CARROLL COUNTY BOARD OF EDUCATION CARROLLTON, GEORGIA ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2019 (Including Independent Auditor's Reports) CARROLL COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S REPORT REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS EXHIBITS BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS A STATEMENT OF NET POSITION B STATEMENT OF ACTIVITIES FUND FINANCIAL STATEMENTS C BALANCE SHEET RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION D STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS E RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES F STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS G STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS H NOTES TO THE BASIC FINANCIAL STATEMENTS SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION 1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA 2 SCHEDULE OF CONTRIBUTIONS - TEACHERS RETIREMENT SYSTEM OF GEORGIA 3 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION TEACHERS RETIREMENT SYSTEM OF GEORGIA 4 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 5 SCHEDULE OF CONTRIBUTIONS - EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 6 NOTES TO THE REQUIRED SUPPLEMENTAY INFORMATION EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 7 SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM OF GEORGIA Page i 1 2 3 4 5 6 7 8 49 50 51 52 53 54 55 CARROLL COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION 8 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM OF GEORGIA 9 SCHEDULE OF PROPORTIONATE SHARE OF NET OPEB LIABILITY OTHER POST-EMPLOYMENT BENEFITS 10 SCHEDULE OF CONTRIBUTIONS OTHER POST-EMPLOYMENT BENEFITS 11 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION OTHER POST-EMPLOYMENT BENEFITS 12 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND SUPPLEMENTARY INFORMATION 13 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 14 SCHEDULE OF STATE REVENUE 15 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS Page 56 57 58 59 60 61 63 65 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL Greg S. Griffin STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 INDEPENDENT AUDITOR'S REPORT The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education and Superintendent and Members of the Carroll County Board of Education Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Carroll County Board of Education (School District), as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions 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 of the School District as of June 30, 2019, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and required supplementary information listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District's basic financial statements. The accompanying supplementary information, as listed in the table of contents, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U. S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 30, 2020 on our consideration of the School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control over financial reporting and compliance. A copy of this report has been filed as a permanent record 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, March 30, 2020 Greg S. Griffin State Auditor CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 INTRODUCTION Our discussion and analysis of the Carroll County School District's (School District) financial performance provides an overview of the School District's financial activities for the fiscal year ended June 30, 2019. 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. Comparative data is provided for fiscal year 2019 and fiscal year 2018. FINANCIAL HIGHLIGHTS Key financial highlights for 2019 are as follows: In total, net position increased $13.4 million which represents an 89.5 percent increase from 2018. This increase was due to governmental activities since the School District has no business type activities and is related to a decrease in total liabilities. The School District had $156.9 million in expenses relating to governmental activities compared to $158.1 million last year. The decrease in overall expenses from last year was driven by a decrease in employer contributions to the state health benefit plan for the month of June 2019. For this year, $106.2 million of these expenses are offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) of $64.1 million were adequate to provide for these programs. As stated above, general revenues accounted for $64.1 million or 37.6 percent of all revenues totaling $170.3 million. Program specific revenues in the form of charges for services, grants and contributions accounted for the remainder. USING THE BASIC FINANCIAL STATEMENTS This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the Carroll County School District as a financial whole, or as an entire operating entity. Each statement type is explained below: Government-Wide Financials The government-wide financial statements include the Statement of Net Position 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 government-wide financial statements are basically a consolidation of all of the School District's operating funds into one total called governmental activities. In reviewing the government-wide financial statements, a reader might ask the question, "How did we do financially in 2019?" The Statement of Net Position and the Statement of Activities provides the basis for answering this question. These financial statements include all the School District's assets, deferred outflows, deferred inflows, and liabilities and use the accrual basis of accounting i CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 similar to the accounting used by most private-sector companies. This basis of accounting considers 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 position and any changes in net position. This change in net position 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 Position and the Statement of Activities, the School District has one distinct type of activity: Governmental Activities - All of the School District's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, after school program, principal's accounts and various others. Fund Financial Statements The fund financial reports focus on individual parts of the School District, reporting the School District's operation in more detail. The governmental fund financial statements reflect the School District's most significant funds. In the case of the Carroll County School District, the general fund, capital projects fund, and debt service fund are the most significant funds. Governmental Funds: Most of the School District's activities are reported in governmental funds, which focus on how money flows in to and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is reconciled in the financial statements. Fiduciary Funds: These statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for assets that belong to others, such as school clubs and organizations within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the government-wide financial statements because it cannot use these assets to finance its operations. 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. ii CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements. FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE The Statement of Net Position provides the perspective of the School District as a whole. Table 1 provides a summary of the School District's net position for this fiscal year. The largest portion of the School District's net position is 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. 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 Position Governmental Activities Fiscal Year Fiscal Year 2019 2018 Assets Current and Other Assets Capital Assets, Net $ 50,679,579 $ 48,806,363 256,712,882 258,045,089 Total Assets 307,392,461 306,851,452 Deferred Outflows of Resources 32,554,762 25,571,112 Li abi l i ti es Current and Other Liabilities Long-Term Liabilities 29,604,412 257,280,342 26,598,148 278,189,146 Total Liabilities 286,884,754 304,787,294 Deferred Inflows of Resources 24,629,125 12,628,948 Net Position Net Investment in Capital Assets Restricted Unrestricted (Deficit) 207,779,129 11,058,625 (190,404,410) 201,048,691 7,914,189 (193,956,558) Total Net Position $ 28,433,344 $ 15,006,322 Total net position increased $13.4 million in fiscal year 2019. This increase is primarily due to a decrease in total liabilities. iii CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 Table 2 shows the changes in net position for fiscal year 2019 compared to the changes in net position for fiscal year 2018. Table 2 Change in Net Position Revenues Program Revenues: Charges for Services $ Operating Grants and Contributions Capital Grants and Contributions Total Program Revenues General Revenues: Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Debt Services Intangible Recording Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous Total General Revenues Total Revenues Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services Instructional Staff Training Federal Grant Administration 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 Community Services Food Services Interest on Long-Term Debt Total Expenses Governmental Activities Fiscal Year Fiscal Year 2019 2018 5,193,878 $ 100,328,524 679,529 106,201,931 4,910,559 98,015,896 491,006 103,417,461 36,151,365 14,585,520 1,214,920 9,957,877 472,452 1,734,284 64,116,418 170,318,349 100,887,698 5,082,086 1,981,869 2,370,124 792,419 537,724 1,825,974 10,194,362 1,014,723 10,344,388 8,846,319 849,970 892,627 510,744 9,507,978 1,252,322 156,891,327 35,191,900 13,013,569 1,390,209 12,257,251 46,291 2,229,541 64,128,761 167,546,222 103,241,333 4,656,955 2,253,436 2,413,644 729,094 495,323 1,740,208 10,307,619 962,358 10,182,547 8,474,829 780,419 720,545 457,817 9,506,190 1,144,939 158,067,256 Change in Net Position $ 13,427,022 $ 9,478,966 iv CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 Governmental Activities Governmental program expenses are comprised of the following: Instruction 64.3 percent, Support Services 28.5 percent and Operations of Non-Instructional Services and Interest 7.2 percent. Table 3 shows a year to year comparison, for governmental activities, the total cost of services and the net cost (total cost less charges for services generated by the activities and intergovernmental aid provided for specific programs) of services. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements. Table 3 Governmental Activities Total Cost of Services Fiscal Year Fiscal Year 2019 2018 Net Cost of Services Fiscal Year Fiscal Year 2019 2018 Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services Instructional staff training Federal Grant Administration 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 Community Services Food Services Interest on Long-Term Debt $ 100,887,698 $ 103,241,333 $ 5,082,086 1,981,869 2,370,124 792,419 537,724 1,825,974 10,194,362 1,014,723 10,344,388 8,846,319 849,970 892,627 4,656,955 2,253,436 2,413,644 729,094 495,323 1,740,208 10,307,619 962,358 10,182,547 8,474,829 780,419 720,545 510,744 9,507,978 1,252,322 457,817 9,506,190 1,144,939 22,344,202 $ 3,913,892 167,797 461,272 792,419 537,724 (397,543) 6,176,811 1,011,348 5,774,016 6,888,610 849,970 751,502 (323,756) 488,810 1,252,322 26,282,458 3,761,002 338,040 543,439 729,094 495,323 (636,694) 6,273,280 953,421 5,808,875 6,570,297 778,472 712,888 (21,690) 916,651 1,144,939 Total Expenses $ 156,891,327 $ 158,067,256 $ 50,689,396 $ 54,649,795 Although program revenues make up a majority of the revenues, the School District is still dependent upon tax revenues for governmental activities. Taxes and other general revenues support 22.1 percent of instructional activities; for all governmental activities general revenue support is 32.3 percent. v CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 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, unassigned 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 $172.0 million and total expenditures and other financing uses of $170.0 million. General fund balance decreased by $1.2 million during the year. The decrease to general fund was primarily due to a one-time investment in school safety controls. The capital projects fund balance decreased by $971 thousand, resulting in fund balance at June 30, 2019 of $180 thousand, which will be used in the continuing construction/renovation of school facilities. The decrease to the capital projects fund was due to expenditures for construction/renovation in progress. 