CATOOSA COUNTY BOARD OF EDUCATION RINGGOLD# GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30# 2008 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS Russell W. Hinton State Auditor CATOOSA COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS EXHIBITS BASIC FINANCIAL STATEMENTS DISTRICT-WIDE FINANCIAL STATEMENTS A STATEMENT OF NET ASSETS 1 B STATEMENT OF ACTIVITIES 2 FUND FINANCIAL STATEMENTS C BALANCE SHEET GOVERNMENTAL FUNDS 4 D RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS 5 E STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 6 F RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES 7 G STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS 8 H NOTES TO THE BASIC FINANCIAL STATEMENTS 9 SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION 1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND 25 CATOOSA COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 26 3 SCHEDULE OF STATE REVENUE 28 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 29 5 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM 31 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 20, 2009 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Catoosa County Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) ofthe Catoosa County Board of Education, as of and for the year ended June 30, 2008, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Catoosa County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Catoosa County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. 2008ARL-11 In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position ofthe governmental activities, each major fund, and the aggregate remaining fund information ofthe Catoosa County Board ofEducation, as ofJune 30, 2008, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated March 20, 2009, on our consideration of the Catoosa County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through x and page 25 respectively, are not a required part ofthe basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Catoosa County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. Respectfully submitted, ~tJ.:&::t;. Russell W. Hinton, CPA, CGFM State Auditor RWH:as 2008ARL-11 CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 INTRODUCTION Our discussion and analysis ofthe Catoosa County School District's financial performance provides an overview ofthe School District's financial activities for the fiscal year ended June 30, 2008. The intent ofthis discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the basic financial statements and the notes to the financial statements to enhance their understanding ofthe School District's financial performance. The basic financial statements contain three components: 1) District-wide financial statements, including the Statement ofNet Assets and the Statement of Activities, which provide a broad, long-term overview of the School District's overall financial status, 2) Fund financial statements, including the Balance Sheet and the Statement of Revenues, Expenditures and Changes in Fund Balance, which provide a greater level of detail of the School District's operations. Fund financial statements reflect the School District's significant funds: General Fund (which includes the general operating fund, special revenue funds and school activity accounts); Capital Project Funds and Debt Service Funds. The Governmental Funds statements disclose how basic services are financed in the short-term and what remains for future spending. The Fiduciary Funds statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others, and 3) Notes to the financial statements. This report presents the financial highlights for the last year and contains other supplementary information. OVERALL ANALYSIS The School District currently serves approximately 10,400 students with a general fund budget of approximately $90.0 million. In generai the financial operations of the School District have remained strong in spite ofexperiencing continuing state revenue reductions. FINANCIAL HIGHLIGHTS Key financial highlights for 2008 are as follows: On the District-wide financial statements: Total net assets ofthe School District increased from $124,986,817 at June 30, 2007, to $132,424,393 at June 30, 2008, an increase of$7,437,576 or 5.95%. Total revenues increased from $111,970,002 in fiscal year 2007 to $112,856,277 in fiscal year 2008, an increase of$886,275 or 0.8%. 1 CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 Total expenses increased from$99,901, 775 in fiscal year 2007 to $105,418,701 in fiscal year 2008, an increase of$5,516,926 or 5.53%. On the fund financial statements: Ending fund balances of the School District decreased from $51,168,613 at June 30, 2007, to $27,726,277 at June 30, 2008, a decrease of$23,442,336, or 45.82%. In the General Fund, unreserved, undesignated fund balance increased from$7,802,191 at June 30, 2007, to $9,837,198 at June 30, 2008, an increaseof$2,035,007, or 20.69%. Total General Fund actual revenues were $3,764,175, or 3.83%, more than budgeted revenues. Total General Fund actual expenditures were $625,293, or 0.63%, less than budgeted expenditures. OVERVIEW OF DISTRICT-WIDE FINANCIAL STATEMENTS The District-wide financial statements are designed to provide readers with a broad overview ofthe School District's finances in a manner similar to a private sector business. The Statement of Net Assets and the Statement of Activities provide information about the School District as a whole, presenting both an aggregate and long-term view ofthe finances. These statements include all assets and liabilities using the actual basis of accounting. This basis of accounting includes all of the current year's revenues and expenses regardless when the cash is received or paid. The Statement ofNet Assets presents information on all ofthe School District's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the School District is improving or diminishing. Causes of the change in net assets are the results of many factors including those not under the control of the School District, such as property tax base, facility conditions, required educational programs, student-teacher ratios and other factors. The Statement ofActivities presents information showing how the School District's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless ofthe timing ofrelated cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes). The District-wide financial statements outline functions of the School District that are principally supported by property taxes and intergovernmental revenues. The governmental activities of the School District include instruction, support services, community services, food services and interest on long-term debt. 11 CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE All ofthe