CARROLL COUNTY BOARD OF EDUCATION CARROLLTON, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS Russell W. Hinton State Auditor CARROLL 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 SUPPLEMENTARYJNFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS EXHIBITS BASIC FINANCIAL STATEMENTS DISTRICT-WIDE FINANCIAL STATEMENTS A STATEMENT OF NET ASSETS 1 B STATEMENT OF ACTIVITIES 2 FUND FINANCIAL STATEMENTS C BALANCE SHEET GOVERNMENTAL FUNDS 4 D RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS 5 E STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 6 F RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES 7 G STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS 8 H STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS 9 I NOTES TO THE BASIC FINANCIAL STATEMENTS 10 SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION 1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND 25 CARROLL COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 26 3 SCHEDULE OF STATE REVENUE 28 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 30 5 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM 31 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS 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 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB 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 CARROLL COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES SECTION I FINANCIAL Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 20, 2008 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Carroll 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 ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through I) of the Carroll County Board of Education, as of and for the year ended June 30, 2007, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Carroll 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 ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe 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 Carroll County Board of Education'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. 2007ARL-11 In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information ofthe Carroll County Board ofEducation, as ofJune 30, 2007, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with GovernmentAuditing Standards, we have also issued our report dated March 20, 2008, on our consideration ofthe Carroll County Board ofEducation'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 ofinternal control over financial reporting and compliance and the results ofthat 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 ofRevenues, 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 ofthe basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Carroll County Board of Education's basic financial statements. The accompanying supplementary information which consist 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 ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken 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, ~)H~~~-~ Russell W. Hinton, CPA, CGFM State Auditor RWH:gp 2007ARL-l 1 CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 INTRODUCTION Our discussion. and analysis of the Carroll County School District's financial performance provides an overview of the School District's financial activities for the fiscal year ended June 30, 2007. The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the financial statements and the notes to the basic financial statements to enhance their understanding of the School District's financial performance. FINANCIAL HIGHLIGHTS Key financial highlights for 2007 are as follows: On the District-wide financial statements, the assets of the School District exceeded liabilities by $138.3 million. Of this amount, $13.3 million is unrestricted and is available for spending at the School District's discretion. The School District had $138.2 million in expenses relating to governmental activities; only $91.6 million of these expenses are offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) of $61.8 million were adequate to provide for these programs. As stated above, general revenues accounted for $61.8 million or 40% of all revenues totaling $153.4 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 andfundfinancial 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 Carroll County School District, the General Fund, District-wide Capital Projects Funds, and Debt Service Funds are the most significant funds. CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 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. 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, are we in a better financial position than last year? The Statement of Net Assets and the Statement of Activities provides the basis for answering this question. These financial statements include all School District's assets and liabilities and uses the accrual basis of accounting similar to the accounting used by most private-sector 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 yearend available for spending in future periods. These funds are reported using the modified accrual method ofaccounting 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 ii CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 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 Recall that the Statement of Net Assets provides the perspective of the School District as a whole. Table 1 provides a summary of the School District's net assets for this fiscal year. By far the largest portion of the School District's net assets, (82.8 percent) reflect its investment in capital assets (e.g., land and improvements, building and building improvements, vehicles, furniture, equipment and construction in progress), less any related debt used to acquire those assets that is still outstanding. The School District uses these capital assets to provide services to its students; consequently, these assets are not available for future spending. Although the School District's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Table 1 Net Assets Governmental Activities Fiscal Fiscal Year 2007 Year 2006 Assets Current and Other Assets Capital Assets, Net $ 120,713,515 $ 54,973,257 118,212,025 103,959,693 Total Assets $ 238,925,540 $ 158,932,950 Liabilities Current and Other Liabilities Long-Term Liabilities $ 15,108,377 $ 11,700,211 85,477,595 24,128,861 Total Liabilities $ 100,585,972 $ 35,829,072 Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted $ 114,550,682 10,467,268 13,321,618 $ 101,222,898 7,187,906 14,693,074 Total Net Assets $ 138,339,568 $ 123,103,878 Table 2 shows the Changes in Net Assets for