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 2019, 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 $155.5 million were over the final budgeted amounts of $151.1 million by $4.4 million. The actual expenditures of $156.9 million were over the final budgeted amount of $153.7 million by $3.2 million. Most of these variances are due to not budgeting revenues and expenditures from principals' accounts. vi CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At fiscal year ended June 30, 2019, the School District had $256.7 million invested in capital assets, all in governmental activities. Table 4 reflects a summary of these balances net of accumulated depreciation from fiscal year 2018 to fiscal year 2019. Table 4 Capital Assets (Net of Depreciation) Governmental Activities Fiscal Year Fiscal Year 2019 2018 Land Construction In Progress Land Improvements Building and Improvements Equipment Software $ 9,798,523 $ 1,515,477 11,568,955 228,119,682 5,392,313 317,932 9,654,713 417,299 12,347,639 230,441,002 4,804,015 380,421 Total $ 256,712,882 $ 258,045,089 The School District's construction in progress is funded primarily from our Special Purpose Local Option Sales Tax (SPLOST) bond. The most significant addition in fiscal year 2019 was the acquisition and renovation of a Teaching & Learning Center. vii CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 Long-Term Liabilities At fiscal year ended June 30, 2019, the School District had $47.3 million in bonds payable and premium, and $1.8 million in other long-term debt. Table 5 summarizes the School District's long-term liabilities which includes general obligation bonds and compensated absences outstanding. Table 5 Long-Term Liabilities at June 30 Governmental Activities Fiscal Year 2019 Fiscal Year 2018 Bonds Payable $ 40,350,000 $ 47,500,000 Unamortized Bond Premium 6,914,463 7,876,544 License Agreement 315,897 350,556 Capital Leases 835,474 1,011,021 Compensated Absences 642,810 649,744 Total $ 49,058,644 $ 57,387,865 At June 30, 2019, the School Districts assigned bond rating was"Aa3" Enhanced as determined by Moody's Investors Services. CURRENT ISSUES Carroll County's economic outlook continues to be positive through the summer of 2019. The overall rate of net population growth has remained relatively flat over the past few years, however, some new investment, economic growth and employment, and an improving tax base are significant factors for the County and the Carroll County School District's overall outlook. School District enrollment remained relatively steady as it has for the previous five-year period. Community economic indicators continued to remain stable with uptrends in 2018 and into 2019. The Carroll County Georgia Board of Tax Assessors performs a cyclical reassessment process. The reassessment resulted in an increase in the 2019 tax digest values. U.S. Census estimates placed Carroll County's population at 118,121 residents in 2018, up from 117,812 in 2017. Carroll County's growth has remained consistent in recent years. Carroll County School District student enrollment remained consistent as well, with 15,006 students enrolled during the spring of 2019, compared with 14,893 enrolled during spring of 2018 and 14,898 students during the same time the year before. This remains consistent with School District projections made in collaboration with local officials and consultants of relatively flat student enrollment as a result of lower local birth rates, lower rates of net county inmigration, and limited inventory of homes at price-points likely to be purchased by young families. viii CARROLL COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 The current millage rate is 17.998 mills with a maximum of 20 mills. Currently, a mill of tax in Carroll County generates approximately $1.8 million. 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. 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 Ms. Delene Strickland, Assistant Superintendent of Finance for the Carroll County School District, 164 Independence Drive, Carrollton, Georgia 30116. You may also email your questions to Ms. Strickland at delene.strickland@carrollcountyschools.com. ix CARROLL COUNTY BOARD OF EDUCATION CARROLL COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2019 ASSETS Cash and cash equivalents Receivables: Taxes Intergovernmental: State Federal Other Restricted: Cash and cash equivalents Prepaid items Inventory Capital assets (nondepreciable) Capital assets (depreciable, net of accumulated depreciation) Total assets DEFERRED OUTFLOWS OF RESOURCES OPEB related items Pension related items Total deferred outflows of resources LIABILITIES Accounts payable Salaries and benefits payable Accrued interest payable Contracts and retainage payable Bonds payable due within one year Bonds payable due in more than one year Capital lease due within one year Capital lease due in more than one year Compensated absences due in less than one year Compensated absences due in more than one year License agreements due in less than one year License agreements due in more than one year Net OPEB liability Net pension liability Total liabilities DEFERRED INFLOWS OF RESOURCES OPEB related items Pension related items Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted for: Debt service Capital outlay Continuation of federal programs Unrestricted (Deficit) Total net position EXHIBIT "A" Governmental Activities $ 32,424,073 3,345,333 11,936,431 1,472,729 406,463 193,862 572,572 328,116 11,314,000 245,398,882 307,392,461 6,520,391 26,034,371 32,554,762 958,681 16,616,549 486,250 137,551 10,934,115 36,330,348 180,419 655,055 69,550 573,260 221,297 94,600 101,279,605 118,347,474 286,884,754 19,460,965 5,168,160 24,629,125 207,779,129 10,197,415 323,176 538,034 (190,404,410) $ 28,433,344 The accompanying notes are an integral part of these financial statements. - 1 - CARROLL COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2019 EXHIBIT "B" Functions/Programs Governmental activities: Instruction Support services: Pupil services Improvement of instructional services Educational media services Instructional staff training Federal grant administration General administration School administration Business administration Maintenance and operation of facilities Student transportation services Central support services Other support services Operations of Non-Instructional Services Food services operation Community service operation Interest on long-term debt Expenses $ 100,887,698 5,082,086 1,981,869 2,370,124 792,419 537,724 1,825,974 10,194,362 1,014,723 10,344,388 8,846,319 849,970 892,627 9,507,978 510,744 1,252,322 Charges for Services Program Revenues Operating Grants and Contributions $ 2,579,848 $ 75,753,493 - 1,168,194 29,703 - 1,813,600 1,902,399 2,222,401 4,017,551 4,417,688 1,648,829 133,704 1,749,827 834,500 - 7,250,665 - Capital Grants and Contributions Net (Expense) Revenue and Changes in Net Position Governmental Activities $ 210,155 $ (22,344,202) - (3,913,892) 472 6,453 1,116 3,375 122,981 308,880 7,421 (167,797) (461,272) (792,419) (537,724) 397,543 (6,176,811) (1,011,348) (5,774,016) (6,888,610) (849,970) (751,502) 18,676 - (488,810) 323,756 (1,252,322) Total governmental activities $ 156,891,327 $ 5,193,878 $ 100,328,524 $ 679,529 (50,689,396) General revenues: Taxes: Property taxes, levied for general purposes Sales taxes: For debt service Intangible taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Other Total general revenues Change in net position Net position, beginning of year Net position, end of year 36,151,365 14,585,520 1,214,920 9,957,877 472,452 1,734,284 64,116,418 13,427,022 15,006,322 $ 28,433,344 The accompanying notes are an integral part of these financial statements. - 2 - CARROLL COUNTY BOARD OF EDUCATION BALANCE SHEET RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2019 EXHIBIT "C" ASSETS Cash and cash equivalents Receivables: Taxes Intergovernmental: State Federal Other Restricted: Cash and cash equivalents Prepaid items Inventory General $ 22,970,626 $ 2,083,706 11,838,488 1,472,729 406,459 572,572 328,116 Capital Projects 31,371 $ - 97,943 - 193,862 - Debt Service 9,422,076 1,261,627 4 Total Governmental Funds $ 32,424,073 3,345,333 11,936,431 1,472,729 406,463 - 193,862 - 572,572 - 328,116 Total assets $ 39,672,696 $ 323,176 $ 10,683,707 $ 50,679,579 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES LIABILITIES Accounts payable $ Salaries and benefits payable Contracts and retainage payable Total liabilities DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes FUND BALANCES Nonspendable: Prepaid items Inventory Restricted: Capital outlay Debt service Continuation of federal programs Unassigned Total fund balances Total liabilities, deferred inflows of resources and fund balances $ 952,830 $ 16,616,549 17,569,379 861,313 572,572 328,116 209,918 20,131,398 21,242,004 39,672,696 $ 5,809 $ - 137,551 143,360 - 42 $ - 42 - 958,681 16,616,549 137,551 17,712,781 861,313 - 179,816 - 179,816 323,176 $ - 10,683,665 - 10,683,665 10,683,707 $ 572,572 328,116 179,816 10,683,665 209,918 20,131,398 32,105,485 50,679,579 Amounts reported for governmental activities in the statement of net position is different because: Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the funds. Cost $ 339,440,635 Less accumulated depreciation (82,727,753) Other long-term assets are not available to pay for current-period expenditures and, therefore, are unavailable in the funds. Property taxes The net pension liability, and related balances, are not expected to be paid with current financial resources and are therefore, not reported in governmental funds. Net pension liability $ (118,347,474) Deferred inflows of resources - pensions (5,168,160) Deferred outflows of resources - pensions 26,034,371 The net OPEB liability, and related balances, are not expected to be paid with current financial resources and are therefore, not reported in governmental funds. Net OPEB liability $ Deferred inflows of resources - OPEB Deferred outflows of resources - OPEB (101,279,605) (19,460,965) 6,520,391 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 Capital leases License agreements Accrued interest Compensated absences $ (40,350,000) (6,914,463) (835,474) (315,897) (486,250) (642,810) 256,712,882 861,313 (97,481,263) (114,220,179) (49,544,894) Net position of governmental activities $ 28,433,344 The accompanying notes are an integral part of these financial statements. - 3 - CARROLL COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 EXHIBIT "D" 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 Instructional staff training Federal grant administration General administration School administration Business administration Maintenance and operation of facilities Student transportation services Central support services Other support services Food services operation Community services operation Capital outlay Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Long-term license agreement Total other financing sources (uses) Net change in fund balances FUND BALANCES, beginning of year FUND BALANCES, end of year General $ 36,227,734 $ - 1,214,920 95,391,832 15,415,219 5,193,878 303,360 1,734,284 155,481,227 Capital Projects - $ - - 287,686 - - 4,351 - 292,037 Debt Service Total Governmental Funds - $ 14,585,520 - - - - 164,741 - 36,227,734 14,585,520 1,214,920 95,679,518 15,415,219 5,193,878 472,452 1,734,284 14,750,261 170,523,525 99,130,704 5,260,602 2,061,434 2,296,921 806,653 554,732 1,816,818 10,649,245 961,544 12,574,372 8,677,839 880,427 711,346 9,064,598 510,819 493,037 411,646 34,556 156,897,293 (1,416,066) 201,439 201,439 (1,214,627) 22,456,631 $ 21,242,004 $ 295,307 45 3,921 264,048 8,300 2,021,382 - 2,593,003 - - 7,150,000 2,257,919 9,407,919 (2,300,966) 5,342,342 1,330,000 - 1,330,000 (970,966) 1,150,782 179,816 $ (1,330,000) - (1,330,000) 4,012,342 6,671,323 10,683,665 $ 99,426,011 5,260,602 2,061,434 2,296,921 806,653 554,732 1,816,818 10,649,245 961,589 12,578,293 8,941,887 880,427 719,646 9,064,598 510,819 2,514,419 7,561,646 2,292,475 168,898,215 1,625,310 1,330,000 (1,330,000) 201,439 201,439 1,826,749 30,278,736 32,105,485 The accompanying notes are an integral part of these financial statements. - 4 - CARROLL COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2019 EXHIBIT "E" Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds $ Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation expense in the current year. Capital outlay $ 5,769,457 Depreciation expense (7,083,489) In the statement of activities, only the gain or loss on the sale of capital assets is recorded. However, in the governmental funds, proceeds from the sale increase financial resources. Thus, the change in net position differs from the change in fund balance by the net book value of the capital assets sold. Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes $ (76,369) Georgia State Financing and Investment Commission (119,753) The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Principal payments - bonds $ 7,150,000 Principal payments - capital leases 175,548 Principal payments - license agreement 236,098 Long-term license agreement (201,439) 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 $ 6,934 Amortization of bond premium 962,081 Change in net OPEB liabilities and related deferred outflows and inflows of resources (366,208) Change in net pension liabilities and related deferred outflows and inflows of resources 5,087,516 Change in accrued interest 78,072 Change in net position - governmental activities $ 1,826,749 (1,314,032) (18,175) (196,122) 7,360,207 5,768,395 13,427,022 The accompanying notes are an integral part of these financial statements. - 5 - CARROLL COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2019 EXHIBIT "F" ASSETS Cash Receivables Total assets Funds held for others LIABILITIES Held in trust for private purposes NET POSITION Private Purpose Trust $ 41,056 - $ 41,056 Agency Fund $ 625,520 1,834 $ 627,354 $ - $ 627,354 $ 41,056 The accompanying notes are an integral part of these financial statements. - 6 - CARROLL COUNTY BOARD OF EDUCATION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 Investment earnings: Interest Change in net position Net position, beginning of year Net position, end of year ADDITIONS EXHIBIT "G" Private Purpose Trust $ 38 38 41,018 $ 41,056 The accompanying notes are an integral part of these financial statements. - 7 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY Reporting Entity The Carroll County Board of Education (the "School District") was established under the laws of the State of Georgia and operates under the guidance of a School Board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below. Basis of Presentation The School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements and notes to the basic financial statements of the Carroll County Board of Education. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness. Government-wide Statements: The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. - 8 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. The School District reports the following major governmental funds: General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund. Capital Projects Fund accounts for financial resources including bond proceeds and grants from the Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities. Debt Service Fund accounts for Education Special Purpose Local Option Sales Taxes (ESPLOST) that are legally restricted for the repayment of general long-term principal, interest and paying agent's fees on the General Obligation Sales Tax Bonds that the School District has issued. The School District reports the following fiduciary fund types: The Private Purpose Trust Fund reports a trust arrangement under which principal is to be invested and preserved intact with the resultant income to be used to assist 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 individual school clubs and activities. Basis of Accounting The basis of accounting determines when transactions are reported on the financial statements. The government-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. The agency fund is custodial in nature and does not present results of operations or have a measurement focus. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from - 9 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. 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 State of Georgia reimburses the School System for teachers' salaries and operating costs through the Quality Basic Education (QBE) Formula Earnings program. State of Georgia law defines the formula driven grant that determines the cost of an academic school year and the State of Georgia's share in this cost. Generally teachers are contracted for the school year (July 1 June 30) and paid over a twelve month contract period, generally September 1 through August 31. In accordance with the requirements of the enabling legislation of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid, funding the academic school year expenditures. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued as the State of Georgia has only postponed the final payment of their share of the cost until the subsequent appropriations for cash management purposes. By June 30 of each year, the State of Georgia has a signed appropriation that includes this final amount, which represents the State of Georgia's intent to fund this final payment. Based on guidance in Government Accounting Standards Board (GASB) Statement No. 33, paragraph 74, the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, and the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition. The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net position available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. - 10 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) New Accounting Pronouncements In fiscal year 2019, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 83, Certain Asset Retirement Obligations. This statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this statement. The adoption of this statement does not have a significant impact on the School District's financial statements. In fiscal year 2019, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. The primary objective of this statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. See Note 9 for further disclosure in accordance with this standard. Cash and Cash Equivalents COMPOSITION OF DEPOSITS Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated (O.C.G.A.) 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured chartered building and loan associations. 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. - 11 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property Taxes The Carroll County Board of Commissioners fixed the property tax levy for the 2018 tax digest year (calendar year) on August 23, 2018 (levy date). Taxes were due on December 4, 2018 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2018 tax digest are reported as revenue in the governmental funds for fiscal year 2019. The Carroll County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2019, for maintenance and operations amounted to $31,972,600. The tax millage rate levied for the 2018 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 17.998 mills Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $4,255,134 during the fiscal year ended June 30, 2019. Sales Taxes Education Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $14,585,520 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. Inventories FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out basis). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. Prepaid Items Payments made to vendors for services that will benefit periods subsequent to June 30, 2019, are recorded as prepaid items using the consumption method by recording an asset for the prepaid amount and reflecting the expenditure/expense in the year in which services are consumed. At the fund reporting level, an equal amount of fund balance is reported as nonspendable as this amount is not available for general appropriation. - 12 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 governmentwide 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 acquisition value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District. Capitalization thresholds and estimated useful lives of capital assets reported in the governmentwide statements are as follows: Capitalization Policy Estimated Useful Life Land Land Improvements $ Buildings and Improvements $ Intangible Assets $ All Equipment $ All 10,000 10,000 100,000 10,000 N/A 15 to 80 years 20 to 80 years Individually Determined 3 to 50 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using straight-line method over the estimated useful lives of the assets. - 13 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Compensated Absences Members of the Teachers Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School District's financial statements. Vacation leave is awarded on a fiscal year basis to all full time personnel employed on twelve month basis, according to the following guidelines: Employees with 0-5 years experience in Carroll County Employees with 6-10 years experience in Carroll County Employees with 11 plus years experience in Carroll County 12 days per year 15 days per year 18 days per year No other employees are eligible to earn vacation leave. Vacation leave not utilized during the fiscal year may be carried over to the next fiscal year, providing such vacation leave does not exceed 25 days for both Classified and Certified Employees. General Obligation Bonds The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the government-wide financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bond issuance costs are recognized in the financial statements during the fiscal year the bonds are issued. In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 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 Position. Deferred Outflows/Inflows of Resources In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The School District has one type of deferred inflow under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available. - 14 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Deferred Outflows/Inflows of Resources (Continued) The School District also has deferred inflows and outflows related to the recording of changes in its net pension liability. Certain changes in the net pension liability are recognized as pension expense over time instead of all being recognized in the year of occurrence. Experience gains or losses result from periodic studies by the School District's actuary which adjust the net pension liability for actual experience for certain trend information that was previously assumed, for example the assumed dates of retirement of plan members. These experience gains or losses are recorded as deferred outflows of resources or deferred inflows of resources and are amortized into pension expense over the expected remaining service lives of plan members. Changes in actuarial assumptions which adjust the net pension liability are also recorded as deferred outflows of resources or deferred inflows of resources and are amortized into pension expense over the expected remaining service lives of plan members. The difference between projected investment return on pension investments and actual return on those investments is also deferred and amortized against pension expense over a five-year period. Changes in the School District's proportionate share of the net pension liability and the difference between the School District's actual contributions towards the pension plan and the School District's proportionate share of contributions are also reported as deferred outflows of resources or deferred inflows of resources and are amortized over the expected remaining service lives of plan members. Additionally, any contributions made by the School District to the pension plan before year end but subsequent to the measurement date of the School District's net pension liability are reported as deferred outflows of resources. These contributions will be recognized as a reduction of the net pension liability in the next fiscal year. Post-employment Benefits Other Than Pensions (OPEB) For purposes of measuring the net OPEB liability (asset), deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Georgia School Employees Postemployment Benefit Fund (School OPEB Fund) and additions to/deductions from the School District OPEB Fund's fiduciary net position have been determined on the same basis as they are reported by the School OPEB Fund. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. - 15 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers Retirement System of Georgia (TRS) and additions to/deductions from TRS's fiduciary net position have been determined on the same basis as they are reported by TRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Public School Employees Retirement System of Georgia (PSERS) and additions to/deductions from PSERS's fiduciary net position have been determined on the same basis as they are reported by PSERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, pension expense, information about the fiduciary net position of the Employees' Retirement System of Georgia (ERS) and additions to/deductions from ERS's fiduciary net position have been determined on the same basis as they are reported by ERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Net Position The School District's net position in the government-wide Statements are classified as follows: Net investment in capital assets This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. Restricted net position These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties. Unrestricted net position Unrestricted net position represents resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes. - 16 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fund Balances The School District's fund balances are classified as follows: Nonspendable Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact. Restricted Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. Committed Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. Assigned Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes. Unassigned The residual classification for the general fund. This classification represents fund balances that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the general fund. The School District reports positive unassigned fund balances only in the general fund. Negative unassigned fund balances may be reported in the other funds. It is the goal of the School District to achieve and maintain a committed, assigned, and unassigned fund balance in the general fund at fiscal year-end of not less than 12 - 14% of annual operating expenditures for the subsequent fiscal year budget, not to exceed 15% of the total budget of the subsequent fiscal year, in compliance with Official Code of Georgia Annotated Section 20-2-167(a)5. If the unassigned fund balance at fiscal year-end falls below the goal, the School District shall develop a restoration plan to achieve and maintain the minimum fund balance. When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds. Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. - 17 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 3: BUDGETARY DATA The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general fund. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end. The Superintendent is authorized by the Board to approve adjustments of no more than 5 percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than 5 percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. Under no circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board. See Schedule 12 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year under review. - 18 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 4: 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 of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance. At June 30, 2019, all deposits were secured by surety bond, insurance or collateral as specified above. 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. - 19 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 4: DEPOSITS (Continued) CATEGORIZATION OF DEPOSITS Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2019, School District had deposits with a carrying amount of $33,284,511, and a bank balance of $37,973,486. The bank balances insured by Federal depository insurance were $1,461,367 and the bank balances collateralized with securities held by the pledging financial institution or by the pledging financial institution's trust department or agent in the School District's name were $18,917,201. At June 30, 2019, $17,594,918 of the School District's bank balance was exposed to custodial credit risk as follows: Uninsured and Uncollateralized $ Uninsured with collateral held by the pledging financial institution Uninsured with collateral held by the pledging financial institution's trust department or agent but not in the School District's name 17,594,918 Total $ 17,594,918 Note 5: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. For the year ended June 30, 2019, the commodities usage is recorded at their federally assigned value of $725,090. For additional information, see Note 2 Inventories. - 20 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 6: CAPITAL ASSETS EXHIBIT "H" The following is a summary of changes in the capital assets during the fiscal year: Balances July 1, 2018 Increases Decreases Balances June 30, 2019 Governmental Activities Capital Assets, Not Being Depreciated: Land Construction in Progress $ 9,654,713 $ 143,810 $ - $ 417,299 3,004,241 1,906,063 9,798,523 1,515,477 Total Capital Assets Not Being Depreciated 10,072,012 3,148,051 1,906,063 11,314,000 Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements Intangible Assets 284,753,975 18,167,119 20,550,726 608,676 2,696,363 1,551,372 73,048 206,686 481,330 - 287,450,338 19,237,161 20,623,774 815,362 Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements Intangible Assets 54,312,973 13,363,104 8,203,087 228,255 5,017,683 944,899 851,732 269,175 463,155 - 59,330,656 13,844,848 9,054,819 497,430 Total Capital Assets, Being Depreciated, Net 247,973,077 (2,556,020) 18,175 245,398,882 Governmental Activities Capital Assets - Net $ 258,045,089 $ 592,031 $ 1,924,238 $ 256,712,882 - 21 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 6: CAPITAL ASSETS (Continued) Capital assets being acquired under license agreements as of June 30, 2019, are as follows: Governmental Funds Intangible Assets Less: Accumulated Depreciation $ 815,362 497,430 $ 317,932 Capital assets being acquired under capital leases as of June 30, 2019, are as follows: Governmental Funds Building improvements Less: Accumulated Depreciation $ 1,684,589 608,007 $ 1,076,582 Current year depreciation expense by function is as follows: Instruction $ Support Services: Improvement of Instructional Services $ 12,282 Educational Media Services 167,984 General Administration 29,063 Business Administration 87,855 Maintenance and Operation of Facilities 32,922 Other Support Services 193,199 Student Transportation Services 602,909 Food Services Operation 5,471,079 1,126,214 486,196 $ 7,083,489 - 22 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 7: INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2019, consisted of the following: Transfers To Transfers From Debt Service Fund Capital Projects Fund $ 1,330,000 Transfers are used to move sales tax revenues collected by the debt service fund to the capital projects fund to pay for Special Purpose Local Option Sales Tax (SPLOST) projects on the voter approved referendum. 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; natural disasters 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, 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. Unemployment compensation expenditures and liabilities are 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 2019 $ -$ 2,870 $ 2,870 $ - 2018 $ -$ 7,826 $ 7,826 $ - 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 of workers' compensation self-insurance for its member organizations. - 23 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 8: RISK MANAGEMENT (Continued) The School District pays an annual premium to the Fund for its Workers' Compensation insurance coverage. Excess 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 $550 thousand loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $550 thousand loss per occurrence, up to $2 million. In addition to the $550,000 per occurrence retention, the Fund also retains an additional $200,000 per year corridor retention. The School District has purchased a surety bond to provide additional insurance coverage as follows: Position Covered Amount Superintendent $ 100,000 Note 9: LONG TERM DEBT 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. CAPITAL LEASES The Carroll County Board of Education has entered into a lease agreement for energy improvements to buildings in the amount of $1,680,000. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of its inception. Monthly principal and interest payments are required until maturity on November 4, 2023 at an interest rate of 2.74%. - 24 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 9: LONG TERM DEBT (Continued) The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2019 are as follows: Governmental Fiscal Year Ending June 30: Activities 2020 2021 2022 2023 2024 Total minimum lease payments Less: amount representing interest Present value of minimum lease payments Less: current liabilities $ 201,056 201,056 201,056 201,056 83,773 887,997 (52,523) 835,474 (180,419) Amount due greater than one year $ 655,055 GENERAL OBLIGATION DEBT OUTSTANDING The School District has issued general obligation bonds to provide funds to finance the cost of acquiring, constructing, and equipping certain capital outlay projects and the costs of issuing the bonds. The bonds are general obligations of the School District and will constitute a pledge of the full faith and credit of the School District. Principal of and interest on the bonds are payable first from the receipts of a special one percent sales and use tax for educational purposes ("Educational Sales Tax") collected within the territorial limits of the School District. The receipts from this Educational Sales Tax are anticipated to be sufficient to pay all debt service on the bonds; however, to the extent any liability on such debt is not satisfied from the proceeds of the Educational Sales Tax, it shall be paid from a direct annual ad valorem tax which may be levied, without limitation as to rate or amount, upon all taxable property within the territorial limits of the School District subject to taxation for school bond purposes. The School District has outstanding general obligations debt outstanding from direct placements related to the governmental activities in the amount of $1,040,000. General Obligation Bonds currently outstanding are as follows: Description General Government - Series 2011 General Government - Series 2016 General Government - Series 2017 Interest Rates 3.00% - 5.00% 2.00% - 5.00% 3.25% Issue Date 6/3/2011 3/15/2016 3/16/2017 Amount Amount Maturity Date Issued Outstanding 4/1/2023 $ 71,245,000 $ 22,280,000 4/1/2023 17,945,000 17,030,000 4/1/2023 2,055,000 1,040,000 $ 91,245,000 $ 40,350,000 - 25 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 9: LONG TERM DEBT (Continued) EXHIBIT "H" Debt service requirements to maturity on the General Obligations Bonds are as follows: Fiscal Year Ended June 30 General Obligation Debt Principal Interest General Obligation Debt (Direct Placement) Principal Interest Unamortized Bond Premium 2020 2021 2022 2023 $ 9,155,000 $ 9,575,000 10,040,000 10,540,000 1,911,200 $ 1,491,550 1,028,999 527,000 410,000 $ 325,000 215,000 90,000 33,800 $ 20,475 9,913 2,925 1,369,115 1,631,887 1,880,010 2,033,451 Totals $ 39,310,000 $ LICENSE AGREEMENTS 4,958,749 $ 1,040,000 $ 67,113 $ 6,914,463 The Carroll County Board of Education has entered into various multiyear agreements for software licenses. These agreements are treated like capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum license payments as of the date of their inception. License agreements currently outstanding are as follows: Description Frontline Tyler Curriculum Illuminate Interest Rates 3.50% 3.50% 3.50% 3.50% Issue Date 7/1/2016 1/1/2017 8/1/2017 7/1/2016 Maturity Date 7/1/2019 $ 1/1/2020 8/1/2019 7/1/2020 Amount Amount Issued Outstanding 54,062 $ 20,674 327,485 86,212 66,830 23,059 443,534 185,952 $ 891,911 $ 315,897 The future minimum license obligations and the net present value of these minimum license payments as of June 30, 2019 are as follows: Governmental Year Ending June 30: Activities 2020 2021 Total minimum lease payments Less: amount representing interest Present value of minimum lease payments Less: current liabilities $ 228,825 96,404 325,229 (9,332) 315,897 (221,297) $ 94,600 - 26 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 9: LONG TERM DEBT (Continued) EXHIBIT "H" The changes in Long-Term Debt during the fiscal year ended June 30, 2019, were as follows: Balance July 1, 2018 Governmental Activities Balance Additions Reductions June 30, 2019 Due Within One Year General Obligation (G.O.) Bonds $ 47,500,000 $ Unamortized bond premiums 7,876,544 - $ 7,150,000 $ 40,350,000 $ 9,565,000 - 962,081 6,914,463 1,369,115 Total bonds payable 55,376,544 - 8,112,081 47,264,463 10,934,115 Capital leases License agreements Compensated absences Total long-term liabilities 1,011,022 350,556 649,744 $ 57,387,866 $ 201,439 592,277 175,548 236,098 599,211 835,474 315,897 642,810 180,419 221,297 69,550 793,716 $ 9,122,938 $ 49,058,644 $ 11,405,381 Note 10: RELATED PARTY TRANSACTIONS The School District purchased a vehicle from Morris Auto Sales amounting to $9,950 in the current year. The owner is a relative of Sandra Morris, a current Board member. Note 11: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $242,717 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. Georgia Department of Education Paid the Teachers Retirement System (TRS) For Teachers Retirement In the amount of $29,810 Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System (PSERS) For Public School Employees Retirement Employer's Cost In the amount of $212,907 - 27 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 12: SIGNIFICANT COMMITMENTS The following is an analysis of significant outstanding construction or other contracts executed by the School District as of June 30, 2019: Unearned Project Contracts Villa Rica High School Renovations Temple High School Renovations Bowden Elementary School Renovations and Modifications Ithica Elementary School Classroom Central Middle School Classrooom Central Middle School Canopy Mount Zion Middle School Canopy and Renovations $ 325,099 97,804 892,350 665,328 39,813 110,057 210,583 $ 2,341,034 The amounts described in this note are not reflected in the basic financial statements. Note 13: SIGNIFICANT CONTINGENT LIABILITIES The School District participates in numerous State and Federal grant programs, which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs are subject to audit and adjustment by the grantor agencies; therefore, to the extent that the School District has not complied with the rules and regulations governing the grants, refunds of any amounts received may be required and the collectability of any related receivable at year-end may be impaired. In the opinion of the School District, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies. The School District is a defendant in various legal actions in the nature of claims for alleged damages to persons and property and other similar types of actions in the course of School District operations. While the ultimate results of these legal actions cannot be determined, the School District does not expect that these matters will have a material adverse effect on the financial condition of the School District. - 28 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 14: RETIREMENT PLANS EXHIBIT "H" GENERAL INFORMATION ABOUT THE TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) Plan Description: All teachers of the School District as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a costsharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. TRS issues a publicly available financial report that can be obtained at www.trsga.com/publications. Benefits provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death. Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6.00 % of their annual pay during fiscal year 2019. The School District's contractually required contribution rate for the year ended June 30, 2019 was 20.90% of annual School District payroll, of which 20.86% of payroll was required from the School District and 0.04% of payroll was required from the State. For the current fiscal year, employer contributions to the pension plan were $16,119,714 and $29,810 from the School District and the State, respectively. - 29 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 14: RETIREMENT PLANS (Continued) EXHIBIT "H" Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2019, the School District reported a liability for its proportionate share of the net pension liability that reflected a reduction for support provided to the School District by the State of Georgia for certain public school support personnel. The amount recognized by the School District as its proportionate share of the net pension liability, the related State of Georgia support, and the total portion of the net pension liability that was associated with the School District are summarized in the following table: School District's proportionate share of the net pension liability $ 118,255,880 State of Georgia's proportionate share of the net pension liability associated with the School District 228,686 Total $ 118,484,566 The net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2017. An expected total pension liability as of June 30, 2018 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2018. At June 30, 2018, the School District's proportion was 0.637081%, which was a decrease of 0.000318% from its proportion measured as of June 30, 2017. - 30 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 14: RETIREMENT PLANS (Continued) EXHIBIT "H" Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) For the year ended June 30, 2019, the School District recognized pension expense of $10,975,333 and revenue of ($57,349) for support provided by the State of Georgia for certain support personnel. At June 30, 2019, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Net difference between projected and actual earnings on pension plan investments Deferred Outflows of Resources Deferred Inflows of Resources $ - $ 3,233,345 Changes of assumption 1,784,438 - Differences between expected and actual experience 7,828,706 243,728 Changes in proportion and differences between School District contributions and proportionate share of contributions 276,786 1,688,976 School District contributions subsequent to the measurement date 16,119,714 - Total $ 26,009,644 $ 5,166,049 - 31 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 14: RETIREMENT PLANS (Continued) EXHIBIT "H" Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) School District contributions subsequent to the measurement date of $16,119,714 are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended June 30: 2020 2021 2022 2023 2024 $ 5,220,782 2,613,289 (3,167,401) (53,439) 110,650 Total $ 4,723,881 Actuarial assumptions: The total pension liability as of June 30, 2018 was determined by an actuarial valuation as of June 30, 2017 using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return Postretirement benefit increases 2.75% 3.25 9.00%, average, including inflation 7.50%, net of pension plan investment expense, including inflation 1.50% semi-annually Postretirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service retirements and dependent beneficiaries. The RP-2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used for death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. - 32 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 14: RETIREMENT PLANS (Continued) EXHIBIT "H" Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014. The long-term expected rate of return on pension plan investments was determined using a lognormal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the longterm expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table. Asset class Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks Total Target allocation 30.00% 39.80% 3.70% 1.50% 19.40% 5.60% 100.00% Long-term expected real rate of return* (0.50)% 9.00% 12.00% 13.50% 8.00% 12.00% * Rates shown are net of the 2.75% assumed rate of inflation Discount rate: The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that Plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current Plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. - 33 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 14: RETIREMENT PLANS (Continued) EXHIBIT "H" Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) Sensitivity of the School District's proportionate share of the net pension liability to changes in the discount rate: The following presents the School District's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the School District's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate: School District's proportionate share of the net pension liability 1% Decrease (6.50%) $ 197,402,924 Current discount rate (7.50%) $ 118,255,880 1% Increase (8.50%) $ 53,034,687 Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS financial report which is publicly available at www.trsga.com/publications. - 34 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 14: RETIREMENT PLANS (Continued) EXHIBIT "H" GENERAL INFORMATION ABOUT THE PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS) Plan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs. Benefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service. Upon retirement, the member will receive a monthly benefit of $15.00, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits. Contributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution was $212,907. At June 30, 2019, the School District did not have a liability for a proportionate share of the net pension liability because of the related State of Georgia support. The amount of the State's proportionate share of the net pension liability associated with the School District is as follows: State of Georgia's proportionate share of the Net Pension Liability associated with the School District $ 1,256,874 - 35 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 14: RETIREMENT PLANS (Continued) Pension Liabilities and Pension Expense The net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2017. An expected total pension liability as of June 30, 2018 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2018. For the year ended June 30, 2019, the School District recognized pension expense of $291,012 and revenue of $291,012 for support provided by the State of Georgia. Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increase Investment rate of return 2.75% N/A 7.30%, net of pension plan investment expense, including inflation Post-retirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) for the period after service retirements and for dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 9-11% less than expected under the selected table for disabled retirees. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014. The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the table at the top of the following page. - 36 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 14: RETIREMENT PLANS (Continued) EXHIBIT "H" Pension Liabilities and Pension Expense (Continued) Asset class Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks Alternatives Total Rates shown are net of the 2.75% assumed rate of * inflation Target allocation 30.00% 37.20% 3.40% 1.40% 17.80% 5.20% 5.00% 100.00% Long-term expected real rate of return* (0.50)% 9.00% 12.00% 13.50% 8.00% 12.00% 10.50% Discount rate: The discount rate used to measure the total pension liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that Plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current Plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued PSERS financial report which is publicly available at www.ers.ga.gov/formspubs/. GENERAL INFORMATION ABOUT THE EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (ERS) Plan description: ERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1949 for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. ERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs. - 37 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 14: RETIREMENT PLANS (Continued) EXHIBIT "H" Benefits provided: The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the Old Plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009, are New Plan members subject to modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their memberships to GSEPS. General Information About the Employees' Retirement System of Georgia (ERS) Under the Old Plan, New Plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60. Retirement benefits paid to members are based upon the monthly average of the member's highest 24 consecutive calendar months of salary, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor. Annually, post-retirement cost-of-living adjustments may also be made to members' benefits, provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS. Contributions: Member contributions under the Old Plan are 4% of annual compensation up to $4,200 plus 6% of annual compensation in excess of $4,200. Under the Old Plan, the state pays member contributions in excess of 1.25% of annual compensation. Under the Old Plan, these state contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the New Plan and GSEPS are 1.25% of annual compensation. The School District's contractually required contribution rate, actuarially determined annually, for the year ended June 30, 2019 was 24.78% of annual covered payroll for the old and new plan members and 21.78% for GSEPS members. The rates include the annual actuarially determined employer contribution rate of 24.66% of annual covered payroll of new and old plan members and 21.66% for GSEPS members, plus a 0.12% adjustment for the HB 751 onetime benefit adjustment of 3% to retired state employees. The School District's contributions to ERS totaled $14,601 for the year ended June 30, 2019. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. - 38 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 14: RETIREMENT PLANS (Continued) EXHIBIT "H" Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2019, the School District reported a liability for its proportionate share of the net pension liability in the amount of $91,594. The net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2017. An expected total pension liability as of June 30, 2018 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to ERS during the fiscal year ended June 30, 2018. At June 30, 2018, the School District's proportion was 0.002228%, which was an increase of 0.000108% from its proportion measured as of June 30, 2017. For the year ended June 30, 2019, the School District recognized pension expense of $14,117. At June 30, 2019, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Net difference between projected and actual earnings on pension plan investments Deferred Outflows of Resources Deferred Inflows of Resources $ - $ 2,111 Changes of assumption 4,315 - Differences between expected and actual experience 2,849 - Changes in proportion and differences between School District contributions and proportionate share of contributions 2,962 - School District contributions subsequent to the measurement date 14,601 - Total $ 24,727 $ 2,111 School District contributions subsequent to the measurement date of $14,601 are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as shown in the table at the top of the following page. - 39 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 14: RETIREMENT PLANS (Continued) EXHIBIT "H" Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) Year ended June 30: 2020 2021 2022 2023 $ 8,846 3,621 (3,509) (943) Total $ 8,015 Actuarial assumptions: The total pension liability as of June 30, 2018 was determined by an actuarial valuation as of June 30, 2017 using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increase Investment rate of return 2.75% 3.25 - 7.00%, average, including inflation 7.50%, net of pension plan investment expense, including inflation Post-retirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward 2 years for both males and females) for the period after service retirements and for dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set back 7 years for males and set forward 3 years for females) was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-12% less than the actual number of deaths that occurred during the study period for service retirements and beneficiaries and for disability retirements. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. These mortality tables utilized represent changes from tables used in the prior valuation. The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014. The long-term expected rate of return on pension plan investments was determined using a lognormal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of inflation) are developed for each major asset class. The ranges are combined to produce the longterm expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. - 40 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 14: RETIREMENT PLANS (Continued) EXHIBIT "H" Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset class Target allocation Long-term expected real rate of return* Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks Alternative 30.00% 37.20% 3.40% 1.40% 17.80% 5.20% 5.00% (0.50)% 9.00% 12.00% 13.50% 8.00% 12.00% 10.50% Total 100.00% * Rates shown are net of the 2.75% assumed rate of inflation Discount rate: The discount rate used to measure the total pension liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current Plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the School District's proportionate share of the net pension liability to changes in the discount rate: The following represents the School District's proportionate share of the net pension liability calculated using the discount rate of 7.30%, as well as what the School District's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.30%) of 1-percentage-point higher (8.30%) than the current rate: School District's proportionate share of the net pension liability 1% Decrease (6.30%) $ 130,279 Current discount rate (7.30%) $ 91,594 1% Increase (8.30%) $ 58,633 - 41 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 14: RETIREMENT PLANS (Continued) EXHIBIT "H" Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued ERS financial report which is publically available at www.ers.ga.gov/formspubs/formspubs. Note 15: OTHER POSTEMPLOYMENT BENEFITS GEORGIA SCHOOL EMPLOYEES POSTEMPLOYMENT BENEFIT FUND Plan Description: Certified teachers and non-certified employees of the School District as defined in 20-2-875 of the Official Code of Georgia Annotated (O.C.G.A.) are provided OPEB through the School OPEB Fund - a cost-sharing multiple-employer defined benefit postemployment healthcare plan, reported as an employee trust fund of the State of Georgia and administered by a Board of Community Health (DCH Board). Title 20 of the O.C.G.A. assigns the authority to establish and amend the benefit terms of the group health plan to the DCH Board. Benefits: The School OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for public school teachers, including librarians, other certified employees of public schools, regional educational service agencies, and non-certified public school employees. Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from Employees' Retirement System (ERS), Georgia Judicial Retirement System (JRS), Legislative Retirement System (LRS), Teachers Retirement System (TRS) or Public School Employees Retirement System (PSERS). If elected, dependent coverage starts on the same day as retiree coverage. Medicare-eligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The School OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the School OPEB Fund is permitted. Contributions. As established by the Board of Community Health, the School OPEB Fund is substantially funded on a pay-as-you-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. Contributions required and made to the School OPEB Fund from the School District were $4,326,036 for the year ended June 30, 2019. Active employees are not required to contribute to the School OPEB Fund. - 42 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 15: POSTEMPLOYMENT BENEFITS (Continued) GEORGIA SCHOOL EMPLOYEES POSTEMPLOYMENT BENEFIT FUND (Continued) OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB At June 30, 2019, the School District reported a liability of $101,279,605 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2018. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2017. An expected total OPEB liability as of June 30, 2018 was determined using standard roll-forward techniques. The School District's proportion of the net OPEB liability was actuarially determined based on employer contributions to the State OPEB Fund during the fiscal year ended June 30, 2018. At June 30 2018, the School District's proportion was 0.796869%, which was an increase of 0.008139% from its proportion measured as of June 30, 2017. For the year ended June 30, 2019, the School District recognized OPEB expense of $4,692,244. At June 30, 2019, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Net difference between projected and actual earnings on pension plan investments $ 137,031 $ - Changes of assumption - 17,157,252 Differences between expected and actual experience - 2,303,713 Changes in proportion and differences between School District contributions and proportionate share of contributions 2,057,324 - School District contributions subsequent to the measurement date 4,326,036 - Total $ 6,520,391 $ 19,460,965 - 43 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 15: POSTEMPLOYMENT BENEFITS (Continued) EXHIBIT "H" OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued) School District contributions subsequent to the measurement date of $4,326,036 are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year ended June 30: 2020 2021 2022 2023 2024 2025 $ (3,340,727) (3,340,727) (3,340,727) (3,348,914) (2,800,344) (1,095,171) Total $ (17,266,610) Actuarial assumptions: The total OPEB liability as of June 30, 2018 was determined by an actuarial valuation as of June 30, 2017 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2018: Inflation Salary increases Long-term expected rate of return Healthcare cost trend rate: Pre-Medicare Eligible Medicare Eligible Ultimate trend rate Pre-Medicare Eligible Medicare Eligible Year of Ultimate trend rate Pre-Medicare Eligible Medicare Eligible 2.75% 3.25 9.00%, including inflation 7.3%, compounded annually, net of investment expense, and including inflation 7.50% 5.50% 4.75% 4.75% 2028 2022 - 44 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 15: POSTEMPLOYMENT BENEFITS (Continued) EXHIBIT "H" OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued) Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows: For TRS Members: The RP-2000 White Collar Mortality Table projected to 2025 with projection scale BB (set forward 1 year for males) was used for death after service retirement and beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 2 years for males and four years for females) was used for death after disability retirement. For PSERS Members: The RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) is used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for the period after disability retirement. The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the pension system, which covered the five-year period ending June 30, 2014. The remaining assumptions (eg., initial per capita costs, healthcare cost trends, rate of plan participation, rate of plan election, etc.) used in the June 30, 2017 valuation were based on a review of recent plan experience done concurrently with the June 30, 2017 valuation. Projection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the District and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation. Additionally, there was a change that affected measurement of the total OPEB liability since the prior measurement date. The methodology used to determine employee and retiree participation in the School OPEB Fund is based on their current or last employer payroll location. Current and former employees of public school districts, libraries, regional educational service agencies, and community colleges are allocated to the School OPEB Fund irrespective of retirement system affiliation. - 45 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 EXHIBIT "H" Note 15: POSTEMPLOYMENT BENEFITS (Continued) OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued) The long-term expected rate of return on OPEB plan investments was determined using a log- normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. During fiscal year 2018, the School OPEB fund updated their investment strategy to a more long-term approach. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset class Target allocation Long-term expected real rate of return* Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks Alternative 30.00% 37.20% 3.40% 1.40% 17.80% 5.20% 5.00% (0.50)% 9.00% 12.00% 13.50% 8.00% 12.00% 10.50% Total 100.00% Rates shown are net of the 2.75% assumed rate of * inflation Discount rate: The discount rate has changed since the prior measurement date from 3.58% to 3.87%. In order to measure the total OPEB liability for the School OPEB Fund, a single equivalent interest rate of 3.87% was used as the discount rate. This is comprised mainly of the yield or index rate for 20 year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.87% per the Bond Buyer Index). The projection of cash flows used to determine the discount rate assumed that the current sharing of costs between the employer and the member will continue and that contributions from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2118. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2018. Therefore, the calculated discount rate of 3.87% was applied to all periods of projected benefit payments to determine the total OPEB liability. - 46 - CARROLL COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018 Note 15: POSTEMPLOYMENT BENEFITS (Continued) EXHIBIT "H" Sensitivity of the School District's proportionate share of the net OPEB liability to changes in the discount rate: The following presents the School District's proportionate share of the net OPEB liability calculated using the discount rate of 3.87%, as well as what the School District's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1percentage-point lower (2.87%) or 1-percentage-point higher (4.87%) than the current rate: School District's proportionate share of the net pension liability 1% Decrease (2.87%) $ 118,262,822 Current discount rate (3.87%) $ 101,279,605 1% Increase (4.87%) $ 87,584,416 The following presents the School District's proportionate share of the net OPEB liability, as well as what the School District's proportionate share of the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current healthcare trend rates: School District's proportionate share of the net pension liability 1% Decrease $ 85,146,578 Current Healthcare cost trend rate 1% Increase $ 101,279,605 $ 121,897,017 OPEB plan fiduciary net position: Detailed information about the OPEB plan's fiduciary net position is available in the Comprehensive Annual Financial Report (CAFR) which is publicly available at https://sao.georgia.gov/comprehensive-annual-financial-reports. - 47 - (This page left intentionally blank) CARROLL COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA FOR THE FISCAL YEAR ENDED JUNE 30 SCHEDULE "1" School District's proportion of the net pension liability 2019 0.637081% 2018 0.637399% 2017 0.634764% 2016 0.649976% School District's proportionate share of the net pension liability $ 118,255,880 $ 118,462,567 $ 130,958,891 $ 98,952,392 State of Georgia's proportionate share of the net pension liability associated with the School District 228,686 310,746 416,542 313,767 Total $ 118,484,566 $ 118,773,313 $ 131,375,433 $ 99,266,159 School District's covered payroll $ 76,050,750 $ 73,485,904 $ 69,847,647 $ 69,666,236 School District's proportionate share of the net pension liability as a percentage of its covered payroll 155.50% 161.20% 187.49% 142.04% Plan fiduciary net position as a percentage of the total pension liability 80.27% 79.33% 76.06% 81.44% School District's proportion of the net pension liability 2015 0.659656% School District's proportionate share of the net pension liability $ 83,338,835 State of Georgia's proportionate share of the net pension liability associated with the School District 341,109 Total $ 83,679,944 School District's covered payroll $ 68,777,850 School District's proportionate share of the net pension liability as a percentage of its covered payroll 121.17% Plan fiduciary