School District's services are reported in the District-wide financial statements, including instruction, pupil services, improvement of instructional services, educational media services, general administration, business administration, school administration, pupil transportation, maintenance and operations, central support services, other support services, food services and interest on long-term debt. Property taxes and operating grants and contributions finance most of these activities. Additionally, all capital and debt financing activities are reported here. Table 1 Net Assets Fiscal Year 2008 Governmental Activities Fiscal Year2007 Change %Change Assets Current and Other Assets Capital Assets, Net $ 43,457,116 $ 67,927,439 $-24,470,323 -36.03% 144.965,219 114,344.997 30,620,222 26.78% Total Assets $188,422.335 $182,272.436 $ 6,149.899 3.38% Liabilities Current and Other Liabilities Long-Term Liabilities $ 15,560,786 $ 16,723,562 $ -1,162,776 40,437,156 40,562,057 -124,901 -6.96% -0.31 % Total Liabilities $ 55,997,942 $ 57,285.619 $ -1.287.677 -2.25% Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted $104,528,063 $ 93,100,724 $11,427,339 16,197,671 22,661,413 -6,463,742 11.698,659 9,224.680 2,473.979 12.28% -28.53% 26.82% Total Net Assets $132,424.393 $124,986.817 $ 7,437,576 5.95% 111 CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 NET ASSETS - JUNE 30, 2008 Unrestricted Assets Invested In Capital Assets, Net Of Related Debt 79% Current Assets decreased, primarily due to a significant decrease in the area ofrestricted cash and investments attributable to expended bond proceeds in the current year. Capital Assets, net of depreciation, increased as a result ofsignificant capital projects, including the ongoing construction of a new high school reported as construction-in-progress. Current Liabilities increased as a result ofincreases in salaries and benefits payable due to current year rate increases in both salaries and benefits. Contractual obligations, contracts and retainages payable, decreased in conjunction with completion or near completion ofongoing capital projects. Long-Term Liabilities are attnbutable to the debt associated with the current outstanding bond issue. iv CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 Table 2 Change in Net Assets Fiscal Year2008 Governmental Activities Fiscal Year2007 Change %Change Revenues: Program Revenues: Charges for Services $ 3,148,580 Operating Grants and Contributions 62,242,104 Capital Grants and Contributions 173,159 General Revenues: Property Taxes 24,667,866 Special Purpose Sales Tax for Capital Projects 9,358,317 Other Taxes 1,598,606 Grants and Contributions not Restricted to Specific Programs 6,409,934 Unrestricted Investment Earnings 1,758,342 Miscellaneous 3,499.369 $ 2,111,927 $ 1,036,653 58,210,807 4,031,297 5,901,944 -5,728,785 22,231,601 2,436,265 9,369,107 1,123,493 -10,790 475,113 5,544,679 2,968,897 4,507,547 865,255 -1,210,555 -1,008.178 49.09% 6.93% -97.07% 10.96% -0.12% 42.29% 15.61% -40.78% -22.37% Total Revenues $112,856.277 $111.970,002 $ 886.275 0.80% Program Expenses: Instruction $ 70,295,241 Support Services 27,925,829 Community Services 645,170 Food Services 4,949,213 Interest and Fees on Long-Term Debt 1,603.248 $ 66,524,424 $ 3,770,817 27,052,354 873,475 496,798 148,372 4,973,446 -24,233 854.753 748.495 5.67% 3,23% 29.87% -0.49% 87.57% Total Expenses $105,418,701 $ 99,901,775 $ 5,516,926 5.53% Change in Net Assets $ 7,437,576 $ 12,068,227 $ -4,630,651 -38.37% Net Assets - Beginning 124,986.817 112.918,590 12,068,227 10.69% Net Assets - Ending $132,4241393 $12419861817 $ 714371576 5.95% OVERVIEW OF FUND FINANCIAL STATEMENTS A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The School District uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. All funds of the School District can be divided into two categories: governmental funds and fiduciary funds. V CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 Governmental funds: are used to account for essentially the same functions reported as governmental activities in the District-wide financial statements. However, unlike the District-wide statements, governmental fund financial statements focus on near-term inflows of spendable resources, as well as on balances ofspendable resources available at the end ofthe fiscal year. Such information may be useful in evaluating the School District's near-term financing requirements. Because the focus of governmental funds is narrower than that of the District-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the District-wide financial statements. By doing so, readers may better understand the long-term impact of the School District's near-term financing decisions. The governmental funds Balance Sheet and the Statement of Revenues, Expenditures and Changes in Fund Balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The School District's fund financial statements provide detailed information about the most significant funds - not the School District as a whole. The majorityofthe School District's services are reported in governmental funds. Governmental fund reporting focuses on showing how money flows into and out offunds and the balances left at year-end that are available for spending. They are reported using modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental funds financial statements provide a detailed short-term view ofthe School District's operations and the services it provides. In accordance with generally accepted accounting principles, the School District maintains many individual governmental funds. Information is presented separately in the governmental funds Balance Sheet and the Statement ofRevenues, Expenditures and Changes in Fund Balances for the General Fund, Capital Projects Fund and the Debt Service Fund, each ofwhich is considered to be a significant or major fund. The School District has no nonmajor funds as described by generally accepted accounting principles Fiduciary Funds: are used to account for those assets belonging to clubs, organizations and others. The School District acts as a trustee, or fiduciary, and as such is responsible for ensuring the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. Fiduciary fund activity is excluded from the District-wide financial statements as these assets cannot be used to finance its operations. REVENUES AND OTHER FINANCING SOURCES -FUND FINANCIAL STATEMENTS The following schedule presents a summary ofthe governmental funds revenues and other financing sources for the period ended June 30, 2008, as compared to June 30, 2007. It depicts both the absolute value and percentage changes in relation to the prior year. vi CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 Property Taxes Sales Taxes State Funds Federal Funds Other Other Financing