Bulloch County Board of Education
Statesboro, Georgia
Annual Financial Report Fiscal Year Ending June 30, 2012
(Including Independent Auditor's Reports)

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

Page
i
1 2 4 5 6 7 9 10
25

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
26 28 29 31

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 WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

SECTION III 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

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 4, 2013

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 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, 2012, 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 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 of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Board's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our 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, 2012, 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.

2012ARL-11

In accordance with Government Auditing Standards, we have also issued our report dated March 4, 2013, 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 Auditing Standards and should be considered in assessing the results of our audit.
Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through viii and page 25 respectively, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. 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 regarding 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.
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 Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the 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 basic 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,

GSG:as 2012ARL-11

Greg S. Griffin State Auditor

BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012
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, 2012. 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 2012 are as follows:
On the District-wide financial statements, the assets of the School District exceeded liabilities by $143.8 million. Of this amount, $21.1 million is unrestricted and is available for spending at the School District's discretion.
The School District had $86.5 million in expenses relating to governmental activities; only $53.2 million of these expenses are offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) of $41.6 million and fund balance were adequate to provide for these programs.
As stated above, general revenues accounted for $41.6 million, or 44%, of all revenues totaling $94.9 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 District-wide and fund financial statements.
The District-wide financial statements include the Statement of Net Assets and Statement of Activities. These statements provide information about the activities of the School District presenting both short-term and long-term information about the 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 Governmental Funds statements disclose how basic services are financed in the short-term as well as what remains for future spending. The Fiduciary 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.
i

BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012
District-wide Statements
The District-wide financial statements are basically a consolidation of all of the School District's operating funds into one column called governmental activities. 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 District's assets and liabilities 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 assets 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 financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The 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 fiduciary, for assets that belong to others, such as school clubs and organizations within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the 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.
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BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012

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)

LIABILITIES

Total Assets

Salaries and Benefits Payable Interest 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

Table 1 Net Assets
Fiscal Year 2012

Governmental Activities Fiscal
Year 2011

Net Change

$ 26,233,797.74 $ 41,494,865.08 $ -15,261,067.34

29,514.17

29,147.96

366.21

2,530,365.85 5,391,464.98
563,498.33
78,813.92 357,600.90 671,761.17 37,494,209.46

2,724,147.77 5,560,352.94 2,004,089.05
5,100.00
268,295.52 799,307.15 48,824,216.19

-193,781.92 -168,887.96 -1,440,590.72
-5,100.00 78,813.92 89,305.38 -127,545.98 -11,330,006.73

143,360,377.90

120,485,583.56

22,874,794.34

$ 216,711,404.42 $ 222,195,105.22 $ -5,483,700.80

$

8,184,792.26 $

8,281,585.12 $

-96,792.86

501,274.33

596,666.00

-95,391.67

1,033,511.08

-1,033,511.08

645,086.56

1,946,105.48

-1,301,018.92

11,705,708.86 51,890,416.08

11,320,708.86 63,596,124.94

385,000.00 -11,705,708.86

$ 72,927,278.09 $ 86,774,701.48 $ -13,847,423.39

$ 118,022,582.18 $ 101,992,542.94 $ 16,030,039.24

2,356,551.40 2,249,905.37
21,155,087.38

2,009,252.94 3,760,837.29 3,610,336.39 24,047,434.18

347,298.46 -1,510,931.92 -3,610,336.39 -2,892,346.80

$ 143,784,126.33 $ 135,420,403.74 $ 8,363,722.59

$ 216,711,404.42 $ 222,195,105.22 $ -5,483,700.80

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BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012

Table 2 Change in Net Assets

Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions

Fiscal Year 2012

Governmental Activities Fiscal Year 2011

Net Change

$ 2,442,756.35 $ 2,459,859.78 $ -17,103.43

49,995,780.07

54,937,796.34

-4,942,016.27

779,393.10

2,028,304.58

-1,248,911.48

Total Program Revenues

$ 53,217,929.52 $ 59,425,960.70 $ -6,208,031.18

General Revenues:

Taxes

Property Taxes

For Maintenance and Operations

$

For Debt Services

Railroad Cars

Intangible Recording Tax

Sales Taxes

Special Purpose Local Option Sales Tax

For Maintenance and Operations

For Debt Services

Grants and Contributions not

Restricted to Specific Programs

Investment Earnings

Miscellaneous

Special Items

Loss on Demolition of Buildings

16,842,359.68 $ 1,169,105.96 9,423.04 376,700.20
10,361,149.91 10,363,541.36
1,666,333.00 84,626.14
759,502.11

17,028,312.92 $ 1,255,364.29 9,519.04 307,599.13

-185,953.24 -86,258.33 -96.00 69,101.07

9,838,987.13 9,842,059.94
2,506,159.00 160,814.62 999,905.49
-3,582,781.04

522,162.78 521,481.42
-839,826.00 -76,188.48
-240,403.38
3,582,781.04

Total General Revenues and Special Items

$ 41,632,741.40 $ 38,365,940.52 $ 3,266,800.88

Total Revenues

$ 94,850,670.92 $ 97,791,901.22 $ -2,941,230.30

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-Instructional Services Food Services Interest on Short-Term and Long-Term Debt

