debit) Principal Staff & Professional Development Special Education Programs Total
Grants From Pre-K Lottery Georgia Prekindergarten Program Total
Other Grants From Georgia Department Of Education Math And Science Supplement Total
Grand Total
Page 34
See note to basic financial statements.

General Fund

$

90,971

32,100

221,785

49,180

63,256

73,606

159,997

120,782

57,894

8,586

41,122

10,641

31,010

9,509

5,319

211,285 85,340 67,014 17,696
(143,352)

109,791 324,949
6,835 45,000
(3,008) 1,479 4,560 1,703,347

8,099 8,099

334 412,759 413,093
(97) (123,247) (123,344)
71,551 71,551
(31,081) (31,081)
$ 2,041,665

Baker County Board of Education Schedule of Special Purpose Local Option Sales Tax For the Fiscal Year Ended June 30, 2015

Project
Adding to, renovating, improving and equipping existing facilities Upgrading Instructional and Administrative Technology Purchasing school buses and transportation equipment Purchasing textbooks and vocational, fine arts, instructional and athletic equipment Purchasing safety and security equipment
Acquiring any property necessary or desirable therefor, both real and personal Bond interest payments and bank fees

Original Estimated
Cost (1)

Current Estimated
Cost (2)

Current Year (3)

Expenditure

Estimated Estimated

Prior

Total

Proceeds Not Completion

Year

Completed Cost Expended

Date

$ 1,176,000 $ 2,646,539 $

42,000

1,444

70,000

26,193

- $ 2,646,539 $ 2,646,539 $

-

1,444

1,444

-

26,193

26,193

- Completed - Completed - Completed

-

182,365

-

-

-

182,365

-

-

182,365 -

- Completed - Completed

112,000

144,788

-

-

-

145,341

145,341

- Completed - Completed

Total

$ 1,400,000 $ 3,001,329 $

- $ 3,001,882 $ 3,001,882 $

-

(1)

The School District's original cost estimate as specified in the resolution calling for the imposition of the Local

Option Sales Tax.

The School District's current estimate of total cost for the projects. Includes all cost from project inception to
(2)
completion.

The voters of Baker County approved the imposition of a 1% sales tax to fund the above projects and retire

(3)

associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property

taxes and/or other funds over the life of the projects.

Page 35

See note to basic financial statements.

Baker County Board of Education General Fund - Quality Based Education Program (QBE) Allotments and Expenditures by Program For the Fiscal Year Ended June 30, 2015

Description

Allotment from Georgia Department of Education
(1) (2)

Eligible QBE Program Cost Salary Operations Totals

Direct Instructional Programs

Kindergarten Programs

$

Kindergarten Program - Early Intervention

Program

Primary Grades (1-3) Program

Primary Grades Early Intervention (1-3)

Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early

Intervention (4-5) Program

Middle Grades (6-8) Program

Middle Grades (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program

Students With Disabilities

CATEGORY III

CATEGORY IV Gifted Student -CATERGORY VI Remedial Education Program Alternative Education Program

TOTAL DIRECT INSTRUCTIONAL

PROGRAMS

$

Media Center Program Staff and Professional Development

TOTAL QBE FORMULA FUNDS

$

111,429 $
39,300 271,867
60,231 77,556
90,114
196,100
148,395 71,640
355,202
10,522 50,358 13,035
1,495,749 $
38,495 7,498
1,541,742 $

67,341 $
217 175,110
43,268 51,414
35,720 (76,017) 312,609
108,624 55,878
166,226 2,146 -
44,986 -
987,522 $
4,258 -
991,780 $

4,055 $

71,395

355 14,571

572 189,681

1,082 4,882

44,350 56,296

728 3,773 6,732

36,448 (72,244) 319,341

12,636 6,253

121,260 62,131

11,475
-

177,701 2,146 -
44,986 -

66,539 $ 1,054,063

1,762 -

6,020 8,076

68,301 $ 1,068,159

Page 36 See note to basic financial statements.

