Bulloch County Board of Education, Statesboro, Georgia, annual financial report for the fiscal year ended June 30, 2010 (including independent auditor's reports)

rn Statesborn, Georgia
- Bigor, Rehvcutce, Rd&mh@s EWIYStu&ni, Bwry Day Serving more than 9,500 atitdentsacross 16 m p u ~

BULLOCH 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

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

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 ASSETS

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 ASSETS

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

BULLOCH COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION
2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM

Page

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WlTH GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH O M 6 CIRCULAR A-133

SECTION Ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 6563174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1- 156
Atlanta, Georgia 30334-8400
February 2 5 , 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Bulloch County Board of Education
INDEPENDENTAUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Bulloch County Board of Education, as of and for the year ended June 30, 2010, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Bulloch County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GovernmentAuditing 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Bulloch County Board of Education, as of June 30, 2010, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated February 25, 2011, on our consideration of the Bulloch 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 Audithg Standardsand should be considered in assessing the results of our audit.

Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedule of Revenues, Expendituresand Changes in Fund Balances - Budget and Actual, as presented on pages i through viii and page 25 respectively, 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 the 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.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Bulloch County Board of Education's financial statements as a whole. The accompanying supplementary information consists of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Nun-Profit Organ~zations,are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
~ d s e lWl . Hinton, CPA, CGFM State Auditor

BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010
INTRODUCTION
Our discussion and analysis of the Bulloch County School District's financial performance provides an overview of the School District's financial activities for the fiscal year ended June 30, 2010. The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the notes to the basic financial statements and financial statements to enhance their understanding of the School District's financial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2010 are as follows:
On the District-widefinancial statements, the assets of the School District exceeded liabilities by $126.9 million. Of this amount, $17.7 million is unrestricted and is available for spending at the School District's discretion.
The School District had $86.9 million in expenses relating to governmental activities; only $57.0 million of these expenses are offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) of $40.1 million and fund balance were adequate to provide for these programs.
As stated above, general revenues accounted for $40.1 million, or 41.3%,of all revenues totaling $97.1 million. Program specific revenues in the form of charges for services, grants and contributions accounted for the rest.
OVERVIEW OF THE FINANCIAL STATEMENTS
This report consists of several parts including management's discussion and analysis, the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the Distrid-wide and fundfinancialstatements.
The District-wide financial statements include the Statemento f Net Assets and Statemento fActivities. These statements provide information about the activities of the School District presenting both short-term and long-terminformation about the School District's overall financial status.
The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The GovernmentalFundsstatements disclose how basic services are financed in the short-term as well as what remains for future spending. The Fiduciaary Funds statement provides information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. The fund financial statements reflect the School District's most significant funds. In the case of the Bulloch County School District, the General Fund, District-wide Capital Projects Funds, and Debt Service Funds are the most significant funds.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.

BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010
District-wide Statements
The District-wide financial statements are basically a consolidation of all of the School District's operatingfunds into one column called governmentaladivities. In reviewing the District-wide financial statements, a reader might ask the question about whether the School District is in a better financial position than last year? The Statement of Net Assets and the Statement of Activities provides the basis for answering this question. These financial statements include all School District's assetsand liabilies and uses the accrual basis of accounting similar to the accounting used by most privatesector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the School District's net asseh and any changes in those assets. The change in net assets is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the results of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs and other factors.
The Statement of Net Assets and the Statement of Activities reflects the School District's governmental activities.
Fund Financial Statements
The School District uses many funds to account for a multitude of financial transactions during the fiscal year. However, the fund financial statements presented in this report provide detail information about only the School District's significant or major funds.
Governmental Funds
Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using the modified accrual method of accounting which measures cash and all other financialasse&that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The differences between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are reconciled within the financial statements.
Fiduciary Funds
The School District is the trustee, or fiduciaw, for assets that belong to others, such as school clubs and organizations within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE
Table 1,Statement of Net Assets, provides the perspective of the School District as whole. Table 2 shows the Changes in Net Assets for the year.

BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010

Table 1 Net Assets

ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Local Other Inventories Deferred Charges Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)

Fiscal Year 2010

Governmental Activities Fiscal
Year 2009

Net Change

LIABILITIES

Total Assets

Salaries and Benefits Payable Contracts Payable Retainages Payable Long-Term Liabilities
Due With~nOne Year Due in More Than One Year

Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt
Restricted for Continuation of Federal Programs Debt Service Capital Projects
Unrestricted

Total Net Assets

Total Liabilities and Net Assets

BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010

Table 2 Change in Net Assets

Revenues Program Revenues: Charges for Services and Sales OperatingGrants and Contributions Capital Grants and Contributions
Total Program Revenues
General Revenues: Taxes Property Taxes For Maintenanceand Operations For Debt Services Intangible RecordingTax Sales Taxes Special Purpose Local Option Sales Tax For Maintenanceand Operations For Debt Services Grants and Contributions not Restrictedto Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Total Revenues
Program Expenses: Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-InstructionalServices Food Services Interest on Short-Term and Long-Term Debt
Total Expenses
Increase in Net Assets

Fiscal Year 2010

Governmental Activities Fiscal Year 2009

Net Change

BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDEDJUNE 30,2010

Governmental Activities
The Statement of Activities shows the cost of program services and the charges for services and grants offsetting these services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. It identifies the cost of these services supported by tax revenue and unrestricted State entitlements
Table 3 Governmental Activities

Total Cost of Services Fiscal Year 2010

Net Cost of Services
Fiscal Year 2010

Instruction Support Services:
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance of Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services: Food Services Interest on Short-Term and Long-Term Debt

$ 54,584,361 $ 14,200,489

Total Expenses
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS
The School District's governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues and other financing sources of $123.1 million and total expenditures and other financing uses of $125.1 million. The excess of expenditure over revenues was mainly the result of Capital Projects expenditures incurred in fiscal year 2010, for which funding had occurred through general obligation bond issuances in 2007 (fiscal year 2008) and 2009 (fiscal year 2010).

BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010
General Fund Budgeting Highlights
The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund, which includes local, state and Federal funds collected and disbursed for the purpose of operating the school system.
The School District's budget is based on its strategic plan and incorporates site-based budgeting into the budget process to control total site budgets but provide flexibility for site management.
For the General Fund, the actual revenues of $85.2 million were over the final budgeted amount of $84.7 million by $0.5 million. This difference (actual vs. final budget) was a combination of undercollection of state and local revenues, offset by an increase in Federalstimulus funding.
The actual expenditures of $83.3 million were less than the final budgeted amount of $90.3 million by $7.0 million. This difference was due primarily to the efforts taken by management, particularly in personnel, to contain and reduce costs during a period of declining revenues.
General Fund revenues exceeded expenditures by $1.9 million.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At fiscal year ended June 30, 2010, the School District had $159.7 million invested in capital assets, all in governmental activities. Table 4 reflects a summary of these balances net of accumulated depreciation. The School District has implemented a facilities plan that involves the construction and improvement of three high schools and four elementary schools, as well as necessary additions and improvements to facilities, including classroom wing additions and technology infrastructure. These capital expenditures are being funded by combined Educational Special Purpose Local Option Sales Tax (ESPLOST) revenues, General Obligation Bond proceeds, and state capital outlay funding. In September, 2005, the voters of Bulloch County approved early re-imposition of the Educational Special Purpose Local Option Sales Tax, to be collected between January 1,2009 and December 31, 2013, to provide additional resources to complete this facilities plan. General Obligation Bonds in the amount of $44.3 million were issued against this tax in December, 2007. In March, 2009, the voters of Bulloch County approved an extension of the Educational Special Purpose Local Option Sales Tax, to be collected between January 1,2014 and December 31, 2018, to provide additional resources to complete this facilities plan. General Obligation Bonds in the amount of $23.5 million were issued against this tax in December, 2009, and another $13.7 million were issued in October, 2010.

BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010

Land Construction In Progress Buildingand Improvements Equipment Land lmprovements
Total

Table 4 Capital Assets (Net of Depreciation)

Fiscal Year 2 0 1 0

Governmental Activities Fiscal
Year 2009

$

4,256,446 $

4,256,446 $

Net Change
0

Debt
In September, 2005, voters approved a 1% Education Special Purpose Local Option Sales Tax (ESPLOST) in conjunction with a $44.3 million General Obligation Bond issuance, for the purpose of building new schools and improvements throughout the school system. The ESPLOST collected between January 1,2009, and December 31, 2013, is being used to retire the bonds. In addition, in March, 2009, the voters of Bulloch County approved an extension of the ESPLOST, in conjunction with $53.9 million in General Obligation Bond issuance capacity, for the purpose of building new schools and improvements throughout the school system. The ESPLOST collected between January 1, 2014, and December 31, 2018, will be used to retire the bonds. In December, 2009, $23.5 million in General Obligation Bonds were issued against this bonding capacity and in October, 2010, another $13.7 million was issued. The remaining bonding capacity is expected to be utilized by December, 2012. Also, in January, 2005, the Bulloch County Board of Education issued $12.8 million in General Obligation Refunding Bonds to advance refund $12.3 million of outstanding General Obligation Bonds, resulting in the present value economic gain of over one-half million dollars due to interest cost reduction. At fiscal year ended June 30, 2010, the School District had $68.3 million in bonds outstanding.