$ 53,967,858.10 $ 54,708,877.28 $ -741,019.18

3,434,139.82 1,543,175.45 1,422,917.13
500,890.61 4,941,491.91
929,341.72 6,277,228.41 4,744,156.28 1,030,157.11
779,428.75

3,541,564.01 1,489,913.62 1,415,223.42
527,567.32 4,914,434.58
750,042.11 6,242,072.89 5,856,232.31 1,099,379.05
801,878.69

-107,424.19 53,261.83 7,693.71 -26,676.71 27,057.33
179,299.61 35,155.52
-1,112,076.03 -69,221.94 -22,449.94

4,652,245.07 2,263,907.97

4,684,355.80 3,231,904.22

-32,110.73 -967,996.25

Total Expenses

$ 86,486,938.33 $ 89,263,445.30 $ -2,776,506.97

Increase (Decrease) in Net Assets

$ 8,363,732.59 $ 8,528,455.92 $ -164,723.33

iv

BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012

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 2012

Net Cost of Services Fiscal
Year 2012

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-Instructional Services: Food Services Interest on Short-Term and Long-Term Debt

$ 53,967,858.10 $ 17,735,229.65

3,434,139.82 1,543,175.45 1,422,917.13
500,890.61 4,941,491.91
929,341.72 6,277,228.41 4,744,156.28 1,030,157.11
779,428.75

2,862,311.95 674,253.86 342,996.60 -937,968.32
2,661,438.39 927,836.19
3,413,647.43 3,130,988.30 1,028,208.96
126,744.10

4,652,245.07 2,263,907.97

-442,488.85 1,745,810.55

Total Expenses

$ 86,486,938.33 $ 33,269,008.81

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 of $95.0 million and total expenditures of $109.3 million. The excess of expenditures over revenues was mainly due to finalizing many capital outlay projects using Bond Proceeds and SPLOST funds received in previous years.

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 overall mission and incorporates site-based budgeting into the budget process to control total site budgets but provide flexibility for site management.

v

BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012

For the General Fund, the actual revenues of $83.0 million were over the final budgeted amount of $81.6 million by $1.4 million. This difference (actual vs. final budget) was mainly due to an increase in charges for services revenue and higher collection of state revenues than expected, resulting from conservative budgeting efforts, as well as increased QBE funding formula components.

The actual expenditures of $82.3 million were less than the final budgeted amount of $83.4 million by $1.1 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 $.6 million.
CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

At fiscal year ended June 30, 2012, the School District had $180.9 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 Education Special Purpose Local Option Sales Tax (ESPLOST) revenues and General Obligation Bond proceeds. In September, 2005, the voters of Bulloch County approved early re-imposition of the Education 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 Education 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.

Table 4 Capital Assets

Fiscal Year 2012

Governmental Activities Fiscal
Year 2011

Net Change

Land Construction In Progress Building and Improvements Equipment Land Improvements

$ 4,256,445.67 $ 33,237,763.79 135,044,767.70 4,042,285.29 4,273,324.91

4,256,445.67 $

0.00

44,567,770.52 -11,330,006.73

115,022,039.79 20,022,727.91

3,877,818.99

164,466.30

1,585,724.78 2,687,600.13

Total

$ 180,854,587.36 $ 169,309,799.75 $ 11,544,787.61

vi

BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012

Debt

In September, 2005, voters approved a 1.0% 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, 2013. 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, 2012, the School District had $61.2 million in bonds outstanding.
Table 5
Debt at June 30

Fiscal Year 2012

Governmental Activities Fiscal Year 2011

Net Change

Bonds Payable

$ 61,160,000.00 $ 71,775,000.00 $ 10,615,000.00

At June 30, 2012, the School District's assigned bond rating was "A+" as determined by Standard and Poor's. The School District's bond rating was upgraded to "AA-" in October 2012 due to the School District's financial stability and soundness.
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 the effects of the economic recession. To date, beginning in fiscal year 2009, state funding for education has been reduced by a sustained amount of over $6.5 million, annually. However, temporary Federal funding, in the form of state stabilization funds, were provided through the American Recovery and Reinvestment Act (ARRA) in the amount of $1.0 million in fiscal year 2009 and $4.6 million in fiscal year 2010. In addition, temporary Federal funding in the form of Education Jobs Funds of $1.8 million was received in fiscal year 2011. No significant ARRA funding was received in fiscal year 2012, leaving the effect of the sustained loss in state revenues, plus local funding losses from decreased property tax collections, to be addressed by the School District. The School District did see a rebound in sales tax collections from both its SPLOST and LOST. Combined, these amounted to a $1.1 million increase in collections over fiscal year 2011. Due to the School District's sound fiscal practices, the General Fund Balance was accumulated to beyond the maximum amount allowed by the State of Georgia, which is 15% of the past fiscal year's operating budget. This

