Cherokee County School District, comprehensive annual financial report for the fiscal year ended June 30, 2018, Canton, Georgia

CHEROKEE COUNTY SCHOOL DISTRICT
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2018 CANTON, GEORGIA

COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
CANTON, GEORGIA
PREPARED BY: CHEROKEE COUNTY SCHOOL DISTRICT DIVISION OF FINANCIAL MANAGEMENT KENNETH OWEN, CHIEF FINANCIAL OFFICER

Introductory Section

Cherokee County School District Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2018

TABLE OF CONTENTS

Introductory Section

Table of Contents Letter of Transmittal Board Members Organizational Chart

i-iii iv-viii
ix x

Financial Section

Independent Auditor's Report Management's Discussion and Analysis
Basic Financial Statements: Government-wide Financial Statements:
Statement of Net Position Statement of Activities Fund Financial Statements: Balance Sheet Governmental Funds Reconciliation of the Governmental Balance Sheet to the
Statement of Net Position Statement of Revenues, Expenditures, and Changes in
Fund Balances Governmental Funds Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances to the Statement of Activities General Fund Statement of Revenues, Expenditures,
and Changes in Fund Balance Budget to Actual Statement of Fiduciary Assets and Liabilities Agency Fund Statement of Changes in Fiduciary Assets and Liabilities
Agency Fund Notes to the Basic Financial Statements

1-3 4-12
13 14
15
16
17
18
19 20
21 22-56

Required Supplementary Information:

Schedule of Proportionate Share of Net Pension Liability

Teachers Retirement System of Georgia

57

Schedule of Contributions Teachers Retirement System of Georgia 58

Schedule of Proportionate Share of Net Pension Liability

Employees' Retirement System of Georgia

59

Schedule of Contributions Employees' Retirement System of Georgia 60

Schedule of Proportionate Share of Net Pension Liability

Public School Employees Retirement System of Georgia

61

Schedule of Proportionate Share of Net Pension Liability

School OPEB Fund

62

Schedule of Contributions School OPEB Fund

63

i

Cherokee County School District Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2018

Notes to the Required Supplementary Information

64

Special Reports Section:

Schedule of Expenditures of Educational Local Option Sales Tax

Proceeds

65

Statistical Section

Financial Trends These schedules contain trend information to help the reader understand how the Board's financial performance and well-being have changed over time.

Net Position by Component Changes in Net Position Fund Balances Governmental Funds Changes in Fund Balances Governmental Funds

66 67-68
69 70

Revenue Capacity These schedules contain information to help the reader access the Board's most significant local revenue source, property tax.

Assessed Value and Estimated Actual Value of Property by Type

71

Property Tax Rates Direct and Overlapping Governments

72

Principal Property Taxpayers

73

Property Tax Levies and Collections

74

Debt Capacity These schedules present information to help the reader assess the affordability of the Board's current levels of outstanding debt and the Board's ability to issue additional debt in the future.

Ratios of Total Debt Outstanding by Type

75

Ratios of General Bonded Debt Outstanding

76

Direct and Overlapping Governmental Activities Debt

77

Legal Debt Margin

78

Economic & Demographic These schedules offer demographic and economic indicators to help the reader understand the environment within which the Board's financial activities take place.

Demographic and Economic Statistics

79

Principal Employers

80

ii

Cherokee County School District Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2018

Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the Board's financial report related to the services the Board provides and the activities it performs.

Employees by Function Teacher Salary Schedule School Building Capacity Number of Personnel and Ratio of Pupils to Professional Personnel Operating Statistics

81 82 83-84 85 86

Compliance Section

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

87-88

Independent Auditor's Report on Compliance for Each Major Federal Program

and on Internal Control Over Compliance Required by the Uniform

Guidance

89-90

Schedule of Expenditures of Federal Awards

91

Schedule of Findings and Questioned Costs

92-93

iii

SCHOOL BOARD MEMBERS
Front row, from left, Kelly Poole (District 1), Chair, Kyla Cromer and Patsy Jordan (District 2). Back row from left, Superintendent Dr. Brian Hightower, Robert Rechsteiner (District 4), Vice-Chair, Mike Chapman (District 6), John Harmon (District 3) and Clark Menard (District 5).
Kyla Cromer, School Board Chair Mike Chapman, School Board Vice-Chair
John Harmon Patsy Jordan Clark Menard Kelly Poole Robert Rechsteiner
ix

CCSD Organizational Chart of Divisions - - SY 2017-18 and SY 2018-19
CHEROKEE COUNTY CITIZENS
BOARD OF EDUCATION
Superintendent of Schools/ Chief Executive Officer DR. BRIAN V. HIGHTOWER

Chief of Staff
MIKE MCGOWAN

Technology and Information Services
Division

Support Services Division

Chi ef I nform ation
Offi cer
BOBBY BLOUNT

Chief Support Services Officer
BILL SEBRING

Communications Division
Chief Communic
ations Officer BARBARA JACOBY

Deputy Superintendent/ Chief Operations
Officer
TREY OLSON

School Operations
Division

Safety and Security
Division

Chief of Police MARK KISSEL
x

Human Resources
Division
Chief Human Resource Officer RICK BEAULIEU

Financial Man agement
Division

Curriculum and Instruction
Division

Chief Financial Officer
KENNETH OWEN

Chief Academic
Officer
DR. NICOLE HOLMES

Financial Section

1

2

3

CHEROKEE COUNTY SCHOOL DISTRICT Management's Discussion and Analysis For the Year ended June 30, 2018
Introduction
The discussion and analysis of the Cherokee County School District's (the "School District") financial performance provides an overview of the School District's financial activities for the fiscal years ended June 30, 2018 and June 30, 2017. The intent of this discussion and analysis is to look at the School District's financial performance as a whole. Readers should also review the notes to the basic financial statements and the financial statements to enhance their understanding of the School District's financial performance.
Financial Highlights
Key financial highlights for fiscal year 2018 are as follows:
Total revenue increased from $441.4 million in 2017 to $468.5 million in 2018, an increase of $27.1 million, or 6.2%. The revenue increase was primarily from higher state funding and property and sales taxes.
Total expenses increased from $463.2 million in 2017 to $466.6 million in 2018, an increase of $3.4 million, or .7%. The increased expense was largely due to higher salaries and benefits.
Total Fund Balance increased from $108.7 million in in 2017 to $151.1 million in 2018, an increase of $42.4 million, or 39%. The increase is largely due to the issuance of general obligation bonds, which increased the Capital Projects' fund balance by $29.7 million, as well as a $4.5 million increase in the General Fund's fund balance and an $8.3 million increase in the Debt Service fund balance.
Total net position changed from negative $54.6 million in 2017 to negative $357.4 million in 2018, a decrease of $302.8 million. Net position was restated as of July 1, 2017 by a decrease of $304.8 million due to the adoption of Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. These pension costs are spread out over multiple years well into the future and therefore do not negatively impact the financial strength of the School District.
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 School District. These include the Government-wide and fund financial statements.
The Government-wide financial statements include the Statement of Net Position and Statement of Activities. These statements provide information about the activities of the School District presenting both short-term and long-term information about the overall financial status.
4

CHEROKEE COUNTY SCHOOL DISTRICT Management's Discussion and Analysis For the Year ended June 30, 2018
The fund financial statements focus on individual parts, reporting the School District's operation in more detail. The Governmental Funds statements disclose how basic services are financed in the short-term as well as what remains for future spending. The Fiduciary Funds statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others.
The fund financial statements reflect the School District's most significant funds. For the years ending June 30, 2018 and 2017, the General Fund, the 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 presented that further supplements understanding of the financial statements.
Government-wide Statements
The government-wide financial statements provide readers with a broad overview of the School District's finances, in a manner similar to a private-sector business.
The Statement of Net Position presents information on all of the School District's assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the School District is improving or deteriorating.
The Statement of Activities presents information showing how the School District's net position changed during the most recent fiscal year. Changes in net position appear as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses appear in this statement for some items that will result in future fiscal period's cash flows (e.g., uncollected taxes and earned but unused vacation leave).
The Statement of Net Position and the Statement of Activities reflect the School District's governmental activities.
Fund Financial Statements
A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The School District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. School District funds are comprised of governmental funds and fiduciary funds.
5

CHEROKEE COUNTY SCHOOL DISTRICT Management's Discussion and Analysis For the Year ended June 30, 2018
Governmental Funds Most of the School District's activities are reported in governmental funds. The governmental fund statements focus on how money flows in and out of those funds and the balances left at year-end that are available for spending in future periods. These funds are reported using the modified accrual basis of accounting which measures cash and all other financial assets that can readily be converted to cash. These statements also provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The School District maintains numerous governmental funds with the majority of activities occurring in the General Fund. The differences between governmental activities (reported in Statement of Net Position and Statement of Activities) and governmental funds are reconciled in the financial statements. Fiduciary Funds The School District is the trustee, or fiduciary, for assets that belong to others. The School District's fiduciary funds include the clubs and organizations within the Student Activity Fund. The School District is responsible for ensuring that the assets in this fund are used exclusively for their intended purposes for the benefit of those to whom the assets belong. The School District excludes this fund from the government-wide financial statements because it cannot use the assets to finance its operations.
6

CHEROKEE COUNTY SCHOOL DISTRICT Management's Discussion and Analysis For the Year ended June 30, 2018

Financial Analysis of the School District as a Whole

Recall that the Statement of Net Position provided the perspective of the School District as a whole. The table below provides a summary of the School District's net position as of June 30, 2018 and 2017.