Table 5 Debt at June 30

Fiscal Year 2010

Governmental Activities Fiscal
Year 2009

Net Change

Bonds Payable

At June 30, 2010, the School District's assigned bond rating was "AA+" as determined by Standard and Poors.

BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30.2010
CURRENT ISSUES
Following is a list of currently known facts, decisions or conditions that are expected to have a significant effect on financial positions or results of operations.
Economic Recession - The State of Georgia and Bulloch County have not been spared from the effects of the ongoing economic recession. To date, beginning in fiscal year 2009, state funding for education has been reduced by a sustained $6.4 million annual amount. The Federal government provided temporary funding through American Recovery and Reinvestment Act (ARRA) Stabilization funding of $1.0 million in fiscal year 2009 and $4.6 million in fiscal year 2010. No ARRA funding is expected in fiscal year 2011, or thereafter, leaving the effect of the $6.4 million annual loss in state revenues, plus local funding losses from decreased sales and property tax collections, to be addressed by the School District. Due to the School District's sound fiscal practices, the General Fund Balance was accumulated beyond the maximum amount allowed by the State of Georgia, which is 15% of the subsequent fiscal year's operating budget. This has given the School District the flexibility of responding to the current economic crisis in a planned and methodical manner, maintaining critical services to students to ensure academic success, while implementing a five-year plan to reduce expenditures. The School District's long-term cost reduction strategy consists mainly of a staffing reduction plan targeted at raising class sizes and eliminating over 100 teaching positions, as well as selected administrative positions and other program and operational cuts. These position reductions will mainly occur through natural attrition and have occurred as expected, to date. The School District is committed to maintaining a healthy General Fund Balance, student academic achievement and sustainable operations. Therefore, the School District's strategic financial plan also includes the possibility of increasing revenues through property taxes. In fiscal year 2011, the School District levied a 0.5 mill property tax increase, to offset the declining value of the property tax digest and to offset local funding diverted from the School District to the Charter Conservatory for Arts and Technology, by the State of Georgia. Currently, approximately 4.5 mills of property tax are available to be levied for operations.
CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information contact Mr. Charles Wilson, CPA, Assistant Superintendent for Business and Finance for the Bulloch County School System, 150 Williams Road, Suite A, Statesboro, Georgia 30458. You may also email your questions to Mr. Wilson at cwilson@buIloch.kl2.ga.us.

BULLOCH COUNTY BOARD OF EDUCATION

BULLOCH COUNN BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30,2010
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Local Other Inventories Deferred Charges Capital Assets, Non-Depreciable Capital Assets, Depreciable(Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Salaries and Benefits Payable Contracts Payable Retainages Payable Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT "A"
GOVERNMENTAL ACTIVITIES

The notes to the basic financial statements are an integral part of this statement. -1-

BULLOCH COUNW BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30.2010

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services improvement of Instructional Services Educational Media Services General Administration School Administration Business Adminlstratlon Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operationsof Non-InstructionalServices Food Services Interest on Short-Term and LongTerm Debt
Total GovernmentalAct~vities
General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Sales Taxes Spec~aPl urpose Local Opt~onSales Tax For Debt Services Local Option Sales Tax Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Changes in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

The notes to the basic financial statements are an integral part of this statement. -2-

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

BULLOCH COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30,2010

EXHIBIT "C"

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Local Other Inventories
Total Assets

LIABILITIES AND FUND BALANCES
LIABILITIES
Salaries and Benefits Payable Contracts Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Debt Service Capital Projects Inventories
Unreserved Designatedfor Student Activities UndesignatedReported in: General Fund Capital Projects
Total Fund Balances

Total Liabilities and Fund Balances

$ 24,399,384.43 $ 20,139,532.72 $ 6,604,126.38 $

51,143,043.53

The notes to the basic financial statements are an integral part of this statement. -4-

BULLOCH COUNTY BOARD OF EDUCATION RECONCILIATIONOF THE GOVERNMENTALFUNDS BALANCESHEET
TO THE STATEMENT OF NET ASSETS JUNE 30,2010
Total Fund Balances - GovernmentalFunds (Exhibit"C")
Amounts reported for GovernmentalActivities in the Statement of Net Assets are different because:
Capital Assets used in GovernmentalActivities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Taxes that are not available to pay for current period expenditures are deferred in the funds.
Other Long-Term Assets are not available to pay for current period expenditures and therefore, are deferred on the Statement of Net Assets.
Long-Term Liabilities, includ~ngBonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-TermLiabilltles at year-end consist of:
General Obligation Bonds Payable UnamortizedBond Premiums
Total Long-Term Liabilities
Net Assets of GovernmentalActivities (Exh~b"~At")

