Catoosa County Board of Education, Ringgold, Georgia, annual financial report for the fiscal year ended June 30, 2015 (including independent auditor's reports)

CATOOSA COUNTY BOARD OF EDUCATION
RINGGOLD, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2015
(Including Independent Auditor's Reports)

CATOOSA COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET POSITION

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

H NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS' RETIREMENT SYSTEM OF GEORGIA
2 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Page
i
1 2 4 5 6 7 8 9
33 34

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CATOOSA COUNTY BOARD OF EDUCATION

- TABLE OF CONTENTS -

Page

SECTION I

SCHEDULES

FINANCIAL

REQUIRED SUPPLEMENTARY INFORMATION

3 SCHEDULE OF CONTRIBUTIONS TEACHERS' RETIREMENT SYSTEM OF GEORGIA

36

4 SCHEDULE OF CONTRIBUTIONS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 38

5 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION

40

6 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

41

SUPPLEMENTARY INFORMATION

7 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

42

8 SCHEDULE OF STATE REVENUE

44

9 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

45

10 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

47

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

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

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

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SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
May 26, 2016

Honorable Nathan Deal, 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 REPORT
Ladies and Gentlemen:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Catoosa County Board of Education, as of and for the year ended June 30, 2015, and the related notes to the financial statements (Exhibits A through H), which collectively comprise the Board's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

2015ARL-11

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effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Catoosa County Board of Education, as of June 30, 2015, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2015, the Catoosa County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions an amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date an amendment of GASB Statement No. 68. The School District restated beginning Net Position for the cumulative effect of these accounting changes. Our opinion is not modified with respect to this matter.
As discussed in Note 2 to the financial statements, in 2015, the Catoosa County Board of Education restated the prior period financial statements to correct misstatements. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, Schedules of Proportionate Share of the Net Pension Liability, Schedules of Contributions to Retirement Systems, Notes to the Required Supplementary Information and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual as presented on pages i through x and pages 33 through 41, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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Other Information
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, consisting of Schedules 7 through 10, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements.
The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated May 26, 2016, 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 of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Catoosa County Board of Education's internal control over financial reporting and compliance.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,

GSG:er 2015ARL-11

Greg S. Griffin State Auditor

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CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
INTRODUCTION
The discussion and analysis of the Catoosa County Board of Education's (the Board) financial performance provides an overview of the Board's financial activities for the fiscal years ended June 30, 2015 and June 30, 2014. The intent of this discussion and analysis is to look at the Board's financial performance as a whole. Readers should also review the financial statements and the notes to the basic financial statements to enhance their understanding of the Board's financial performance.
FINANCIAL HIGHLIGHTS
Key financial highlights for the fiscal years 2015 and 2014 are as follows:
On the District-wide financial statements, the assets and deferred outflow of resources of the Board exceeded liabilities and deferred inflow of resources by $107.6 million and $187.2 million, respectively, for the fiscal years ended June 30, 2015 and 2014. Of these amounts, $3,437,757 and $3,458,076, respectively, for fiscal years 2015 and 2014 are available for spending at the Board's discretion. The amounts for fiscal years 2015 and 2014 do not reflect the effects of the restatement of Net Position as described in Note 2.
The Board had $105.2 million and $106.4 million in expenses relating to governmental activities for the fiscal years ended June 30, 2015 and June 30, 2014, respectively. Only $65.4 million and $61.6 million of the above mentioned expenses for 2015 and 2014 were offset by program specific charges for services, grants and contributions. General revenues (primarily property and sales taxes) of $49.3 million and $48.5 million, respectively, for 2015 and 2014, along with fund balance were adequate to provide for these programs.
The current ratio, which measures the Board's ability to transform current assets into cash and pay its short- term liabilities, was 2.79 and 2.73 for the fiscal years ended June 30, 2015 and June 30, 2014, respectively. Generally, a ratio greater than 2.0 is considered very financially stable.
The General Fund (the primary operating fund), presented on a current financial resource basis, ended the fiscal year with a fund balance of $10.9 million, an increase of $977,841 from the June 30, 2014 fund balance of $9.9 million.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts; management's discussion and analysis, the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the Board of Education. These include the Districtwide and fund financial statements.
The District-wide financial statements include the Statement of Net Position and Statement of Activities. These statements provide information about the activities of the Board presenting both short-term and long-term information about the overall financial status.
The fund financial statements focus on individual parts, reporting the Board's operation in more detail. The Governmental Funds statements disclose how basic services are financed in the short-term as well as what remains for future spending. The Fiduciary Funds statements provide information about the financial relationships in which the Board acts solely as a trustee or agent for the benefit of others.
i

CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
The fund financial statements reflect the Board's most significant funds. For the years ending June 30, 2015 and 2014, the General Fund, the District-wide Capital Projects Fund, and the Debt Service Fund represent the most significant funds.
The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements.
District-Wide Statements
The District-wide statements report information about the Board as a whole using accounting methods similar to those used by private-sector companies. The Statement of Net Position includes all of the Board's assets and liabilities. All of the current fiscal year's revenues and expenses are accounted for in the Statement of Activities regardless of when cash is received or paid.
The two District-wide statements report the Board's Net Position and how it has changed. Net Position, the difference between the Board's assets and deferred outflows of resources, and liabilities and deferred inflows of resources, are one way to measure the Board's overall financial health or position. Over time, increases or decreases in Net Position are an indication of whether its financial health is improving or deteriorating. Changes may be the result of many factors, including those not under the Board's control, such as the property tax base, facility conditions, required educational programs and other factors.
In the Statement of Net Position and the Statement of Activities, the Board has one distinct type of activity:
Governmental Activities All of the Board's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, student activity accounts and various others.
Fund Financial Statements
The Board's fund financial statements provide detailed information about the most significant funds, not the Board as a whole. Some funds are required by State law and some by bond requirements. The Board's major governmental funds are the General Fund, District-wide Capital Projects Fund, and Debt Service Fund.
Governmental Funds - Most of the Board's activities are reported in governmental funds, which focus on the determination of financial position and change in financial position, not on income determination. These funds are reported using the modified accrual method of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Board's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds are reconciled to the financial statements.
ii

CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Fiduciary Funds - The Board is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the principals' accounts. The Board is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The Board excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.

FINANCIAL ANALYSIS OF THE BOARD AS A WHOLE

Recall that the Statement of Net Position provides the perspective of the Board as a whole. Table 1 provides a summary of the Board's net position for fiscal years 2015 and 2014.

Table 1 Net Position

Fiscal Year 2015

Governmental Activities

Percent

Fiscal

of Total

Year 2014 (1)

Percent of Total

Assets Current and Other Assets Capital Assets, Net

$

35,654,186

15% $ 36,842,394

16%

197,811,084

85%

198,151,585

84%

Total Assets

233,465,270 100%

234,993,979 100%

Deferred Outflows of Resources

Related to Defined Benefit Pension Plans

7,218,913 100%

0

Liabilities Current Liabilities Long-Term Liabilities

12,759,725

12%

94,336,408

88%

13,503,019

28%

34,262,937

72%

Total Liabilities

107,096,133 100%

47,765,956 100%

Deferred Inflows of Resources

Related to Defined Benefit Pension Plans

25,954,690 100%

0

Net Position Net Investment in Capital Assets Restricted Unrestricted
Total Net Position $

177,483,412 12,332,716 -82,182,768
107,633,360

165% 11% -76%

174,153,837 9,616,110 3,458,076

100% $ 187,228,023

93% 5% 2%
100%

(1) Fiscal year 2014 balances do not reflect the effects of the restatement of Net Position. See Note 2 in the Notes to the Basic Financial Statements for additional information.