Net Position

Governmental Activities

June 30, 2018

June 30, 2017

Change 2017-2018

Assets Current and Other Assets Capital Assets, Net Total Assets

$ 194,155,577 $ 150,047,934

576,125,423

589,362,549

$ 770,281,000 $ 739,410,483

29.4% -2.2% 4.2%

Deferred Outflows of Resources

$

86,899,622 $ 111,728,512

-22.2%

Liabilities Current Liabilities Long-Term Liabilities Total Liabilities

$

49,708,993 $ 50,482,203

1,136,281,960

852,412,596

$ 1,185,990,953 $ 902,894,799

Deferred Inflows of Resources

$

28,627,544 $

2,832,881

Net Position Invested in Capital Assets, Net of Debt $ Restricted Unrestricted

110,975,930 $ 90,376,401
(558,790,206)

144,651,983 52,384,239
(251,624,907)

Total Net Position

$ (357,437,875) $ (54,588,685)

-1.5% 33.3% 31.4%
910.5%
-23.3% 72.5% 122.1%
-554.8%

Governmental accounting standards require the School District to report its proportional liability of state administered pension and OPEB plans in which the School District participates for the benefit of its employees. Deferred Outflows of Resources reflected a decrease of 22.2% and Deferred Inflows of Resources increased 910.5%, due to this reporting. Additionally, the increase in Long-Term Liabilities of 31.4% is primarily due to the requirement to report the district's portion of the Net OPEB Liability of $306.4 million for the year ended June 30, 2018. Although the resulting decrease in net position of 554.8% causes a deficit balance in unrestricted net position, it should not be considered a financial weakness as the pension and OPEB costs are spread out over multiple years well into the future.

7

CHEROKEE COUNTY SCHOOL DISTRICT Management's Discussion and Analysis For the Year ended June 30, 2018

The table below shows the Changes in Net Position for fiscal years ending June 30, 2018 and June 30, 2017.

Revenues

Program Revenues

Charges for Services

$

Operating grants and Contributions

Capital Grants and Contributions

General Revenues

Taxes

$

Other

Total Revenues

$

19,786,586 $ 233,948,283
4,600,742

20,556,631 221,016,968
2,079,785

208,156,705 $ 2,036,919
468,529,235 $

192,685,171 5,021,207
441,359,762

-3.7% 5.9% 121.2%
8.0% -59.4%
6.2%

Expenses Instruction Pupil and Instructional Services School and Administrative Services Student Transportation Maintenance and Operations Support Services Food Nutrition Program Community Service Operations Interest on Long-term Debt Total Expenses

$

307,545,475 $ 304,154,371

37,478,527

35,113,913

32,718,111

30,852,605

24,470,133

22,969,715

25,712,187

25,171,126

5,144,624

4,287,159

16,709,035

16,377,079

2,133,240

2,001,908

14,683,311

22,271,369

$

466,594,643 $ 463,199,245

1.1% 6.7% 6.0% 6.5% 2.1% 20.0% 2.0% 6.6% -34.1% 0.7%

Increase (Dec) in Net Position $

Beginning Net Position

Prior Period Adjustment

Ending Net Position

$

1,934,592 $ (54,588,685) (304,783,782) (357,437,875) $

(21,839,483) (32,749,202)
(54,588,685)

-108.9% 66.7% -
-554.8%

Revenues
In 2018, the School District's total revenues increased 6.2%, or $27.2 million, over the prior year due primarily to an increase in state funding and increased tax revenue.
Operating Grants and Contributions increased 5.9%, or $12.9 million, over the prior year due to an increase in state instructional program revenue.
Capital Grants and Contributions increased 121.2%, or $2.5 million, over the prior year due to an increase in reimbursements received from the Georgia State Financing and Investment Commission to offset certain construction projects.
General Revenues - Taxes increased 8.0%, or $12.5 million, over the prior year due to a 9.2% increase in real property tax values and a 6.6% increase in sales taxes within the School District's county during the year ended June 30, 2018.

8

CHEROKEE COUNTY SCHOOL DISTRICT Management's Discussion and Analysis For the Year ended June 30, 2018

Expenses

In 2018, the School District's total expenses increased 0.7%, or $3.4 million, over the prior year due primarily to an increase in salaries and benefits, offset by a decrease in instructional textbooks costs and a reduction in interest on long-term debt.

The School District added 41 teachers in fiscal year 2018 to address student population growth and also hired five teachers at the elementary school level to further reduce Districtwide class sizes.
Initiatives to attract and retain the best teachers, principals and support staff in fiscal year 2018 included providing a 2% cost-of-living raise and an annual longevity-step increase for all eligible employees.
Instructional operating costs decreased due to a reduction in textbook adoption costs during fiscal year 2018.
Interest on Long-term Debt decreased 34.1%, or $7.6 million, primarily due to the change in amortization amounts from prior year.

Cost of Services

Total Cost of Services

Net Cost of Services

2018

2017

2018

2017

Instruction

$

Support Services

Pupil Services

Improvement of Instruction Services

Educational Media Services

General Administration

School Administration

Business Administration

Maintenance and Operations

Student Tranportation Services

Central Support Services

Other Support Services

Operations and Noninstructional Services

Community Service Operations

Food Service Operations

Interest on Long-term Debt

Total

$

307,545,475 $ 304,154,371

$

18,963,817 13,800,487
4,714,223 4,665,197 25,260,871 2,792,043 25,712,187 24,470,133 5,144,624
-

18,457,952 12,314,950
4,341,011 4,639,969 22,616,547 3,596,089 25,171,126 22,969,715 4,228,809
58,350

2,133,240

2,001,908

16,709,035

16,377,079

14,683,311

22,271,369

466,594,643 $

463,199,245

$

108,138,220 $
11,984,638 8,870,266 153,339 3,873,134
17,368,488 2,746,189
14,808,969 21,571,473
5,103,729 -
2,133,193 (224,699)
11,732,093 208,259,032 $

108,880,359
17,660,466 10,956,641
18,802 4,584,319 14,396,082 3,440,258 14,729,594 20,889,930
229,419 58,350
2,001,908 (571,636)
22,271,369 219,545,861

The Cost of Services table above shows, for governmental activities, 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 School District's taxpayers by each activity (44.6% overall for the year ended June 30, 2018).

9

CHEROKEE COUNTY SCHOOL DISTRICT Management's Discussion and Analysis For the Year ended June 30, 2018
Financial Analysis of the School District's Funds
The School District ended fiscal year 2018 with a positive fund balance in its governmental funds. The combined balance of all governmental funds, at $151.1 million, was 39% higher than 2017's ending balance of $108.7 million. The General Fund's fund balance increased by $4.5 million, or 8.0%. This level achieves the Board Policy goal of the School District achieving and maintaining an unassigned fund balance in the General Fund at fiscal year-end of not less than 12.0-15.0% of prior year general fund budgeted expenditures. Capital Projects fund increased its fund balance by $29.7 million, an increase of 298.5%, as new bonds were issued during the fiscal year. Debt Service increased its fund balance by $8.3 million, an increase of 19.5%.
General Fund Budgeting Highlights
The most significant fund for the School District is the General Fund, funded primarily through state revenue and local property tax revenue. The State of Georgia is required to maintain a balanced budget (a constitutional requirement in Georgia), as are all state-funded school districts.
For the General Fund, actual revenues of $419.6 million were 100.5% of the final budgeted amount of $417.4 million. The final actual expenditures of $415.3 million were 100.1% of the final budgeted amount of $415.0 million. While budgeted revenues exceeded budgeted expenditures by $2.4 million, actual results for the fiscal year show that expenditures were under revenues by $4.4 million.
General Fund Balance
As the operating fund of the School District, General Fund revenue from state and federal sources accounted for 55.5% of revenue. The other 44.5% is from local sources, primarily ad valorem taxes. In fiscal year 2018, state and federal funding increased by $9.6 million, due to increased state funding as a result of student enrollment growth and employee benefit costs. Local revenues increased by $8.7 million. This is a result of 9.2% growth in the property tax digest over prior year. The School District's maintenance and operation millage is 18.95 mils, a reduction from 19.45 mils in fiscal year 2017.
Capital Assets and Debt Administration
Capital Assets
As of June 30, 2018 and June 30, 2017, the School District had $576.1 million and $589.4 million, respectively, invested in a broad range of capital assets, including land, buildings and furniture and equipment for its governmental activities. For two consecutive years, the School District observed asset depreciation exceed the acquisition of new assets. The table presented on the next page summarizes and compares the capital assets for 2018 and 2017, breaking down the asset balances, by class, net of accumulated depreciation.
10

CHEROKEE COUNTY SCHOOL DISTRICT Management's Discussion and Analysis For the Year ended June 30, 2018

Capital Assets (Net of Accumulated Depreciation)

Governmental Activities Fiscal Year 2018 Fiscal Year 2017

Land Construction in Progress Building and Improvements Land Improvements Equipment

$ 31,248,204 $ 2,116,527
522,816,869 10,371,969 9,571,854

31,226,934 15,267,328 523,704,088 10,111,456
9,052,743

Total

$ 576,125,423 $ 589,362,549

Long-Term Obligations
The School District issued $39.7 million in General Obligation Bonds during the year ended June 30, 2018. As of June 30, 2018, the School District had $422.5 million in general obligation and qualified school construction bonds outstanding with $9.4 million due within one year. On November 8, 2016, the citizens of Cherokee County approved a referendum to collect a one cent Education Special Purpose Local Option Sales Tax (Ed SPLOST) for five years beginning January 1, 2018 and ending December 31, 2022. The bonds will be repaid from sales tax proceeds of this continuing Ed SPLOST. The table below summarizes and compares the School District's liabilities for 2018 and 2017.