EXHIBIT "D"

The notes to the basic financial statements are an integral part of this statement.
-5-

BULLOCH COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURESAND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30.2010

REVENUES
Properly Taxes Sales Taxes State Funds Federal Funds Charges for S e ~ ~ c e s Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instrucuon Support Sewlces Pupil S e ~ l c e s Improvement of lnstructlonal Setvlces Educat~onaMl edla S e ~ l c e s General Adrnlnlstratlon School Admlnlstratlon Buslness Adm~n~strat~on Maintenance and Operat~onof Plant Student Transportat~onS e ~ l c e s Central Support Setvlces Other Support S e ~ l c e s Food Services Operat~on
Capital Outlay Debt S e ~ l c e s
Pr~nc~pal Interest
Total Expenditures
Excess of Revenues over (under) Expend~tures
OTHER FINANCING SOURCES iUSESl
Proceedsof Long-Term Capltal Related Debt Premlums on Bonds Sold Transfers In Transfers Out
Total Other FinancingSources (Uses)
Net Change in Fund Balances
Fund Balances - Beginn~ng
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

The notes to the basic financial statements are an ~ntegrapl art of thls statement.
- 6 -

BULLOCH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 3 0 . 2 0 1 0
Total Net Change In Fund Balances- Governmental Funds (Exh~b"~Et") Amounts reported for Governmental Activities in the Statement of Activities are different because:
Cap~taOl utlays are reported as expend~turesIn Governmental Funds. However, in the Statement of Activities, the cost of Cap~taAl ssets is allocated over their estimated useful l~vesas depreciat~onexpense. In the current period. these amounts are: Capital Outlay Depreciation Expense Excessof Cap~taOl utlay over Depreciation Expense
Taxes reported In the Statement of Act~v~tlethsat do not prov~decurrent f~nanclarlesources are not reported as revenues In the funds.
The net effect of varlous m~scellaneoustransactions ~nvolv~ngcap~atsaslets (i.e., sales, trade-ins, donat~ons,and disposals) IS to decrease net assets.
Bond proceeds prov~decurrent financlal resources to Governmental Funds; however. lssulng debt Increases Long-TermL ~ a b ~ l ~Int ~theesStatement of Net Assets In the current per~odp, roceeds were rece~vedfrom General Obl~gat~on Bonds Issued. ~nclud~nagpremlum of $2,186,971.50.
Repayment of Long-Term Debt IS reported as an expenditure In Governmental Funds, butthe repayment reduces LongTerm Llabil~t~eInsthe Statement of Net Assets. In the current year, these amounts conslst of Bond Prlnc~paRl etirements.
Some Items reported in the Statement of Activities do not require the use of current financlal resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of: Deferral of Issuance Costs Amortlzatlon of Bond Premiums Amortization of Changes in Principal for Refunding Bond Issue Amortlzatlon of Bond Issuance Costs Total Additional Ex~enditures
Change In Net Assets of Governmental Activit~es(Exhibit "B")
The notes to the baslc financ~asl tatements are an Integral part of this statement. - 7

BULLOCH COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30,2010
ASSETS Cash and Cash Equivalents Investments
Total Assets
LIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS

The notes to the basic financial statements are an integral part of this statement. - 8 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Bulloch 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 SIGNIFICANTACCOUNTING 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 Bulloch County Board of Education.
District-wide Satemenis: The Statement of Net Assets 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.
The School District reports the following major governmental funds:
a General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
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District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
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, governments 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, 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 are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
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contracted for the school year (July 1- June 30) and paid over a twelve month contract period, generally September 1through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2010, the School District adopted the Governmental Accounting and Standards Board (GASB) Statement No. 51, Accounting and Reporfing for Intangible Assetrs. The provisions of this Statement generally require retroactive reporting for intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated.
In addition, the School District adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. The provisions of this Statement impacts disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 3.
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.
INVESTMENTS
Composition of Investments lnvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,

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(5) Prime banker's acceptances,
(6) The Georgia Fund 1administered by the State of Georgia, Office of Treasury and Fiscal Services,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.
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 Bulloch County Board of Commissioners fixed the property tax levy for the 2009 tax digest year (calendar year) on August 4, 2009 (levy date). Taxes were due on December 1,2009 (lien date). Taxes collected within the current fiscal year or within 6 0 days after year-end on the 2009 tax digest are reported as revenue in the governmental funds for fiscal year 2010. The Bulloch 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, 2010, for maintenance and operations amounted to $16,345,121.70 and for school bonds amounted to $1,382,230.73.
Tax millage rates levied for the 2009 tax year (calendar year) for the Bulloch County Board of Education were as follows (a mill equals $1per thousand dollars of assessed value):

School Operations School Bonds

9.45 mills 0.45 mills

9.90 mills
SALESTAXES
Local Option Sales Tax revenue, at the fund reporting level, during the fiscal year amounted to $9,615,082.16 and was recorded in the General Fund. Local Option Sales Tax is to be used for the maintenance and operation of the School District.
Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $9,644,695.46 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.