Sources Total FY2008 $ 25,263,610 10,226,390 61,797,904 7,027,293 8,406,291 $112,121,~88 % of Total 22.41% 9.08% 54.82% 6.24% 7.45% 1QQ,QQ% FY2007 $ Change $ 22,274,536 10,492,600 61,773,397 7,222,985 10,134,926 40,676,550 $ 2,989,074 -266,210 24,507 -195,692 -1,728,635 -40,676,550 $152,574,224 $-32,853,506 %Change 13.42% -2.54% 0.04% -2.71% -17.06% -26.12% EXPENDITURES AND OTHER FINANCING USES-FUND FINANCIAL STATEMENTS The following schedule presents a summary of the governmental funds expenditures and other financing uses for the period ended June 30, 2008, as compared to June 30, 2007. It depicts both the absolute value and percentage changes in relation to the prior year. FY2008 Current Instruction Support Services Pupil Services Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operations Student Transportation Service Central Support Services Other Support Services Community Services Operations Food Services Operations Capital Outlay Debt Services $ 67,617,527 3,491,211 3,060,027 1,865,670 839,127 6,657,770 519,311 6,653,135 3,871,572 458,751 829,030 663,570 4,891,664 33,017,309 1,728,150 Total $136,163,824 %ofTotal FY 2007 $ Change 49.65% $ 64,286,049 $ 3,331,478 2.57% 2.25% 1.37% 0.62% 4.88% 0.39% 4.88% 2.85% 0.34% 0.61% 0.49% 3.59% 24.24% 1.27% 2,811,098 3,669,540 1,759,394 1,078,799 6,543,363 681,643 6,166,022 3,435,601 381,777 594,158 496,798 4,910,676 25,382,891 854,753 680,113 -609,513 106,276 -239,672 114,407 -162,332 487,113 435,971 76,974 234,872 166,772 -19,012 7,634,418 873,397 1Q0,0Q% $123,052,562 $ 13,111,262 %Change 5.19% 24.20% -16.61% 6.04% -22.22% 1.75% -23,82% 7.90% 12.69% 20.17% 39.53% 33.57% -0.39% 30.08% 102.19% 10.66% GENERAL FUND BUDGETARY HIGHLIGHTS The School District's annual budget is prepared on a basis consistent with generally accepted accounting principles. The most significant budgeted fund is the General Fund. During the course ofthe fiscal year, the School District amends its General Fund budget as needed. During fiscal year 2008, the General Fund had actual revenues totaling $102.1 million, which exceeded the original budgeted amounts of$93.1 million by $9.0 million. While Federal revenues were $2.6 million less than the original budgeted amounts, State revenues exceeded the original budget by $4.3 million. In addition, miscellaneous revenues from various sources not included in the original budget, primarily school activity (principal) accounts, totaled $6.6 million. Vll CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 General Fund actual expenditures for fiscal year 2008 exceeded original budgeted amounts by $3.0 million. The difference was primarily due to the increase in operational costs and expenditures of various school activity (principal) accounts totaling $3.5 million. The original budget adopted by the School District included the anticipated use of$3.7 million of fund balance. During the year the budget was amended several times to provide for additional State revenue, including a mid-term adjustment to state allotments not included in the original budget. As actual revenues exceeded original budgeted revenues $8.9 million and actual expenditures exceeded original budgeted expenditures $3.0 million, the fund balance was increased by $2.2 million rather than the anticipated reduction of$3.7 million. SUBSEQUENT YEAR BUDGET AND RATES The School District adopted a General Fund budget for fiscal year 2009 reflecting total resources, including appropriations, of $91.2 million and total expenditures of $93.0 million with the anticipated use of$1.8 million of fund balance. The fiscal year 2008 budget was based on a tax rate for maintenance and operations of schools (M&O) ofl 6.828 mills. In fiscal year 2009, the School District set the tax rate for M&O at 16.773 mills. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At fiscal year ended June 30, 2008, the School District had $144,965,219 invested in capital assets, net of accumulated depreciation, all in governmental activities. This amount represents a net increase (including additions, deletions and depreciation) of$30,620,222 or 26.78%, from fiscal year 2007. The assets are made up of a broad range of items including buildings, land, land improvements, equipment (transportation, maintenance and food service) and construction-inprogress. The following schedule reflects a summary of these balances as compared to the prior year. Capital Assets (Net of Depreciation) Governmental Activities Fiscal Fiscal Year 2008 Year 2007 Land Construction In Progress Land Improvements Buildings and Improvements Equipment Total $ 4,757,420 50,797,688 1,944,091 83,517,663 3,948,357 $ 4,757,420 22,739,685 1,923,073 81,366,353 3,558,466 $ 144,965.219 $ 114,344,997 viii CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 Catoosa County School District has significant ongoing construction projects, including a new high school, as well as additions and renovations to existing buildings. Additional information related to the Schools District's capital assets can be found in the Notes to the Basic Financial Statements. Long-Term Debt The following schedule summarizes the School District's debt for the Series 2006 General Obligation Bonds: Debt at June 30, 2008 Bonds Payable (including unamortized Bond Premium) $ 40,437.156 CURRENT ISSUES Currently known facts, decisions or conditions that are expected to have a significant effect on financial positions or results ofoperations: Economic Slowdown - Decreases in total State funding for education has placed more pressure on the local school districts to prioritize its educational programs and provide. additional local funding. As dependence can no longer be placed on traditional sources offunding, the School District must be creative and adopt a new way ofthinking to find funds to keep the budget balanced. The Board of Education and the Superintendent understand the involvement ofcommunity stakeholders is crucial and are implementing plans to ensure the community understands the problems and gets involved in solutions. The Board ofEducation understands that businesses have a vested interest in students who are ready for the workforce, and that both the School District and the community benefit from the well-crafted partnerships established at the Catoosa County School District. In addition, the School District is looking beyond the budget cycle when making decisions that will affect the School District and its plan for a sustainable future. Despite these challenges, the Catoosa County Board of Education remains optimistic about the ability of the School District to maximize all of its financial resources to provide a quality education to all of its students. Capital Improvements - The School District p,lans 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 the general obligation bond issue 