Long-term Liabilities at June 30

Governmental Activities Fiscal Year 2018 Fiscal Year 2017

Bonds Payable Bond Premium Compensated Absences Workers Compensation Claims Payable Net Pension Liability Net OPEB Liability

$ 422,505,000 $ 48,598,225 1,545,657 479,706
356,740,189 306,413,183

404,395,000 48,463,109 1,465,733 610,163
397,478,591 -

Total

$ 1,136,281,960 $ 852,412,596

At June 30, 2018, the School District's assigned bond ratings were Aa2 Stable (upgraded from Aa2 during fiscal year 2018) and AA Stable (upgraded from AA- Positive during fiscal year 2018) as determined by Moody's Investor Services, Inc. and Standard and Poor's Rating Services, respectively.
Additional information on the School District's capital assets and long-term obligations can be found in Note 6 and Noted 8, respectively, on pages 35 and 36 of this report.

11

CHEROKEE COUNTY SCHOOL DISTRICT Management's Discussion and Analysis For the Year ended June 30, 2018
Factors Affecting the School District's Future
The fiscal year 2019 budget was presented to the public and tentatively adopted by the Board of Education on May 17, 2018 with the final adoption on June 21, 2018. The budget represents an investment plan for the School District, its students, employees, and the communities as a whole. The budget is tied directly to the strategic vision and direction of the Board of Education.
The budget for the General Fund for fiscal year 2019 is $454.1 million, representing an increase of 5.2% from the fiscal year 2018 General Fund budget. For the first time since fiscal year 2003, the Governor and General Assembly have eliminated austerity reductions from the Quality Basic Education (QBE) funding formula for public education. However, the cumulative effect of the previous fiscal year austerity reductions for the School District over the 15-year period was a loss of approximately $209.2 million. The persistent state cuts resulted in employee furlough days, increased class sizes and various cuts across-the-board to the School District's educational program. The restoration of $4 million allows several budgetary enhancements including filling 55 new teacher positions.
The fiscal year 2019 millage rate is 19.45 mils, with 18.95 mils to support the School District's operating budget (Maintenance and Operations) and .50 mils for bond debt service. Positively impacting revenue estimates is projected growth in the local property tax digest. The value of the ad valorem tax digest increased by 7.6% in fiscal year 2017 and 9.2% in fiscal year 2018. The tax digest is projected to increase by 7.2% in fiscal year 2019. This indicates that existing property values have stabilized, and new construction is being added to the digest.
The School District plans capital improvements as future capital needs arise due to increased student population, facility repair, and maintenance needs. Specific capital expenditure plans are formalized in conjunction with individual general obligation bond issues, collections from Education Special Purpose Local Options Sales Tax (Ed SPLOST), and anticipated annual receipts of capital outlay funds from the State of Georgia Department of Education. The School District regularly monitors anticipated capital outlay needs.
Contacting the School District's Office of Financial Management
This financial report is designed to provide a general overview of the Cherokee County School District's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of Financial Management, Cherokee County School District, P.O. Box 769, Canton, Georgia, 30169.
12

Basic Financial Statements

CHEROKEE COUNTY SCHOOL DISTRICT Statement of Net Position June 30, 2018

Assets Cash and Cash Equivalents Investments Receivables
Taxes State Government Federal Government Other Inventory Capital Assets, Nondepreciable Capital Assets, Net
Total Assets
Deferred Outflow of Resources Pension Contributions OPEB Contributions Deferred Charges
Total Deferred Outflows of Resources
Total Assets and Deferred Outflows of Resources
Liabilities Accounts Payable Salaries and Benefits Payable Accrued Interest Payable Retainage Payable Net Pension Liability Net OPEB Liability Long-term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
Deferred Inflows of Resources Pension Plan Changes OPEB Changes
Total Deferred Inflows of Resources
Total Liabilities and Deferred Inflows of Resources
Net Position Net Investment In Capital Assets Restricted For:
Capital Projects Debt Service Unrestricted
Total Net Position
The accompanying notes are an integral part of this financial statement.
13

Governmental Activities
$ 132,031,407 16,799,372
8,386,986 32,107,930
3,895,847 183,656 750,379
33,364,731 542,760,692 770,281,000
63,458,928 17,486,962
5,953,732 86,899,622
857,180,622
3,576,760 36,313,523
8,505,808 1,312,902 356,740,189 306,413,183
17,611,300 455,517,288 1,185,990,953
5,294,962 23,332,582 28,627,544
1,214,618,497
110,975,930
39,591,694 50,784,707 (558,790,206) $ (357,437,875)

CHEROKEE COUNTY SCHOOL DISTRICT Statement of Activities
For the Fiscal Year Ended June 30, 2018

Program Revenues

Functions/Programs

Expenses

Charges for Services

Operating Grants and Contributions

Capital Grants and Contributions

Governmental Activities :

Instruction

$ 307,545,475 $ 12,515,944 $ 185,367,922 $

Support Services

Pupil Services

18,963,817

-

6,979,179

Improvement of Instruction Services

13,800,487

-

4,930,221

Educational Media Services

4,714,223

-

4,560,884

General Administration

4,665,197

-

715,954

School Administration

25,260,871

-

7,872,864

Business Administration

2,792,043

-

41,784

Maintenance and Operations

25,712,187

227,793

10,652,763

Student Transportation Services

24,470,133

-

2,898,660

Central Support Services

5,144,624

-

40,894

Other Support Services

-

-

-

Operations of Noninstructional Services:

Community Service Operations

2,133,240

-

47

Food Services Operations

16,709,035

7,042,849

9,887,111

Interest on Long-term Debt

14,683,311

-

-

Total Governmental Activities

$ 466,594,643 $ 19,786,586 $ 233,948,283 $

1,523,389
76,109 19,519 4,070 22,662 -
3,775 2,951,218 4,600,742

General Revenues: Taxes:
Property Tax, Levied for General Purposes Property Tax, Levied for Debt Service Educational Local Option Sales Tax Other Tax Miscellaneous Restricted Investment Earnings Unrestricted Investment Earnings Loss on Disposal of Capital Assets Total General Revenues
Change in Net Position Net Position - Beginning of Year Prior Period Adjustment
Net Position - End of Year

Net (Expense) Revenue and Changes in Net Position
(108,138,220)
(11,984,638) (8,870,266) (153,339) (3,873,134)
(17,368,488) (2,746,189)
(14,808,969) (21,571,473)
(5,103,730) -
(2,133,193) 224,700
(11,732,093) (208,259,032)
158,505,094 4,120,032
38,528,529 7,003,050 1,492,706 945,547 467,627 (868,961)
210,193,624 1,934,592
(54,588,685) (304,783,782) (357,437,875)

The accompanying notes are an integral part of these financial statements.
14

CHEROKEE COUNTY SCHOOL DISTRICT Balance Sheet
Governmental Funds June 30, 2018

Assets Cash and Cash Equivalents Investments Receivables
Taxes State Government Federal Government Other Inventories
Total Assets
Liabilities and Fund Balance
Liabilities Accounts Payable Salaries and Benefits Payable Retainage Payable
Total Liabilities
Deferred Inflows of Resources Unearned Revenue
Total Deferred Inflows of Resources

General Fund

District-Wide Capital Projects

Debt Service

Total Governmental
Funds

$

58,838,078 $

42,255,150 $

30,938,179 $

132,031,407

534,728

-

16,264,644

16,799,372

4,805,102

32,107,930

3,895,847

183,656

750,379

$

101,115,720 $

42,255,150 $

3,581,884 -
50,784,707 $

8,386,986 32,107,930
3,895,847 183,656 750,379
194,155,577

$

2,226,206 $

36,313,523

-

38,539,729

1,762,781 1,762,781

1,350,554 $ -
1,312,902 2,663,456
-

- $ -
43,193 43,193

3,576,760 36,313,523
1,312,902 41,203,185
1,805,974 1,805,974

Fund Balances
Nonspendable Inventory
Restricted Debt Service Capital Projects
Committed School Food Services School Activities
Unassigned Total Fund Balances