COMPLIANCE SECTION

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT
OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Superintendent and Members of the Baker County Board of Education
Newton, Georgia
We were engaged to audit, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Baker County Board of Education as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the Baker County Board of Education's basic financial statements and have issued our report thereon dated March 29, 2019. Because of the significance of the matter described in the "Basis for Disclaimer of Opinions" paragraph of our report on the financial statements, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for audit opinions on the financial statements of the governmental activities, each major fund and the aggregate remaining fund information of the Baker County Board of Education as of June 30, 2015, and the respective changes in financial position for the year then ended. Accordingly, we do not express an opinion on these financial statements.
Internal Control Over Financial Reporting In connection with our engagement to audit the financial statements of the Baker County Board of Education, we considered the Baker County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Baker County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Baker County Board of Education's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that have not been identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.
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
300 MULBERRY STREET, SUITE 300 POST OFFICE BOX 1877 MACON, GEORGIA 31202-1877 478-464-8000 FAX 478-464-8051 www.mjcpa.com MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies described in the accompanying schedule of findings and questioned costs as items 2015-001 and 2015-003 to be material weaknesses.
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. We consider the deficiency described in the accompanying schedule of findings and questioned costs as item 2015-002 to be a significant deficiency.
Compliance and Other Matters In connection with our engagement to audit the financial statements of the Baker County Board of Education, 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 determination of financial statement amounts. 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. If the documentation provided by management had been sufficient to enable us to express opinions on the basic financial statement, instances of noncompliance or other matters may have been identified and reported herein.
Baker County Board of Education's Response to Findings Baker County Board of Education's responses to the findings identified in our engagement are described in the accompanying schedule of findings and questioned costs. Baker County Board of Education's responses were not subjected to the auditing procedures applied in the engagement to audit the financial statements and, accordingly, we express no opinion on them.
Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an engagement to perform an audit in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Macon, Georgia April 8, 2019
38

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY
OMB CIRCULAR A-133
To the Superintendent and Members of the Baker County Board of Education
Newton, Georgia
Report on Compliance for Each Major Federal Program We were engaged to audit the Baker County Board of Education's compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Baker County Board of Education's major federal programs for the year ended June 30, 2015. The Baker County Board of Education's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.
Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.
Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the Baker County Board of Education's major federal programs based on conducting an audit of the types of compliance requirements referred to above. We were engaged to conduct our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Baker County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
Basis for Disclaimer of Opinion on Child Nutrition Cluster and Special Education Cluster As described in the accompanying schedule of findings and questioned costs, the Baker County Board of Education was unable to provide sufficient appropriate evidence that they had complied with the requirements regarding the Child Nutrition Cluster and the Special Education Cluster as described in finding 2015-004. As a result of this lack of appropriate evidence, we were unable to apply the auditing procedures necessary for a conclusion about whether the Baker County Board of Education complied with the requirements applicable to those programs.
300 MULBERRY STREET, SUITE 300 POST OFFICE BOX 1877 MACON, GEORGIA 31202-1877 478-464-8000 FAX 478-464-8051 www.mjcpa.com MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

Disclaimer of Opinion on Child Nutrition Cluster and Special Education Cluster Because of the significance of the matter described in the "Basis for Disclaimer of Opinion on the Child Nutrition Cluster and Special Education Cluster" paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion of the types of compliance requirements that could have a direct and material effect on the Child Nutrition Cluster and Special Education Cluster programs. Accordingly, we do not express an opinion on such compliance of the Child Nutrition Cluster or Special Education Cluster programs for the Baker County Board of Education for the year ended June 30, 2015.
Other Matters Baker County Board of Education's response to the noncompliance finding identified in our audit is described in the accompanying schedule of findings and questioned costs. Baker County Board of Education's response was not subjected to the engagement to audit of compliance and, accordingly, we express no opinion on the response.
Report on Internal Control Over Compliance Management of the Baker County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In connection with our engagement to audit compliance, we considered the Baker County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Baker County Board of Education's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
40

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified. We identified a deficiency in internal control over compliance as described in the accompanying schedule of findings and questioned costs as item 2015-004 that we consider to be a material weakness. The Baker County Board of Education's response to the internal control over compliance finding identified in our audit is described in the accompanying schedule of findings and questioned costs. The Baker County Board of Education's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on it. 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 OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Macon, Georgia April 8, 2019
41

Baker County Board of Education Schedule of Expenditures of Federal Awards Year Ended June 30, 2015

Funding Agency
Progarm/Grant
Agriculture, U.S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total U.S. Department of Agriculture
Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Title I, Part A Cluster Pass-Through From Georgia Department of Education Title I Grants to Local Educational Agencies
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Improving Teacher Quality State Grants Migrant Education - State Grand Program
Total Other Programs
Total U.S. Department of Education
Total Expenditures of Federal Awards

CFDA Number

PassThrough Entity ID Number

10.553

10.555

n/a

84.027

n/a

84.173

n/a

84.010

n/a

84.048

n/a

84.367

n/a

84.011

n/a

Expenditures in Period
$ 140,890 70,788
211,678
$ 104,216 188
104,404
168,513
8,796 54,605 12,892 76,294 560,888 $ 560,888

Page 42 See note to basic financial statements.

BAKER COUNTY BOARD OF EDUCATION
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

NOTE 1.

BASIS OF PRESENTATION
The Schedule of Expenditures of Federal Awards includes the federal grant activity of the Baker County Board of Education and is presented on the accrual basis of accounting.
The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in or used in the preparation of the financial statements.