vii

BULLOCH COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2012
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 has consisted mainly of a staffing reduction plan targeted at raising class sizes and eliminating 102 teaching positions, as well as selected administrative positions and other operational cuts. The majority of these position reductions occurred through natural attrition through fiscal year 2012 but approximately 4 of the originally targeted positions remain, and are not likely to attrition as enrollment has been increasing thus necessitating additional classroom personnel. Natural attrition cannot necessarily be translated into the elimination of a position without directly affecting program offerings, which could be critical to the mission of the school system. The School District is committed to maintaining a healthy General Fund Balance, a focus on student academic achievement and efficient and sustainable operations. Therefore, the School District's financial plan also includes the possibility of increasing revenues through property taxes, but not before all other avenues of effective expenditure reductions have been thoroughly analyzed Currently, approximately 4.5 mills of property tax are available to be levied for operations.
In light of on-going economic challenges and the continuing need to improve student achievement, the School District, under the direction of its newly appointed Superintendent, is developing and will be effectively implementing a comprehensive strategic plan to guide all of its actions. This plan will consider program delivery in relation to stakeholder needs, while aligning resource allocation and cost structure to ensure the best opportunity for student success and utilization of taxpayer resources.
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. Troy A. Brown, CPA, Chief Financial Officer for the Bulloch County School System, 150 Williams Road, Suite A, Statesboro, Georgia 30458. You may also email your questions to Mr. Brown at tbrown@bulloch.k12.ga.us.
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BULLOCH COUNTY BOARD OF EDUCATION

BULLOCH COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2012
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Deferred Charges Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Salaries and Benefits Payable Interest 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 Unrestricted
Total Net Assets
Total Liabilities and Net Assets

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES
$ 26,233,797.74 29,514.17
2,530,365.85 5,391,464.98
563,498.33 78,813.92
357,600.90 671,761.17 37,494,209.46 143,360,377.90
$ 216,711,404.42

$

8,184,792.26

501,274.33

645,086.56

11,705,708.86 51,890,416.08

$ 72,927,278.09

$ 118,022,582.18
2,356,551.40 2,249,905.37 21,155,087.38
$ 143,784,126.33

$ 216,711,404.42

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

BULLOCH COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2012

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Other Taxes Sales Taxes Special Purpose Local Option Sales 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
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$

53,967,858.10 $

3,434,139.82 1,543,175.45 1,422,917.13
500,890.61 4,941,491.91
929,341.72 6,277,228.41 4,744,156.28 1,030,157.11
779,428.75

4,652,245.07 2,263,907.97

$

86,486,938.33 $

1,282,573.85
1,160,182.50 2,442,756.35

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

$ 34,921,067.94 $
571,827.87 868,921.59 1,079,507.64 1,438,649.60 2,279,642.30
1,487.31 2,862,871.34 1,384,509.48
1,891.25 651,757.52
3,933,646.23
$ 49,995,780.07 $

28,986.66 $
412.89 209.33 411.22
18.22 709.64 228,658.50
56.90 927.13
905.19 518,097.42
779,393.10 $

-17,735,229.65
-2,862,311.95 -674,253.86 -342,996.60 937,968.32
-2,661,438.39 -927,836.19
-3,413,647.43 -3,130,988.30 -1,028,208.96
-126,744.10
442,488.85 -1,745,810.55
-33,269,008.81

$

16,842,349.68

1,169,105.96

9,423.04

10,361,149.91 10,363,541.36
376,700.20 1,666,333.00
84,626.14 759,502.11

$

41,632,731.40

$

8,363,722.59

135,420,403.74

$ 143,784,126.33

- 3 -

BULLOCH COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2012

EXHIBIT "C"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 21,189,460.22 $ 3,079,077.61 $ 1,965,259.91 $ 26,233,797.74

29,514.17

29,514.17

1,651,412.73 5,391,464.98
563,498.33 1,403,329.30
4,800.00 357,600.90

878,953.12

2,530,365.85 5,391,464.98
563,498.33 1,403,329.30
4,800.00 357,600.90

$ 30,591,080.63 $ 3,079,077.61 $ 2,844,213.03 $ 36,514,371.27

LIABILITIES AND FUND BALANCES
LIABILITIES
Interfund Payable Salaries and Benefits Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Nonspendable Restricted Assigned Unassigned
Total Fund Balances
Total Liabilities and Fund Balances

$ 1,236,282.05 $ 167,047.25 $ 1,403,329.30

$ 8,184,792.26

8,184,792.26

645,086.56

645,086.56

230,920.15

11,358.81

242,278.96

$ 8,415,712.41 $ 1,881,368.61 $ 178,406.06 $ 10,475,487.08

$

357,600.90

$

357,600.90

1,998,950.50

$ 2,665,806.97

4,664,757.47

556,551.07 $ 1,197,709.00

1,754,260.07

19,262,265.75

19,262,265.75

$ 22,175,368.22 $ 1,197,709.00 $ 2,665,806.97 $ 26,038,884.19

$ 30,591,080.63 $ 3,079,077.61 $ 2,844,213.03 $ 36,514,371.27

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

BULLOCH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2012

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported as assets in governmental 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 governmental funds.
Qualified School Construction Bond interest subsidy not earned in the current period and therefore not reported as a receivable on the fund level.
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, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
General Obligation Bonds Payable Accrued Interest Unamortized Bond Premiums
Total Long-Term Liabilities