750,379
-
5,188,306 4,408,587 50,465,938 60,813,210

-
39,591,694
39,591,694

-
50,741,514 -
50,741,514

750,379
50,741,514 39,591,694
5,188,306 4,408,587 50,465,938 151,146,418

Total Liabilities, Deferred Inflows of Resources, and

Fund Balances

$

101,115,720 $

42,255,150 $

50,784,707 $

194,155,577

The accompanying notes are an integral part of this financial statement.
15

CHEROKEE COUNTY SCHOOL DISTRICT Reconciliation of the Governmental Funds
Balance Sheet to the Statement of Net Position June 30, 2018

Total Fund Balances Governmental Funds
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 in the funds.
Cost Less Accumulated Depreciation
Some liabilites are not due and payable in the current period and, therefore are not reported in the funds.
Net Pension Liability Net OPEB Liability
Taxes that are not available to pay for current period expenditures are deferred in the governmental funds.
Property Taxes
Deferred charges or credits on debt refundings are applicable to future periods and are therefore not reported in the funds and are amortized over the life of the new debt.
Loss on Bond Refundings
Deferred Ouflows and Inflows of Resources related to pensions/OPEB are applicable to future periods and, therefore, are not reported in the governmental funds.
Related to Pensions Related to OPEB
Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds.
Bonds Payable Bond Premium, Net of Amortization
Claims Payable Accrued Interest Compensated Absences
Net Position Of Governmental Activities

$ 151,146,418

824,446,554 (248,321,131)

576,125,423

(356,740,189) (306,413,183)

(663,153,372)

1,805,974

5,953,732

58,163,966 (5,845,620)

52,318,346

(422,505,000) (48,598,225) (479,706) (8,505,808) (1,545,657)

(481,634,396) $ (357,437,875)

The accompanying notes are an integral part of this financial statement.
16

CHEROKEE COUNTY SCHOOL DISTRICT Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds For the Year Ended June 30, 2018

General Fund

District Wide Capital Projects

Debt Service

Total Governmental
Funds

Revenues
Local Sources State Funds Federal Funds Miscellaneous Investment Earnings
Total Revenues

$

185,244,828 $

209,846,607

23,111,998

963,847

467,627

419,634,907

492,082 $ 1,649,519
180,458 2,322,059

42,648,563 $ -
2,951,218 765,089
46,364,870

228,385,473 211,496,126
23,111,998 3,915,065 1,413,174
468,321,836

Expenditures
Current Instruction Support Services: Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation Student Transportation Services Central Support Services Community Services School Nutrition Program
Capital Outlay Debt Services
Principal Retirement Interest and Fees Issuance Costs
Total Expenditures

Excess (Deficiency) of Revenues Over (Under) Expenditures

Other Financing Sources (Uses)
Bond Issuance Bond Premium Proceeds From Sale of Capital Assets Transfers In Transfers Out
Total Other Financing Sources (Uses)

Net Change in Fund Balances

Fund Balances - Beginning

Fund Balances - Ending

$

276,890,170
18,577,288 13,570,161
4,616,997 3,823,016 24,482,989 2,688,671 25,345,889 21,326,630 5,108,539 2,133,240 16,261,941
393,159
39,004
415,257,694
4,377,213
2,610,647 (2,500,000) 110,647
4,487,860
56,325,350
60,813,210 $

7,871,955
1,478,567 8,325,400
448,703 18,124,625
(15,802,566)
39,685,000 6,663,214 2,500,000 (3,389,760)
45,458,454
29,655,888
9,935,806
39,591,694 $

-
-
21,575,000 19,886,549
41,461,549
4,903,321
3,389,760 3,389,760
8,293,081
42,448,433
50,741,514 $

284,762,125
18,577,288 13,570,161
4,616,997 3,823,016 24,482,989 2,688,671 25,345,889 22,805,197 5,108,539 2,133,240 16,261,941 8,718,559
21,575,000 19,925,553
448,703 474,843,868
(6,522,032)
39,685,000 6,663,214 2,610,647 5,889,760 (5,889,760)
48,958,861
42,436,829
108,709,589
151,146,418

The accompanying notes are an integral part of this financial statement.
17

CHEROKEE COUNTY SCHOOL DISTRICT Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances to the Statement of Activities For the Year Ended June 30, 2018

Net Change in Fund Balances - Total Governmental Funds
Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. The amount by which capital outlays exceeded depreciation expense is as follows:
Capital Outlay Depreciation Expense
The net effect of various miscellaneous transactions involving capital assets during the fiscal year decreased net position.
Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.
Property Taxes
District pension contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the reported net pension/OPEB liability is measured a year before the District's report date. Pension/OPEB expense, which is the change in the net pension/OPEB liability adjusted for changes in deferred outflows and inflows of resources related to pensions/OPEB, is reported in the Statement of Activities.
Pension expense OPEB expense
The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. This amount is the net effect of these differences in the treatment of long-term debt and related items.
Bond Issuance Bond Premium Principal Payments - Bonds
Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds.
Amortization of Bond Premium Amortization of Deferred Charge on Refunding
Change in Claims Payable Change in Compensated Absences
Change in Accrued Interest
Change in Net Position of Governmental Activities

8,718,559 (18,476,077)
(39,685,000) (6,663,214) 21,575,000
6,528,098 (2,193,811)
130,457 (79,924) 1,356,658

$ 42,436,829
(9,757,518) (3,479,608) 1,087,366
(1,845,720) (7,475,021)
(24,773,214)
5,741,478 $ 1,934,592

The accompanying notes are an integral part of this financial statements.
18

CHEROKEE COUNTY SCHOOL DISTRICT General Fund
Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget to Actual For the Fiscal Year Ended June 30, 2018

Original Budget

Final Budget

Actual

Variance With Final Budget

Revenues
Local Sources State Funds Federal Funds Miscellaneous Investment Earnings
Total Revenues

$ 186,290,776 $ 186,290,776 $ 185,244,828 $

221,275,512

221,275,512

209,846,607

9,872,250

9,872,250

23,111,998

-

-

963,847

-

-

467,627

417,438,538

417,438,538

419,634,907

(1,045,948) (11,428,905) 13,239,748
963,847 467,627 2,196,369

Expenditures
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 School Nutrition Program Capital Outlay Debt Service Principal Retirement Interest
Total Expenditures

269,550,135
16,845,344 12,496,476
4,669,275 3,886,013 23,607,407 2,678,499 24,276,398 20,061,612 4,766,150
267,439 -
17,538,382 582,057
13,780,068
415,005,255

269,550,135
16,845,344 12,496,476
4,669,275 3,886,013 23,607,407 2,678,499 24,276,398 20,061,612 4,766,150
267,439 -
17,538,382 582,057
13,780,068 -
415,005,255

276,890,170
18,577,288 13,570,161
4,616,997 3,823,016 24,482,989 2,688,671 25,345,889 21,326,630 5,108,539
2,133,240 16,261,941
393,159
39,004 415,257,694

(7,340,035)
(1,731,944) (1,073,685)
52,278 62,997 (875,582) (10,172) (1,069,491) (1,265,018) (342,389) 267,439 (2,133,240) 1,276,441 188,898
13,780,068 (39,004)
(252,438)

Excess of Revenues over (under) Expenditures

2,433,283

2,433,283

4,377,213

1,943,931

Other Financing Sources Proceeds from Sale of Capital Assets Transfers Out
Total Other Financing Sources (Uses)

-

-

2,610,647

2,610,647

-

-

(2,500,000)

(2,500,000)

-

-

110,647

110,647

Net Change in Fund Balances

2,433,283

2,433,283

4,487,860

2,054,577

Fund Balances - Beginning

56,325,350

56,325,350

56,325,350

-

Fund Balances - Ending

$ 58,758,633 $ 58,758,633 $ 60,813,210 $

2,054,577

The accompanying notes are an integral part of this financial statement.
19

CHEROKEE COUNTY SCHOOL DISTRICT Statement of Fiduciary Assets and Liabilities
Agency Funds June 30, 2018
Assets Cash and Cash Equivalents Total Assets

Agency Fund

$

494,428

$

494,428

Liabilities Due To Others
Total Liabilities

$

494,428

$

494,428

The accompanying notes are an integral part of this financial statement. 20

CHEROKEE COUNTY SCHOOL DISTRICT Statement of Changes in Fiduciary Assets and Liabilities
Agency Funds June 30, 2018

Assets - Cash Liabilities - due to others

Balance July 1, 2017

Additions

Deletions

Balance June 30, 2018

$

437,803 $

1,053,584 $

996,959 $

494,428

$

437,803 $

1,053,584 $

996,959 $

494,428

The accompanying notes are an integral part of this financial statement.
21

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018
Note 1 Description of School District and Reporting Entity
Reporting Entity
The Cherokee County School District (School District) was established under the laws of the State of Georgia and operates under the guidance of a seven-member board elected by the voters and a Superintendent appointed by the Board. The School District is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2 - Summary of Significant Accounting Policies
The accompanying financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below:
Basis of Presentation
The School District's basic financial statements are collectively comprised of the governmentwide financial statements, fund financial statements, and notes to the basic financial statements. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness.
Government-wide Statements:
The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Net Position presents the School District's non-fiduciary assets and liabilities, with the difference reported as net position. Net position is reported in three categories as follows:
1. Net investment in capital assets consists of the School District's total investment in capital assets, net of accumulated depreciation, and reduced by 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.
22