43

BAKER COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015

SECTION I SUMMARY OF AUDITOR'S RESULTS

Financial Statements Type of auditor's report issued

Disclaimer

Internal control over financial reporting: Material weaknesses identified?
Significant deficiencies identified not considered to be material weaknesses?
Noncompliance material to financial statements noted?

X Yes

No

X Yes Yes

None Reported X No

Federal Awards

Internal control over major programs: Material weaknesses identified?
Significant deficiencies identified not considered to be material weaknesses?
Type of auditor's report issued on compliance for major programs

X Yes

No

Yes X None Reported

Disclaimer both major programs

Any audit findings disclosed that are required to be reported in accordance with OMB Circular A-133, Section 510(a)
Identification of major programs:
CFDA Number
10.553, 10.555 84.027, 84.173
Dollar threshold used to distinguish between Type A and Type B programs
Auditee qualify as low risk auditee?

X Yes

No

Name of Federal Program of Cluster
Child Nutrition Cluster Special Education Cluster

$300,000 Yes

X No

44

BAKER COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
SECTION II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
2015-001. Failure to Adequately Maintain General Ledger (Repeat Finding)
Criteria: Management is responsible for having adequate controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The School District's internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills, and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB). Additionally, Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with GAAP.
Condition/Context: The School District engaged an outside consultant to assist with year-end closeout and preparation of the financial statements to present for audit. The consultant made numerous, significant corrections, including adjusting, correcting, and closing entries, in order to adjust the general ledger to accurately reflect the activities of the School District in accordance with GAAP. Despite the efforts of the outside consultant, we were unable to obtain the documentation necessary to support various account balances of the School District's funds, including cash, accounts receivable and revenue, accounts payable, salaries payable and salary expenditures. Additionally, we were unable to obtain the necessary records to perform testing of disbursements and testing of information provided to TRS to use in calculating the net pension liability. Finally, due to the continued turnover of personnel, we were unable to obtain answers to various questions raised in analytical procedures.
Cause: In discussing this deficiency with the School District, management indicated the cause was a direct result of turnover in personnel both during and after year-end, which put a strain on resources dedicated to the accounting function.
Effect or Potential Effect: The School District did not comply with the requirements of GAAP and the Department of Education regarding financial reporting. Due to the nature of the significant year-end adjustments made by the consultant, and the lack of information available to perform the annual audit, a disclaimer on the School District financial statements for the fiscal year ended June 30, 2015 has been issued by the external auditors.
Recommendation: Management should take appropriate steps to ensure the time and resources are made available to immediately correct the deficiencies related to maintenance of the general ledger, financial reporting and maintenance of records and documents related to financial transactions of the School District.
Views of Responsible Officials and Corrective Action Plans: We concur with this finding. Management has implemented control over the maintenance of the general ledger and preparation of financial statements in accordance with generally accepted accounting principles and the Financial Management for Georgia Local Units of Administration. Furthermore, a consultant, with over 20 years of school finance experience and a successful track record of school accounting, has been hired to assist the finance director with this and other matters.
45

BAKER COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
SECTION II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS (CONTINUED)
2015-002. Inadequate Segregation of Duties School Activity Accounts (Repeat Finding)
Criteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and reasonable assurance that transactions are processed according to established procedures. Such internal controls would limit any one individual's access to both physical assets and the related accounting records.
Condition: Appropriate segregation of duties was not maintained in the areas of cash reconciliation and recording, revenue/receipts/receivables, and expenditures/payables for the school activity accounts.
Context: Internal controls were not in place for school activity accounts to ensure the safeguarding of assets.
Cause: Staff turnover and the limited number of individuals available to perform each of these duties.
Effect: Lack of proper segregation of duties could result in irregularities and/or misappropriation of assets.
Recommendation: We recommend the School District implement segregation of duties in order to strengthen internal controls over school activity accounts.
Views of Responsible Officials and Planned Corrective Action: We concur with this finding. Management has implemented a plan to strengthen internal controls and segregation of duties over school activity accounts. Furthermore, a consultant, with over 20 years of school finance experience and a successful track record of school accounting, has been hired to assist the finance director with this and other matters.
2015-003. Inadequate Internal Control Procedures Cash and Cash Equivalents and Revenues/ Receivables/Receipts (Repeat Finding)
Criteria: The School District's management is responsible for designing and maintaining controls that provide reasonable assurance that transactions are processed according to established procedures. Such internal controls would limit any one individual's access to both physical assets and the related accounting records.
Condition: Appropriate segregation of duties was not maintained in the areas of cash reconciliation and revenue/receipts/receivables. Additionally, timely and accurate reconciliations of cash and receivables were not being performed.
Context: Internal controls were not in place to ensure the safeguarding of assets.
Cause: Staff turnover and the limited number of individuals available to perform each of these duties.
46