During fiscal year 2015, The Board adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. Together, these two statements drastically changed the presentation of the District-wide balance sheet by requiring the reporting of the Board's net pension liability and the deferred inflows and outflows associated with pension payments for all State pension programs in which the Board participates. The total liability effect of these pensions was $85,620,525

iii

CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 for the year ended June 30, 2015. These liabilities exceeded the Board's unrestricted net position of $3,437,757. Although this causes a large deficit balance in unrestricted net position, it should not be considered a financial weakness as these costs are spread out over multiple years well into the future. Table 2 shows the Changes in Net Position for fiscal years ending June 30, 2015 and June 30, 2014.
iv

CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Revenues Program Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions
Total Program Revenues
General Revenues: Property Taxes Sales Taxes Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Total Revenues
Program Expenses: Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Community Services Food Services Interest on Debt
Total Expenses
Increase in Net Position
Beginning Net Position, Restated
Ending Net Position

Table 2 Change in Net Position
Fiscal Year 2015

Governmental Activities

Percent

Fiscal Year

of Total

2014 (1)

Percent of Total

$

2,637,035

61,439,249

1,295,495

65,371,779

4% $ 94%
2%
100%

2,571,712 58,755,915
287,196
61,614,823

4% 95%
1%
100%

29,070,511 10,250,790
6,341,355 53,151
3,554,713
49,270,520
114,642,299

59% 21%
13% 0% 7%
100%

29,163,176 9,437,189
5,876,601 80,766
3,990,020
48,547,752
110,162,575

60% 19%
12% 0% 9%
100%

66,561,294
4,121,622 2,342,587 1,753,484 1,336,878 6,982,394
575,463 8,664,477 5,153,894
503,508 1,292,834
500,370 5,191,284
221,105
105,201,194
9,441,105
98,192,255
$ 107,633,360

63%
4% 2% 2% 2% 7% 1% 8% 5% 0% 1%
0% 5% 0%
100%
$

67,346,556
4,020,813 2,406,807 1,865,198 1,159,921 7,027,408
646,672 8,381,976 5,296,772
488,273 1,360,761
481,859 5,374,805
493,778
106,351,599
3,810,976
183,417,047
187,228,023

63%
4% 2% 2% 1% 7% 1% 8% 5% 0% 1%
0% 5% 1%
100%

(1) Fiscal year 2014 balances do not reflect the effects of the restatement of Net Position. See Note 2 in the Notes to the Basic Financial Statements for additional information.

v

CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Program revenues, in the form of charges for services, operating grants and contributions and capital grants and contributions increased $3,756,956 for governmental activities. This increase is largely due to an increase in funds earned through the State Quality Basic Education (QBE) Funding Formula and capital grants received from the Georgia State Financing and Investment Commission (GSFIC) to offset certain construction projects. The Board received $1.3 million from GSFIC and were aided in a decrease in the QBE Austerity Reduction from $7.8 million in fiscal year 2014 to $5.1 million in fiscal year 2015.
General revenues increased by $722,768 during fiscal year 2015, despite a small rollback of the millage rate from 18.713 in 2014 to 18.692 in 2015. Continued development of the county and economic improvement resulted in an extra $800,000, approximately, of sales tax revenue, and the Board received approximately $500,000 more in equalization funding.
The Board continues to analyze spending patterns and look for areas where reductions can be made without affecting the level of education provided. As a result of these savings, the Board was able to restore two furlough days in 2015 to bring the total down to three. Table 3 shows the total cost of services and the net cost of services. Net cost of services can be defined as the total cost less fees generated by the activities and intergovernmental revenue provided for specific programs. The net cost reflects the financial burden on the Board's taxpayers by each activity.

Table 3 Governmental Activities

Total Cost of Services

Fiscal

Fiscal

Year 2015

Year 2014 (1)

Net Cost of Services

Fiscal

Fiscal

Year 2015

Year 2014 (1)

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

$ 66,561,294 $ 67,346,556 $ 18,355,210 $

4,121,622 2,342,587 1,753,484 1,336,878 6,982,394
575,463 8,664,477 5,153,894
503,508 1,292,834

4,020,813 2,406,807 1,865,198 1,159,921 7,027,408
646,672 8,381,976 5,296,772
488,273 1,360,761

3,366,486 1,109,554
514,244 -302,623 4,378,420 574,921 5,725,488 4,164,715 501,074 802,534

500,370 5,191,284
221,105

481,859 5,374,805
493,778

317,563 100,724 221,105

23,341,897
3,007,227 1,078,687
613,094 -451,329 4,440,225 645,228 5,469,327 4,211,463 481,786 848,747
340,861 215,785 493,778

Total Expenses

$ 105,201,194 $ 106,351,599 $ 39,829,415 $ 44,736,776

(1) Fiscal year 2014 balances do not reflect the effects of the restatement of Net Position. See Note 2 in the Notes to the Basic Financial Statements for additional information.

vi

CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
Although program revenues make up a majority of the funding, the Board is still dependent upon tax revenues for governmental activities. For 2015, 39% of instruction and support activities were supplemented by taxes and other general revenues compared to 43% in 2014. It exemplifies the State's stance that the public is becoming an equal partner in bearing the cost of educating Georgia's children.
FINANCIAL ANALYSIS OF THE BOARD'S FUNDS
The Board's governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues and other financing sources of $126.2 million and total expenses and other financing uses of $126.9 million. There was a decrease in the fund balance totaling $0.6 million for the governmental funds as a whole. The $10.9 million fund balance in the General Fund reflects that the Board continues to be able to adequately meet current costs.
General Fund Budgeting Highlights
The Board's budget is prepared according to Georgia Law. The most significant budgeted fund is the General Fund, funded primarily through state revenue and local property tax revenue. During the course of fiscal years 2015 and 2014, the Board amended its general fund budget as needed.
During fiscal year 2015 the General Fund had final actual revenues totaling $104.1 million, which represented an increase from the original budgeted amount of $98.1 million by $6.0 million. This difference (final actual vs. original budget) was due to conservative estimates by the Board that were exceeded slightly in every major category.
Final actual expenditures during fiscal year 2015 totaling $103.1 million represented an increase from the original budgeted amount of $102.3 million by $0.8 million. The increase in actual expenditures versus original budget expenditures was due primarily to higher than expected costs for pupil services and media services.
General fund revenues and other financing sources exceeded expenditures by $977,841 for the fiscal year 2015.
CAPITAL ASSETS
At the fiscal years ended June 30, 2015 and June 30, 2014, the School District had $197.8 million and $198.2 million, respectively, invested in a broad range of capital assets, including land, buildings and furniture and equipment for its governmental activities. For the first time in several years, the Board saw asset depreciation exceed the acquisition of new assets due to the winding down of ESPLOST IV funds. These funds finance all major additions and renovations of the School System. Table 4 breaks down the asset balances, by class, net of accumulated depreciation.
vii

CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2015

Year 2014 (1)

Land Land Improvements Buildings and Improvements Equipment Construction in Progress

$

6,523,176

5,807,215

177,646,791

7,617,948

215,954

6,253,176 5,927,865 169,540,915 7,126,018 9,303,611

Total

$

197,811,084

198,151,585

(1) Fiscal year 2014 balances do not reflect the effects of the restatement of Net Position. See Note 2 in the Notes to the Basic Financial Statements for additional information.
The construction in progress balance at June 30, 2015 consists of the following projects:
Battlefield Elementary School VCT Flooring Lakeview-Fort Oglethorpe High School VCT Flooring Boynton Elementary School Fire Alarm System Battlefield Elementary School Fire Alarm System Graysville Elementary School Fire Alarm System
DEBT ADMINISTRATION
The Board did not issue any general obligation bonds in fiscal year 2015. As of June 30, 2015, the Board had $25.4 million in general obligation bonds outstanding with $8.0 million due within one year. The bonds will be repaid from sales tax proceeds of a Special Purpose Local Option Sales Tax (SPLOST) that began July 1, 2012 and ends June 30, 2017. Table 5 summarizes bond debt outstanding at June 30, 2015 and 2014.