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018
2. Restricted net position consists of resources for which the School District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties or imposed by law through constitutional provisions or enabling legislation.
3. Unrestricted net position consists of resources not meeting the definition of the two preceding categories. Unrestricted net position often has constraints on resources imposed by management which can be removed or modified.
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:
The 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.
The Capital Projects Fund accounts for and reports financial resources including Educational Special Purpose Local Option Sales Tax (Ed-SPLOST), bond proceeds, and grants from the Georgia State Financing and Investment Commission that are restricted, committed, or assigned for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets.
The Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (property and sales) legally restricted for the payment of general long-term principal and interest.
23

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018
The School District reports the following fiduciary fund type:
Agency Fund is used to report resources of the school activity funds held by the School District in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations.
Basis of Accounting
The basis of accounting determines when transactions are reported on the financial statements. The government-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Property taxes are recognized as revenue in the period for which they were levied, if they are collected within sixty days after year-end. All other revenues are also considered to be available when they are collectible within six months of year-end, with the exception of grants and donations, which are recognized when all eligibility requirements have been satisfied. Property taxes, sales taxes, and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination 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.
New Accounting Pronouncements
In fiscal year 2018, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. This statement establishes standards for recognizing and measuring
24

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018
liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed. The adoption of this statement has a significant impact on the School District's financial statements. As noted in the Restatement of Net Position note
disclosure, the School District restated beginning net position for the cumulative effect of this accounting change.
In fiscal year 2018, the School District adopted GASB Statement No. 81, Irrevocable Split-Interest Agreements. This statement requires that a government that receives resources pursuant to an irrevocable split-interest agreement recognize assets, liabilities, and deferred inflows of resources at the inception of the agreement. Furthermore, this statement requires that a government recognize assets representing its beneficial interests in irrevocable split-interest agreements that are administered by a third party, if the government controls the present service capacity of the beneficial interests. This statement requires that a government recognize revenue when the resources become applicable to the reporting period. The adoption of this statement does not have a significant impact on the School District's financial statements.
In fiscal year 2018, the School District adopted GASB Statement No. 85, Omnibus 2017. The objective of this statement is to address practice issues that have been identified during implementation and application of certain GASB Statements. This statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits [OPEB]). The adoption of this statement does not have a significant impact on the School District's financial statements.
In fiscal year 2018, the School District adopted GASB Statement No. 86, Certain Debt Extinguishment Issues. The primary objective of this statement is to improve consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources-- resources other than the proceeds of refunding debt--are placed in an irrevocable trust for the sole purpose of extinguishing debt. This statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. The adoption of this statement does not have a significant impact on the School District's financial statements.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool (Georgia Fund 1) and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated (O.C.G.A.) 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations, or insured chartered building and loan associations.
25

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018
Investments
The School District can invest its funds as permitted by O.C.G.A. 36-83-4. 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.
Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. All other investments are reported at fair value.
For accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired.
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.
Due to other funds and due from other funds consist of activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year.
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 (calculated on the first-in, first-out method). 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 are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses are recorded as the inventory items are used.
Supplies/Equipment Inventories: On the basic financial statements, inventories of stored supplies and equipment are reported at cost using the first-in, first-out method. The School District uses the consumption method to account for the inventories whereby items are recorded as an asset when purchased and expenses are recorded when the item is put into use.
Prepaid Items
Payments made to vendors for services that will benefit future accounting periods are recorded as prepaid items, in both the government-wide and governmental fund financial statements.
26

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

Capital Assets

On the government-wide financial statements, capital assets are recorded 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. 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. The School District does not capitalize book collections or works of art.

Capital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities column in the government-wide financial statements.

Depreciation is computed using the straight-line method for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives.

Capitalization thresholds and estimated useful lives of capital assets reported in the governmentwide statements are as follows:

Description

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings Equipment

Any Amount $ 10,000 $ 10,000 $ 10,000

N/A 20 Years 20-50 Years 5-10 Years

Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to future periods and, therefore, will not be recognized as an outflow of resources (expense/expenditure) until then.
In addition to liabilities, the statement of financial position will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to future periods and, therefore, will not be recognized as an inflow of resources (revenue) until that time.

27

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018
Compensated Absences
Compensated absences payable consists of vacation leave employees earned based on services already rendered.
Vacation leave of 12 days is awarded on a fiscal year basis to all full-time personnel employed on a twelve month basis. No other employees are eligible to earn vacation leave. Vacation leave not utilized during the fiscal year may be carried over to the next fiscal year, providing such vacation leave does not exceed 45 days. Vacation leave of 20 days is awarded on a fiscal year basis to the Superintendent and there are no limits on the amount that may be carried over. Upon terminating employment, the School District pays all unused and unforfeited vacation benefits to employees. Accordingly, vacation benefits are accrued as a liability in the government-wide financial statements. A liability for these amounts is reported in the governmental fund financial statements only if they have matured, for example, as a result of employee resignations and retirements by fiscal year-end.
Members of the Teachers Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the
individual school districts. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School District's financial statements.
Long-Term Liabilities and Bond Discounts/Premiums
In the School District's government-wide financial statements, outstanding debt is reported as liabilities. Bond premiums and discounts and the difference between the reacquisition price and the net carrying value of refunded debt are deferred and amortized over the life of the bonds using the effective interest method. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued.
In the governmental fund financial statements, the School District recognizes the proceeds of debt and premiums as other financing sources of the current period. Bond issuance costs are reported as debt service expenditures.
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 pension plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the respective plan. 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.
Postemployment Benefits Other Than Pensions (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Georgia School Employees Postemployment Benefit Fund (School OPEB Fund) and additions to/deductions from School OPEB Fund fiduciary net position have been determined on the same basis as they are reported by School OPEB Fund. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
28

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018
Fund Balances
Fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent.
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 consists of resources that can be used only for specific purposes pursuant to constraints either (1) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.
Committed consists of resources that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board. The Board is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned consists of resources 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 or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.
Unassigned consists of resources within the General Fund not meeting the definition of any aforementioned category. The General Fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance.
When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.
It is the goal of the School District to achieve and maintain a committed, assigned, and unassigned fund balance in the General Fund at fiscal year-end of not less than 12% of prior year General Fund budgeted expenditures, not to exceed 15% of the total budget of the subsequent fiscal year, in compliance with O.C.G.A. 20-2-167(a)5. If the unassigned fund balance at fiscal year-end falls below the goal, the School District shall develop a restoration plan to achieve and maintain the minimum fund balance.
29

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

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.
Property Taxes
The Cherokee County Board of Commissioners adopted the property tax levy for the 2017 tax digest year on July 18, 2017 (levy date) to be paid by December 20, 2017. Taxes collected within the current fiscal year or within 60 days after year-end on the 2017 tax digest are reported as revenue in the governmental funds for fiscal year 2018. The Cherokee County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.0% 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, 2018, for maintenance and operations amounted to $140,041,512 and for school bonds amounted to $3,832,858.

Tax millage rates levied for the 2017 tax year for the Cherokee County School District were as follows (a mil equals $1 per thousand dollars of assessed value):

School Operations School Bonds

18.95 mils .50 mils
19.45 mils

Additionally, Title Ad Valorem Tax revenues at the fund reporting level amounted to $10,983,989 during fiscal year ended June 30, 2018.