this fiscal year. 11l CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Table 2 Change in Net Assets Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Fiscal Fiscal Year 2007 Year 2006 $ 4,607,888 82,019,221 5,008,805 $ 2,857,315 74,071,646 1,209,842 Total Program Revenues $ 91,635,914 $ 78,138,803 General Revenues: Taxes Property Taxes For Maintenance and Operations $ Sales Taxes Special Purpose Local Option Sales Tax For Debt Service Intangible Recording Tax Real Estate Transfer Taxes Railroad Equipment Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous 32,439,389 12,320,927 1,290,188 395,870 25,982 11,454,073 2,420,674 1,427,260 $ 30,794,375 11,734,742 1,243,012 451,955 9,304,820 1,135,828 3,145,771 Total General Revenues $ 61,774,363 $ 57,810,503 Total Revenues $ 153,410,277 $ 135,949,306 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 Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt $ 86,937,912 3,959,641 2,304,217 2,681,262 2,242,166 8,626,911 761,343 9,129,721 7,789,671 968,041 855,358 2,915,121 604,431 7,164,624 1,234,168 $ 77,393,816 3,254,260 2,526,343 2,481,556 1,700,961 7,450,732 712,572 8,338,494 6,182,535 834,344 555,763 2,366,706 516,603 6,387,097 1,196,226 Total Expenses $ 138,174,587 $ 121,898,008 Increase in Net Assets $ 15,235,690 $ 14,051,298 IV CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 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. The table shows each functions net cost (total cost less charges for services generated by the activities and intergovernmental aid provided for specific programs). The net cost shows the financial burden that was placed on the School District's taxpayers by each of these functions. Table 3 Governmental Activities Total Cost of Services Fiscal Fiscal Year 2007 Year 2006 Net Cost of Services Fiscal Fiscal Year 2007 Year 2006 Instruction $ 86,937,912 $ 77,393,816 $ 22,909,940 $ 22,100,609 Support Services Pupil Services 3,959,641 3,254,260 2,152,946 1,858,814 Improvement of Instructional Services 2,304,217 2,526,343 1,193,870 1,105,708 Educational Media Services 2,681,262 2,481,556 1,152,591 1,059,217 General Administration 2,242,166 1,700,961 -150,590 -205,905 School Administration 8,626,911 7,450,732 5,388,835 4,414,313 Business Administration 761,343 712,572 746,055 699,834 Maintenance and Operation of Plant 9,129,721 8,338,494 5,221,142 4,500,902 Student Transportation Services 7,789,671 6,182,535 3,867,083 4,028,144 Central Support Services 968,041 834,344 950,305 819,385 Other Support Services 855,358 555,763 622,616 371,817 Operations ofNon-Instructional Services Enterprise Operations 2,915,121 2,366,706 747,667 1,957,729 Community Services 604,431 516,603 524,931 -4,776 Food Services 7,164,624 6,387,097 -22,886 -142,812 Interest on Short-Term and Long-Term Debt 1,234,168 1,196.226 1,234,168 1,196,226 Total Expenses $138,174.587 $121,898.008 $ 46,538.673 $ 43,759.205 FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS Governmental Funds: The focus of the School District's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the School District's financing requirements. In particular, unreserved fund balance may serve as a useful measure of the School District's net resources available for spending at the end of the fiscal year. The School District's governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues and other financing sources of $226.4 million and total expenditures and other financing uses of $164.3 million. General Fund fund equity decreased by $776 thousand during the year. The Capital Projects Fund equity increased by $60.5 million due to new bond issuance. Construction of school facilities to be repaid by SPLOST sales tax receipts were forward funded V CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 with a $70.0 million bond issue. Capital Projects fund equity at June 30, 2007, was $82.1 million to be used in the continuing construction of school facilities. GENERAL FUND BUDGETING HIGHLIGHTS The School District's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund. During the course of fiscal year 2007, the School District amended its general fund budget as needed in particular due to student growth and facility safety needs. For the General Fund, the actual revenues of $135.l million were over the final budgeted amount of $127.3 million by $7.8 million. This difference (actual vs. final budget) was due primarily to charges for services over final budget of $2.4 million and property taxes over final budget of $1.6 million. The charges for services over final budget were due to the inclusion of the principals' accounts in our financial statements, but not in the budget. State revenues exceeded budget figures by $3.2 million, Federal revenues were below budget by $935 thousand. The actual expenditures of $136.2 million exceeded the final budgeted amount of $129.7 million by $6.5 million. This difference was due in part to our school principals' accounts not being included in the budget process. General Fund revenues were less than expenditures by $1.1 million. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At fiscal year ended June 30, 2007, the School District had $118.2 million invested in capital assets, including school buildings, athletic facilities, buses and other vehicles, computers, and other equipment, all in governmental activities. Table 4 reflects a summary of these balances, net of accumulated depreciation. Table 4 Capital Assets (Net of Depreciation) Governmental Activities Fiscal Fiscal Year 2007 Year 2006 Land Construction in Progress Land Improvements Buildings and Improvements Equipment Total $ 6,671,205 15,059,894 2,429,023 88,386,031 5,665,872 $ 118,212,025 $ 5,789,479 1,087,336 2,204,921 89,703,457 5,174,500 $ 103,959,693 vi CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Due to the ongoing growth in the county, the School District has numerous construction projects including new buildings, additions and renovations. Debt At fiscal year ended June 30, 2007, the School District had $81.5 million in bonds outstanding, and $3.9 million in other long-term debt. Table 5 summarizes the School District's debt which includes general obligation bonds and compensated absences outstanding. Bonds and Notes Payable Unamortized Bond Premium Capital Leases Compensated Absences Total Table 5 Debt at June 30 Governmental Activities Fiscal Fiscal Year 2007 Year 2006 $ 81,510,000 2,289,768 1,128,686 549 141 $ 22,740,000 825,572 563,289 $ 85A77,595 $ 24.128,861 At June 30, 2007, the School District's assigned bond ratings were "AA" as determined by Fitch Ratings, Inc. CURRENT ISSUES Currently known