Table 5 Long-Term Debt Outstanding

Governmental Activities

Fiscal

Fiscal

Year 2015

Year 2014

General Obligations Bonds

$ 25,385,000 $ 32,885,000

The Board's bonds have been assigned a rating of "AA+" by Standard and Poor's based on the Board's participation in the Georgia State Intercept Program. Standard and Poor's has assigned an underlying rating (without regard to the Georgia State Intercept Program) of "AA-" to the bonds.

viii

CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

The Board entered into three new capital leases in fiscal year 2015. Capital leases are generally used as a way to purchase buildings and equipment without a large lump sum payment. The leases are paid over a period of 3-5 years. Table 6 summarizes capital lease obligations outstanding at June 30, 2015 and 2014. A schedule of future payments can be found in the notes to the financial statements.

Table 6 Capital Leases Outstanding

Governmental Activities

Fiscal

Fiscal

Year 2015

Year 2014 (1)

Capital Lease Obligations Outstanding $ 1,350,133 $

0

(1) Fiscal year 2014 balances do not reflect the effects of the restatement of Net Position. See Note 2 in the Notes to the Basic Financial Statements for additional information.

CURRENT ISSUES
In fiscal year 2016, the cost of the employer portion of TRS pension will increase approximately $600,000, and an increase in health insurance premiums for non-certified employees is expected to add another $750,000. In addition, revenues will again be cut as the State of Georgia imposes another QBE Austerity Reduction expected to cost the Board approximately $3.3 million in earned revenue, bringing the grand total of revenue lost since the cuts began in 2003 to more than $60.0 million. In spite of these hardships, the Board plans to reduce the number of furlough days from three to two for fiscal year 2016 and add numerous teaching positions to help combat increasing class sizes.
Approximately 85% of general fund expenses, the main operating fund for the Board, were related to salaries and employee benefits for the year ended June 30, 2015. More than a third of certified personnel in the School District have 21 years or more of experience resulting in salaries at the highest possible state pay level. With such personnel heavy expenses, it is difficult to offset mandated expense increases such as TRS and health insurance premium expenses. The Board consistently evaluates how funds can be spent smarter and more effectively to ensure that Catoosa County students receive a quality education from effective personnel.

The Board's millage rate for fiscal year 2015 was 18.692. The net digest was relatively flat during fiscal years 2015 and 2014, ending a string of several years where it decreased annually. The net digest for fiscal year 2015 was $1.497 billion, which produced approximately $1,497,000 per mill. As shown in Table 3, property tax and sales tax are responsible for covering 39% of the Board's costs. It is anticipated that this pressure to provide local monies to meet mandated educational requirements and operational costs will continue.
The most significant challenge facing the Board is the relative uncertainty regarding how School Districts will be funded moving forward. The General Assembly is in the process of exploring new funding formulas that would likely cement in the austerity reductions received annually and change the way personnel salaries are calculated. It is uncertain at this point what type of financial impact these changes might have on the Board's finances.

ix

CATOOSA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 CONTACTING THE BOARD'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the Board's finances and to show the Board's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Blake Stansell, CPA, Finance Manager at the Catoosa County Board of Education, 307 Cleveland Street, Ringgold, Georgia 30736. You may also email your questions to bstansell@catoosa.k12.ga.us.
x

CATOOSA COUNTY BOARD OF EDUCATION

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CATOOSA COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2015
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest Taxes State Government Federal Government Other Inventories Prepaid Items Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
DEFERRED OUTFLOWS OF RESOURCES
Related to Defined Benefit Pension Plans
LIABILITIES
Accounts Payable Salaries and Benefits Payable Interest Payable Claims Payable Retainages Payable Deposits and Unearned Revenues Long-Term Liabilities
Due Within One Year Due in More Than One Year Net Pension Liability
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Related to Defined Benefit Pension Plans
NET POSITION
Net Investment in Capital Assets Restricted for
Continuation of Federal Programs Debt Service Capital Projects National Park Field Trips Unrestricted (Deficit)
Total Net Position
The notes to the basic financial statements are an integral part of this statement. - 1 -

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

25,017,623

21,500

1,799 2,333,183 7,469,303
596,055 19,535
185,188 10,000
6,739,130 191,071,954

233,465,270

7,218,913

26,153 11,957,258
348,292 408,608
2,211 17,203
8,686,456 18,765,204 66,884,748
107,096,133

25,954,690

177,483,412
545,595 9,155,890 2,628,801
2,430 -82,182,768

$

107,633,360

CATOOSA COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2015

EXPENSES

CHARGES FOR SERVICES

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

$

66,561,294 $

4,121,622 2,342,587 1,753,484 1,336,878 6,982,394
575,463 8,664,477 5,153,894
503,508 1,292,834

500,370 5,191,284
221,105

272,710 230,274
3,111 37,551 54,689 64,647
297,084 180,476 1,496,493

Total Governmental Activities

$ 105,201,194 $

2,637,035

General Revenues Taxes Property Taxes For Maintenance and Operations Other Taxes Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous

Total General Revenues

Change in Net Position

Net Position - Beginning of Year, Restated

Net Position - 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 POSITION

$

46,765,024 $

519,430 1,226,137 1,201,689 1,630,101 2,549,285
542 2,793,708
989,179 2,434
193,216

3,568,504

$

61,439,249 $

1,168,350 $ 5,432 3,785 9,400
80,634
2,331 25,563
1,295,495

-18,355,210
-3,366,486 -1,109,554
-514,244 302,623 -4,378,420 -574,921 -5,725,488 -4,164,715 -501,074 -802,534
-317,563 -100,724 -221,105
-39,829,415

28,268,456 802,055

9,643,843 606,947
6,341,355 53,151
3,554,713
49,270,520
9,441,105
98,192,255

$

107,633,360

- 3 -

CATOOSA COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2015

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest Taxes State Government Federal Government Other Inventories Prepaid Items

GENERAL FUND

DISTRICT-WIDE CAPITAL PROJECTS FUND

DEBT SERVICE
FUND

TOTAL

$ 13,733,678 $ 21,500

1,781,547 $

15 1,483,718 7,469,303
596,055 19,535
185,188 10,000

849,465

9,502,398 $

25,017,623 21,500

1,784

1,799 2,333,183 7,469,303
596,055 19,535
185,188 10,000

Total Assets

$ 23,518,992 $ 2,631,012 $

9,504,182 $ 35,654,186

LIABILITIES
Accounts Payable Salaries and Benefits Payable Retainages Payable Deposits and Unearned Revenue
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes

$

26,153

11,957,258

$

17,203

12,000,614

2,211 2,211

607,330

$

26,153

11,957,258

2,211

17,203

12,002,825

607,330

FUND BALANCES
Nonspendable Restricted Assigned Unassigned
Total Fund Balances

195,188 362,837 1,101,967 9,251,056
10,911,048

2,628,801 $

9,504,182

2,628,801

9,504,182

195,188 12,495,820
1,101,967 9,251,056
23,044,031

Total Liabilities, Deferred Inflows of Resources, and Fund Balances

$ 23,518,992 $ 2,631,012 $

9,504,182 $ 35,654,186

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 POSITION JUNE 30, 2015

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Position are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported as assets in governmental funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings and Improvements Equipment Accumulated Depreciation
Total Capital Assets
Some liabilities, including net pension obligations, are not due and payable in the current period and, therefore, are not reported in the funds.
Net Pension Liability
Deferred Outflows and Inflows of Resources related to pensions are applicable to future periods and, therefore, are not reported in the governmental funds.
Taxes that are not available to pay for current period expenditures are deferred in the governmental funds.
Property Taxes
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. These consist of:
Bonds Payable Accrued Interest Payable Capital Leases Payable Bond Premiums, Net of Amortization Claims and Judgments Payable
Total Long-Term Liabilities