BAKER COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
SECTION II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS (CONTINUED)
2015-003. Inadequate Internal Control Procedures Cash and Cash Equivalents and Revenues/ Receivables/Receipts (Repeat Finding) (Continued)
Effect: Lack of adequate controls over cash increases the risk for theft, fraud, or misuse of School District resources that may result in errors and/or irregularities which would not be detected in a timely manner.
Recommendation: We recommend the School District strengthen internal controls and segregation of duties in the areas of cash and cash equivalents and revenues/receivables/receipts.
Views of Responsible Officials and Planned Corrective Action: We concur with this finding. Management has implemented a plan to strengthen internal controls over cash and cash equivalents and revenues/receivables/receipts. Furthermore, a consultant, with over 20 years of school finance experience and a successful track record of school accounting, has been hired to assist the finance director with this and other matters.
SECTION III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
2015-004. Failure to Adequately Maintain Records Related to Federal Awards
U.S Department of Education Passed through Georgia Department of Education Program Names: Child Nutrition Cluster (CFDA #10.553, 10.555)
Special Education Cluster (CFDA #84.027, 84.173
Criteria: Amounts reported on the Schedule of Expenditures of Federal Awards (SEFA) should reconcile to the general ledger of the School District. Additionally, documentation related to expenditures of federal programs should be maintained in order to support compliance, but also to be available to external auditors for performance of a Single Audit in accordance with the Uniform Guidance.
Condition: We were unable to reconcile the amounts listed in the SEFA to the School District's general ledger, nor were we able to test or verify the amounts included as expenditures in the SEFA. Additionally, we were unable to obtain documentation necessary to perform a Single Audit. Specifically:
Management was unable to provide a reconciliation between the amounts reported on the SEFA, the trial balances (and thus the financial statements), the grant completion reports, and the grant drawdown requests.
No payment advice was provided to substantiate the amounts recorded as School Nutrition revenue and no meal counts/participation reports were provided so that we could analytically estimate/predict revenue based on the reimbursement rates in effect at the time. 47

BAKER COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
SECTION III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED)
2015-004. Failure to Adequately Maintain Records Related to Federal Awards (Continued) U.S Department of Education Passed through Georgia Department of Education Program Names: Child Nutrition Cluster (CFDA #10.553, 10.555
Special Education Cluster (CFDA #84.027, 84.173 Context: We were unable to reconcile the majority of expenditures included in the SEFA to supporting documentation, including the general ledger. Cause: Staff turnover and lack of internal controls surrounding the maintenance of financial information. Questioned Costs: Unknown Effect: We were unable to complete a Single Audit for the fiscal year ended June 30, 2015 and unable to opine on compliance related to the major program, nor determine if the major programs selected are the correct major programs under A-133 audit requirements. Recommendation: We recommend the School District immediately take the steps necessary to strengthen controls surrounding the recording of financial transactions and maintenance of financial records. Views of Responsible Officials and Planned Corrective Action: We concur with this finding. Management has implemented a plan to strengthen internal controls over the reporting of grant revenues, financial transactions and financial records. Furthermore, a consultant, with over 20 years of school finance experience and a successful track record of school accounting, has been hired to assist the finance director with this and other matters.
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BAKER COUNTY BOARD OF EDUCATION
SCHEDULE OF PRIOR YEAR FINDINGS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
2014-001. Failure to Adequately Maintain General Ledger
Criteria: Management is responsible for having adequate controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The School District's internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills, and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB). Additionally, Chapter 22A Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with GAAP.
Condition: The School District engaged an outside consultant to assist with year-end closeout and preparation of the financial statements to present for audit. The consultant made numerous, significant corrections, including adjusting, correcting, and closing entries, in order to adjust the general ledger to accurately reflect the activities of the School District in accordance with GAAP.
Auditee Reponse/Status: Unresolved. See current year finding 2015-001.
2014-002. Inadequate Segregation of Duties School Activity Accounts (Repeat Finding)
Criteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and reasonable assurance that transactions are processed according to established procedures. Such internal controls would limit any one individual's access to both physical assets and the related accounting records.
Condition: Appropriate segregation of duties was not maintained in the areas of cash reconciliation and recording, revenue/receipts/receivables, and expenditures/payables.
Auditee Reponse/Status: Unresolved. See current year finding 2015-002.
2014-003. Inadequate Internal Control Procedures Cash and Cash Equivalents and Revenues/Receivables/Receipts (Repeat Finding)
Criteria: The School District's management is responsible for designing and maintaining controls that provide reasonable assurance that transactions are processed according to established procedures. Such internal controls would limit any one individual's access to both physical assets and the related accounting records. Condition: Appropriate segregation of duties was not maintained in the areas of cash reconciliation and revenue/receipts/receivables.
Auditee Reponse/Status: Unresolved. See current year finding 2015-003.
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