$ 26,038,884.19

$

4,256,445.67

33,237,763.79

5,123,791.82

153,708,463.22

14,011,898.25

-29,483,775.39

180,854,587.36

242,278.96

74,013.92

671,761.17

$ -61,160,000.00 -501,274.33
-2,436,124.94

-64,097,399.27

Net Assets of Governmental Activities (Exhibit "A")

$ 143,784,126.33

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

BULLOCH COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2012

EXHIBIT "E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 17,078,834.34 10,723,945.15 41,826,566.36 10,096,842.39 2,442,756.35 62,647.58 $ 759,502.11
$ 82,991,094.28 $

$ 1,178,755.85 $ 10,377,446.32

11,858.35

10,120.21 444,083.50

11,858.35 $ 12,010,405.88 $

18,257,590.19 21,101,391.47 41,826,566.36 10,096,842.39
2,442,756.35 84,626.14
1,203,585.61
95,013,358.51

$ 52,691,948.87

$ 52,691,948.87

3,434,139.82 1,543,175.45 1,399,071.15
488,800.93 4,917,742.59
810,270.82 $ 6,247,239.88 4,625,853.06
826,480.42 725,883.95 4,634,631.47

3,400.00 $ 537,097.50 203,843.15
12,549,607.93

1,085.00

3,434,139.82 1,543,175.45 1,399,071.15
488,800.93 4,917,742.59
814,755.82 6,247,239.88 5,162,950.56 1,030,323.57
725,883.95 4,634,631.47 12,549,607.93

10,615,000.00 3,065,008.50

10,615,000.00 3,065,008.50

$ 82,345,238.41 $ 13,293,948.58 $ 13,681,093.50 $ 109,320,280.49

$

645,855.87 $ -13,282,090.23 $ -1,670,687.62 $ -14,306,921.98

21,529,512.35

14,479,799.23

4,336,494.59

40,345,806.17

$ 22,175,368.22 $ 1,197,709.00 $ 2,665,806.97 $ 26,038,884.19

The notes to the basic financial statements are an integral part of this statement. - 6 -

BULLOCH COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENTS OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2012

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) is to decrease net assets.
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
Qualified School Construction Bond interest subsidy recorded as revenue in the Statement of Activities that do not provide current financial resources are not reported as revenue on the fund level.
Bond issuance costs, deferred gains on refundings and similar items when debt is first issued are reported as an expenditure in Governmental Funds, but are reported as deferred charges on the Statement of Net Assets and amortized over the term of the debt, using the straight-line method. The details of this difference in the current period are as follows:
Amortization of Bond Premiums Amortization of Bond Issuance Costs Amortization of Deferred Gain on Refunding of Bonds
Total Bond Issuance Costs
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of Bond Principal Retirements.
Interest expense reported in the Statement of Activities is recorded as incurred, whereas interest expense in the governmental fund statements is reported when paid.
Change in Net Assets of Governmental Activities (Exhibit "B")

$ -14,306,921.98

$ 14,570,150.39 -2,897,881.32

11,672,269.07

-127,481.46

-236,711.51

74,013.92

$

705,708.86

-82,545.98

-45,000.00

578,162.88

10,615,000.00 95,391.67

$ 8,363,722.59

The notes to the basic financial statements are an integral part of this statement. - 7 -

(This page left intentionally blank)

BULLOCH COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2012
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS $ 238,853.63
$ 238,853.63

The notes to the basic financial statements are an integral part of this statement. - 9 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

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 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 Bulloch County Board of Education.
District-wide Statements:
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. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for 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 or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
Debt Service Fund accounts for and reports financial resources that are restricted including taxes (property and sales) legally restricted for the payment of general long-term principal and interest.
- 10 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "H"

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 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.
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
Investments 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

- 11 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "H"

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,

5. Prime banker's acceptances,

6. The Georgia Fund 1 administered by the State of Georgia, Office of the State Treasurer,

7. Repurchase agreements, and

8. Obligations of other political subdivisions of the State of Georgia. 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 2011 tax digest year (calendar year) on August 30, 2011 (levy date). Taxes were due on December 5, 2011 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2011 tax digest are reported as revenue in the governmental funds for fiscal year 2012. 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, 2012, for maintenance and operations amounted to $17,069,411.30 and for school bonds amounted to $1,178,755.85.

Tax millage rates levied for the 2011 tax year (calendar year) for the Bulloch County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations School Bonds

9.95 mills 0.45 mills

10.40 mills
SALES TAXES
Local Option Sales Tax revenue, at the fund reporting level, during the fiscal year amounted to $10,363,541.36 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 $10,361,149.91 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.