$ 23,044,031

$

6,523,176

215,954

7,166,109

208,345,784

14,231,465

-38,671,404

197,811,084

-66,884,748 -18,735,777

607,330

$ -25,385,000 -348,292
-1,350,133 -716,527 -408,608

-28,208,560

Net Position of Governmental Activities (Exhibit "A")

$ 107,633,360

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, 2015

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 Community Services Food Services Operation
Capital Outlay Debt Services
Principal Dues and Fees Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Capital Leases Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICT-WIDE CAPITAL PROJECTS FUND

DEBT SERVICE
FUND

TOTAL

$ 29,332,359 606,947 $
60,198,626 7,741,039 2,637,035 33,360 3,509,943
104,059,309

9,643,843 1,295,495
6,638 $ 44,770 10,990,746

$
13,153 13,153

29,332,359 10,250,790 61,494,121
7,741,039 2,637,035
53,151 3,554,713
115,063,208

65,580,121 4,244,620 2,404,170 1,823,038 1,311,845 7,273,453 666,717 7,816,835 4,442,883 517,618 1,314,922 505,231 5,136,380
71,410 20,790 103,130,033 929,276
48,565
48,565 977,841 9,933,207
$ 10,911,048 $

302,995
12,828 1,296,666
443,074
3,251,220
5,306,783 5,683,963

7,680,000 825
985,900
8,666,725
-8,653,572

65,883,116
4,244,620 2,404,170 1,823,038 1,324,673 7,273,453
666,717 9,113,501 4,885,957
517,618 1,314,922
505,231 5,136,380 3,251,220
7,751,410 825
1,006,690
117,103,541
-2,040,333

1,350,000 -9,753,539 -8,403,539 -2,719,576 5,348,377
2,628,801 $

9,753,539
9,753,539 1,099,967 8,404,215 9,504,182 $

1,398,565 9,753,539 -9,753,539 1,398,565
-641,768 23,685,799
23,044,031

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, 2015

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
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
Some of the Capital Assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Position, the lease obligation is reported as a Long-Term Liability.
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 Position. In the current year, these amounts consist of:
Bond Principal Retirements Capital Lease Payments
Total Long-Term Debt Repayments
Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. The net adjustments consist of:
Accrued Interest Payable Amortization of Bond Premium Pension Expense Claims and Judgements
Total Additional Expenditures
Change in Net Position of Governmental Activities (Exhibit "B")

$

-641,768

$

4,290,133

-4,673,002

-382,869 -261,848

-1,398,565

$

7,500,000

251,410

7,751,410

$

125,000

661,410

3,254,633

333,702

4,374,745

$

9,441,105

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

CATOOSA COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS JUNE 30, 2015
ASSETS Cash and Cash Equivalents Accounts Receivable, Net
Other
Total Assets LIABILITIES Funds Held for Others

EXHIBIT "G"

AGENCY FUNDS

$

451,390

50,385

$

501,775

$

501,775

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, 2015

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 of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements:
The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.
District-wide Capital Projects Fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and grants from Georgia State Financing and Investment Commission that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest.

- 9 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general longterm debt and claims and judgments, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, both restricted and unrestricted resources are 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.
RESTATEMENT OF PRIOR YEAR NET POSITION
For fiscal year 2015, the School District made several prior period adjustments due to the adoption of GASB Statement No. 68 and GASB Statement No. 71, as described in "New Accounting Pronouncements" below and due to omission of capital leases and capital assets acquired through capital leases. These items require the restatement of the June 30, 2014, net position in Governmental Activities. The result is a decrease in Net Position at July 1, 2014 of $89,035,768. These changes are in accordance with generally accepted accounting principles.

- 10 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Net Position, July 1, 2014, as previously reported Recognition of Prior Year Capital Leases Recognition of Prior Year Capital Assets
Prior Period adjustment - Implementation of GASB 68: Net pension liability (measurement date)
TRS ERS Deferred Outlfows - School District's contribution made during fiscal year 2014 TRS ERS
Net Position, July 1, 2014, as restated

$ 187,228,023 -202,978 42,368

$ -95,346,678 -161,787

-95,508,465

$ 6,626,065 7,242

6,633,307

$ 98,192,255

NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. The adoption of this statement has a significant impact on the School District's financial statements. As noted above, the School District restated beginning Net Position for the cumulative effect of this accounting change.
In fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 69, Government Combinations and Disposals of Government Operations. This statement provides specific accounting and financial reporting guidance for combinations in the governmental environment. This statement also requires that disclosures be made by governments about combination arrangements in which they engage and for disposals of government operations. The School District did not have any activities of this type during the fiscal year and the adoption of this statement does not have a significant impact on the School District's financial statements.
In fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB No. 68. The objective of this statement is to improve accounting and financial reporting by addressing an issue in Statement No. 68, Accounting and Financial Reporting for Pensions, concerning transition provisions related to certain pension contributions made to defined benefit pension plans prior to implementation of statement. This statement amends paragraph 137 of Statement No. 68 which limited recognition of pension-related deferred inflows of resources at the transition to circumstances in which it is practical to determine the amounts of all deferred outflows of resources and deferred inflows of resources related to pensions. The adoption of this statement has a significant impact on the School District's financial statements. As noted above, the School District restated beginning Net Position for the cumulative effect of this accounting change.

- 11 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

CASH AND CASH EQUIVALENTS
Composition of Deposits
Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
Composition of Investments
Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The local government investment pool (Georgia Fund 1) administered by the State of Georgia, Office of the State Treasurer,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.
RECEIVABLES
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

- 12 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

PROPERTY TAXES
The Catoosa County Board of Commissioners adopted the property tax levy for the 2014 tax digest year (calendar year) on September 2, 2014 (levy date) based on property values as of January 1, 2014. Taxes were due on December 20, 2014 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2014 tax digest are reported as revenue in the governmental funds for fiscal year 2015. 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, 2015, for maintenance and operations amounted to $26,723,341.
The tax millage rate levied for the 2014 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

18.692 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $1,806,963 during fiscal year ended June 30, 2015.
SALES TAXES
Education Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $9,643,843 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum, and the sales tax must be re-authorized at least every five years.
INVENTORIES
Food Inventories
On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.
PREPAID ITEMS
Payments made to vendors for services that will benefit periods subsequent to June 30, 2015, are recorded as prepaid items.
CAPITAL ASSETS
Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.
- 13 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

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

$

Intangible Assets

$

All 10,000 10,000 10,000
100,000

N/A 20 to 80 years 20 to 80 years
5 to 15 years 10 to 20 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.
Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, generally 10 to 20 years.
DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of net position and/or the balance sheet will report a separate section for deferred outflows of resources. This separate financial statement element, represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. Under the full accrual method of accounting, the School District has reported the deferred outflows of resources related to a defined benefit pension plan, as discussed in Note 16 Retirement Plans.
In addition to liabilities, the statement of net position and/or the balance sheet will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. Under the full accrual method of accounting, the School District has reported deferred inflows of resources related to a defined benefit pension plan, as discussed in Note 16 Retirement Plans. This item is reported only in the District-wide Statement of Net Position. Additionally, the School District has one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reporting only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and grants, and these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available.
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued.