Sales Taxes
Educational Special Purpose Local Option Sales Tax revenue, at the fund reporting level, during the year ended June 30, 2108 amounted to $38,528,531 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.
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, the Debt Service Fund, and the Capital Projects Fund. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function, and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the General Fund was not prepared in accordance with accounting principles generally accepted in the United States of America.
After the Board has tentatively adopted the budget, the budget is advertised at least once in the local newspaper of general circulation. At the next regularly scheduled meeting after advertisement, the Board receives comments, makes revisions as necessary, and adopts the final budget. The approved budget is then submitted in accordance with provisions of O.C.G.A. 20-

30

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018
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 less than five percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent will report to the Board concerning such adjustments not later than the next regular meeting of the Board. If at any time during the budget year expenditure of funds in any budget function for any fund is anticipated to be five percent or more of the amount budgeted for that function in the Board approved budget, the Superintendent is directed to request a budget amendment by the Board to authorize the additional anticipated expenditures. See General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual for a detail of any over/under expenditures during the fiscal year under review. Budgetary GAAP Basis Reconciliation In the General Fund, accounting principals used in developing budgets on a budgetary basis differ from those used in preparing financial statements in conformity with generally accepted accounting principles (GAAP). The primary difference between the budget basis and GAAP basis are:
Payments made by the State of Georgia for school district employee benefits are recognized as revenues and expenditures under GAAP and are not recognized on the budget basis.
Proceeds and repayments of tax anticipation notes are budgeted by the School District as revenues and expenditures of the General Fund. Under generally accepted accounting principles, a tax anticipation note is considered a short-term debt issuance.
31

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

Thus, there is an accounting basis difference between the budget and actual Statement of Revenues, Expenditures and Changes in Fund Balances in the General Fund that is reconciled as follows:

Actual Revenues, GAAP Basis Add TAN Proceeds Less On Behalf Contributions Actual Revenues, Budgetary Basis

$ 419,634,907 13,750,000 (10,997)
$ 433,373,910

Actual Expenditures, GAAP Basis Add Payback of TAN Principal Less On Behalf Benefits Expenditures Actual Expenditures, Budgetary Basis

$ 415,257,694 13,750,000 (10,997)
$ 428,996,697

Other Financing Sources (Uses), Net GAAP Basis

$ 110,647

Other Financing Sources (Uses), Net Budgetary Basis

110,647

Revenues Over Expenditures and Other Financing Sources (Uses), Budgetary Basis

4,487,860

Revenues Over Expenditures and Other Financing Sources (Uses), GAAP Basis

$ 4,487,860

Note 4 Deposits, Cash Equivalents and Investments

Collateralization of Deposits

O.C.G.A. 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. 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall not be less than 110 percent of the daily pool balance. As of June 30, 2018, the School District's deposits were secured by surety bond, insurance, or collateral.

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,

32

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
Categorization of Deposits
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a formal deposit policy for managing custodial credit risk. At June 30, 2018, the School District had deposits with a carrying amount of $47,229,433, which includes $534,728 in Certificates of Deposit that are recorded as investments. Bank balances at June 30, 2018 were $51,058,440. The bank balances insured by Federal depository insurance were $7,104,987 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 $43,953,453.
Categorization of Cash Equivalents
The School District reported cash equivalents of $85,336,702 in Georgia Fund 1, a local government investment pool, which is included in the cash balances above. Georgia Fund 1 is not registered with the SEC as an investment company and does not operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share, which approximates fair value. The pool is an AAAf rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2018, was 10 days.
Georgia Fund 1, administered by the State of Georgia, Office of the State Treasurer, is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1, does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at www.audits.ga.gov/SGD/cafr.html.
33

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

Categorization of Investments

The School District measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognize a three-tiered fair value hierarchy, as follows:
Level 1: Quoted prices for identical investments in active markets; Level 2: Observable inputs other than quoted market prices; and, Level 3: Unobservable inputs.

At June 30, 2018, the School District had the following investments:

Investment Type Certificates of Deposit Repurchase Agreements

Fair Value

Maturity

534,728 1-5 Years

16,264,644 Less Than One Year

Fair Value Level Level 2 Level 2

Total $ 16,799,372

Interest Rate Risk

Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The School District does not have a formal policy for managing interest rate risk.

Custodial Credit Risk

Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk.

At June 30, 2018, $16,799,372 of the School District's applicable investments were insured or registered, with securities held by the entity or its agent, in the School District's name.

Credit Quality Risk

Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State law limits investments to those prescribed by O.C.G.A. 36-83-4. The School District does not have a formal policy for managing credit quality risk.

The investments subject to credit quality risk are reflected below:

Investment Type Repurchase Agreements

Fair Value 16,264,644

Unrated 16,264,644

Total

$ 16,264,644 $ 16,264,644

34

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

Note 5 Interfund Transfers Interfund transfers for the fiscal year ended June 30, 2018 consisted of the following:

Transfer From General Fund
Capital Projects Fund

Transfer To Capital Projects Fund
Debt Service

Amount $ 2,500,000
$ 3,389,760

Transfers were moved from the General Fund to the Capital Projects Fund to utilize proceeds from sale of a building for capital expenditures. Transfers were made from the Capital Projects Fund to the Debt Service Fund for capitalized interest on the bond proceeds.
Note 6 - Capital Assets
The following is a summary of changes in capital assets for governmental activities during the fiscal year:

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

Balance July 1, 2017
$ 31,226,934 15,267,328 46,494,262

Additions

$

-

1,316,528

1,316,528

Deletions and Transfers

Balance June 30, 2018

$

21,270

(14,467,329)

(14,446,059)

$ 31,248,204 2,116,527
33,364,731

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements
Total

710,946,428 43,020,025 23,770,834
777,737,287

3,608,341 2,787,769 1,005,921
7,402,031

6,539,091 (593,764) (2,822)
5,942,505

721,093,860 45,214,030 24,773,933
791,081,823

Less Accumulated Depreciation For: Buildings and Improvements Equipment Land Improvements
Total

(187,242,340) (33,967,282) (13,659,378)
(234,869,000)

(15,496,930) (2,234,119) (745,028)
(18,476,077)

4,462,279 559,225 2,442
5,023,946

(198,276,991) (35,642,176) (14,401,964)
(248,321,131)

Capital Assets Being Depreciated, Net

542,868,287

(11,074,046)

10,966,451

542,760,692

Governmental Activities Capital Assets, Net

$ 589,362,549 $ (9,757,518) $ (3,479,608) $ 576,125,423

35

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

Current year depreciation expense by function is as follows:
Instruction General Administration School Administration Support Services - Business Maintenance and Operation Student Transportation Services School Nutrition Program
Total Depreciation

$ 16,129,176 805,815 206,656 43,091 239,939
1,011,431 39,969
$ 18,476,077

Note 7 Short-term Debt
During fiscal 2018, the School District issued a tax anticipation note in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt was to provide cash for operations until property tax collections were received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75% of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred. Short-term debt activity for the fiscal year was as follows:

Tax Anticipation Notes

Beginning Balance

$

-

Issued $ 13,750,000

Redeemed $ (13,750,000)

Ending Balance

$

-

Note 8 - Long-Term Liabilities
The changes in long-term liabilities during the fiscal year for governmental activities were as follows:

Governmental Activities:

Beginning Balance

Additions

Reductions

Ending Balance

Due Within One Year

General Obligation Bonds Qual School Const Bonds Bond Premiums Claims Payable Compensated Absences
Total

$364,340,000 $ 39,685,000 $ (21,575,000) $382,450,000 $ 9,420,000

40,055,000

-

- 40,055,000

-

48,463,109

6,663,214 (6,528,098) 48,598,225

6,810,152

610,163

406,007

(536,464)

479,706

479,706

1,465,733

981,366

(901,442) 1,545,657

901,442

$454,934,005 $ 47,735,587 $ (29,541,004) $473,128,588 $ 17,611,300

36

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

General Obligation Debt Outstanding

The School District's bonded debt consists of various issues of general obligation bonds that are generally callable with interest payable semiannually. Bond proceeds primarily pay for acquiring or constructing capital facilities. Bonds have also been issued to advance-refund previously issued bonds. The School District repays general obligation bonds from voter-approved property taxes and sales taxes. General obligation bonds are direct obligations and pledge the full faith and credit of the School District.

During fiscal year 2018, the Cherokee County Board of Education issued $39,685,000 in General Obligation Bonds to finance the costs of adding to, renovating, repairing, improving, and equipping existing school facilities, including athletic facilities, and acquiring system-wide technology improvements and school buses.

Voters have authorized $75,315,000 in general obligation debt for capital outlay projects and the costs of issuing and paying capitalized interest which was not issued as of June 30, 2018.

General Obligation Bonds currently outstanding are as follows:

Description

Interest Rates

Issue Date

Maturity Date

Amount Issued

Amount Outstanding

2009A Series

4.00-5.00%

2009B Series

5.87%

2012 Series

4.00-5.00%

2014A Series

5.00%

2014B Series

3.75-5.00%

2015 Series

4.00-5.00%

2016 Series

5.00%

2017 Series

3.00-5.00%

2018 Series

5.00%

Total General Obligation Bonds

6/18/2009 6/18/2009 11/1/2012
2/6/2014 2/6/2014 2/15/2015 5/19/2016 5/9/2017 5/3/2018

8/1/2019 8/1/2028 8/1/2033 8/1/2033 8/1/2025 2/1/2033 8/1/2023 2/1/2033 8/1/2033

$ 52,880,000 48,375,000 35,930,000 46,885,000 34,430,000
108,960,000 42,685,000 18,175,000 39,685,000
$ 428,005,000

$ 8,000,000 48,375,000 35,930,000 46,885,000 34,430,000
108,285,000 42,685,000 18,175,000 39,685,000
$ 382,450,000

37

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

At June 30, 2018, principal and interest payments due by fiscal year for general obligation bonds are as follows:

Payments Due in Fiscal Year Ending June 30

Principal

Interest

Amortization of Bond Premium

2019 2020 2021 2022 2023 2024-2028 2029-2033 2034-2038
Total

$ 9,420,000 16,110,000 21,270,000 25,100,000 27,105,000
181,900,000 87,290,000 14,255,000
$ 382,450,000

$ 18,554,410 18,486,350 17,611,825 16,509,950 15,228,325 51,785,401 15,629,544 341,850
$ 154,147,655