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. ix CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2008 CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide the citizens, taxpayers, parents, students, investors and creditors with a general overview ofthe School District's finances. The report also demonstrates the School District's accountability for the funds it receives. Additional information can be requested by mail at the following address: Catoosa County Board ofEducation 307 Cleveland Street Ringgold, Georgia 30736 X CATOOSA COUNTY BOARD OF EDUCATION CATOOSA COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2008 ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Other Inventories Prepaid Items Capital Assets Buildings Construction in Progress Equipment Land Land Improvements Less: Accumulated Depreciation Total Assets LIABILITIES Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Deferred Revenue Long-Term Liabilities Due Within One Year Due in More Than One Year Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Continuation of Federal Programs Debt Services Capital Projects Unrestricted Total Net Assets Total Liabilities and Net Assets The notes to the basic financial statements are an integral part of this statement. -1- EXHIBIT"A" GOVERNMENTAL ACTIVITIES $ 25,114,265 7,453,897 2,512,905 7,540,087 635,496 24,315 175,355 796 105,380,993 50,797,688 7,571,242 4,757,420 2,852,496 -26,394,620 $ ===18=8=,4=2=2=,3=35= $ 174,852 11,647,908 788,720 2,640,294 309,012 6,124,902 34,312,254 $ 55,997,942 $ 104,528,063 1,061,156 8,062,245 7,074,270 11,698,659 $ 132,424,393 $ ===1=8=8=,4=22=,3=3=5 CATOOSA COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2008 GOVERNMENTAL ACTIVITIES Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Food Services Community Services Interest on Short-Term and Long-Term Debt Total Governmental Activities General Revenues Taxes Property Taxes For Maintenance and Operations In Lieu of Taxes Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous Total General Revenues Change in Net Assets Net Assets - Beginning of Year EXPENSES CHARGES FOR SERVICES $ 70,295,241 $ 3,491,211 3,060,027 1,865,670 802,666 6,657,770 519,311 6,515,274 3,726,119 458,751 829,030 4,949,213 645,170 1,603,248 $ 105,418,701 $ 581,025 136,745 36,253 117,643 62,427 2,035,895 178,592 3,148,580 Net Assets - End of Year The notes to the basic financial statements are an integral part of this statement. -2- EXHIBIT "B" PROGRAM REVENUES OPERATING GRANTS AND CONTRIBUTIONS CAPITAL GRANTS AND CONTRIBUTIONS NET (EXPENSES) REVENUES AND CHANGES IN NET ASSETS $ 48,034,095 996,719 764,368 1,204,006 1,631,737 2,490,921 15,335 2,810,448 1,206,484 $ 8,802 143,774 2,893,659 41,756 $ 62,242,104 $ $ 173,159 173,159 $ -21,680, 121 -2,357,747 -2,295,659 -625,411 829,071 -4,049,206 -503,976 -3,642,399 -2,346,476 -449,949 -685,256 -19,659 -424,822 -1,603,248 -39,854,858 $ 24,667,866 730,533 9,358,317 703,232 164,841 6,409,934 1,758,342 3 499 369 $ 47 292 434 $ 7,437,576 124,986 817 $ 132,424,393 -3- CATOOSA COUNTY BOARD OF EDUCATION BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2008 EXHIBIT"C" ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Other Inventories Prepaid Items Total Assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Deferred Revenue Total Liabilities FUND BALANCES Reserved for: Continuation of Federal Programs Inventories Debt Service Capital Projects Unreserved Designated for Student Activities Undesignated Reported in: General Fund Capital Projects Total Fund Balances Total Liabilities and Fund Balances GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 14,859,481 $ 21,500 772,724 7,540,087 635,496 24,109 175,355 796 2,192,539 $ 7,432,397 1,570,128 206 8,062,245 $ 25,114,265 7,453,897 2,342,852 7,540,087 635,496 24,315 175,355 796 $ 24,029,548 $ 11,195,270 $ 8,062,245 $ =====4=3'=28=7=,0=6=3 $ 171,496 $ 11,647,908 309,012 $ 12,128,416 $ 3,356 788,720 2,640,294 3,432,370 $ 174,852 11,647,908 788,720 2,640,294 309,012 $ 15,560,786 $ 885,801 175,355 $ 1,002,778 9,837,198 $ 11,901,132 $ $ 7,074,270 688,630 7,762,900 $ $ 8,062,245 8,062,245 $ 885,801 175,355 8,062,245 7,074,270 1,002,778 9,837,198 688,630 27,726,277 $ 24,029,548 $ 11,195,270 $ 8,062,245 $ =====4..,3,..,28.,.7,.,,0..,6=3 The notes to the basic financial statements are an integral part of this statement. -4- CATOOSA COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30, 2008 EXHIBIT"D" Total Fund Balances - Governmental Funds (Exhibit "C") Amounts reported for Governmental Activities in the Statement of Net Assets are different because: Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of: Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation Total Capital Assets Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures. Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: Bonds Payable Unamortized Bond Premium Total Long-Term Liabilities $ 27,726,277 $ 4,757,420 50,797,688 2,852,496 105,380,993 7,571,242 -26,394,620 144,965,219 170,053 $ -40,000,000 -437 156 -40,437, 156 Net Assets of Governmental Activities (Exhibit "A") $ 132,424,393 The notes to the basic financial statements are an integral part of this statement. -5- CATOOSA COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2008 EXHIBIT"E" REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation Community Services Capital Outlay Debt Services Interest Paying Agent Fees Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES {USES) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 25,263,610 868,073 $ 9,358,317 61,797,904 7,027,293 3,148,580 509,170 939,319 $ 3,487,476 11 893 $ 102,102,106 $ 10,309,529 $ $ 309,853 309,853 $ 25,263,610 10,226,390 61,797,904 7,027,293 3,148,580 1,758,342 3,499,369 112,721,488 $ 67,617,527 $ 67,617,527 3,446,713 $ 2,665,223 1,865,670 722,307 6,657,770 519,311 6,445,783 3,275,281 458,751 642,904 4,891,664 663,570 44,498 394,804 116,820 207,352 596,291 186,126 33,017,309 3,491,211 3,060,027 1,865,670 839,127 6,657,770 519,311 6,653,135 3,871,572 458,751 829,030 4,891,664 663,570 33,017,309 $ 1,727,500 650 1,727,500 650 $ 99,872,474 $ 34,563,200 $ 1,728,150 $ 136,163,824 $ 2,229,632 $ -24,253,671 $ -1,418,297 $ -23,442,336 $ $ -7,008,441 7,008,441 $ 7,008,441 -7,008,441 $ -7,008,441 $ 7,008,441 $ 0 $ 2,229,632 $ -31,262, 112 $ 5,590,144 $ -23,442,336 9,671,500 39,025,012 2,472,101 51,168,613 Fund Balances - Ending $ 11,901,132 $ 7,762,900 $ 8,062,245 $ 27,726,277 The notes to the basic financial statements are an integral part of this statement. -6- CATOOSA COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2008 EXHIBIT"F" Total Net Change in Fund Balances - Governmental Funds (Exhibit "E") Amounts reported for Governmental Activities in the Statement of Activities are different because: Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are: Capital Outlay $ Depreciation Expense Excess of Capital Outlay over Depreciation Expense Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues. In the Statement of Activities, only the gain on the sale of the equipment is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the equipment sold. Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of: Unamortized Bond Premiums $ -23,442,336 32,575,088 -1,908,944 30,666,144 134,789 -45,922 124,901 Change in Net Assets of Governmental Activities (Exhibit "B") $ ==7=,4=3=7=5=7=6 The notes to the basic financial statements are an integral part of this statement. -7- CATOOSA COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2008 ASSETS Cash and Cash Equivalents Accounts Receivable, Net Other Total Assets LIABILITIES Salaries and Benefits Payable Funds Held for Others Total Liabilities EXHIBIT"G" AGENCY FUNDS $ 151,335 600 $ ===1=51=,9=3=5 $ 3,778 148,157 $===1=51=,9=3=5 The notes to the basic financial statements are an integral part of this statement. -8 - CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY REPORTING ENTITY The Catoosa County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Catoosa County Board of Education. District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. The Statement ofActivities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. -9- CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The School District reports the following major governmental funds: General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund. District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation ofmajor capital facilities. Debt Service Fund accounts for taxes (sales) legally restricted for the payment ofgeneral longterm principal, interest and paying agent's fees. The School District reports the following fiduciary fund type: Agency funds account for assets held by the School District as an agent for various funds, governments or individuals. BASIS OF ACCOUNTING The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund - 10 - CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES liability is incurred, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities are reported as other financing sources. The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code ofGeorgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation ofthe United States government, (5) Prime banker's acceptances, - 11 - CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia. The School District does not have a formal investment policy that addresses credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks. RECEIVABLES Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Catoosa County Board of Commissioners fixed the property tax levy for the 2007 tax digest year (calendar year) on August 21, 2007 (levy date). Taxes were due on December 20, 2007 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2007 tax digest are reported as revenue in the governmental funds for fiscal year 2008. The Catoosa 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, 2008, for maintenance and operations amounted to $24,533,077. The tax millage rate levied for the 2007 tax year (calendar year) for the Catoosa County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): School Operations 16.828 mills SALES TAXES Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $9,358,317 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. - 12 - CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVENTORIES FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. CAPITAL ASSETS Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works ofart. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District. Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows: Capitalization Policy Estimated Useful Life Land Land Improvements Buildings and Improvements Equipment All NIA $ 10,000 20 to 80 years $ 10,000 20 to 80 years $ 10,000 5 to 15 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. - 13 - CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GENERAL OBLIGATION BONDS The School District issues general obligation bonds to provide funds for the acquisition and construction ofmajor capital facilities. In the District-wide financial statements, bond premiums are amortized over the life of the bonds using the straight-line method. Bond issuance costs are not reported as deferred charges and amortized over the life of the debt. To conform to generally accepted accounting principles, issuance costs should be deferred over the life ofthe bonds using the straight-line method. The effect ofthis deviation is deemed to be immaterial to the fair presentation of the basic financial statements. 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 Assets. NET ASSETS The School District's net assets in the District-wide Statements are classified as follows: Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties. Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes. Note 3: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face - 14 - CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 3: DEPOSITS AND INVESTMENTS value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. Acceptable security for deposits consists of any one of or any combination ofthe 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 ofthe State of Georgia, and (7) Bonds, bills, notes, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS At June 30, 2008, the bank balances were $28,094,057. The amounts of the total uninsured bank balances are classified into three categories of custodial credit risk: Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name. - 15 - CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 3: DEPOSITS AND INVESTMENTS The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2008, as follows: Custodial Credit Risk Category Bank Balance 1 $ 0 2 18,852,645 3 0 Total $ 18,852.645 CATEGORIZATION OF INVESTMENTS At June 30, 2008, the carrying value ofthe School District's total investments was $7,432,397, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund 1, formerly referred to as LGIP, administered by the State of Georgia, Office of Treasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office ofTreasury and Fiscal Services for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State ofGeorgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.state.ga.us/intemet/searchRpts.html. The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2008, was 40 days. Note 4: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories Note 5: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year: - 16 - CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 5: CAPITAL ASSETS Balances July 1, 2007 Increases Balances Decreases June 30, 2008 Governmental Activities Capital Assets, Not Being