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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 District-wide 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 Policy

Estimated Useful Life

Land Land lmprovements Buildings and lmprovements Equipment lntangible Assets

Any Amount

$

5,000.00

$

5,000.00

$

5,000.00

$

50,000.00

N/A
60 years 10 to 60 years 5 to 12 years 10 to 20 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.
Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed usingthe straight-line method over the estimated useful lives of the assets, generally 1 0 to 20 years.

GENERAL OBLIGATION BONDS

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the debt.

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
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In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
N ET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - 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 invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent 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.
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: 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 1 1 0 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 45-8-13.1)the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 1 1 0 percent of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
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(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,

(2) lnsurance on accounts provided by the Federal Deposit lnsurance Corporation,

(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,

(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,

(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,

(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and

( 7 ) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by 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, 2010, the bank balances were $43,244,083.41. The amounts exposed to custodial credit risk are classified into three categories as follows:

Category 1Category 2 -
Category 3 -

Uncollateralized, Cash collateralized with securities held by the pledging financial institution, 0 r 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, 2010, are as follows:

Custodial Credit Risk Category

Bank Balance

Total

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CATEGORIZATION OF INVESTMENTS

At June 30, 2010, the carrying value of the School District's total investments was $1,673,070.92, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund 1,formerly referred to as LGIP, administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of Treasury and Fiscal Services for the Georgia Fund 1(Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1is disclosed in the State of GeorgiaComprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at htt~://www.audits.aa.aov/SGD/cafr.html.
The Primary Liquidity Portfolio consists of Georgia Fund 1which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1may not exceed 60 days. The weighted average maturity for Georgia Fund 1on June 30,2010, was 4 6 days.

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

July 1, 2009

Increases

Decreases

Governmental Activities

Cap~taAl ssets, Not Being Depreciated:

Land

$

4,256.445.67

ConstructionWork In Progress

Balances June 30,2010

$

4,256,445.67

Total Capital Assets, Not Being Depreciated $ 51,157,257.32 $ 28,891,141.82 $

4,281,812.05 $ 75,766,587.09

Capital Assets. Being Depreciated: Buildings and Improvements Equipment Land Improvements

$ 94,402,420.73 $ 12,403,853.61 1,034,456.64

3,085,919.13 $ 1,036,663.11 1,252.526.91

55,116.00 $ 31,946.25 56,500.00

97,433,223.86 13,408,570.47
2,230.483.55

Less: Accumulated Depreciation: Buildings and Improvements Equipment Land lmprovements

Total Capital Assets, Being Depreciated, Net $ 80,979,724.14 $

Governmental Activity Capital Assets - Net

$ 132,136,981.46 $

3,090,734.69 $ 31,981,876.51 $

106,373.25 $ 83,964,085.58 4,388,185.30 $ 159,730,672.67

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
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Current year depreciation expense by function is as follows:
Instruction Support Services
Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services

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Note 6: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2010, consisted of the following:

Transfer to

Transfers From
Debt Service Fund

District-wide Capital Projects

$ 8,608,650.80

Transfers are used to move sales tax revenues, exceeding debt service requirements, from the Debt Service Fund to the District-wide Capital Projects Fund.

Note 7: 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, job related illness or injuries to employees and acts of God. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims in the same fund from which an employee's salary and benefits are paid. Claims are accounted for with expenditure and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.

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

follows:

Claims and

Beginning of Year

Changes in

Claims

End of Year

Liability

Estimates

Paid

Liability

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

Position Covered

Amount

Superintendent All Employees

Note 8: OPERATING LEASES

The Bulloch County Board of Education has entered into a lease as lessee for digital copiers, service, and supplies. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2010, for governmental funds amounted to $311,251.23. Future minimum lease payments for these leases are as follows:

Year Ending

Governmental Funds

Total

$

269,674.46

Note 9: LONG-TERM DEBT

GENERAL OBLIGATION DEBT OUTSTANDING

General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

General Government - Refunding- Series 2005 General Government - Series 2007 General Government - Series 2009

2.50%- 4.50% 4.00% - 5.00%
3.00%- 5.00%

Amount
$ 9,320,000.00 35,485,000.00 23,525,000.00

Voters have authorized $30,065,000.00 in general obligation debt for Bulloch County Board of Education which was not issued as of June 30, 2010.