- 12 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "H"

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:

C a pita liz a tio n Policy

Estim ated Useful Life

Land Land Im provem ents Buildings and Im provem ents Equipm ent Intangible Assets

Any Amount

$

5 ,0 0 0 .0 0

$

5 ,0 0 0 .0 0

$

5 ,0 0 0 .0 0

$

5 0 ,0 0 0 .0 0

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 using the straight-line method over the estimated useful lives of the assets, generally 10 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.
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

- 13 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "H"

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.
NET 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 and debt service 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.
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.
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.

- 14 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "H"

Fund Balances of the Governmental Funds at June 30, 2012, are as follows:

N o nspe nda ble In v e n to rie s
Restricted Continuation of Federal Program s Debt Service
Assigned School Activity Accounts Local Capital Outlay Projects
Unassigned

$

3 5 7 ,6 0 0 .9 0

$ 1,998,950.50 2 ,6 6 5 ,8 0 6 .9 7

4 ,6 6 4 ,7 5 7 .4 7

$

5 5 6 ,5 5 1 .0 7

1 ,1 9 7 ,7 0 9 .0 0

1 ,7 5 4 ,2 6 0 .0 7 1 9 ,2 6 2 ,2 6 5 .7 5

Fund Balance, June 30, 2012

$ 26,038,884.19

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 8.0% of expenditures, 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 is prepared and adopted by fund and function. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the General Fund was prepared in 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. 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 20-2167(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.
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.

- 15 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "H"

NOTE 4: DEPOSITS
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 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 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,
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, 2012, the bank balances were $28,678,750.50. The bank balances were entirely covered by Federal depository insurance, or collateralized with securities held in the entity's name.
NOTE 5: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

- 16 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "H"

NOTE 6: CAPITAL ASSETS

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

Balances July 1, 2011

Increases

Decreases

Balances June 30, 2012

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction in Progress

$ 4,256,445.67

$ 4,256,445.67

44,567,770.52 $ 13,095,763.45 $ 24,425,770.18

33,237,763.79

Total Capital Assets Not B eing Depreciated

$ 48,824,216.19 $ 13,095,763.45 $ 24,425,770.18 $ 37,494,209.46

Capital Assets B eing Depreciated B uildings and Improvements Equipment Land Improvements

$ 131,537,762.15 $ 22,287,794.07 $

13,814,877.00

893,864.73

2,405,293.50

2,718,498.32

117,093.00 $ 153,708,463.22

696,843.48

14,011,898.25

5,123,791.82

Less Accumulated Depreciation for: B uildings and Improvements Equipment Land Improvements

16,515,722.36 9,937,058.01 819,568.72

2,172,238.89 694,744.24 30,898.19

24,265.73 662,189.29

18,663,695.52 9,969,612.96 850,466.91

Total Capital Assets, Being Depreciated, Net $ 120,485,583.56 $ 23,002,275.80 $

127,481.46 $ 143,360,377.90

Governmental Activity Capital Assets - Net $ 169,309,799.75 $ 36,098,039.25 $ 24,553,251.64 $ 180,854,587.36

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

$ 2,026,834.29

$

36,661.10

18,586.83

36,512.49

1,617.81

63,009.56

546,914.00

5,051.97

82,320.43

790,674.19 80,372.84

$ 2,897,881.32

- 17 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "H"

NOTE 7: INTERFUND ASSETS AND LIABILITIES

Due to and due from other funds are recorded for interfund receivables and payables which arise from interfund transactions. Interfund balances at June 30, 2012, consisted of the following:

Due From Other Funds

Due To Other Funds

General Fund District-w ide C apital Projects Debt Service Fund

$

1 ,4 0 3 ,3 2 9 .3 0

$

1 ,2 3 6 ,2 8 2 .0 5

1 6 7 ,0 4 7 .2 5

$

1,403,329.30 $

1 ,4 0 3 ,3 2 9 .3 0

Funds were borrowed from the General Fund to cover costs related to capital outlay and bond payments, which are to be repaid when sufficient SPLOST funds are received.

NOTE 8: RISK MANAGEMENT

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

The School District has obtained commercial insurance for 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 expenditures and liability being reported when it is probably that a loss has occurred, and the amount of that loss can be reasonably estimated.