facts, decisions or conditions that are expected to have a significant effect on financial positions or results of operations. Economic Slowdown - State funding for education has been stagnant and as a result more pressure is being placed on the local school districts to prioritize its educational programs and provide additional local funding. Over the past two years, the Carroll County Board has lost over $12.0 million in state funding shifting the burden to the local tax base. The current millage rate is 18.1 mills with a maximum of 20 mills. Currently, a mill of tax in Carroll County generates $1.6 million. Despite these challenges, the Carroll County School District is strong financially and we remain optimistic about the ability of the School District to maximize all of the financial resources to provide a quality education to our students. Capital Improvements - The School District plans capital improvements as future capital needs arise due to increased student population and facility repair and maintenance needs. Specific capital expenditure plans are formalized in conjunction with individual general obligation bond issues and anticipated annual receipts of capital outlay funds from the State of Georgia Department of Education. The School District regularly monitors anticipated capital outlay needs. vu CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 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. Greg Denney, Chief Financial Officer for the Carroll County School System, 164 Independence Drive, Carrollton, Georgia 30117. You may also email your questions to Mr. Denney at greg.denney@carrollcountyschools.com. Vlll CARROLL COUNTY BOARD OF EDUCATION CARROLL COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2007 ASSETS Cash and Cash Equivalents Investments Receivables Taxes Intergovernmental State Federal Interest Other Inventory Deferred Charges Capital Assets (Nondepreciable) Capital Assets (Net of Accumulated Depreciation) Total Assets LIABILITIES Salaries and Benefits Payable Accrued Interest Payable Retainage Payable Bonds Payable Due Within One Year Bonds Payable Due in More Than One Year Unamortized Bond Premium Due Within One Year Unamortized Bond Premium Due in More Than One Year Capital Leases Due Within One Year Capital Leases Due in More Than One Year Compensated Absences, Due in Less Than One Year Compensated Absences, Due in More Than One Year Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Continuation of Federal Programs Capital Projects Debt Service Unrestricted Total Net Assets Total Liabilities and Net Assets The notes to the basic financial statements are an integral part of this statement. - 1- EXHIBIT "A" GOVERNMENTAL ACTIVITIES $ 97,840,718 3,787,817 3,336,317 11,593,410 3,216,494 132,563 19,681 212,829 573,686 21,731,099 96,480,926 $ ===2=3=8=,9=2=5=,5=40= $ 14,054,406 361,418 692,553 11,510,000 70,000,000 466,156 1,823,612 346,576 782,110 375,569 173,572 $ 100,585,972 $ 114,550,682 423,140 2,547,074 7,497,054 13,321,618 $ 138,339,568 $ ===2=3=8=9,=2=5,=54=0= CARROLL COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2007 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 Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt Total Governmental Activities General Revenues Taxes Property Taxes, Levied for General Purposes Sales Taxes For Debt Services Intangible Recording Tax Transfer Taxes Railroad Equipment Tax Grants and Contributions not Restricted to Specific Programs Unrestricted Investment Earnings Other Total General Revenues Change in Ne! Assets Net Assets - Beginning of Year EXPENSES CHARGES FOR SERVICES $ 86,937,912 3,959,641 2,304,217 2,681,262 2,242,166 8,626,911 761,343 9,129,721 7,789,671 968,041 855,358 2,915,121 $ 604,431 7,164,624 1 234 168 $ 138,174,587 $ 2,167,454 2,440,434 4,607,888 Net Assets - End of Year The notes to the basic financial statements are an integral part of this statement. -2- EXHIBIT "8" PROGRAM REVENUES OPERATING GRANTS AND CONTRIBUTIONS CAPITAL GRANTS AND CONTRIBUTIONS NET (EXPENSES) REVENUES AND CHANGES IN NET ASSETS $ 60,353,777 $ 1,806,695 1,110,347 1,374,932 2,355,270 3,238,076 15,288 3,832,013 3,382,914 17,736 217,742 79,500 4,234,931 $ 82,019,221 $ 3,674,195 $ 153,739 37,486 76,566 539,674 15,000 512,145 5,008,805 $ -22,909,940 -2, 152,946 -1,193,870 -1,152,591 150,590 -5,388,835 -746,055 -5,221, 142 -3,867,083 -950,305 -622,616 -747,667 -524,931 22,886 -1,234, 168 -46,538,673 $ 32,439,389 12,320,927 1,290,188 395,870 25,982 11,454,073 2,420,674 1 427 260 $ 61,774,363 $ 15,235,690 123 103 878 $ ===13=8=,3=3=9=,5=68= -3- CARROLL COUNTY BOARD OF EDUCATION BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2007 EXHIBIT"C" ASSETS Cash and Cash Equivalents Investments Receivables Taxes Intergovernmental State Federal Interest Other Inventories GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 15,954,314 $ 76,488,120 $ 27,013 3,760,804 1,237,547 9,133,515 3,216,494 19,681 212,829 2,459,895 132,563 5,398,284 $ 2,098,770 97,840,718 3,787,817 3,336,317 11,593,410 3,216,494 132,563 19,681 212 829 Total Assets $ 29,801,393 $ 82,841,382 $ 7 497 054 $ =====12=0=1' =3=9=,8=29= LIABILITIES AND FUND BALANCES LIABILITIES Salaries and Benefits Payable Retainage Payable Deferred Revenue Total Liabilities FUND BALANCES Reserved for: Continuation of Federal Programs Inventories Capital Outlay Debt Service Unreserved Undesignated Total Fund Balances $ 14,054,406 $ $ 692,553 1054467 $ 15,108,873 $ 692,553 $ $ 210,311 212,829 $ 82,148,829 $ 14,269,380 $ 14,692,520 $ 82,148,829 $ $ 7,497,054 7 497 054 $ 14,054,406 692,553 1054467 15,801,426 210,311 212,829 82,148,829 7,497,054 14,269,380 104,338,403 Total Liabilities and Fund Balances $ 29,801,393 $ 82,841,382 $ 7 497 054 $ ===1=2=-0,=13=9=,8=29= The notes to the basic financial statements are an integral part of this statement. -4- CARROLL COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30, 2007 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 in the funds. These assets consist of: Cost Less Accumulated Depreciation Total Capital Assets Other Long-Term Assets are not available to pay for current period expenditures and, therefore, are deferred in the funds. Property Taxes Long-Term Liabilities are not due and payable in the current period and therefore, are not reported in the funds. Bonds Bond Premium, Net of Amortization Bond Issuance Costs, Net of Amortization Accrued Interest Capital Leases Compensated Absences Total Long-Term Liabilities $ 104,338,403 $ 152,210,214 -33, 998, 189 118,212,025 1,054,467 $ -81,510,000 -2,289,768 573,686 -361,418 -1, 128,686 -549 141 Net Assets of Governmental Activities (Exhibit "A") $ ===1,..38..,,3..,.3..,9.,.,5..,68= The notes to the basic financial statements are an integral part of this statement. -5- CARROLL COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2007 EXHIBIT"E" REVENUES Property Taxes Sales Taxes Other 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 Enterprise Operations Food Services Operation Community Services Operation Capital Outlay Debt Services Principal Retirement Interest and Fees Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Proceeds from Capital Lease Operating Transfers In Operating Transfers Out Bonds Issued Premium on Bonds Sold Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 32,449,515 1,712,040 82,292,354 $ 11,735,616 4,607,888 855,522 1,427,260 $ 135,080,195 $ $ $ 12,320,927 4,454,131 1,251,603 313,549 5,705,734 $ 12,634,476 $ 32,449,515 12,320,927 1,712,040 86,746,485 11,735,616 4,607,888 2,420,674 1427260 153,420,405 $ 85,348,464 $ 3,959,641 2,304,217 2,583,653 2,218,366 8,641,059 760,843 $ 9,081,109 7,207,188 968,041 530,195 2,915,121 7,164,624 604,431 1,643,438 574,186 15,276,009 197,118 42 035 $ 11,230,000 830 715 $ 136,169,543 $ 15,850,195 $ 12,060,715 $ $ -1,089,348 $ -10 144 461 $ 573 761 $ 85,348,464 3,959,641 2,304,217 2,583,653 2,218,366 8,641,059 1,335,029 9,081,109 7,207,188 968,041 530,195 2,915,121 7,164,624 604,431 16,919,447 11,427,118 872 750 164 080 453 -10 660 048 $ 500,232 $ $ 187,426 -187,426 68,221,184 $ 1,778,816 2,289,768 $ 312 806 $ 70,698,378 $ 1 778 816 $ $ -776,542 $ 60,553,917 $ 2,352,577 $ 15,469,062 21,594,912 5 144 477 500,232 187,426 -187,426 70,000,000 2 289 768 72 790 000 62,129,952 42 208 451 Fund Balances - Ending $ 14,692,520 $ 82,148,829 $ 7 497 054 $===1=0=4=3=3=8=4=03= The notes to the basic financial statements are an integral part of this statement. "6" CARROLL COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2007 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: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is: Capital Outlay Depreciation Expense Excess of Capital Outlay over Depreciation Expense Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Property Taxes In the Statement of Activities, the gain or loss on the sale or retirement of buildings and equipment is reported, whereas in the Governmental Funds, only proceeds from a sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the building and equipment sold or retired. The issuance of Long-Term Debt provides current financial resources to governmental funds, while the repayment of the principal on Long-Term Debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of Long-Term Debt and related items. Principal Payments - Bonds Principal Payments - Capital Leases Issuance of General Obligation Debt Bond Premium Bond Issuance Costs Capital Lease Proceeds Total Long-Term Debt Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Change in Compensated Absences Change in Accrued Interest $ 62,129,952 $ 17,557,898 -2,827,940 14,729,958 -10,128 -477,626 $ 11,230,000 197,118 -70,000,000 -2,289,768 573,686 -500,232 -60,789,196 $ 14,148 -361,418 -347 270 Change in Net Assets of Governmental Activities (Exhibit "B") $ ====15='=23=5=,6=9=0 The notes to the basic financial statements are an integral part of this statement. -7- CARROLL COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2007 EXHIBIT"G" ASSETS Cash Investments Total Assets LIABILITIES Funds Held for Others NET ASSETS Held in Trust for Private Purposes Total Liabilities and Net Assets PRIVATE PURPOSE TRUSTS AGENCY FUNDS $ 2,282 $ 402,347 35,248 11,000 $ 37,530 $ ====41=3=,3=47= $ 413,347 $ _ _ _37....,,5_3_0_ $ 37,530 $==4=1=3=3=47= The notes to the basic financial statements are an integral part of this statement. -8- CARROLL COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS YEAR ENDED JUNE 30, 2007 EXHIBIT "H" ADDITIONS Investment Earnings Interest DEDUCTIONS None Noted Change in Net Assets Net Assets - Beginning Net Assets - Ending PRIVATE PURPOSE TRUSTS $ 1,176 $ 0 $ 1,176 36,354 $ ===3=7=,5=30= The notes to the basic financial statements are an integral part of this statement. -9 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "I" Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY REPORTING ENTITY The Carroll County Board ofEducation (School District) was established under the laws ofthe 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 Carroll County Board of Education. District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting ofinternal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. The Statement ofActivities 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 ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal 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. - 10 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "I" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The School District reports the following major governmental funds: General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund. District-wide Capital Projects Fund accounts for financial resources including Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities. Debt Service Fund accounts for taxes (sales) legally restricted for the payment ofgeneral longterm principal, interest and paying agent's fees. The School District reports the following fiduciary fund types: Private Purpose Trust Fund reports a trust arrangement under which the principal is to be invested and preserved intact with the resultant income to be used to assist State University of West Georgia juniors and seniors who have committed to a career in education or to veteran teachers who are returning to school to upgrade their teaching credentials. Agency Funds account for assets held by the School District as an agent for various funds, governments or individuals. BASIS OF ACCOUNTING The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless ofwhen 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. - 11 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "I" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources. The School District funds certain programs by a combination ofspecific 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 ofcash 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 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia 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 ofreturn 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, - 12 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "I" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State ofGeorgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia. The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit risks, interest rate risks or foreign currency risks. RECEIVABLES Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Carroll County Board of Commissioners fixed the property tax levy for the 2006 tax digest year (calendar year) on July 26, 2006 (levy date). Taxes were due on December 1, 2006 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2006 tax digest are reported as revenue in the governmental funds for fiscal year 2007. The Carroll County Tax Commissioner bills and collects the property taxes for the School District, withholds 1% of taxes collected as a fee for tax collection and remits the balance oftaxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2007, for maintenance and operations amounted to $32,449,515. The tax millage rate levied for the 2006 tax year (calendar year) for the Carroll County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): School Operations 18.10 mills - 13 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "I" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SALES TAXES Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $12,320,927 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. INVENTORIES FOOD INVENTORIES On the basic financial statements, inventories ofdonated food commodities used in the preparation ofmeals 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 ofassets 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 ofart. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District. Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows: Capitalization Policy Estimated Useful Life Land Land Improvements Buildings and Improvements All Equipment $ $ $ 5,000 to$ All 10,000 10,000 10,000 NIA 20 to 80 years 20 to 80 years 3 to 20 years - 14 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "I" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. GENERAL OBLIGATION BONDS The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. 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 ofoutstanding 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 bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties. Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes. Note 3: DEPOSITS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. At June 30, $3,304 of deposits were not secured by surety bond, insurance or collateral as specified above. The School District is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits. - 15 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "I" Note 3: DEPOSITS Acceptable security for deposits consists of any one of or any combination of the following: (1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, (5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose, (6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and (7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. At June 30, 2007, the bank balances were $107,552,726. The amounts of the total uninsured bank balances are classified into three categories of custodial credit risk: Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or by its trust department or agent in the School District's name, Category 3 - Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name. The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2007, as follows: - 16 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "I" Note 3: DEPOSITS Custodial Credit Risk Category Bank Balance 1 $ 3,304 2 0 3 106,652,326 Total $ 106,655,630 Note 4: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories Note 5: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year: Balances July I, 2006 Increases Decreases Balances June 30, 2007 Governmental Activities Capital Assets, Not Being Depreciated: Land Construction in Progress $ 5,789,479 $ 881,726 1,087,336 14,696,422 $ $ 6,671,205 723 864 15,059,894 Total Capital Assets Not Being Depreciated $ 6,876,815 $ 15,578,148 $ 723 864 $ 21,731,099 Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements $ I08,770,289 $ 13,788,677 5,938,748 723,864 $ 1,481,806 497,944 415,499 $ 109,078,654 306,714 14,963,769 6,436,692 Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements 19,066,832 8,614,177 3,733,827 1,654,864 899,234 273,842 29,073 215,514 20,692,623 9,297,897 4,007,669 Total Capital Assets, Being Depreciated, Net $ 97,082,878 $ -124,326 $ 477 626 $ 96,480,926 Governmental Activity Capital Assets - Net $ 103.959.693 $ 15-,453.822 $ 1,201.490 $ 118,212.025 Capital assets being acquired under capital leases as of June 30, 2007, are as follows: - 17 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "I" Note 5: CAPITAL ASSETS Governmental Funds Equipment Less: Accumulated Depreciation $ 779,500 45,300 Current year depreciation expense by function is as follows: $====7"'=34-,2,,,,,,0"""0 Instruction Support Services Educational Media Services General Administration Maintenance and Operation of Plant Student Transportation Services Food Services $ 1,750,273 $ 97,609 23,800 48,612 582,483 752,504 325,163 $ 2,827,940 Note 6: RESTRICTED ASSETS Special Purpose Local Option Sales Tax (SPLOST) and general obligation bond proceeds are restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2007, were as follows: District-wide Capital Projects Bond Proceeds Debt Service Funds Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions Restricted Investments: Capital Acquisitions $ $ 76,488,120 $ 3,760,804 5,398,284 Note 7: INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2007, consisted of the following: - 18 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "I" Note 7: INTERFUND TRANSFERS Transfer to Transfers From General Fund District-wide Capital Projects $=====1==87="=,4==2==6 Transfers are used to move property tax revenues collected by the General Fund to the District-wide Capital Projects Fund as required match or supplemental funding source for capital construction projects. 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 participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage. The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: Beginning of Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability 2006 2007 $ 0 $ 6 187 $ 6 187 $ 0 $ 0 $ 920 $ 920 $ 0 - 19 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "I" Note 8: RISK MANAGEMENT The School District participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1, 1992, to develop, implement, and administer a program ofworkers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $400,000 loss per occurrence, up to $1,000,000. The School District has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent Each Principal and Assistant Principal All Other Employees $ 100,000 $ 20,000 $ 100,000 Note 9: LONG-TERM DEBT CAPITAL LEASES The Carroll County Board of Education has entered into various lease agreements as lessee for copiers and mobile classroom units. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception. COMPENSATED ABSENCES Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences. GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: Purpose Interest Rates Amount General Government - Series 2001 General Government - Series 2007 2.70% - 3.75% 3.67% - 3.77% $ 11,510,000 70,000,000 $ 81,510.000 The changes in Long-Term Debt during the fiscal year ended June 30, 2007, were as follows: - 20 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "I" Note 9: LONG-TERM DEBT Balance July I, 2006 Additions Capital Leases Annual Leave Earned G. 0. Bonds Unamortized Bond Premium Deductions Annual Leave Utilized Debt Retired Balance June 30, 2007 Portion of Long-Term Debt Due within One Year Capital Leases Governmental Funds General Compensated Obligation Absences Bonds Unamortized Bond Premium Total $ 825,572 $ 563,289 $ 22,740,000 $ 0 $ 24,128,861 500,232 435,339 70,000,000 2,289,768 500,232 435,339 70,000,000 2,289,768 197 118 $ I 128,686 $ 449,487 11,230,000 449,487 11,427,118 549 141 $ 81 510 OOQ $ 2 282,768 $ 85 471595 $ 346 576 $ 375 569 $ 11,510,000 $ 466,156 $ 12,698,301 At June 30, 2007, payments due by fiscal year which includes principal and interest for these items are as follows: Fiscal Year Ended June 30 CaQital Leases Princi2al Interest 2008 2009 2010 2011 2012 $ 346,576 $ 312,742 307,318 133,071 28 979 50,853 33,535 17,607 5,429 259 Total Principal and Interest $ 1,128,686 $ 107,683 Fiscal Year Ended June 30 General Obligation Debt PrinciQal Interest Unamortized Bond Premium 2008 2009 2010 2011 2012 2013 - 2016 $ 11,510,000 $ 2,830,983 $ 466,156 11,720,000 3,202,250 570,803 13,055,000 2,733,450 487,239 14,495,000 2,141,250 381,679 16,050,000 1,445,450 257,652 14,680,000 708,200 126,239 Total Principal and Interest $ 81,510,000 $ 13,061,583 $ 2,289,768 - 21 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "I" Note 10: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $2,359,312 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $2,305,878 Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $36,295 Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $17,139 Note 11: SIGNIFICANT COMMITMENTS . The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2007, together with funding available: Project Unearned Executed Contracts Funding Available From State 080-622-006 Bay Springs Middle School Bowdon Elementary School Central Middle School Glanton Hindsman Elementary School Temple High School Villa Rica High School $ 3,895,227 $ 1,501,948 32,013 4,439,381 166,682 724,254 2,029,316 3,955,124 $ 1522412997 $ 125012948 The amounts described in this note are not reflected in the basic financial statements. - 22 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "I" Note 12: SIGNIFICANT CONTINGENT LIABILITIES Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements. Note 13: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA {TRS) TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia {TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. 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. TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2007 2006 2005 100% 100% 100% $ 6,621,494 $ 5,517,336 $ 5,715,602 - 23 - (This page left intentionally blank) CARROLL COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2007 SCHEDULE "1" REVENUES Property Taxes Other 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 Enterprise Operations Food Services Operation Community Services Operation Capital Outlay Debt Service Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Proceeds from Capital Leases Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning NONAPPROPRIATED BUDGETS ORIGINAL (1) FINAL (1) ACTUAL AMOUNTS $ 30,816,814 $ 30,816,814 $ 32,449,515 1,791,137 1,791,137 1,712,040 78,821,315 79,091,532 82,292,354 4,337,257 12,671,612 11,735,616 2,182,200 2,182,200 4,607,888 434,000 434,000 855,522 282 369 282 311 1427260 $ 118,665,092 $ 127,269,606 $ 135 080 195 $ 78,069,409 $ 84,283,854 $ 85,348,464 2,736,643 1,713,419 2,561,519 713,322 8,365,169 685,070 8,632,892 6,847,517 892,569 1,000 6,760,264 21,265 323,893 4,084,539 2,739,346 2,561,519 1,651,994 8,378,991 685,070 8,632,892 7,340,436 892,569 303,301 6,760,264 111,913 1,241,910 3,959,641 2,304,217 2,583,653 2,218,366 8,641,059 760,843 9,081,109 7,207,188 968,041 530,195 2,915,121 7,164,624 604,431 1,643,438 239 153 $ 118 323 951 $ 129,668,598 $ 136 169 543 $ 341 141 $ -2 398 992 $ -1 089 348 $ $ 311,076 $ 311,076 -1 311 076 -1 311 076 500,232 -187 426 $ -1 000 000 $ -1 000 000 $ 312 806 $ -658,859 $ -3,398,992 $ -776,542 15 469 062 15,469,062 15 469 062 Fund Balances - Ending $ 14810203 $ 12 070 070 $ 14 692 520 Notes to the Schedule of Revenues Exgenditures 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. 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 - CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2007 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 Child Nutrition Cluster Other Programs Pass-Through From Georgia Department of Education Food Donation (1) Total U.S. Department of Agriculture Corporation for National and Community Service Pass-Through From Georgia Department of Education Learn and Serve America School and Community Based Programs 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 Other Programs Pass-Through From Georgia Department of Education Comprehensive School Reform Demonstration Education for Homeless Children and Youth English Language Acquisition Grants Enhancing Education Through Technology Program Hurricane Education Recovery Improving Teacher Quality State Grants Mathematics and Science Partnerships State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States Total U.S. Department of Education Health and Human Services, U.S. Department of Pass-Through From Carroll County Department of Family and Children Services Promoting Safe and Stable Families CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD . 10.553 . 