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The changes in Long-Term Debt during the fiscal year ended June 30,2010, were as follows:

Balance
July 1.2009

Additions

Governmental Funds

Balance

Deductions

June 30,2010

Due Within One Year

G. 0. Bonds

$ 54,715,000.00 $ 23,525,000.00 $ 9,910,000.00 $ 68,330,000.00 $ 10,260,000.00

Bond Premium - Unamortized

2,251,176.22 2,186,971.50

590,605.06 3,847.542.66

705.708.86

At June 30, 2010, payments due by fiscal year which includes principal and interest for these items are as follows:

General Obligation Debt

Unamortized

Principal

Interest

Bond Premium

Fiscal Year Ended June 30:

Total Principaland Interest
Note 10: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $242,814.72 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $157,554.62
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $43,504.33
Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $41,755.77

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Note 11: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2010:

Project

Unearned Executed Contracts

Southeast Bulloch High School Agriculture Barn Southeast Bulloch High School Stadium and Fieldhouse Statesboro High School Gym Renovation Statesboro High School Fieldhouse Statesboro High School Landscapingand Irrigation Portal High School Sallie Zetterower Elementary School Julia P. Bryant ElementarySchool Mattie Lively Elementary School

The amounts described in this note are not reflected in the basic financial statements.
Note 12: 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 13: SUBSEOUENT EVENTS
On October 14, 2010, the Bulloch County Board of Education issued $13,705,000.00 in General Obligation Bonds, related to the Education Special Purpose Local Option Sales Tax approved by voters on March 17, 2009, which is to begin on January 1,2014. The Bulloch County Board of Education will continue to issue these bonds, as necessary, over the next three years to fund construction projects identified in the school system's facilities plan.
Note 14: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL EMPLOYEES 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

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service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Insurance Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (OCGA) 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).
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. On average, plan members pay approximately 25 percent of the cost of the health insurance coverage.
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, 2010:
For certificated teachers, librarians and regional educational service agencies:

July 2009 August 2009 - October 2009 November 2009 -June 2010

18.534% of covered payroll for August Coverage
14.492% of covered payroll for September - November Coverage
18.534% of covered payroll for December - July Coverage

For non-certificated school personnel:

July 2009 -June 2010

$162.72 per member per month plus Department of Education contribution of $22,838,311.00

No additional contribution was required by the Board for fiscal year 2010 nor contributed to the State OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other post-employment 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:

Percentage

Required

Fiscal Year

Contributed

Contribution

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Note 15: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1,1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 3 0 years of creditable service, regardless of age, or after 1 0 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 6 0 or by 7% for each year or fraction thereof by which the member has less than 3 0 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 1 0 years of service. If a member terminates with less than 1 0 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2010, were 5.25% of annual salary. The member contribution rate will increase to 5.53% effective July 1, 2010. Employer contributions required for fiscal year 2010 were 9.74% of annual salary as required by the June 30, 2007, actuarial valuation. The employer contribution rate will increase to 10.28% effective July 1,2010.

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

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

Fiscal Year

Percentage Contributed

Required Contribution

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BULLOCH COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDEDJUNE 30.2010

SCHEDULE "1"

REVENUES
Propetty Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES
Other Sources
Net Change in Fund Balances
Fund Balances- Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

- Fund Balances Ending
Notes to the Schedule of Revenues. Exoendituresand Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.
The accompanyingschedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accountingwhich is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements.