Depreciated: Land Construction in Progress $ 4,757,420 $ 4,757,420 22,739,685 $ 31,453,085 $ 3,395,082 50,797,688 Total Capital Assets Not Being Depreciated $ 27,497,105 $ 31,453,085 $ 3,395,082 $ 55,555,108 Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements $ 101,800,400 $ 7,139,085 2,769,584 3,580,593 853,580 $ 82,912 $ 105,380,993 421,423 7,571,242 2,852,496 Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements 20,434,047 3,580,619 846,511 1,429,283 417,767 61,894 375,501 21,863,330 3,622,885 908,405 Total Capital Assets, Being Depreciated, Net $ 86,847,892 $ 2,608,141 $ 45,922 $ 89,410,111 Governmental Activity Capital Assets - Net $ 114,34~,297 $ 34,061,226 $ 3,~~1,004 $ 144,265,219 Current year depreciation expense by function is as follows: Instruction Support Services General Administration Maintenance and Operation of Plant Student Transportation Services Food Services $ 1,463,732 $ 13,982 44,416 349,455 407,853 37,359 $ 1,908,944 Note 6: RESTRICTED ASSETS Special Purpose Local Option Sales Tax (SPLOST) and general obligation bond proceeds are restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2008, were as follows: - 17 - CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 6: RESTRICTED ASSETS District-wide Capital Projects SPLOST Debt Service Funds Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions Restricted Investments: Capital Acquisitions $ 8,062,245 $ 1,503,909 $ 7,432,397 Note 7: INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2008, consisted of the following: Transfer to Transfers From District-wide Capital Projects Debt Service Fund $ 7,008,441 Transfers are used to move sales tax revenues collected by the District-wide Capital Projects Fund to the Debt Service Fund for interest payments due February 1, 2008 and August 1, 2008 for the Series 2006 General Obligation Bonds. Note 8: RISK MANAGEMENT The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation. The School District has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions and job related illness or injuries to employees. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years. The School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years. - 18 - CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 8: RISK MANAGEMENT The School District has established a limited risk management program for workers' compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liabilities being reported when it is probable that a loss has occurred, and the amount ofthat loss can be reasonably estimated. An excess coverage insurance policy covers individual claims in excess of $300,000 loss per occurrence, up to the statutory limit. Changes in the workers' compensation claims liability during the last two fiscal years are as follows: 2007 2008 Beginning of Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability $ 0 $ 117 791 $ 117 791 $ 0 $ 0 $ 263,303 $ 263,303 $ 0 The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liabilities being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: 2007 2008 Beginning of Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability $ 0 $ 15,012 $ 15,012 $ 0 $ 0 $ 3 239 $ 3 329 $ 0 The School District has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent All Other Employees $ 25,000 $ 100,000 Note 9: LONG-TERM DEBT GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: - 19 - CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT"H" Note 9: LONG-TERM DEBT Purpose Interest Rates Amount General Government - Series 2006 4.00% - 4.50% $ 40,000,000 The changes in Long-Term Debt during the fiscal year ended June 30, 2008, were as follows: Balance Jul)'. I, 2007 Governmental Funds Additions Deductions Balance June 30, 2008 Due Within One Year G.O. Bonds $ 40,000,000 $ Bond Premiums Amortized 562,057 0 $ $ 40,000,000 $ 6,000,000 124,901 437,156 124,902 $ 40 562,057 $ 0 $ ]24 201 $ 40,437,156 $ 6,124,202 Fiscal Year Ended June 30 General Obligation Debt Principal Interest Unamortized Bond Premium 2009 2010 2011 2012 2013 $ 6,000,000 $ 7,000,000 8,000,000 9,000,000 10,000.000 1,600,000 $ 1,323,750 1,014,500 652,000 225.000 124,902 124,902 124,902 62,450 Total Principal and Interest $ 40,000.000 $ 4,815.250 $ 437,156 Note 10: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $2,113,723 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $2,089,253 Paid to the Teachers' Retirement System For Teachers' Retirement System (TRS) Employer's Cost In the amount of $13,040 - 20- CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 10: ON-BEHALF PAYMENTS Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $11,430 Note 11: SIGNIFICANT COMMITMENTS The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2008, together with funding available: Project Unearned Executed Contracts Funding Available From State 0?RA-623-004 $ 512,258 $ 611,421 Ringgold High School - Auxiliary Gym 89,301 Ringgold High School - Fire Protection System 22,476 $ 624,035 $====6=!,:11=,4=2=1 The amounts described in this note are not reflected in the basic financial statements. Note 12: SIGNIFICANT CONTINGENT LIABILITIES Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements. Note 13: POSTEMPLOYMENT BENEFITS Georgia Retiree Health Benefit Fund Plan Description. The School District contributes to the Georgia Retiree Health Benefit Fund ("GRHBF"), a cost-sharing multiple-employer defined benefit postemployment healthcare plan administered by the Department ofCommunity Health. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries. Pursuant to Title 45, Chapter 18 ofthe Official Code ofGeorgia Annotated, the authority to establish and amend the benefit provisions ofthe plan is - 21 - CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 13: POSTEMPLOYMENT BENEFITS assigned to the Board of Community Health. The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department ofCommunity Health at 2 Peachtree Street, Atlanta, Georgia 30303. Funding Policy. The contribution requirements of plan members and participating employers are established and may be amended by the Board of Community Health. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) of the cost of health insurance coverage. Participating employers are statutorily required to contribute in accordance with the employer contribution rate established by the Board of Community Health. This contribution rate is established to fund both the active and retired employee health insurance plans based on projected pay-as-you-go financing requirements. The employer contribution rates for the combined active and retiree plans for the fiscal year ended June 30, 2008, were as follows: Teachers Non-Certificated Employees 18.534% of state-based salaries $162.72 per month The School District's contribution to the health insurance plans for the fiscal year ended June 30, 2008, was $9,631,077 which equaled the required contribution. Note 14: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: - 22 - CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT"H" Note 14: RETIREMENT PLANS Fiscal Year 2008 2007 2006 Percentage Contributed 100% 100% 100% Required Contribution $ 5,121,859 $ 4,885,494 $ 4,405,945 - 23 - (This page left intentionally blank) CATOOSA COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2008 SCHEDULE "1" REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation Community Services Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES {USES) Operating Transfers From Other Funds Other Sources Operating Transfers To Other Funds Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning Adjustments NONAPPROPRIATED BUDGETS ORIGINAL(1) FINAL (1) ACTUAL AMOUNTS $ 24,689,611 $ 24,689,611 $ 25,263,610 1,000,000 1,000,000 868,073 57,446,867 61,602,388 61,797,904 9,662,356 10,602,061 7,027,293 3,148,580 350,000 350,000 509,170 93 871 3,487 476 $ 93,148,834 $ 98,337,931 $ 102,102,106 $ 65,807,145 $ 68,402,471 $ 67,617,527 2,933,031 3,272,462 1,768,596 828,597 6,439,848 555,051 6,337,420 3,041,215 400,855 416,064 5,036,000 3,101,438 3,333,500 1,812,725 884,090 6,611,923 530,598 6,421,385 3,237,568 447,818 662,907 5,036,000 15 344 3,446,713 2,665,223 1,865,670 722,307 6,657,770 519,311 6,445,783 3,275,281 458,751 642,904 4,891,664 663,570 $ 96,836,284 $ 100 497 767 $ 99 872474 $ -3 687 450 $ -2,159,836 $ 2,229,632 $ 224,280 $ 235,280 45,000 -253 448 -264 448 $ -29 168 $ 15 832 $ -3,716,618 $ -2,144,004 $ 9,671,198 9,671,198 24995 2,229,632 9,671,500 Fund Balances - Ending $ 5 954 580 $ 7552189 $ 11901,132 Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual (1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts. The accompanying schedule of revenues. expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 25 - CATOOSA COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2008 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program Total Child Nutrition Cluster Other Programs Pass-Through From Georgia Department of Education Food Donation (1) Total U. S. Department of Agriculture Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants Total Special Education Cluster Other Programs Direct Fund for the Improvement of Education Pass-Through From Georgia Department of Education Comprehensive School Reform Demonstration Education for Homeless Children and Youth Improving Teacher Quality State Grant Safe and Drug-Free Schools and Communities State Grants for Innovative Programs Title I Grants to Local Educational Agencies Twenty-First Century Community Learning Centers Vocational Education - Basic Grants to States Total U. S. Department of Education Health and Human Services, U. S. Department of Pass-Through From Georgia Department of Human Resources, Division of Mental Health, Developmental Disabilities and Addictive Diseases Block Grants for Prevention and Treatment of Substance Abuse Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program Total Federal Financial Assistance N/A = Not Available - 26 - CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD 10.553 10.555 N/A N/A $ $ (2) 4 314 916 4,314,916 10.550 N/A $ 317 486 4 632 402 84.027 84.173 N/A $ N/A $ 1,650,609 55 486 1,706,095 84.215 84.332 84.196 84.367 84.186 84.298 84.010 84.287 84.048 N/A N/A N/A N/A N/A N/A N/A N/A $ 8,772 10,776 38,256 368,164 30,833 14,826 1,699,698 321,948 90 020 4,289,388 93.959 N/A $ 13 384 $ 104 120 $===9=,0=3=9=,2=94= CATOOSA COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2008 SCHEDULE "2" Notes to the Schedule of Expenditures of Federal Awards (1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year. (2) Expenditures for the funds earned on the School Breakfast Program ($535,071) were not maintained separately and are included in the 2008 National School Lunch Program. Major Programs are identified by an asterisk (*) in front of the CFDA number. The School District did not provide Federal Assistance to any Subrecipient. The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Catoosa County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 27 - CATOOSA COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2008 AGENCY/FUNDING GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Communities in Schools - Dropout Recovery and Prevention Health Insurance High School Graduation Coach Middle School Remediation and Intervention Grant National Teacher Certification Preschool Handicapped Program Residential and Reintegration State Grant Teachers' Retirement Virtual Schools State Grant Office of Treasury and Fiscal Services Public School Employees Retirement See notes to the basic financial statements. -28- SCHEDULE "3" GOVERNMENTAL FUND TYPE GENERAL FUND $ 905,138 3,062,308 642,350 7,944,815 772,609 3,799,416 373,771 6,631,459 5,137,236 2,359,706 8,684,584 2,481,513 275,757 514,718 103,546 1,159,877 348,281 217,467 1,507,210 2,317,431 2,726,483 920,538 173,159 189,489 29,505 6,409,934 273,258 166,793 -928,902 26,412 2,089,253 84,192 7,568 38,923 169,639 157,824 13,040 174 11 430 $ =====6=1_7,=97.,,9=0=4 CATOOSA COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2008 SCHEDULE "4" PROJECT To build, equip and furnish new schools; to make additions, modifications and renovations to existing schools; to provide computers, computer technology equipment and personalty; to acquire land and pay for site preparation and paving at new and existing schools; to pay for construction, renovation, modifications, additions and repairs of areas and structures that will be jointly used by the School District for instructional, sporting and physical activities; and to pay for the expenses incident to accomplish the foregoing purposes. To build, equip and furnish new schools, including but not limited to a new high school and a new elementary school; to make additions, modifications and renovations to existing schools; to provide computers, equipment and personalty (including school buses); to acquire land and pay for site preparation and paving at new and existing schools; to pay for construction, renovation, modifications, additions and repairs of areas and structures that will be jointly used for instructional, sports and physical education activities; and to pay for the expenses incident to accomplish the foregoing purposes. ORIGINAL ESTIMATED COST (1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3) (4) AMOUNT EXPENDED IN PRIOR YEARS (3) (4) PROJECT STATUS $ 46,500,000 $ 53,974,200 $ 4,729,378 $ 45,822,797 Ongoing 59,000,000 59,000,000 29,647,697 18,726,597 Ongoing $ 105,500,000 $ 112,974,200 $ 34,377,075 $ 64,549,394 (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 Catoosa 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. (4) In addition to the expenditures shown