10.555 NIA NIA $ $ (2) 6,535,521 6,535,521 10.550 N/A $ 314 720 6,850,241 94.004 NIA $ 9614 84.027 84.173 N/A $ NIA $ 2,989,743 143 967 3,133,710 84.332 84.196 84.365 84.318 84.938 84.367 84.366 84.298 84.010 84.048 N/A NIA NIA N/A N/A N/A N/A NIA NIA N/A $ 91,756 67,100 33,889 13,433 (3) 592,817 97,992 21,047 2,983,109 150 056 7 184 909 93.556 NIA $ 79 500 - 26 - CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2007 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Defense, U.S. Department of Direct Department of the Army R.O.T.C. Program CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD $ _ _ _--'3'-'0-'-",3--'4""-2 Total Federal Financial Assistance N/A = Not Available $===14='=15=4=,6=0=6 Notes to the Schedule of Expenditures of Federal Awards (1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year. (2) Expenditures for the funds earned on the School Breakfast Program ($1,026,577) were not maintained separately and are included in the 2007 National School Lunch Program. (3) Funds earned and expended in the prior period on the Hurricane Education Recovery Act, in the amount of $58,550, do not require reporting of expenditures. 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 Carroll 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 - CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2007 SCHEDULE "3" AGENCY/FUNDING GRANTS 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 Category I Category II Category Ill Category IV CategoryV Program for Intellectually Gifted Students - 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 Categorical Grants Pupil Transportation Regular Bus Replacement State Bonds Nursing Services Principal Supplements Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Graduation Coaches K-8 Statewide Reading and Math Grants Middle School Summer Remedial Program National Teacher Certification Other State Grant Preschool Handicapped Program Virtual Schools Grant Lottery Programs Pre-Kindergarten GOVERNMENTAL FUND TYPES CAPITAL GENERAL PROJECTS FUND FUND TOTAL $ 4,774,253 393,010 10,453,218 876,932 4,809,970 523,771 560,158 7,447,700 7,794,011 1,612,397 426,152 898,711 4,692,844 1,348,839 995,027 2,571,529 449,936 651,978 230,961 1,468,999 447,261 287,462 1,660,620 2,965,612 4,655,697 1,903,377 189,674 350,000 257,937 48,661 37,717 11,454,073 374,374 243,705 -1,350,777 200,375 225,297 20,569 44,272 226,421 287,885 2,225 2,324,018 $ 4,774,253 393,010 10,453,218 876,932 4,809,970 523,771 560,158 7,447,700 7,794,011 1,612,397 426,152 898,711 4,692,844 1,348,839 995,027 2,571,529 449,936 651,978 230,961 1,468,999 447,261 287,462 1,660,620 2,965,612 4,655,697 1,903,377 189,674 350,000 257,937 48,661 37,717 11,454,073 374,374 243,705 -1,350,777 200,375 225,297 20,569 44,272 226,421 287,885 2,225 2,324,018 - 28- CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2007 SCHEDULE "3" AGENCY/FUNDING GRANTS Georgia State Financing and Investment Commission Reimbursement on Construction Projects On Behalf Payments On Behalf Payments - Health Insurance On Behalf Payments - Teachers Retirement On Behalf Payments - Public School Employees Retirement Human Resources, Georgia Department of Family Advocate Program Family Connection OTHER Community Affairs, Georgia Department of Local Assistance Grant GOVERNMENTAL FUND TYPES CAPITAL GENERAL PROJECTS FUND FUND TOTAL $ 4,454,131 $ 4,454,131 $ 2,305,878 36,295 17,139 2,305,878 36,295 17,139 31,191 50,000 31,191 50,000 15 000 15 000 $ 82,292,354 $ 4 454 131 $ =====8=6=7,=46='=48=5= See notes to the basic financial statements. - 29 - CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2007 SCHEDULE "4" PROJECT (A) Funding the acquisition, construction and equipping of capital outlay projects, consisting of four (4) elementary schools, one (1) new middle school and two (2) new high schools, the acquisition of future school sites and additions, renovations, modifications and improvements at existing schools and facilities within the Carroll County School District and (B) Interest on the School District debt. Providing funds to pay or to be applied toward the cost of capital outlay projects within the Carroll County School District, consisting of acquiring, constructing, adding to, renovating, modifying, repairing, improving and equipping existing schools and other buildings and facilities and acquiring any property necessary or desirable therefore, both real and personal; acquiring real estate for the construction of new schools and facilities; constructing and equipping new schools and facilities and acquiring any property necessary or desirable therefore, both real and personal. ORIGINAL ESTIMATED COST (1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3) AMOUNT EXPENDED IN PRIOR YEARS (3) PROJECT STATUS $ 80,135,000 $ 80,135,000 $ 15,450,849 $ 35,898,162 Ongoing 105,420,000 105,420,000 867,823 Ongoing $ 185,555,000 $ 185,555,000 $ 16,318,672 $ 35,898,162 (1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. (2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion. (3) The voters of Carroll County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. See notes to the basic financial statements. - 30 - CARROLL COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2007 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 I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program 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 $ 5,280,253 $ 5,565,512 $ 130,382 $ 5,695,894 458,272 473,138 6,526 479,664 11,651,135 12,041,779 433,462 12,475,241 999,090 1,289,321 9,072 1,298,393 5,396,263 6,507,718 325,530 6,833,248 597,828 623,535 8,399,499 8,711,804 1,806,228 10,292,125 2,908,510 449,208 730,908 252 305 712,788 545,257 9,122,381 10,861,816 2,147,297 157,861 840,025 9,248,813 244,419 1,866,303 2,845,246 433,559 1,246,603 248 351 6,127 20,587 269,664 823,173 227,091 11,972 11,749 79,079 39,421 61,189 58,816 820 7,369 728 718,915 565,844 9,392,045 11,684,989 2,374,388 169,833 851,774 9,327,892 283,840 1,927,492 2,904,062 434,379 1,253,972 249 079 $ 58,556,963 $ 66,398,187 $ 2,522,757 $ 68,920,944 1,644,906 325 790 2,337,408 165,857 186,574 161,933 2,523,982 327 790 TOTAL QBE FORMULA FUNDS $ 60 527 659 $ 68,901,452 $ 2 871 264 $ ===71:f=77=2=7=1=6 (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 Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 20, 2008 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Carroll County Board of Education 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 Carroll County Board of Education as of and for the year ended June 30, 2007, which collectively comprise Carroll County Board of Education's basic financial statements and have issued our report thereon dated March 20, 2008. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica 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 In planning and performing our audit, we considered Carroll 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 Carroll County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Carroll County Board of Education's internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified a certain deficiency in internal control over financial reporting that we consider to be a significant deficiency. 