BULLOCH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURESOF FEDERALAWARDS
YEAR ENDED JUNE 30,2010

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Througt- From Georgia Department of Educat~on Food Services School Breakfast Program Nat~onaSl chool Lunch Program
Total Ch~ldNutr~t~oCnluster
Other Programs Pass-ThroughFrom Bright From the Stan: Georgia Department of Early Care and Learning Summer Food Sewice Program for Children Pass-ThroughFrom Georgia Department of Education Food S e ~ l c e s ARRA- Child Nutr~tionDiscret~onaryGrants L~mitedAva~lab~l~ty
Total U. S. Department of Agr~culture
Education, U. S. Depattment of Education Technology State Grants Cluster Pass-ThroughFrom Georg~aDepartment of Educat~on Education Technology State Grants
Special Educat~onCluster Pass-ThroughFrom Georg~aDepartment of Educatlon Spec~aEl ducation ARRA- Grants t o States
ARRA - Preschool Grants
Grants to States Preschool Grants
Total Special Education Cluster
State Fiscal Stabilization Fund Cluster Pass-ThroughFrom Georg~aDepartment of Education ARRA- Education State Grants
Title I. Part A Cluster Pass-ThroughFrom Georgia Department of Education ARRATitle I Grants to Local EducaQonalAgenc~es Title IGrants to Local Educational Agencies
Total Title I. Part A Cluster
Other Programs Direct
Safe and Drug-FreeSchools and Communities - Nat~onaPl rograms
Pass-ThroughFrom Georgia Department of Educat~on
Career and Technical Education - Bas~cGrants to States
English LanguageAcquis~tionGrants ImprovingTeacher Quality State Grants Migrant Education S t a t e Grant Program
Total Other Programs
Total U. S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

BULLOCH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDEDJUNE 30,2010

SCHEDULE " 2

FUNDING AGENCY PROGRAM/GRANT
Health and Human Services. U. S. Department of Chlld Care and Development Fund Cluster Pass-ThroughFrom Bright Fromthe Start: Georgia Department of Early Care and Learnlng AURA - Child Care and DevelO~menBt lock Grant
Justlce. U. S. Department of Direct Drug-FreeCommun~tlesSupport Program Grants
Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

Total Federal Financial Assistance
N/A = Not Available
Notes to the Schedule of Expenoitures of Federal Awards
(1) Includes the Federallyasslgned value of donated commod~t~efosr the Food Donatlon Program ~nthe amount of $393,668.78.
(2) Expenditures for the funds earned on the School Breakfast Program (5732.151.50) were not ma~ntalnedseparately and are lncluded In the 2010 Natlonal School Lunch Program
Major Programs are identified by an asterisk (*) in front of the CFDA number
The School District did not prov~deFederal Assistance to any Subreclplent.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activlty of the Bulloch County Board of Educat~onand is presented on the modified accrual basis of accountlngwhlch IS the basls of accounting used in the presentation of the fund financial statements.

See notes to the baslc financial statements.

BULLOCH COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30.2010

GRANTS Brlght From the Start: Georgla Department of Early Care and Learn~ng Pre-Kindergarten Program
Education, Georgia Department of Qual~tyBasic Education Direct lnstructlonal Cost Kindergarten Program Kinderganen Program Early lntewentlon Program Primary Grades (1-3) Program Primary Grades Early lnterventlon (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades Early lnte~ention(4 5) Program Middle Grades (6 8) Program Middle School (6-8) Program High School Generai Education (9 12) Program Vocational Laboratory (9-12) Program Students wlth Disabll~tles Glfted Student - Category VI Remedlal Education Program Alternative Education Program Engllsh Speakers of Other Languages (ESOL) Media Center Program 2 0 Days Additional lnstructlon Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categor~caGl rants Pupil Transportation Regular Nursing Services Migrant Education Vocational Supe~isors Educat~onEqualization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Dual Enrollment Georgia Needs Special Scholarshshlp Fund Health Insurance National Teacher Certification Preschool Handicapped Program Special Education Support Cost Teachers' Retirement Tuition for Multi - Handicapped Students Virtual Schools Grant
Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Office of Treasury and Flscal Servlces Publ~cSchool Employees Retirement
CONTRACT Human Resources. GeorBa Department of Family Connection

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

SCHEDULE "3" TOTAL

See notes to the basic financial statements.

BULLOCH COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDEDJUNE 30.2010

SCHEDULE "4"

PROJECT
For the purpose of acquir~ngc, onstructing, and equ~ppingnew facllnles for Portal H~gh School and Middle School. Southeast Bulloch H~ghSchool, Statesboro Hlgh School, and Nevlls Elementary School. relocat~onof Wllllam James Mlddle School to the exlstlng Statesboro Hlgh School and the renovation and equlpplngof the f a c ~ l ~ t ~ e s for use as a mlddle school, a new central audltorlum on the campus of the new Statesboro H~ghSchool to be used by all Bulloch County students; and Site ~mprovements,Improvements to facllltles, and technology upgrades throughout the Bulloch County School System.
For the purpose of acquir~ng,constructing. and equipping (i) new facllltles for Jul~a Bryant. Sallle Zetterower, and Manie Lively ElementarySchools. ( i ~n)ew classroom fac~lihesfor Langston Chapel Elementary, Mill Creek Elementary. Portal Elementary. and Willlam James Middle Schools, (111) new athletic facilities for Statesboro Hlgh School. Southeast Bulloch High School. William James Mlddle School, Southeast Bulloch M~ddlea, nd Langston Chapel Mlddle School, (IV) a new kymnasium, athletlc fac~lities,and other lmprovements for Portal Mlddle and High School, and (v) real and personal property, slte improvements, renovauons and improvements to facilities, and technology upgradesthroughout the BullOCh County School System.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