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CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Position.
PENSIONS
For purposes of measuring the Net Pension Liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers' Retirement System of Georgia (TRS), the Employees' Retirement System of Georgia (ERS) and the Public School Employees Retirement System (PSERS) and additions to/deductions from TRS/ERS/PSERS's fiduciary net position have been determined on the same basis as they are reported by TRS/ERS/PSERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. See Note 16 - Retirement Plans.
NET POSITION
The School District's net position in the District-wide Statements is classified as follows:
Net Investment in Capital Assets - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets.
Restricted Net Position - This represents resources for which the School District is legally or contractually obligated to spend resources for National Park field trips, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted Net Position - Unrestricted Net Position is the net amount of the assets, deferred outflows of resources, liabilities and deferred inflows of resources that are not included in the determination of Net Investment of Capital Assets and Restricted Net Position. Included in the net deficit reported is the School District's Net Pension Liability of $66,884,748 which is required for financial reporting.
FUND BALANCES
The School District's fund balances are classified as follows:
Nonspendable Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.
Restricted Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.
Committed Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.

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CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Assigned Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.
Unassigned The residual classification for the General Fund. This classification represents fund balances that have not been assigned to other funds and that have not been restricted, committed, or assigned to specific purposes within the General Fund.
Fund Balances of the Governmental Funds at June 30, 2015, are as follows:

Nonspendable

Inventories

$

Prepaid Assets

Restricted

Continuation of Federal Programs

$

Capital Projects

Debt Service

National Park Field Trips

Assigned

School Activity Accounts

Unassigned

185,188 10,000 $
360,407 2,628,801 9,504,182
2,430

195,188
12,495,820 1,101,967 9,251,056

Fund Balance, June 30, 2015

$

23,044,031

When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
NOTE 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the General Fund. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America.

- 16 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines, and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
The Superintendent is authorized by the Board to approve adjustments of no more than 5 percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than 5 percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. Under no circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board.
See Schedule 6 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year under review.
NOTE 4: DEPOSITS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
- 17 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

CATEGORIZATION OF DEPOSITS
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2015, the School District had deposits with a carrying amount of $25,490,513, which includes $21,500 in Certificates of Deposit that are reported as Investments, and a bank balance of $28,800,229. The bank balances insured by Federal depository insurance were $10,343,898, and the bank balances collateralized with securities held by the pledging institution or by the pledging financial institution's trust department or agent in the School District's name were $18,456,331.

NOTE 5: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 Inventories.

NOTE 6: CAPITAL ASSETS
The following is a summary of changes in the Capital Assets during the fiscal year:

Restated Balances July 1, 2014

Increases

Decreases

Balances June 30, 2015

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

$

6,253,176 $

270,000

$

6,523,176

9,303,611

1,773,593 $ 10,861,250

215,954

Total Capital Assets Not Being Depreciated

15,556,787

2,043,593

10,861,250

6,739,130

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

196,635,854 13,348,969 7,072,643
27,094,939 6,180,583 1,144,778

11,709,930 1,304,394 93,466
3,604,054 854,832 214,116

421,898 421,898

208,345,784 14,231,465 7,166,109
30,698,993 6,613,517 1,358,894

Total Capital Assets, Being Depreciated, Net

182,637,166

8,434,788

0

191,071,954

Governmental Activity Capital Assets - Net

$

198,193,953 $ 10,478,381 $ 10,861,250 $

197,811,084

- 18 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Capital assets being acquired under capital leases as of June 30, 2015, are as follows:
Governmental Activities

Buildings and Improvements Equipment Land Less: Accumulated Depreciation

$

1,080,000

68,403

270,000

41,214

$

1,377,189

Current year depreciation expense by function is as follows:

Instruction

$

Support Services

Pupil Services

$ 22,319

Improvements of Instructional Services

17,324

General Administration

33,807

Maintenance and Operation of Plant

290,001

Student Transportation Services

823,416

Other Support Services

2,317

Community Services

8,384

Food Services

$

3,383,493
1,197,568 91,941
4,673,002

NOTE 7: INTERFUND TRANSFERS
Interfund transfers for the year ended June 30, 2015, consisted of the following:

Transfer to Debt Service Fund

Transfers From District-wide
Capital Projects

$

9,753,539

Transfers are used to move sales tax revenues collected by the District-wide Capital Projects Fund to the Debt Service Fund to pay principal and interest for the General Obligation Bonds as required in the bond resolution.

- 19 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

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 acts of God. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years.
The School District 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 liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. An excess coverage insurance policy covers individual claims in excess of $450,000 loss per occurrence, up to the statutory limit.
Changes in the workers' compensation claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2014 $ 2015 $

616,858 $ 742,310 $

438,077 $ 38,388 $

312,625 $ 372,090 $

742,310 408,608

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.
Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2014 $ 2015 $

0$

16,618 $

16,618 $

0

0$

30,288 $

30,288 $

0

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

Position Covered

Amount

Superintendent

$

25,000

- 20 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

NOTE 9: OPERATING LEASES
Catoosa County Board of Education has entered into various leases as lessee for copiers. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2015, for governmental funds amounted to $449,898. Future minimum lease payments for these leases are as follows:

Year Ending

Governmental Funds

2016 2017 2018 2019 2020 2021

$

425,894

338,355

73,700

72,712

16,829

1,146

Total

$

928,636

NOTE 10: LONG-TERM LIABILITIES
CAPITAL LEASES
The Catoosa County Board of Education entered into various lease agreements for purchase of land, building and equipment. These lease agreements qualify as capital leases for accounting purposes, and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception.
GENERAL OBLIGATION DEBT OUTSTANDING
General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

Amount

General Government - Series 2011

2.0% - 4.0% $ 25,385,000

The changes in Long-Term Liabilities during the fiscal year ended June 30, 2015, were as follows:

Restated Balance July 1, 2014

Governmental Activities

Additions

Deductions

Balance

Due Within One

June 30, 2015

Year

G.O. Bonds

$

Capital Leases

Bond Premiums Amortized

$

32,885,000 202,978 $
1,377,937
34,465,915 $

$ 1,398,565
1,398,565 $

7,500,000 $ 251,410 661,410
8,412,820 $

25,385,000 $ 1,350,133 716,527
27,451,660 $

7,960,000 65,046
661,410
8,686,456

- 21 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

At June 30, 2015, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30:

Capital Leases

Principal

Interest

2016 2017 2018 2019 2020

$

65,046 $

1,224,475

44,628

14,162

1,822

19,084 15,982 13,093
4,155 535

Total Principal and Interest

$

1,350,133 $

52,849

Fiscal Year Ended June 30

2016

$

2017

2018

Total Principal and Interest

$

General Obligation Debt

Principal

Interest

Unamortized Bond Premium

7,960,000 $ 8,450,000 8,975,000

676,700 $ 348,500
89,750

661,410 55,117

25,385,000 $

1,114,950 $

716,527

NOTE 11: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $251,035 for retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Teachers' Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $13,210
Office of the State Treasurer Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $237,825
Funds paid on behalf of the School District are reported in governmental funds. See Note 16 Retirement Plans for the State support related to the Net Pension Liability.

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CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

NOTE 12: SIGNIFICANT COMMITMENTS
The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2015:

Project

Unearned Executed Contracts

Battlefield Elementary - VCT Floor Replacement

$

Lakeview-Fort Oglethorpe HS - VCT Floor Replacement

Battlefield Elementary - Fire Alarm System

Boynton Elementary - Fire Alarm System

Graysville Elementary - Fire Alarm System

45,277 3,301
26,511 31,260 21,762

$

128,111

The amounts described in this note are not reflected in the basic financial statements.
NOTE 13: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
NOTE 14: SUBSEQUENT EVENTS
On March 1, 2016, voters approved an extension of the Educational Local Option Sales Tax for a period of time not to exceed five years (20 consecutive calendar quarters). Within the referendum, the School District was authorized to issue general obligation bonds in an amount not to exceed $49,000,000. The proceeds from these bonds and sales taxes will be used for educational purposes and capital outlay projects as enumerated within the referendum.
NOTE 15: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand-alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

- 23 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012 pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "payas-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2015:

For certificated teachers, librarians and regional educational service agencies and certain other eligible participants:

July 1, 2014 - June 30, 2015

$945.00 per member per month

For non-certificated school personnel:

July 1, 2014 - June 30, 2015

$596.20 per member per month

No additional contribution was required by the Board for fiscal year 2015 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation.