2007YB-41 A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Carroll County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Carroll County Board of Education's financial statements that is more than inconsequential will not be prevented or detected by the Carroll County Board of Education's internal control. We consider item FS-6221-07-01 in the accompanying Schedule of Findings and Questioned Costs to be a significant deficiency in internal control over financial reporting. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Carroll County Board of Education's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we consider item FS-6221-07-01 to be a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether Carroll County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, 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 Carroll County Board of Education in a separate letter dated March 20, 2008. Carroll County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule ofManagement's Responses. We did not audit Carroll County Board of Education's response and, accordingly, we express no opinion on it. 2007YB-41 This report is intended solely for the information and use of the management, members of the Carroll County Board ofEducation, 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. RWH:gp 2007YB-41 Respectfully submitted, ~~~-k Russell W. Hinton, CPA, CGFM State Auditor Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 20, 2008 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Carroll County Board of Education REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 Ladies and Gentlemen: Compliance We have audited the compliance ofCarroll County Board ofEducation with the types ofcompliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2007. Carroll 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 Carroll County Board of Education's management. Our responsibility is to express an opinion on Carroll 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 ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Carroll County Board ofEducation'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 Carroll County Board of Education's compliance with those requirements. 2007SA-10 In our opinion, the Carroll County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2007. Internal Control Over Compliance The management of Carroll County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Carroll County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness ofinternal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Carroll County Board of Education's internal control over compliance. A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be 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 the management, members of the Carroll County Board ofEducation, 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, ~~w-~ Russell W. Hinton, CPA, CGFM State Auditor RWH:gp 2007SA-10 SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS CARROLL COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-6221-05-01 FS-6221-06-01 Further Action Not Warranted Previously Reported Corrective Action Implemented PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AUDITEE'S RESPONSE/STATUS SEE AUDITOR'S COMMENTS F A-6221-06-01 Unresolved (1) AUDITOR'S COMMENTS (1) Funding for the Hurricane Education Recovery program was a one year grant. Georgia Department ofEducation is reviewing this matter to determine ifa refund is appropriate. SECTION IV FINDINGS AND QUESTIONED COSTS CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Carroll County Board ofEducation's financial statements was unqualified. 2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Carroll County Board of Education disclosed a financial statement significant deficiency related to the following control category. Financial Reporting The significant deficiency described above is considered to be a material weakness. 3. Noncompliance Material to the Financial Statements The audit of the Carroll County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements. 4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Carroll County Board ofEducation did not disclose any significant deficiencies in internal control over major programs. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Carroll County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Carroll County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133. 7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $424,638. 9. Low Risk Auditee The Carroll County Board of Education qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133. - 1- CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINANCIAL REPORTING Inadequate Internal Controls over School Activity Accounts Material Weakness Finding Control Number: FS-6221-07-01 Condition: A review ofprincipal account activity revealed that governmental funds were inappropriately reported as agency funds. Criteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are processed according to established procedures. According to the entity's Local School Accounting Manual, all principal account funds lxx and 3xx should account for agency fund activity and all others as governmental. Questioned Cost: $88,854 Information: The auditor noted that agency fund cash and liabilities were overstated by $88,854. This amount was deemed material to agency funds. An adjustment was proposed by the auditors and posted by the entity to correct the financial statements. Cause: School bookkeepers had incorrectly classified certain funds as agency type funds in violation of Local School Accounting Manual procedures. These funds should have been classified as governmental funds. Effect: Potential material misstatement to agency fund cash and liabilities. Recommendation: Management should revise and monitor controls to provide reasonable assurance that transactions are processed according to established procedures. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. -2 - SECTION V MANAGEMENT'S RESPONSES CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30, 2007 Finding Control Number: FS-6221-07-01 We concur with this finding. The Board has reviewed each principal's account for proper classification in accordance with the School District's Local School Accounting Manual. These corrections have been performed as of March 1, 2008. Contact Person: Greg Denney, Chief Financial Officer Phone: (770) 832-3568 Fax: (770) 836-2739 E-mail: greg.denney@carrollcountyschools.com