net position as a percentage of the total pension liability 84.03% Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available. - 49 - CARROLL COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA FOR THE FISCAL YEAR ENDED JUNE 30 SCHEDULE "2" Contractually required contributions 2019 2018 2017 2016 2015 (1) $ 16,119,714 $ 12,759,460 $ 10,459,050 $ 9,935,661 $ 9,161,110 Contributions in relation to the contractually required contributions 16,119,714 12,759,460 10,459,050 9,935,661 9,161,110 Contribution deficiency (excess) $ - $ - $ - $ - $ - School District's covered payroll $ 77,274,964 $ 76,050,750 $ 73,485,904 $ 69,847,647 $ 69,666,236 Contributions as a percentage of covered payroll 20.86% 16.78% 14.23% 14.22% 13.15% Contractually required contributions 2014 (1) 2013 (1) 2012 (1) 2011 (1) 2010 (1) $ 8,445,920 $ 7,862,272 $ 7,209,297 $ 7,431,613 $ 7,232,354 Contributions in relation to the contractually required contributions 8,445,920 7,862,272 7,209,297 7,431,613 7,232,354 Contribution deficiency (excess) $ - $ - $ - $ - $ - School District's covered payroll $ 68,777,850 $ 68,906,854 $ 70,129,348 $ 72,291,955 $ 74,254,148 Contributions as a percentage of covered payroll 12.28% 11.41% 10.28% 10.28% 9.74% (1) The contractually required contribution amount includes amounts paid by the State of Georgia on behalf of Carroll County Board of Education. - 50 - CARROLL COUNTY BOARD OF EDUCATION Notes to the Required Supplementary Information Teachers Retirement System of Georgia For the Fiscal Year Ended June 30, 2019 SCHEDULE "3" Changes of assumptions: On November 18, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. The expectation of retired life mortality was changed to RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males). In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience. - 51 - CARROLL COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA FOR THE FISCAL YEAR ENDED JUNE 30 SCHEDULE "4" School District's proportion of the net pension liability School District's proportionate share of the net pension liability School District's covered payroll School District's proportionate share of the net pension liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability School District's proportion of the net pension liability School District's proportionate share of the net pension liability School District's covered payroll School District's proportionate share of the net pension liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability 2019 0.002228% 2018 0.002120% 2017 0.002090% 2016 0.001944% $ 91,594 $ 86,100 $ 98,866 $ 78,759 $ 56,841 $ 52,006 $ 48,589 $ 44,442 161.14% 76.68% 2015 0.003023% $ 113,381 $ 64,837 165.56% 76.33% 203.47% 72.34% 177.22% 76.20% 174.87% 77.99% Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available. - 52 - CARROLL COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA FOR THE FISCAL YEAR ENDED JUNE 30 SCHEDULE "5" Contractually required contributions Contributions in relation to the contractually required contributions Contribution deficiency (excess) School District's covered payroll Contributions as a percentage of covered payroll Contractually required contributions Contributions in relation to the contractually required contributions Contribution deficiency (excess) School District's covered payroll Contributions as a percentage of covered payroll 2019 2018 2017 2016 2015 $ 14,601 $ 14,102 $ 12,903 $ 12,011 $ 9,759 14,601 14,102 12,903 12,011 9,759 $ - $ - $ - $ - $ - $ 58,921 $ 56,841 $ 52,006 $ 48,589 $ 44,442 24.78% 24.81% 24.81% 24.72% 21.96% 2014 2013 2012 2011 2010 $ 11,969 $ 24,769 $ 23,574 $ 21,315 $ 22,459 11,969 24,769 23,574 21,315 22,459 $ - $ - $ - $ - $ - $ 64,837 $ 166,236 $ 202,706 $ 204,753 $ 215,740 18.46% 14.90% 11.63% 10.41% 10.41% - 53 - CARROLL COUNTY BOARD OF EDUCATION Notes to the Required Supplementary Information Employees' Retirement System of Georgia For the Fiscal Year Ended June 30, 2019 SCHEDULE "6" Changes of benefit terms: A new benefit tier was added for members joining the System on and after July 1, 2009. A one-time 3% payment was granted to certain retirees and beneficiaries effective July 2016. A one-time 3% payment was granted to certain retirees and beneficiaries effective July 2017. Changes of assumptions: On March 15, 2018, the Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. - 54 - CARROLL COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM OF GEORGIA FOR THE FISCAL YEAR ENDED JUNE 30 SCHEDULE "7" School District's proportion of the net pension liability 2019 0.000000% 2018 0.000000% 2017 0.000000% 2016 0.000000% School District's proportionate share of the net pension liability $ - $ - $ - $ - State of Georgia's proportionate share of the net pension liability associated with the School District 1,256,874 1,074,167 1,481,491 953,607 Total $ 1,256,874 $ 1,074,167 $ 1,481,491 $ 953,607 School District's covered payroll School District's proportionate share of the net pension liability as a percentage of its covered payroll $ 3,059,371 $ 3,014,963 N/A N/A $ 2,906,131 N/A $ 2,863,749 N/A Plan fiduciary net position as a percentage of the total pension liability 85.26% 85.69% 81.00% 87.00% School District's proportion of the net pension liability 2015 0.000000% School District's proportionate share of the net pension liability State of Georgia's proportionate share of the net pension liability associated with the School District $ - 850,673 Total $ 850,673 School District's covered payroll School District's proportionate share of the net pension liability as a percentage of its covered payroll $ 2,843,546 N/A Plan fiduciary net position as a percentage of the total pension liability 88.29% Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available. - 55 - CARROLL COUNTY BOARD OF EDUCATION Notes to the Required Supplementary Information Public School Employees Retirement System of Georgia For the Fiscal Year Ended June 30, 2019 SCHEDULE "8" Changes of assumptions: On March 15, 2018, the Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for June 30, 2017 actuarial valuation. In addition, based on the Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date. On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement and withdrawal. The expectation of retired life mortality was changed to the RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females). In 2010 and later, the expectation of retired life mortality was changed to the RP-2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. - 56 - CARROLL COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET OPEB LIABILITY OTHER POST-EMPLOYMENT BENEFITS FOR THE FISCAL YEAR ENDED JUNE 30 SCHEDULE "9" School District's proportion of the net OPEB liability School District's proportionate share of the net OPEB liability School District's covered payroll School District's proportionate share of the net OPEB liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total OPEB liability 2019 0.796869% 2018 0.788730% $ 101,279,605 $ 110,816,247 $ 62,400,929 $ 59,203,218 162.30% 2.93% 187.18% 1.61% Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available. - 57 - CARROLL COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CONTRIBUTIONS OTHER POST-EMPLOYMENT BENEFITS FOR THE FISCAL YEAR ENDED JUNE 30 SCHEDULE "10" Contractually required contributions Contributions in relation to the contractually required contributions Contribution deficiency (excess) School District's covered payroll Contributions as a percentage of covered payroll 2019 2018 2017 $ 4,326,036 $ 4,130,093 $ 4,112,501 4,326,036 4,130,093 4,112,501 $ - $ - $ - $ 64,025,584 $ 62,400,929 $ 59,203,219 6.76% 6.62% 6.95% Schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available. - 58 - CARROLL COUNTY BOARD OF EDUCATION Notes to the Required Supplementary Information Other Post-Employment Benefits For the Fiscal Year Ended June 30, 2019 SCHEDULE "11" Changes of benefit terms: There have been no changes in benefit terms. Changes of assumptions: June 30, 2017 valuation: the June 30, 2017 actuarial valuation was revised, for various factors, including the methodology used to determine how employees and retirees were assigned to each of the OPEB Funds and anticipated participation percentages. Current and former employees of State organizations (including technical colleges, community service boards and public health departments) are now assigned to the State OPEB fund based on their last employer payroll location: irrespective of retirement affiliation. The discount rate was updated from 3.58% as of June 30, 2017 to 3.87% as of June 30, 2018. - 59 - CARROLL COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2019 SCHEDULE "12" REVENUES Property taxes Other taxes State funds Federal funds Charges for services Investment earnings Miscellaneous Budget Original (1) Final (1) $ 34,165,000 $ 1,350,000 94,268,092 15,737,380 1,767,271 125,000 179,750 34,965,000 $ 1,350,000 95,900,898 16,649,907 1,767,271 125,000 388,903 Actual Variance With Final Budget 36,227,734 $ 1,214,920 95,391,832 15,415,219 5,193,878 303,360 1,734,284 1,262,734 (135,080) (509,066) (1,234,688) 3,426,607 178,360 1,345,381 Total revenues 147,592,493 151,146,979 155,481,227 4,334,248 EXPENDITURES Current: Instruction Support services: Pupil services Improvement of instructional services Educational media services Instructional staff training Federal grant administration General administration School administration Business administration Maintenance and operation of facilities Student transportation services Central support services Other support services Food services operation Community services operation Capital outlay Debt service: Principal retirement Interest and fiscal charges 96,117,493 5,138,691 1,909,218 2,329,327 798,821 583,071 1,009,381 10,858,582 1,072,772 10,230,274 8,438,854 864,113 540,921 9,273,901 85,000 - 96,721,850 5,523,997 2,000,363 2,330,796 990,994 635,120 1,010,840 10,829,982 1,072,772 11,689,055 8,713,087 879,113 769,221 9,298,901 1,235,000 - 99,130,704 5,260,602 2,061,434 2,296,921 806,653 554,732 1,816,818 10,649,245 961,544 12,574,372 8,677,839 880,427 711,346 9,064,598 510,819 493,037 411,646 34,556 (2,408,854) 263,395 (61,071) 33,875 184,341 80,388 (805,978) 180,737 111,228 (885,317) 35,248 (1,314) 57,875 234,303 (510,819) 741,963 (411,646) (34,556) Total expenditures 149,250,419 153,701,091 156,897,293 (3,196,202) Excess of revenues over expenditures (1,657,926) (2,554,112) (1,416,066) 1,138,046 OTHER FINANCING SOURCES (USES) Transfers in Transfers out Long-term license agreements 810,000 (810,000) 120,000 850,051 (850,051) 120,000 201,439 (850,051) 850,051 81,439 Total other financing sources (uses) 120,000 120,000 201,439 81,439 Net change in fund balances (1,537,926) (2,434,112) (1,214,627) 1,219,485 FUND BALANCE, beginning of year 22,456,631 22,456,631 22,456,631 - FUND BALANCE, end of year $ 20,918,705 $ 20,022,519 $ 21,242,004 $ 1,219,485 Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget to 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 balance budget and actual includes the Original and Final Budget that is presented on a basis other than accounting principles generally accepted in the United States of America (GAAP) as allowed by the State of Georgia. The primary differences between the budget basis and GAAP for fund financial statements include salary and benefit expenditures that are recorded on the budget when paid rather than when the liability is incurred and state revenues recorded on the budget when received rather than when earned. See notes to the basic financial statements. - 60 - CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 SCHEDULE "13" 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 - Cash After School Snacks National School Lunch Program - Commodities (1) Total Child Nutrition Cluster Child Nutrition Discretionary Grants Limited Availability Natural Resources Conservation Service Direct Environmental Quality Incentives Program Total U. S. Department of Agriculture Education, U. S. Department of Direct Investing in Innovation (i3) Fund Education for Homeless Children and Youth Cluster Pass-Through From Georgia Department of Education Education for Homeless Children and Youth Special Education Cluster Pass-Through From Georgia Department of Education Special Education Title VI-B Flow through Title VI-B Flow through High Cost Fund Pool Preschool Grants Preschool Grants Total Special Education Cluster Title I, Part A Pass-Through From Georgia Department of Education Title I - Improving the Academic Achievement of the Disadvantaged Title I - Improving the Academic Achievement of the Disadvantaged Title I - School Improvement Total Title I, Part A CFDA Number PassThrough Entity ID Number Total Expenditures 10.553 10.555 10.555 10.555 19185GA324N1099 $ 19185GA324N1100 19185GA324N1100 19185GA324N1100 10.579 185GA350N8103 1,691,812 4,374,521 188,948 725,090 6,980,371 8,795 10.912 N/A 128,300 7,117,466 84.411 N/A 1,857 84.196 S196A180011 50,787 84.027 84.027 84.027 84.173 84.173 H027A170073 H027A180073 H027A180073 H173A170081 H173A180081 