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

follows:

Beginning

Claim s and

of Year

Changes in

Claim s

End of Year

Liability

Estim ates

Paid

Liability

2011

$

2012

$

16,368.00 $ 5 ,1 6 1 .0 0 $

30,104.00 $ 23,019.00 $

41,311.00 $ 24,770.00 $

5 ,1 6 1 .0 0 3 ,4 1 0 .0 0

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

Position Covered

Am ount

Superintendent All Em ployees

$

1 0 0 ,0 0 0 .0 0

$

2 0 0 ,0 0 0 .0 0

NOTE 9: OPERATING LEASES

Bulloch County Board of Education has entered into various leases 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, 2012, for governmental funds amounted to $261,244.93. Future minimum lease payments for these leases are as follows:

Year Ending

Governm ental Funds

2013

$

46 ,2 48 .92

- 18 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "H"

NOTE 10: LONG-TERM DEBT GENERAL OBLIGATION DEBT OUTSTANDING

General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

Am ount

General Governm ent - Refunding - Series 2005 General Governm ent - Series 2007 General Governm ent - Series 2009 General Governm ent - Series 2010 (QSC B)

2.50% - 4.50% $ 4.00% - 5.00% 3.00% - 5.00% 2.87% - 3.52%

6 ,9 4 5 ,0 0 0 .0 0 1 6 ,9 8 5 ,0 0 0 .0 0 2 3 ,5 2 5 ,0 0 0 .0 0 1 3 ,7 0 5 ,0 0 0 .0 0

$ 61,160,000.00

Voters have authorized $16,360,000.00 in general obligation debt for various capital project initiatives which was not issued as of June 30, 2012.

The changes in Long-Term Debt during the fiscal year ended June 30, 2012, were as follows:

Balance July 1, 2011

A d d i ti o n s

Governmental Funds

Balance

D e d u cti o n s

June 30, 2012

Due Within One Year

G. O. Bonds Bond Premium Amortized

$ 71,775,000.00 $ 3,141,833.80

0.00

10,615,000.00 $ 61,160,000.00 $ 11,000,000.00

705,708.86

2,436,124.94

705,708.86

$ 74,916,833.80 $

0.00 $ 11,320,708.86 $ 63,596,124.94 $ 11,705,708.86

At June 30, 2012, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30:

General Obligation Debt

Principal

I n te r e s t

U namortized Bond Premium

2013 2014 2015 2016 2017 2018 - 2022

$ 11,000,000.00 $ 8,570,000.00 7,485,000.00 6,325,000.00 9,755,000.00
18,025,000.00

2,564,958.50 $ 2,050,163.50 1,641,283.50 1,328,958.50 1,117,458.50 1,011,700.00

705,708.86 483,875.29 262,041.92 262,041.92 262,041.92 460,415.03

Total Principal and Interest

$ 61,160,000.00 $ 9,714,522.50 $

2,436,124.94

NOTE 11: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $6,316,825.78 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 Certificated Personnel In the amount of $6,143,934.00

- 19 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "H"

Paid to the Teachers' Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $48,813.78

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 $124,078.00

NOTE 12: SIGNIFICANT COMMITMENTS

The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2012:

Pro je c t

U n e a rn e d Executed C o n tra cts

M attie Lively Elem entary School

$

N evils Elem entary School Landscaping

Southeast Bulloch High School Stadium and Fieldhouse

1 0 ,3 1 1 .5 6 7 ,1 6 8 .7 3
721 ,7 62.72

$

7 3 9 ,2 4 3 .0 1

The amounts described in this note are not reflected in the basic financial statements. NOTE 13: 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 14: SUBSEQUENT EVENTS

In the subsequent fiscal year, the School District issued previously authorized, general obligation bonds as follows:

Bond Series

Amount

G.O. Series 2012A G.O. Series 2012B G.O. Refunding Series 2012C

$

7,170,000.00

950,000.00

5,705,000.00

$

13,825,000.00

The proceeds from these bonds will be used for Capital Improvements.

- 20 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "H"

NOTE 15: 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.
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, 2012:
For certificated teachers, librarians and regional educational service agencies and certain other
eligible participants:

June 2011 July 2011 August 2011 - March 2012 April 2012 - June 2012

1.429% of covered payroll for July coverage 18.534% of covered payroll for August coverage 24.000% of covered payroll for September - April coverage
3.958% of covered payroll for May - July coverage

- 21 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "H"

For non-certificated school personnel:

July 2011 - August 2011

$246.20 per member per month

September 2011 - June 2012 $296.20 per member per month

No additional contribution was required by the Board for fiscal year 2012 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 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:

Fiscal Year

Percentage C o ntribute d

Required C o n trib u tio n

2012 2011 2010

100% 100% 100%

$

8 ,5 3 9,0 4 1.7 3

$

6 ,9 1 5,2 1 5.2 5

$

7 ,4 5 3,8 3 5.2 3

NOTE 16: 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 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

- 22 -

BULLOCH COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2012

EXHIBIT "H"

Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2012, were 5.53% of annual salary. The member contribution rate will increase to 6.00% effective July 1, 2012. Employer contributions required for fiscal year 2012 were 10.28% of annual salary as required by the June 30, 2009, actuarial valuation. The employer contribution rate will increase to 11.41% effective July 1, 2012.

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

Fiscal Year

Percentage C o ntribute d

Required C o n trib u tio n

2012 2011 2010

100% 100% 100%

$

4 ,7 8 5,1 0 5.2 7

$

4 ,8 8 1,8 8 6.8 8

$

4 ,7 4 0,7 0 2.9 8

PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM (PSERS)
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.