$ 6,810,152 6,489,699 6,014,519 5,364,333 4,618,161
14,646,093 4,561,705 93,563
$ 48,598,225

Qualified School Construction Bonds (QSCB)
Section 1521 of the American Recovery and Reinvestment Act (ARRA) of 2009 provides for a source of capital at no or nominal interest rates for costs incurred by School Districts in connection with the construction, rehabilitation or repair of a public school facility or for the acquisition of land where a school will be built. Investors receive Federal income tax credits at prescribed tax credit rates in lieu of interest, which essentially allows School Districts to borrow without incurring interest costs.
When the stated interest rate on the QSCB results in interest payments that exceed the supplemental interest payments discussed in the preceding paragraph, the School District may apply for a direct cash subsidy payment from the U.S. Treasury which is intended to reduce the stated interest rate to a nominal percentage. To qualify for this subsidy, the School District is required to periodically file appropriate documents with the Internal Revenue Service. These subsidy payments do not include the amount of any supplemental interest paid on a QSCB. The interest subsidy received by the School District in fiscal year 2018 was $2,014,670, which funded all but $238,824 of interest expense due on the QSCB.
Debt currently outstanding under Qualified School Construction Bonds is as follows:

Description

Interest Rates

Issue Date

Maturity Date

Amount Issued

Amount Outstanding

2010B Series

5.63% 11/11/2010 8/1/2028 $ 40,055,000 $ 40,055,000

38

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

The following is a schedule of total Qualified School Construction Bond payments:

Fiscal Year Ended June 30:

Principal

Interest

2019 2020 2021 2022 2023 2024 - 2028 2029 - 2032

$

-

-

-

-

-

-

40,055,000

$ 2,253,494 2,253,494 2,253,494 2,253,494 2,253,494
10,724,141 604,514

Total

$ 40,055,000 $ 22,596,125

Compensated Absences

Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences.

Note 9 - 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; and natural disasters. Except as described below, the School District carries commercial insurance for these risks. Settled claims resulting from these insured risks have not exceeded commercial insurance coverage in any of the past three fiscal years.
The School District is self-insured for workers' compensation, unemployment claims, and dental claims. The School District purchases commercial insurance for all other risks of loss. Settled claims have not exceeded purchased commercial insurance coverage in any of the past three years.

39

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

Workers Compensation Claims

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 $400,000 loss per occurrence, up to the statutory limit.

Changes in workers' compensation claims liability during the last two fiscal years are as follows:

Fiscal Year
2018 2017

Beginning Of Year Liability
$ 610,163 678,677

Claims and Changes in Estimates
406,007 534,892

Claims Paid
(536,464) (603,406)

End Of Year Liability
$ 479,706 610,163

Unemployment Claims

The School District is self-insured with regard to unemployment compensation claims. These claims are accounted for in the School District's General Fund. Unemployment compensation expenditures and liabilities are reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. There was no liability reported for unemployment compensation claims during the last two fiscal years.

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

Year
2018 2017

Year Liability
$ 35,449 71,047

Estimates
$ 2,845,551 2,704,964

Paid
$ (2,842,572) (2,740,562)

Year Liability
$ 38,428 35,449

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

Superintendent Chief Financial Officer School Principals

$

100,000

100,000

10,000

40

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

Note 10 Significant Commitments

The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2018, together with funding available:

Project Mill Creek MS Addition Synthetic Turf Fields

Unearned Executed Contracts1
$ 7,024,624
3,480,313 $ 10,504,937

Payments Through June 30, 20182

$

397,876

1,456,275 $ 1,854,151

Funding Available From State1
$ 1,954,730
$ 1,954,730

1 The amounts described in this note are not reflected in the basic financial statements. 2 Payments include contracts and retainages payable at year-end.
Note 11 Operating Leases

The Cherokee County School District has entered into various lease agreements as lessee for office equipment. These leases are considered for accounting purposes to be operating leases. Rental expenditures under the terms of the operating leases totaled $283,407 for the year ended June 30, 2018. The following future minimum lease payments were required under operating leases at June 30, 2018:

Year Ending

2019 2020 2021 2022

Total

Lease Payments

$

309,172

309,172

309,172

25,764

$

953,280

Note 12 Significant Contingent Liabilities
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. Any disallowances resulting from the grantor audit may become a liability of the School District. However, 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 have a material adverse effect on the financial condition of the School District.

41

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018
Note 13 Other Postemployment Benefits (OPEB)
Georgia School Personnel Postemployment Health Benefit Fund
Plan Description: Certified teachers and non-certified public school employees of the School District as defined in 20-2-875 of the Official Code of Georgia Annotated (O.C.G.A.) are provided OPEB through the School OPEB Fund - a cost-sharing multiple-employer defined benefit postemployment healthcare plan, reported as an employee trust fund and administered by a Board of Community Health (Board). Title 20 of the O.C.G.A. assigns the authority to establish and amend the benefit terms of the group health plan to the Board.
Benefits Provided: The School OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for public school teachers, including librarians, other certified employees of public schools, regional educational service agencies and non-certified public school employees. Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from Employees' Retirement System (ERS),
Teachers Retirement System (TRS) or Public School Employees Retirement System (PSERS). If elected, dependent coverage starts on the same day as retiree coverage. Medicare-eligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The School OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the School OPEB Fund is permitted.
Contributions: As established by the Board, the School OPEB Fund is substantially funded on a pay-as-you-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. Contributions to the School OPEB Fund from the School District were $11,415,245 for the year ended June 30, 2018. Active employees are not required to contribute to the School OPEB Fund.
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
At June 30, 2018, the School District reported a liability of $306,413,183 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2017. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2016. An expected total OPEB liability as of June 30, 2017 was determined using standard roll-forward techniques. The School District's proportion of the net OPEB liability was actuarially determined based on employer contributions during the fiscal year ended June 30, 2017. At June 30, 2017, the School District's proportion was 2.18%, which was an increase (decrease) of 0.05% from its proportion measured as of June 30, 2016.
42

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

For the year ended June 30, 2018, the School District recognized OPEB expense of $18,890,265. At June 30, 2018, the School District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

OPEB

Deferred Outflows Deferred Inflows

of Resources

of Resources

Changes of assumptions Net difference between projected and actual earnings on OPEB plan investments
Changes in proportion and differences between School District contributions and proportionate share of contributions
School District contributions subsequent to the measurement date

89,621
5,982,096 11,415,245

23,332,582 -
-

Total

$

17,486,962 $

23,332,582

School District contributions subsequent to the measurement date of $11,415,245 are reported

as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability

in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and

deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year Ended June 30:

OPEB

2019 2020 2021 2022 2023 2024 Thereafter

$

(3,098,186)

$

(3,098,186)

$

(3,098,186)

$

(3,098,186)

$

(3,120,591)

$

(1,747,530)

$

-

43

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

Actuarial assumptions: The total OPEB liability as of June 30, 2017 was determined by an actuarial valuation as of June 30, 2016 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2017:

OPEB:

Inflation Salary increases
ERS TRS PSERS Long-term expected rate of return
Healthcare cost trend rate: Pre-Medicare Eligible Medicare Eligible
Ultimate trend rate: Pre-Medicare Eligible Medicare Eligible
Year of Ultimate trend rate

2.75% 3.25% - 7.00%, average, including inflation 4.50%, including inflation 3.25 - 9.00%, including inflation N/A 3.88%, compunded annually, net of investment expense, and including inflation
7.75% 5.75%
5.00% 5.00% 2022

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows:

For ERS members: The RP-2000 Combined Mortality Table projected to 2025 with projection scale BB and set forward 2 years or both males and females is used for the period after service retirement and for dependent beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB and set back 7 years for males and set forward 3 years for females is used for the period after disability retirement.
For TRS members: The RP-2000 White Collar Mortality Table projected to 2025 with projection scale BB (set forward 1 year for males) is used for death after service retirement and beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward two years for males and four years for females) is used for death after disability retirement.
For PSERS members: The RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) is used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 5 years for both males and females) is used for the period after disability retirement.

44

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the pension systems, which covered the five-year period ending June 30, 2014.
Projection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation.
Additionally, there was a change that affected measurement of the total OPEB liability since the prior measurement date. The methodology used to determine employee and retiree participation in the School OPEB Fund is based on their current or last employer payroll location. Current and former employees of public school districts, libraries, regional educational service agencies and community colleges are allocated to the School OPEB Fund irrespective of retirement system affiliation.
The long-term expected rate of return on OPEB plan investments was determined using a log- normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class

Target Allocation

Local Government Investment Pool

100.00%

Long-Term Expected Real Rate of Return
3.88%

Discount rate: In order to measure the total OPEB liability for the School OPEB Fund, a single equivalent interest rate of 3.58% was used as the discount rate. This is comprised mainly of the yield or index rate for 20 year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.56% per the Bond Buyers Index). The projection of cash flows used to determine the discount rate assumed that contributions from members and from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2115. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2029.