The School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2015 2014 2013

100%

$

100%

$

100%

$

11,943,274 11,821,884 11,065,810

- 24 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

NOTE 16: RETIREMENT PLANS
Catoosa County Board of Education participates in various retirement plans administered by the State of Georgia as further explained below.
TEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description: All teachers of the School District as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) and certain other support personnel as defined by 47-3-63 are provided pension through the Teachers' Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers' Retirement System of Georgia issues a publicly available separate financial audit report that can be obtained at www.trsga.com/publications.
Benefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.
Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2015. The school district's contractually required contribution rate for the year ended June 30, 2015 was 13.15% of annual school district payroll.

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

Percentage

Required

Fiscal Year

Contributed

Contribution

2015 2014 2013

100%

$

100%

$

100%

$

7,223,549 6,645,843 6,290,446

EMPLOYEES' RETIREMENT SYSTEM
Plan description: The Employees' Retirement System of Georgia (ERS) is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. ERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.

- 25 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Benefits provided: The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the old plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are new plan members subject to modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS.

Under the old plan, the new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.

Retirement benefits paid to members are based upon the monthly average of the member's highest 24 consecutive calendar months, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor. Annually, postretirement cost-of-living adjustments may also be made to members' benefits, provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

Contributions: Member contributions under the old plan are 4% of annual compensation, up to $4,200, plus 6% of annual compensation in excess of $4,200. Under the old plan, the state pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these state contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The School District's contractually required contribution rate, actuarially determined annually, for the year ended June 30, 2015 was 21.96% of annual covered payroll for old and new plan members and 18.87% for GSEPS members. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.

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

Fiscal Year

Percentage Contributed

Required Contribution

2015 2014 2013

100%

$

100%

$

100%

$

8,737 7,242 11,529

PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS)
Plan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers' Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.

- 26 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Benefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service.
Upon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits.

Contributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
At June 30, 2015, the School District reported a liability of $66,884,748 for its proportionate share of the Net Pension Liability ($66,819,412) for TRS and ($65,336) for ERS.
The TRS Net Pension Liability reflected a reduction for support provided to the School District by the State of Georgia for certain public school support personnel. The amount recognized by the School District as its proportionate share of the Net Pension Liability, the related State of Georgia support, and the total portion of the Net Pension Liability that was associated with the School District were as follows:

School District's proportionate share of the TRS Net Pension Liability State of Georgia's proportionate share of the TRS Net Pension Liability associated with the School District
Total

$

66,819,412

125,073

$

66,944,485

The Net Pension Liability was measured as of June 30, 2014. The total pension liability used to calculate the Net Pension Liability was based on an actuarial valuation as of June 30, 2013. An expected total pension liability as of June 30, 2014 was determined using standard roll-forward techniques. The School District's proportion of the Net Pension Liability was based on contributions to TRS and ERS during the fiscal year ended June 30, 2014.
At June 30, 2014, the School District's TRS proportion was 0.528899%, which was a decrease of 0.018288% from its proportion measured as of June 30, 2013. At June 30, 2014, the School District's ERS proportion was 0.001742%, which was a decrease of 0.001592% from its proportion measured as of June 30, 2013.
- 27 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

At June 30, 2015, the School District did not have a PSERS liability for a proportionate share of the Net Pension Liability because of a Special Funding Situation with the State of Georgia, which is responsible for the Net Pension Liability of the plan. The amount of the State's proportionate share of the Net Pension Liability associated with the School District is $958,505.
The PSERS Net Pension Liability was measured as of June 30, 2014. The total pension liability used to calculate the Net Pension Liability was based on an actuarial valuation as of June 30, 2013. An expected total pension liability as of June 30, 2014 was determined using standard roll-forward techniques. The State's proportion of the Net Pension Liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2014.
For the year ended June 30, 2015, the School District recognized pension expense of $3,990,002 for TRS, -$25,722.00 for ERS and $83,240 for PSERS and related revenue of $8,734 for TRS and $83,240 for PSERS. The revenue is support provided by the State of Georgia. For TRS the State of Georgia support is provided only for certain support personnel.
At June 30, 2015, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

TRS

Deferred Outflows of Resources

Deferred Inflows of Resources

ERS

Deferred Outflows of Resources

Deferred Inflows of Resources

Net difference between projected and actual earnings on pension plan investments

$

23,294,664

Changes in proportion and differences between School District contributions and proportionate share of contributions

2,596,539

School District contributions subsequent to the

measurement date

$

7,210,176

$

$

15,946

8,737

47,541

Total

$

7,210,176 $

25,891,203 $

8,737 $

63,487

Catoosa County Board of Education contributions subsequent to the measurement date of June 30, 2014 for TRS and ERS are reported as deferred outflows of resources and will be recognized as a reduction of the Net Pension Liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30:

TRS

ERS

2016 2017 2018 2019 2020

$

-6,413,787 $ -33,700

$

-6,413,787 $ -21,815

$

-6,413,787 $ -3,987

$

-6,413,792 $ -3,985

$

-236,050

- 28 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Actuarial assumptions: The total pension liability as of June 30, 2014 was determined by an actuarial valuation as of June 30, 2013, using the following actuarial assumptions, applied to all periods included in the measurement:
Teachers' Retirement System:

Inflation Salary increases Investment rate of return

3.00% 3.75% - 7.00%
7.50%

average, including inflation net of pension plan investment expense
including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females set back two years for males and set back three years for females.
The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

Employees' Retirement System:

Inflation Salary increases Investment rate of return

3.00% 5.45% - 9.25%
7.50%

average, including inflation net of pension plan investment expense
including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for the periods after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back eleven years for males for the period after disability retirement.
The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

Public School Employees Retirement System:

Inflation Salary increases Investment rate of return

3.00% N/A
7.50%

net of pension plan investment expense, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table set forward one year for males for the period after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back two years for males and set forward one year for females for the period after disability retirement.
The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

- 29 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

The long-term expected rate of return on TRS, ERS and PSERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class

Target Allocation

Long-term Expected Real Rate of Return*

Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks
Total

30.00% 39.70%
3.70% 1.60% 18.90% 6.10%
100.00%

3.00% 6.50% 10.00% 13.00% 6.50% 11.00%

* Rates shown are net of the 3.00% assumed rate of inflation

Discount rate: The discount rate used to measure the total TRS, ERS and PSERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS, ERS, and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Sensitivity of the Catoosa County Board of Education's proportionate share of the Net Pension Liability to changes in the discount rate: The following presents the School District's proportionate share of the Net Pension Liability calculated using the discount rate of 7.50%, as well as what the School District's proportionate share of the Net Pension Liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate:

Teachers' Reti rement Sy stem:

1% Decrease (6.50%)

Current Discount Rate (7.50%)

1% Increase (8.50%)

School District's proportionate share of the Net

Pension Liability

$

123,139,212 $

66,819,412 $

20,441,227

Employees' Reti rement System:

School District's proportionate share of the Net

Pension Liability

$

1% Decrease (6.50%)

Current Discount Rate (7.50%)

95,273 $

65,336 $

1% Increase (8.50%)
39,853

Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS, ERS and PSERS financial report which is publically available at www.trsga.com/publications and www.ers.ga.gov/formspubs/formspubs.