- 23 -

(This page left intentionally blank)

BULLOCH COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2012

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation
Total Expenditures
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$ 16,875,964.00 $ 16,875,964.00 $ 17,078,834.34 $ 202,870.34

10,318,001.00

10,318,001.00

10,723,945.15

405,944.15

40,670,662.44

40,920,227.94

41,826,566.36

906,338.42

9,590,866.00

10,730,651.00

10,096,842.39

-633,808.61

1,277,800.00

1,277,800.00

2,442,756.35

1,164,956.35

96,045.00

96,045.00

62,647.58

-33,397.42

1,367,355.57

1,371,855.57

759,502.11

-612,353.46

$ 80,196,694.01 $ 81,590,544.51 $ 82,991,094.28 $ 1,400,549.77

$ 51,860,085.99 $ 52,603,023.61 $ 52,691,948.87 $ -88,925.26

3,501,174.43 1,375,909.51 1,394,581.63 1,102,143.14 5,133,731.56
768,576.61 6,533,546.28 4,374,505.98
874,197.59 563,984.74 4,705,522.00

3,631,505.49 1,939,477.24 1,405,178.89
634,579.22 4,953,267.86
768,576.61 6,541,599.95 4,774,754.64
859,392.67 661,183.68 4,705,522.00

3,434,139.82 1,543,175.45 1,399,071.15
488,800.93 4,917,742.59
810,270.82 6,247,239.88 4,625,853.06
826,480.42 725,883.95 4,634,631.47

197,365.67 396,301.79
6,107.74 145,778.29
35,525.27 -41,694.21 294,360.07 148,901.58 32,912.25 -64,700.27 70,890.53

$ 82,187,959.46 $ 83,478,061.86 $ 82,345,238.41 $ 1,132,823.45

$ -1,991,265.45 $ -1,887,517.35 $

645,855.87 $ 2,533,373.22

20,140,838.99

22,374,733.82

21,529,512.35

-845,221.47

2,801,020.60

89,305.38

-89,305.38

$ 20,950,594.14 $ 20,576,521.85 $ 22,175,368.22 $ 1,598,846.37

Notes to the Schedule of Revenues, Expenditures and 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. Revenues ($715,143.46) and expenditures ($695,012.93) are included in the actual amounts column.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 25 -

BULLOCH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2012

SCHEDULE "2"

FUNDING AGENCY PROGRAM/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 Direct Safe and Drug-Free Schools and Communities - National Programs Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Education Jobs Fund English Language Acquisition Grants Improving Teacher Quality State Grants Mathematics and Science Partnerships Migrant Education - State Grant Program Twenty-First Century Community Learning Centers
Total Other Programs
Total U. S. Department of Education
Health and Human Services, U. S. Department of Child Care and Development Fund Cluster Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning ARRA - Child Care and Development Block Grant
Justice, U. S. Department of Direct Drug-Free Community Support Program Grants
Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program
National Aeronautics and Space Administration Direct Summer of Innovation Mini Grant

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555

N/A

N/A

$

$

(2) 4,814,498.15 (1)
4,814,498.15

84.027 84.173
84.010
84.184 84.048 84.410 84.365 * 84.367 84.366 84.011 * 84.287

N/A

$

N/A

$

1,831,944.26 52,204.00
1,884,148.26

N/A

$

2,804,452.01

$
N/A N/A N/A N/A N/A N/A N/A
$
$

254,834.71
85,387.00 22,329.00 47,759.68 451,858.39 91,275.74 71,604.99 337,894.77
1,362,944.28
6,051,544.55

93.713 16.729

N/A

$

$

1,700.00 82,256.68

43.008

$

153,004.93

$

2,500.00

Total Expenditures of Federal Awards N/A = Not Available

$

11,105,504.31

- 26 -

BULLOCH COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2012

SCHEDULE "2"

Notes to the Schedule of Expenditures of Federal Awards
(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $334,101.17. (2) Expenditures for the funds earned on the School Breakfast Program ($854,122.08) were not maintained separately and are included in
the 2012 National School Lunch Program.
Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Bulloch County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 27 -

BULLOCH COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2012

AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (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 Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Education Equalization Funding Grant Food Services Nursing Services State Health Reimbursement Other State Programs Agriculture Construction Related Equipment - State Bonds Dual Enrollment Funding Math and Science Supplements Preschool Handicapped Program Pupil Transportation - State Bonds Special Project - QBE Equalization Teachers' Retirement Virtual Schools Grant Vocational Supervisors Vocational Education Vocational Construction Related Equipment - State Bonds
Office of the State Treasurer Public School Employees Retirement
CONTRACT Human Resources, Georgia Department of Family Connection

See notes to the basic financial statements.