84.010 84.010 84.010 S010A170010 S010A180010 S010A180010 390,193 2,175,473 20,467 10,545 101,684 2,698,362 200,706 4,202,444 14,042 4,417,192 continued See notes to the basic financial statements. - 61 - CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 SCHEDULE "13" Funding Agency Program/Grant CFDA Number PassThrough Entity ID Number Total Expenditures Education, U. S. Department of Title II Pass-Through From Georgia Department of Education Title II-A, Improving Teacher Quality Title II-A, Improving Teacher Quality Title II-A, Advanced Placement Grants 84.367 84.367 84.367 S367A170001 $ S367A180001 S367A180001 136,334 371,982 3,400 Total Title II 511,716 Title III Pass-Through From Georgia Department of Education Title III-A, Limited English Proficient Title III-A, Limited English Proficient Title III-A, Immigrant Title III-A, Immigrant 84.365 84.365 84.365 84.365 S365A170010 S365A180010 S365A170010 S365A180010 2,251 39,775 9 2,443 Total Title III 44,478 Title IV Pass-Through From Georgia Department of Education Title IV-Part A, Student Support and Academic Achievement Title IV-Part A, Student Support and Academic Achievement 84.424 84.424 S424A170011 S424A180011 46,861 280,141 Total Title IV 327,002 Vocational Education - Basic Grants to States Pass-Through From Georgia Department of Education CTAE - Perkins Plus Reserve CTE - Perkins IV Grants - Program Improvement CTE - Perkins IV Grants 84.048 84.048 84.048 V048A180010 V048A180010 V048A180010 20,000 126,389 7,404 Total Vocational Education - Basic Grants to States 153,793 Total U. S. Department of Education 8,205,187 Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program 12.Unknown N/A 67,419 Total Expenditures of Federal Awards $ 15,390,072 N/A = Not Available Notes to the Schedule of Expenditures of Federal Awards (1) The amounts shown for the Food Donation Program represent the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year. (2) The School District did not provide Federal Assistance to any Subrecipient. (3) The School District did not utilize the 10% de minimis indirect cost rate. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements of Federal Awards . Therefore, some amounts in this schedule may differ from amounts presented in, or used in the preparation of the financial statements. See notes to the basic financial statements. - 62 - CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE FOR THE FISCAL YEAR ENDED JUNE 30, 2019 SCHEDULE "14" 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 School (6-8) Program High School General Education (9-12) Program Career Technical and Agricultural Education Program (9-12) Students with Disabilities Gifted Students - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program Twenty Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Nursing Services Vocational Supervisors Education Equalization Funding Grant Food Services Career, Technical, and Agricultural Education Amended Formula Adjustment Preschool Handicapped State Grant Teachers Retirement Office of Treasury and Fiscal Services Public School Employees Retirement Grants from Pre-K Lottery Georgia Pre-Kindergarten Program Other Grants From Georgia Department of Education Student Achievement Grant Technology To Support Digital Learning Bonds Pupil Transportation - State Bonds Residential Treatment Center Grants Math and Science Supplement Funds From Other State Agencies Family Connection - DHR Grants Other Capital Outlay Grants Governmental Fund Types Capital General Projects Fund Fund Total $ 3,046,396 $ 2,394,402 8,939,303 4,424,559 4,503,641 2,780,474 8,383,795 7,851,383 2,905,925 14,529,089 4,947,726 1,278,477 636,565 583,798 1,684,510 492,894 311,851 6,495 1,903,117 3,568,992 3,857,005 1,563,718 303,255 28,598 9,957,877 214,952 410,996 (791,910) 251,596 29,810 212,907 2,347,799 428,629 27,429 308,880 811,555 83,628 50,000 121,716 $ 95,391,832 $ - $ - - - 3,046,396 2,394,402 8,939,303 4,424,559 4,503,641 2,780,474 8,383,795 7,851,383 2,905,925 14,529,089 4,947,726 1,278,477 636,565 583,798 1,684,510 492,894 311,851 6,495 1,903,117 3,568,992 3,857,005 1,563,718 303,255 28,598 9,957,877 214,952 410,996 (791,910) 251,596 29,810 - 212,907 - 2,347,799 - 428,629 - 27,429 - 308,880 - 811,555 - 83,628 - 50,000 287,686 287,686 $ 409,402 95,679,518 See notes to the basic financial statements. - 63 - (This page left intentionally blank) CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2019 SCHEDULE "15" Project SPLOST 2016 BOWDON CLUSTER PROJECTS BOWDON HIGH SCHOOL - Renovations and modifications of classrooms; multi-purpose addition; tennis court restrooms; turf for football field (Tier II). $ BOWDON MIDDLE SCHOOL - Parking lot repairs and improvements; new tennis courts. BOWDON ELEMENTARY SCHOOL - Renovations and modifications of classrooms. OTHER - Technology equipment and upgrades; band, fine arts, and other equipment/improvements. CENTRAL CLUSTER PROJECTS CENTRAL HIGH SCHOOL - Gymnasium renovations and modifications; stadium renovations and modifications; fieldhouse expansion; turf for football field (Tier II). CENTRAL MIDDLE SCHOOL - Car rider canopy; parking lot renovations and improvements; new tennis courts; four classroom addition (Tier II). CENTRAL ELEMENTARY SCHOOL - New gymnasium and music room. ROOPVILLE ELEMENTARY SCHOOL - New gymnasium and with connector hall. WHITESBURG ELEMENTARY SCHOOL - Parking lot repairs and improvements. OTHER - Technology equipment and upgrades; band, fine arts, and other equipment/improvements. MOUNT ZION CLUSTER PROJECTS MOUNT ZION HIGH SCHOOL - Multi-purpose addition; football field turf (Tier II). MOUNT ZION MIDDLE SCHOOL - Front canopy; parking lot repairs and improvements; interior renovations; new tennis courts. MOUNT ZION ELEMENTARY SCHOOL - Parking lot repairs and improvements. OTHER - Technology equipment and upgrades; band, fine arts, and other equipment/improvements. TEMPLE CLUSTER PROJECTS TEMPLE HIGH SCHOOL - Stadium and field renovations and modifications (turf for football field); renovations and modifications of classrooms. TEMPLE MIDDLE SCHOOL - New concession stand; renovations of classrooms; new tennis courts; four classroom addition (Tier II). TEMPLE ELEMENTARY SCHOOL - Renovations and modifications of classrooms. PROVIDENCE ELEMENTARY SCHOOL - Parking lot repair and improvements; four classroom addition (Tier II). SHARP CREEK ELEMENTARY SCHOOL - Gymnasium modifications and renovations. OTHER - Technology equipment and upgrades; band, fine arts, and other equipment/improvements. VILLA RICA CLUSTER PROJECTS VILLA RICA HIGH SCHOOL - Dining room modifications and renovations; front office modifications and renovations; fieldhouse expansion; classroom modifications and renovations; three-classroom addition (Tier II); turf for football field (Tier II). BAY SPRINGS MIDDLE SCHOOL - Band room expansion; renovations of classrooms; new tennis courts. VILLA RICA MIDDLE SCHOOL - New concession stand; renovations of classrooms; new tennis courts. GLANTON HINDSMAN ELEMENTARY SCHOOL - Two new connector halls; four classroom addition (Tier II). ITHICA ELEMENTARY SCHOOL - Parking lot repairs and improvements; four classroom addition (Tier II). SAND HILL ELEMENTARY SCHOOL - Two classroom addition; dining room addition; four classroom addition (Tier II). VILLA RICA ELEMENTARY SCHOOL - Renovations and modifications of classrooms; new connector hall. OTHER - Technology equipment and upgrades; band, fine arts, and other equipment/improvements. OTHER PROJECTS COLLEGE AND CAREER ACADEMY - CCA North-Phase II; CCA technology and equipment. PERFORMING ARTS CENTER - Performing Arts Center Phase II (meeting rooms and office space). SYSTEM-WIDE - Replacing, purchasing, upgrading, or supplementing capital equipment to include, but not limited to, school buses, tractors, trucks, furnishings, laboratory, physical education, athletic, band, fine arts, safety, security, or other equipment; books and other instructional equipment; energy efficiency upgrades and acquisition of energy savings project equipment currently being leased; renovations and improvements to facilities and acquisition of land and construction of new schools and facilities as needed: DEBT SERVICE BOND/ DEBT SERVICE FEES Original Estimated Cost(1) 1,435,870 $ 128,150 852,786 332,334 2,821,518 941,150 1,811,615 1,700,650 25,000 747,268 1,055,123 350,650 25,000 302,605 1,935,000 866,150 1,780,880 713,000 175,000 536,370 3,456,414 302,525 178,150 837,292 713,000 1,376,000 1,241,074 999,854 3,076,345 2,984,744 6,403,733 31,698,750 1,990,000 Current Estimated Costs(2) Amount Expended In Current Year (3) Amount Expended In Prior Years (3) Total Completion Cost Excess Proceeds Not Expended 993,587 $ - $ 493,587 $ - $ - 128,150 - - - - 1,248,705 304,620 - - - 332,334 39,181 86,077 - - 2,918,422 - 2,918,422 2,918,422 - 941,150 38,635 - - - 2,247,154 - 2,247,154 2,247,154 - 2,171,616 - 2,171,616 2,171,616 - 25,000 - - - - 747,268 40,940 224,076 - - 1,380,744 - 880,744 - - 350,650 37,792 - - - 25,000 - - - - 302,605 39,430 111,923 - - 2,581,701 431,782 2,024,919 - - 866,150 - - - - 1,468,060 - 1,468,060 1,468,060 - 713,000 - - - - 73,228 - 73,228 73,228 - 536,370 71,303 186,086 - - 3,125,410 686,946 1,542,409 - - 1,421,500 - - - - 178,150 - - - - 837,292 - - - - 713,000 69,140 - - - 1,376,000 - - - - 1,241,074 - - - - 999,854 92,193 306,969 - - 3,076,345 12,260 329,741 - - 9,199,586 - 9,199,586 9,199,586 - 6,403,733 726,705 115,290 - - 31,698,750 6,595,000 - - - 1,990,000 2,177 403,335 - - Estimated Completion Date Fiscal Year 2020 Fiscal Year 2023 Fiscal Year 2020 Fiscal Year 2023 Completed Fiscal Year 2020 Completed Completed Fiscal Year 2023 Fiscal Year 2023 Fiscal Year 2020 Fiscal Year 2020 Fiscal Year 2023 Fiscal Year 2023 Fiscal Year 2020 Fiscal Year 2023 Completed Fiscal Year 2023 Completed Fiscal Year 2023 Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2023 Fiscal Year 2023 Fiscal Year 2023 Fiscal Year 2023 Fiscal Year 2023 Completed Fiscal Year 2023 Fiscal Year 2023 Fiscal Year 2023 $ 73,794,000 $ 82,311,588 $ 9,188,104 $ 24,783,222 $ 18,078,066 $ - (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. - 65 - SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS Greg S. Griffin STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education and Superintendent and Members of the Carroll County Board of Education We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Carroll County Board of Education (School District), as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements, and have issued our report thereon dated [2]. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the School District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the School District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the 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. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Respectfully submitted, March 30, 2020 Greg S. Griffin State Auditor Greg S. Griffin STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education and Superintendent and Members of the Carroll County Board of Education Report on Compliance for Each Major Federal Program We have audited the Carroll County Board of Education's (School District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2019. The School District's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the School District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 School District'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 on compliance for each major federal program. However, our audit does not provide a legal determination of the School District's compliance. Opinion on Each Major Federal Program In our opinion, the School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2019. Report on Internal Control over Compliance Management of the School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Respectfully submitted, March 30, 2020 Greg S. Griffin State Auditor 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, 2019 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. SECTION IV FINDINGS AND QUESTIONED COSTS CARROLL COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2019 I SUMMARY OF AUDITOR'S RESULTS Financial Statements Type of auditor's report issued: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information Unmodified Internal control over financial reporting: Material weakness identified? Significant deficiency identified? No None Reported Noncompliance material to financial statements noted: No Federal Awards Internal Control over major programs: Material weakness identified? Significant deficiency identified? No None Reported Type of auditor's report issued on compliance for major programs: All major programs Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? No Identification of major programs: CFDA Numbers Name of Federal Program or Cluster 84.010 84.027, 84.173 Title I Grants to Local Educational Agencies Special Education Cluster Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as low-risk auditee? $750,000 No II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.