- 30 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

DEFINED CONTRIBUTION PLAN
The Catoosa County Schools Non-TRS 403(B) Plan is an employer contributory plan originally established July 1, 2006, by the Catoosa County Board of Education with Variable Annuity Life Insurance Company. The Plan was transferred to Lincoln Financial Group effective January 1, 2009. Employees eligible for this plan are those employees covered under the Public School Employees Retirement System (PSERS) and thus not eligible for Teachers' Retirement System (TRS). The Board of Education, recognizing PSERS as a limited benefit plan with a limited defined contribution, desired to supplement the retirement income available for this group of employees.
The Plan is funded by member employee elective deferral contributions and employer discretionary contributions. An eligible employee enters the Plan of the first day of the payroll period provided he/she agrees to defer at least $200 annually.
Employer discretionary contributions are contributions the employer may make to the Plan on behalf of the employee without regard to the amount of the employee's elective deferral contributions. These contributions are made at the sole discretion of the employer and in some years such contributions may not be made to the Plan. Employer contributions for fiscal year 2015 were 3.00% of member's annual base salary.
An employee becomes 100% vested with respect to employer discretionary contributions made on his/her behalf after 5 years of service to the Catoosa County School System. Employees are always 100% vested with respect to his/her employee elective deferral contributions.
Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2015 2014 2013

100%

$

100%

$

100%

$

123,044 118,940 114,761

- 31 -

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CATOOSA COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS' RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30, 2015

SCHEDULE "1"

School District's proportion of the Net Pension Liability School District's proportionate share of the Net Pension Liability State of Georgia's proportionate share of the Net Pension Liability
associated with the School District Total
School District's covered-employee payroll School District's proportionate share of the Net Pension Liability
as a percentage of its covered employee payroll Plan fiduciary net position as a percentage of the total Pension Liability

2015

0.528899%

$

66,819,412

125,073

$

66,944,485

$

54,125,004

123.45% 84.03%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by Catoosa County Board of Education.
- 33 -

CATOOSA COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30, 2015

SCHEDULE "2"

School District's proportion of the Net Pension Liability School District's proportionate share of the Net Pension Liability School District's covered-employee payroll School District's proportionate share of the Net Pension Liability
as a percentage of its covered employee payroll Plan fiduciary net position as a percentage of the total Pension Liability

2015

0.001742%

$

65,336

$

39,232

166.54% 77.99%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by Catoosa County Board of Education.
- 34 -

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CATOOSA COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS TEACHERS' RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

Contractually required contribution Contributions in relation to the contractually required contribution Contribution deficiency (excess) School District's covered-employee payroll Contributions as a percentage of covered-employee payroll

2015

2014

2013

$ 7,223,549 $ 6,645,843 $

6,290,446

$ 7,223,549 $ 6,645,843 $

6,290,446

$

0$

0$

0

$ 54,931,930 $ 54,125,004 $ 55,132,412

13.15%

12.28%

11.41%

- 36 -

SCHEDULE "3"

2012

2011

2010

2009

2008

2007

$ 5,663,053 $ 5,671,299 $ 5,382,333 $ 5,185,416 $ 5,121,354 $ 4,886,996 $

$ 5,663,053 $ 5,671,299 $ 5,382,333 $ 5,185,416 $ 5,121,354 $ 4,886,996 $

$

0$

0$

0$

0$

0$

0$

$ 55,089,674 $ 55,165,271 $ 55,260,087 $ 55,865,539 $ 55,187,006 $ 52,661,590 $

10.28%

10.28%

9.74%

9.28%

9.28%

9.28%

2006 4,405,949 4,405,949
0 47,683,427
9.24%

- 37 -

CATOOSA COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

Contractually required contribution Contributions in relation to the contractually required contribution Contribution deficiency (excess) School District's covered-employee payroll Contributions as a percentage of covered-employee payroll

2015

2014

2013

$

8,737 $

7,242 $ 11,529

$

8,737 $

7,242 $ 11,529

$

0$

0$

0

$

39,784 $

39,232 $ 77,373

21.96%

18.46%

14.90%

- 38 -

SCHEDULE "4"

2012

2011

2010

2009

2008

2007

2006

$

19,434 $

21,599 $

22,474 $

22,483 $

22,174 $

23,852 $

20,564

$

19,434 $

21,599 $

22,474 $

22,483 $

22,174 $

23,852 $

20,564

$

0$

0$

0$

0$

0$

0$

0

$ 167,099 $ 207,484 $ 215,890 $ 215,973 $ 213,002 $ 229,126 $ 197,538

11.63%

10.41%

10.41%

10.41%

10.41%

10.41%

10.41%

- 39 -

CATOOSA COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2015

SCHEDULE "5"

Teachers' Retirement System
Changes of assumptions : In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience.
Method and assumptions used in calculations of actuarially determined contributions : The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2015 reported in that schedule:

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation rate Salary increases Investment rate of return

June 30, 2012 Entry age Level percentage of payroll, open 30 years Seven-year smoothed market 3.00% 3.75 7.00%, including inflation 7.50%, net of pension plan investment
expense, including inflation

Employees' Retirement System

Changes of assumptions : There were no changes in assumptions or benefits that affect the measurement of the total pension liability since the prior measurement date.

Method and assumptions used in calculations of actuarially determined contributions : The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2015 reported in that schedule:

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation rate Salary increases
Investment rate of return

June 30, 2012 Entry age Level dollar, open 30 years Seven-year smoothed market 3.00% 2.725% 4.625% for FY 2012-2013, 5.45% - 9.25% for FY2014+ 7.50%, net of pension plan investment
expense, including inflation

- 40 -

CATOOSA COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2015

SCHEDULE "6"

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 Operation
Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Other Sources Other Uses
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$

28,394,695 $

28,394,695 $

29,332,359 $

430,000

430,000

606,947

59,331,733

59,698,673

60,198,626

8,026,298

8,539,360

7,741,039

1,940,600

1,940,600

2,637,035

2,000

2,000

33,360

3,509,943

98,125,326

99,005,328

104,059,309

937,664 176,947 499,953 -798,321 696,435
31,360 3,509,943
5,053,981

66,525,235
3,538,985 2,069,715 1,528,563 1,042,908 7,343,100
649,591 7,794,950 4,823,344
811,871 315,225 5,891,000
1,517
102,336,004
-4,210,678

67,664,010
3,713,309 2,779,033 1,528,563 1,073,019 7,342,503
649,591 7,794,950 4,727,645
811,871 355,752 5,891,000
1,517
104,332,763
-5,327,435

65,580,121
4,244,620 2,404,170 1,823,038 1,311,845 7,273,453
666,717 7,816,835 4,442,883
517,618 1,314,922 5,136,380
505,231 92,200
103,130,033
929,276

392,955 -392,955
0 -4,210,678 9,769,485

364,662 -392,955
-28,293 -5,355,728 9,769,485

48,565
48,565 977,841 9,933,207

$

5,558,807 $

4,413,757 $

10,911,048 $

2,083,889
-531,311 374,863 -294,475 -238,826
69,050 -17,126 -21,885 284,762 294,253 -959,170 754,620 -503,714 -92,200
1,202,730
6,256,711
-316,097 392,955
76,858
6,333,569
163,722
6,497,291

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include the budgeted revenues or expenditures of the various principal accounts. The actual revenues and expenditures of the various principal accounts are $3,565,749 and $3,561,311, respectively.
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.