above, the School District has incurred interest to provide advance funding for the above projects as follows: Prior Years $ 854,153 Current Year 1,727,500 Total $ ==2,=58=1=,6=5=3 See notes to the basic financial statements. - 29 - (This page left intentionally blank) CATOOSA COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM {QBE) ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2008 SCHEDULE "5" DESCRIPTION ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL Direct Instructional Programs Kindergarten Program $ Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages {ESOL) 3,494,876 $ 730,085 8,965,098 891,780 4,290,242 425,744 3,860,918 $ 698,435 10,608,724 1,320,150 5,514,812 583,046 7,516,579 5,880,700 2,679,888 9,671,957 2,709,412 288,353 586,173 112 690 8,989,948 7,499,313 2,453,852 1,705,181 713,272 6,826,832 1,180,788 272,269 2,356,297 49,325 1,063,875 227,251 58,863 $ 12,003 202,496 12,952 113,049 6,806 257,997 205,971 217,304 98,734 172 21,631 7 897 3,919,781 710,438 10,811,220 1,333,102 5,627,861 589,852 9,247,945 7,705,284 2,671,156 1,803,915 713,444 6,826,832 1,180,788 272,269 2,377,928 49,325 1,063,875 235 148 TOTAL DIRECT INSTRUCTIONAL PROGRAMS $ 48,243,577 $ 55,924,288 $ 1,215,875 $ 57,140,163 Media Center Program Staff and Professional Development 1,312,088 248 574 1,559,168 137,027 223,862 1,696,195 223,862 TOTAL QBE FORMULA FUNDS $ 49,804,239 $ 57,483,456 $ 1,576,764 $===5,..9,=06=0=,2=2=0 (1) Comprised of Stale Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment. See notes to the basic financial statements. - 31 - SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 20, 2009 Honorable Sonny Perdue, Governor Members ofthe General Assembly Members of the State Board of Education and Superintendent and Members of the Catoosa County Board of Education REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information ofCatoosa County Board ofEducation as of and for the year ended June 30, 2008, which collectively comprise Catoosa County Board of Education's basic financial statements and have issued our report thereon dated March 20, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered Catoosa County Board ofEducation's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressjng our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the Catoosa County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Catoosa County Board of Education's internal control over financial reporting. A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Catoosa County Board ofEducation's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted 2008YB-10 accounting principles such that there is more than a remote likelihood that a misstatement of the Catoosa County Board ofEducation's financial statements that is more than inconsequential will not be prevented or detected by the Catoosa County Board of Education's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Catoosa County Board of Education's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether Catoosa County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we have reported to management of Catoosa County Board of Education in a separate letter dated March 20, 2009. This report is intended solely for the information and use ofmanagement, members ofthe Catoosa County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~tJ.~ Russell W. Hinton, CPA, CGFM State Auditor RWH:as 2008YB-10 Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 20, 2009 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Catoosa County Board of Education REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133 Ladies and Gentlemen: Compliance We have audited the compliance of Catoosa County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2008. Catoosa County Board ofEducation's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Catoosa County Board of Education's management. Our responsibility is to express an opinion on Catoosa County Board of Education's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Catoosa County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the 2008SA-10 circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Catoosa County Board of Education's compliance with those requirements. In our opinion, the Catoosa County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2008. Internal Control Over Compliance The management of Catoosa County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Catoosa County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose ofexpressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness ofthe Catoosa County Board ofEducation's internal control over compliance. A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement ofa Federal program will not be prevented or detected by the entity's internal control. Our consideration ofthe internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. 2008SA-10 This report is intended solely for the information and use of management, members ofthe Catoosa County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, RWH:as 2008SA-10 Russell W. Hinton, CPA, CGFM State Auditor SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS CATOOSA COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AUDITEE'S RESPONSE/STATUS SEE AUDITOR'S COMMENTS FS-6231-04-02 Further Action Not Warranted (1) FS-6231-07-01 Previously Reported Corrective Action Implemented AUDITOR'S COMMENTS (1) The final resolution ofthis finding rests with the Georgia Department ofCommunity Health. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. SECTION IV FINDINGS AND QUESTIONED COSTS CATOOSA COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Catoosa County Board ofEducation's financial statements was unqualified. 2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Catoosa County Board ofEducation did not disclose any significant deficiencies related to the financial statements. 3. Noncompliance Material to the Financial Statements The audit of the Catoosa County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements. 4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Catoosa County Board ofEducation did not disclose any significant deficiencies in internal control over major programs. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Catoosa County Board of Education's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Required to be Reported by Section .51 0(a) of 0MB Circular A-133 The Catoosa County Board ofEducation's audit did not disclose audit findings required to be reported by section .5 lO(a) of 0MB Circular A-133. 7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000. 9. Low Risk Auditee The Catoosa County Board of Education qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133. - 1- CATOOSA COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. -2-