- 28 -

SCHEDULE "3"
GOVERNMENTAL FUND TYPE GENERAL FUND
$ 1,323,046.36
2,953,319.00 179,750.00
6,649,857.00 440,485.00
2,787,268.00 426,861.00 530,684.00
4,421,546.00 3,978,890.00 1,390,111.00 5,476,086.00
732,365.00 -650.00
386,018.00 375,595.00 874,801.00 265,964.00 182,769.00
961,958.00 1,820,983.00 2,281,453.00 -6,829,358.00
1,201,280.00 1,541,256.00
127,810.00 143,082.00 6,143,934.00
23,830.70 82,814.00 13,893.96 214,549.00 228,658.50 125,077.00 48,813.78
7,600.00 28,189.00 113,925.33
8,806.48
124,078.00
39,167.25
$ 41,826,566.36

BULLOCH COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOVAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2012

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

TOTAL COMPLETION
COST

For the purpose of acquiring, constructing,

and equipping new facilities for Portal High

School and Middle School, Southeast

Bulloch High School, Statesboro High

School, and Nevils Elementary School;

relocation of William James Middle School

to the existing Statesboro High School and

the renovation and equipping of the facilities

for use as a middle school; a new central

auditorium on the campus of the new

Statesboro High School to be used by all

Bulloch County students; and site

improvements, improvements to facilities,

and technology upgrades throughout the

Bulloch County School System.

$

109,800,000.00 $

111,888,030.78 $

1,276,600.00 $ 107,417,821.43

For the purpose of acquiring, constructing, and equipping (i) new facilities for Julia Bryant, Sallie Zetterower, and Mattie Lively Elementary Schools, (ii) new classroom facilities for Langston Chapel Elementary, Mill Creek Elementary, Portal Elementary, and William James Middle Schools, (iii) new athletic facilities for Statesboro High School, Southeast Bulloch High School, William James Middle School, Southeast Bulloch Middle, and Langston Chapel Middle School, (iv) a new gymnasium, athletic facilities, and other improvements for Portal Middle and High School, and (v) real and personal property, site improvements, renovations and improvements to facilities, and technology upgrades throughout the Bulloch County School System.

80,000,000.00

72,940,810.36 13,755,451.08

37,882,601.10

EXCESS PROCEEDS NOT
EXPENDED

ESTIMATED COMPLETION
DATE
June 30, 2013
June 30, 2016

$ 189,800,000.00 $ 184,828,841.14 $ 15,032,051.08 $ 145,300,422.53

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

See notes to the basic financial statements.

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BULLOCH COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2012

SCHEDULE "5"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (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 VI Alternative Education Program English Speakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

3,649,186.00 $ 3,918,247.77 $ 133,093.89 $

4,051,341.66

234,484.00

147,803.48

7,607.49

155,410.97

8,139,295.00

9,807,362.92

410,329.69

10,217,692.61

535,953.00

808,096.60

14,838.08

822,934.68

3,428,685.00

3,783,295.16

261,338.81

4,044,633.97

551,360.00 1,324,142.00 4,693,241.00 4,858,775.00 1,732,445.00 6,642,589.00
887,440.00 473,976.00 457,054.00

587,617.70 1.00
6,969,504.20 6,296,076.59 1,398,979.81
1,209,492.60 4,090,603.81
471,527.60 189,693.49 900,060.83 692,054.50 443,681.41

17,465.02 432,065.33 823,200.87
78,386.46
184,885.42
44,916.45 37,199.18

605,082.72 1.00
7,401,569.53 7,119,277.46 1,477,366.27
1,209,492.60 4,275,489.23
471,527.60 189,693.49 944,977.28 729,253.68 443,681.41

$ 37,608,625.00 $ 41,714,099.47 $ 2,445,326.69 $ 44,159,426.16

1,074,756.00 224,358.00

1,254,945.03 15,932.26

140,535.48 26,433.01

1,395,480.51 42,365.27

TOTAL QBE FORMULA FUNDS

$ 38,907,739.00 $ 42,984,976.76 $ 2,612,295.18 $ 45,597,271.94

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment.

See notes to the basic financial statements.

- 31 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 4, 2013

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 COMPLIANCE AND OTHER MATTERS 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, 2012, which collectively comprise Bulloch County Board of Education's basic financial statements and have issued our report thereon dated March 4, 2013. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
Management of Bulloch County Board of Education is responsible for establishing and maintaining effective internal control over financial reporting. 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.

2012YB-10

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.
Compliance and 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 March 4, 2013.
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.
Respectfully submitted,

GSG:as 2012YB-10

Greg S. Griffin State Auditor

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
March 4, 2013

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 WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
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, 2012. 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, 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 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, 2012.

2012SA-10

Internal Control Over Compliance
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 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.
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.
Respectfully submitted,

GSG:as 2012SA-10

Greg S. Griffin State Auditor

SECTION III 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 30, 2012
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. 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, 2012

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

Unqualified

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

No None Reported

Noncompliance material to financial statements noted:

No

Federal Awards

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

No None Reported

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

Unqualified

Any audit findings disclosed that are required to be reported in

accordance with OMB Circular A-133, Section 510(a)?

No

Identification of major programs: CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555 84.287 84.367

Child Nutrition Cluster Twenty-First Century Community Learning Centers Improving Teacher Quality State Grants

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

$333,165.13

Auditee qualified as low-risk auditee?

Yes

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.