- 41 -

CATOOSA COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2015

SCHEDULE "7"

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 Services State Administrative Expenses for Child Nutrition
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 Pass-Through From Georgia Department of Education ARRA - Race-to-the-Top Incentive Grants Career and Technical Education - Basic Grants to States Education for Homeless Children and Youth English Language Acquisition Grants Improving Teacher Quality State Grants Title I Grants to Local Educational Agencies
Total Other Programs
Total U. S. Department of Education
Health and Human Services, U. S. Department of Child Care and Development Fund Cluster Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning Child Care and Development Block Grant
Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program
Total Expenditures of Federal Awards
N/A = Not Available

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555

N/A

N/A

$

(2) 4,925,394 (1)
4,925,394

10.560

N/A

10,502 4,935,896

84.027

N/A

84.173

N/A

84.395

N/A

84.048

N/A

84.196

N/A

84.365

N/A

* 84.367

N/A

84.010

N/A

1,682,061 50,014
1,732,075
13,204 98,257 41,322 12,557 325,561 1,943,992
2,434,893
4,166,968

93.575

N/A

10,282

142,037

$

9,255,183

- 42 -

CATOOSA COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2015

SCHEDULE "7"

Notes to the Schedule of Expenditures of Federal Awards
(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $318,035.
(2) Expenditures for the funds earned on the School Breakfast Program ($779,565) were not maintained separately and are included in the 2015 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.

- 43 -

CATOOSA COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2015

SCHEDULE "8"

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 Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Education Equalization Funding Grant Other State Programs Food Services Math and Science Supplements Preschool Handicapped Program Teacher of the Year Teachers' Retirement Vocational Education
Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Office of the State Treasurer Public School Employees Retirement

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

847,042

$

847,042

2,882,024 1,049,172 6,785,075 1,573,629 3,474,478
552,279 6,283,266 5,940,515 2,090,921 11,957,093 3,292,729 1,246,803
476,018 130,189 1,201,689 352,802 219,921
1,563,121 2,523,150 2,758,369 -5,078,603
813,029 194,813 6,341,355
137,333 34,409 99,290 1,014 13,210
204,666

2,882,024 1,049,172 6,785,075 1,573,629 3,474,478
552,279 6,283,266 5,940,515 2,090,921 11,957,093 3,292,729 1,246,803
476,018 130,189 1,201,689 352,802 219,921
1,563,121 2,523,150 2,758,369 -5,078,603
813,029 194,813 6,341,355
137,333 34,409 99,290 1,014 13,210
204,666

$

1,295,495

237,825

1,295,495 237,825

$ 60,198,626 $ 1,295,495 $ 61,494,121

See notes to the basic financial statements.

- 44 -

CATOOSA COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2015

SCHEDULE "9"

PROJECT ESPLOST III

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED IN PRIOR YEARS (3) (4)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT EXPENDED (5)

ESTIMATED COMPLETION
DATE (5)

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 personality (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.

$

ESPLOST IV (1)
Making capital expenditures for instructional purposes, acquiring instructional and technological equipment (including but not limited to wireless electronic devices, desktop and laptop computers, smartboards, projectors, scanners, printers, and student response devices), and acquiring the wiring and other infrastructure necessary to accommodate the use of such technology equipment

(2) Acquiring land for constructing and equipping new schools (including a new elementary school)

(3) Making additions, expansions, modifications and renovations to existing school sites or campuses (including but not limited to classrooms, cafeterias, media centers, restrooms, band rooms and gymnasiums)

(4) Acquiring, constructing and equipping new roofs, a new Lakeview Fort Oglethorpe High School gymnasium and new Ringgold High School theatre

(5) Installing roofing, sprinklers, HVAC, paving, plumbing, electrical wiring and fixtures, painting, fences, alarms, telephone upgrading, equipping, lighting, and general land improvements

(6) Acquiring, constructing and equipping facilities for student evaluation and testing, teacher training and professional learning, special education and storage

(7) Physical education equipment purchases and maintenance

(8) School bus purchases (mainly for replacement)

(9) Acquiring, constructing and equipping transportation facilities to house, drive into/under and repair school busses (including the acquisition of land, and construction of needed facilities and appurtenances therefore): and paying for the expenses incident to accomplish the foregoing purposes

59,000,000 $
23,121,409 14,250,000
6,802,231 13,546,360
5,150,000 5,000,000
250,000 6,800,000
4,080,000

50,796,864 $

0 $

49,803,757 $

5,423,792 18,934

363,014 0

5,060,778 18,934

12,646,795

163,599

12,330,032

18,424,431

211,044

18,213,387

5,612,163

2,677,644

2,934,519

0 0 2,751,792

0 0 381,913

0 0 2,369,879

4,049,523

1,509,569

2,539,954

$ 138,000,000 $

99,724,294 $

5,306,783 $

93,271,240 $

0 $ 0 $

0 December 2016
June 2017 June 2017 June 2017 June 2017 June 2017 June 2017 June 2017 June 2017
June 2017 0

(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

$

10,630,819

Current Year

985,900

Total

$

11,616,719

(5) Original published "Schedule of Approved Local Option Sales Tax Projects" indicated an estimated completion date for ESPLOST III of August 1, 2012. This date has been revised to implement future acquisitions and expenditures in support of projects listed in the ESPLOST III referendum, as approved by the voters of Catoosa County.

See notes to the basic financial statements.

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CATOOSA COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2015

SCHEDULE "10"

DESCRIPTION

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

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 III

Category IV

Category V

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

3,347,857 $ 1,139,210 7,789,617 1,816,039 4,015,956
612,939 7,225,220 6,755,187 2,432,359 13,648,135
3,754,217 1,392,396
545,355 149,150

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

54,623,637

Media Center Program Staff and Professional Development

1,377,764 246,789

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

3,857,523 $ 195,920
9,391,914 597,342
5,103,343
137,218 7,798,536 7,366,239 2,572,749
3,345,780 517,251
8,150,369 947,451 465,133
3,153,974 1,341,524
998,809 233,140
56,174,215
1,562,324 39,766

62,556 $ 9,491
156,725 39,506 94,078
9,525 176,742 359,600 221,679
72,677 22,810 28,317 20,335
14,569
4,653
1,293,263
141,051 89,910

3,920,079 205,411
9,548,639 636,848
5,197,421
146,743 7,975,278 7,725,839 2,794,428
3,418,457 540,061
8,178,686 967,786 465,133
3,168,543 1,341,524
998,809 237,793
57,467,478
1,703,375 129,676

TOTAL QBE FORMULA FUNDS

$

56,248,190 $

57,776,305 $

1,524,224 $

59,300,529

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

See notes to the basic financial statements.

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SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
May 26, 2016

Honorable Nathan Deal, 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 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, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Catoosa County Board of Education as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise Catoosa County Board of Education's basic financial statements and have issued our report thereon dated May 26, 2016.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Catoosa County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Catoosa County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Catoosa County Board of Education's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

2015YB-10

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Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Catoosa County Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, not to provide an opinion on the effectiveness of the Catoosa County Board of Education's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Catoosa County Board of Education's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,

GSG:er 2015YB-10

Greg S. Griffin State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
May 26, 2016

Honorable Nathan Deal, 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 REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
Ladies and Gentlemen:
Report on Compliance for Each Major Federal Program
We have audited Catoosa County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2015. Catoosa County Board of Education's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of Catoosa County Board of Education's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Catoosa County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

2015SA-10

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We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Catoosa County Board of Education's compliance.
Opinion on Each Major Federal Program
In our opinion, the Catoosa County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2015.
Report on Internal Control over Compliance
Management of Catoosa County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Catoosa County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Catoosa County Board of Education's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,

GSG:er 2015SA-10

Greg S. Griffin State Auditor

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

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CATOOSA COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.

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SECTION IV FINDINGS AND QUESTIONED COSTS

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CATOOSA COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2015

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements
Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information
Internal control over financial reporting: Material weakness identified? Significant deficiency identified?

Unmodified
No None Reported

Noncompliance material to financial statements noted:

No

Federal Awards

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

No None Reported

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

Unmodified

Any audit findings disclosed that are required to be reported in

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

No

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555 84.367

Child Nutrition Cluster Improving Teacher Quality State Grants

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

$300,000

Auditee qualified as low-risk auditee?

No

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