PROJECT STATUS

$ 109,800,000.00 $ 105,686,721.43 $ 12,639,258.60 $ 93,047,462.83 Ongoing

80.000.000.00

62.116.954.00

17.941.460.84

1.494.945.98 Ongoing

(1) The School Distr~ct'soriginal cost estlmate as specified in the resolutlon calllngfor the lmposltion of the Local Option Sales Tax.
(2) The School DlStrlCt's current estlmate of total cost for the projects. Includes all cost from project Inception to complet~on.
(3) The voters of Bulloch Countyapproved the imposition of a l%sales tax to fund the above project. Amounts expended for these projects may include sales tax proceeds, state, local propew taxes and/or other funds over the llfe of the projects.

See notes to the basic financial statements

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BULLOCH COUNTY BOARD OF EDUCATION
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES- BY PROGRAM
YEAR ENDEDJUNE 30,2010

SCHEDULE "5"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early lntewentlon Program Primary Grades (1-3) Program Pr~maryGrades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervent~on(4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category II category III Category IV Category V Gifted Student - Category Vl Rerned~aEl ducation Program Alternative Education Program Engl~shSpeakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONALPROGRAMS
Media Center Program Staff and Professional Develo~ment

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

TOTAL QBE FORMULA FUNDS

(1) Comprised of State Funds pius Local Five M ~ lSl hare. (2) Allotments do not include the Impact of the State amended formula adjustment.

See notes to the baslc f~nanciasl tatements.

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
February 2 5 , 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Bulloch County Board of Education
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCEAND OTHER MAlTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Bulloch County Board of Education as of and for the year ended June 30, 2010, which collectively comprise Bulloch County Board of Education's basic financial statements and have issued our report thereon dated February 25, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GovernmentAuditng Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Re~orting
In planning and performing our audit, we considered Bulloch County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures 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 Bulloch County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Bulloch County Board of Education's internal control over financial reporting.
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 combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.

Our consideration of internal control over financial reporting 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 financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
Com~lianceand Other Matters
As part of obtaining reasonable assurance about whether Bulloch County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the 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,
We noted certain matters that we have reported to management of Bulloch County Board of Education in a separate letter dated February 25,2011.
This report is intended solely for the information and use of management, members of the Bulloch County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Res~ectfullvsubmitted,
~ d s e lWl . Hinton, CPA, CGFM State Auditor

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-1 56 Atlanta, Georgia 30334-8400
February 2 5 , 2 0 1 1

Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Bulloch County Board of Education
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133
Ladies and Gentlemen:
Com~ I i a n c e
We have audited Bulloch County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010. Bulloch 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. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major Federal programs is the responsibility of Bulloch County Board of Education's management. Our responsibility is to express an opinion on Bulloch County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audiki of States, Local Governments, and Non-Profit Organizations. Those etandards and 0MB 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 Bulloch County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Bulloch County Board of Education's compliance with those requirements.
In our opinion, the Bulloch County Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30,2010.

Internal Control Over Com~liance
Management of Bulloch County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal programs. In planning and performing our audit, we considered Bulloch County Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance 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 Bulloch County Board of Education's internal control over compliance.
A deficiency in internal control over compljance 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.
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 deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses,as defined above.
This report is intended solely for the information and use of management, members of the Bulloch County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Res~ectfullvsubmitted.
sell W. Hinton, CPA, CGFM
State Auditor

SECTION Ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

BULLOCH COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 3 0 , 2 0 1 0

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6 161 - 0 8 - 0 1 FS-6161-09-01

Further Action Not Warranted Previously Reported Corrective Action Implemented

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

BULLOCH COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information

Internal control over financial reporting: Material weakness identified? Significant deficiency identified?

Noncompliance material to financial statements noted:

Federal Awards

Internal Control over major programs: Material weakness identified? Significant deficiency identified?

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

Any audit findings disclosed that are required to be reported in accordance with OMB Circular A-133, Section 510(a)?

Identification of major programs:

CFDA Nurnber(s)

Name of Federal Program or Cluster Title I, Part A Cluster Special Education Cluster State Fiscal Stabilization Fund Cluster

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

Auditee qualified as low-risk auditee?

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

Ill FEDERALAWARD FINDINGS AND QUESTIONEDCOSTS

No matters were reported.

Unqualified N 0
None Reported
N 0 None Reported
Unqualified