45

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

Therefore, the calculated discount rate of 3.58% was applied to all periods of projected benefit payments to determine the total OPEB liability.
Sensitivity of the District's proportionate share of the net OPEB liability to changes in the discount rate: The following presents the School District's proportionate share of the net OPEB liability calculated using the discount rate of 3.58%, as well as what the District's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1- percentage-point lower (2.58%) or 1 percentage-point higher (4.58%) than the current discount rate:

Net OPEB Liability (asset)

1% Decrease (2.58%)
$ 363,810,768 $

Current Discount Rate (3.58%)

1% Increase (4.58%)

306,413,183 $ 261,114,865

Sensitivity of the District's proportionate share of the net OPEB liability to changes in the healthcare cost trend rates: The following presents the School District's proportionate share of the net OPEB liability, as well as what the School District's proportionate share of the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current healthcare cost trend rates:

Net OPEB Liability (asset)

1% Decrease

Current Healthcare Cost Trend Rate

1% Increase

$ 253,981,620 $

306,413,183 $ 374,678,999

OPEB plan fiduciary net position: Detailed information about the OPEB plan's fiduciary net position is available in the Comprehensive Annual Financial Report (CAFR) which is publicly available at https://sao.georgia.gov/comprehensive-annual-financial-reports.

46

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018
Note 14 - Retirement Plans
The School District participates in various retirement plans administered by the State of Georgia, as further explained below:
1) Teachers Retirement System of Georgia (TRS)
Plan Description: All teachers of the School District as defined in O.C.G.A 47-3-60 and certain other support personnel as defined by O.C.G.A 47-3-63 are provided a 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 2018. The School District's contractually required contribution rate for the year ended June 30, 2018 was 16.81% (excluding payroll attributable to those personnel funded on behalf of the School District by the State). For the current fiscal year, employer contributions to the pension plan were $31,441,169 and $124,316 from the School District and the State, respectively.
2) 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/post/annual-financial-reports.
47

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018
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, 2018 was 24.69% of annual covered payroll for old and new plan members and 21.69% 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 to the pension plan were $16,882 for the current fiscal year.
3) 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/post/annual-financial-reports.
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.
48

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

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. 474-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution was $534,936.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension: At June 30, 2018, the School District reported a liability of $356,740,189 for its proportionate share of the net pension liability for TRS ($356,627,528) and ERS ($112,661).

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 Net Pension Liability $ 356,740,189

State of Georgia's Proportionate Share of the Net Pension Liability Associated with the School District

1,429,396

Total $ 358,169,585

The net pension liability for TRS and ERS was measured as of June 30, 2017. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2016. An expected total pension liability as of June 30, 2017 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, 2017.
At June 30, 2017, the School District's TRS proportion was 1.918868%, which was a decrease of 0.007115% from its proportion measured as of June 30, 2016. At June 30, 2017, the School District's ERS proportion was 0.002774%, which was an increase of 0.000093% from its proportion measured as of June 30, 2016.

49

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

At June 30, 2018, 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 $2,850,834.
The PSERS net pension liability was measured as of June 30, 2017. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2016. An expected total pension liability as of June 30, 2017 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, 2017.
For the year ended June 30, 2018, the School District recognized pension expense of $40,019,266 for TRS, $63,782 for ERS and $574,554 for PSERS and revenue of $73,701 for TRS and $574,554 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, 2018, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

TRS

Deferred

Deferred

Outflows of

Inflows of

of Resources Resources

ERS Deferred Deferred Outflows of Inflows of of Resources Resources

Differences between expected and actual experience

$ 13,340,066 $ 1,345,875 $ 1,234 $

1

Changes of assumptions

7,817,718

-

256

-

Net difference between projected and actual earnings on pension plan investments

-

2,454,194

-

281

Changes in proportion and differences between District

-

contributions and proportionate share of contributions

3,497,471

1,494,611

17,718

District contributions subsequent to the measurement date

38,784,465

-

-

-

Total

$ 63,439,720 $ 5,294,680 $ 19,208 $ 282

The School District contributions subsequent to the measurement date of $38,784,465 for TRS and $0 for 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, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

50

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

Year Ended June 30:

TRS

ERS

2019 2020 2021 2022 2023 Thereafter

(1,431,963) 19,913,479 9,974,590 (9,287,160)
191,629 -

15,491 5,367 1,265 (3,197)
-

Actuarial assumptions: The total pension liability as of June 30, 2017 was determined by an actuarial valuation as of June 30, 2016, using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers Retirement System:

Inflation

2.75%

Salary increases

3.25 9.00%, average, including inflation

Investment rate of return

7.50%, net of pension plan investment expense, including inflation

Post-retirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service requirements and dependent beneficiaries. The RP-2000 Disabled Mortality table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used for the death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.

The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

Employees' Retirement System

Inflation Salary increases Investment rate of return

2.75%
3.25% - 7.00%, average, including inflation
7.50%, net of pension plan investment expense, including inflation

Post-retirement mortality rates were based on the RP-2000 Combined Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB and set forward 2 years for both males and females for service retirements and dependent beneficiaries. The RP-2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB and set back 7 years for males and set

51

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

forward 3 years for females was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-12% less than the actual number of deaths that occurred during the study period for service retirements and beneficiaries and for disability retirements. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.

The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

Public School Employees' Retirement System

Inflation Salary increases Investment rate of return

2.75%
N/A
7.50%, net of pension plan investment expense, including inflation

Post-retirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) for the period after service retirements and for dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward 5 years for both males and females) was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 9-11% less than expected under the selected table for disabled retirees. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.

The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

The long-term expected rate of return on 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 allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in

52

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

the following table: Asset Class

TRS Target Allocation

ERS/PSERS Target
Allocation

Fixed Income Domestic Large Stocks Domestic Mid Stocks Domestic Small Stocks International Developed Market Stocks International Emerging Market Stocks Alternative

30.00% 39.80% 3.70% 1.50% 19.40% 5.60%
--%

30.00% 37.20% 3.40% 1.40% 17.80% 5.20% 5.00%

Total

100.00%

100.00%

* Rates shown are net of the 2.75% assumed rate of inflation

Long-term Expected Real Rate of Return*
(0.50)% 9.00% 12.00% 13.50% 8.00% 12.00% 10.50%

Discount rate: The discount rate used to measure the total 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.

53

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

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

Teachers Retirement System:
School District's Proportionate Share of the Net Pension Liability

1% Decrease 6.50%
$ 585,267,616

Current Rate 7.50%
$ 356,627,528

1% Increase 8.50%
$ 168,279,485

Employees' Retirement System:
School District's Proportionate Share of the Net Pension Liability

1% Decrease 6.50%
$ 159,016

Current Rate 7.50%
$ 112,661

1% Increase 8.50%

$

73,120

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 publicly available at www.trsga.com/publications and www.ers.ga.gov/post/annual-financialreports.

Payables to the pension plan: At June 30, 2018, the School District reported a payable in the amount of $4,411,790 to the TRS plan for the employee and employer contributions attributable to June of 2018.

54

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

4) Defined Contribution Plan

In August 2001, Cherokee County Board of Education adopted the CCSD 403(b) pension plan for the group of employees covered under the Public School Employees' Retirement System (PSERS). Recognizing that PSERS was a limited defined contribution and defined benefit plan which did not provide for an adequate retirement for this group of employees, it was the Board's desire to supplement the retirement savings of this group.

The Board selected VALIC as the provider of the CCSD 403(b) plan. For each employee covered under PSERS, the Board began contributing to the plan an amount equal to $.50 for each $1.00 of employee contributions up to four percent of the employee's regular earnings.

An employee becomes vested in employer contributions in accordance with the following schedule:

0-35 months of service: 36-47 months of service: 48-59 months of service: 60+ months of service:

0% 50% 75% 100%

Employees who have already completed five years of service at the time of enrollment are immediately vested upon enrollment. Employees at all times are 100% vested in employee contributions.

Funds accumulated through employer contributions are only available to the employee upon termination of employment or by achieving normal retirement age as determined by the Internal Revenue Service. If an employee terminates employment prior to achieving vested status, funds contributed by CCSD on behalf of the non-vested employee are credited back to the Board.

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

Fiscal Year
2018 2017 2016

Percentage Contributed
100% 100% 100%

Required Contribution
$ 190,396 176,384 142,208

55

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Basic Financial Statements June 30, 2018

Note 15: Restatement of Prior Year Net Position

For fiscal year 2018, the School District made prior period adjustments due to the adoption of GASB Statement No. 75, as described in "New Accounting Pronouncements", which requires the restatement of the June 30, 2017 net position in Governmental Activities. The result is a decrease in net position at July 1, 2017 of $304,783,783. This change is in accordance with generally accepted accounting procedures.

Net Position, July 1, 2017 as previously reported

$

(54,588,685)

Prior Period Adjustment - Implementation of GASB No. 75: Net OPEB Liability (measurement date)

(316,155,080)

Deferred Outflows - School District's Contributions made during fiscal year 2017

11,371,298

Net Position, July 1, 2017, as restated

$ (359,372,467)

Note 16: Prior Year Defeasement of Debt
In prior years, the School District defeased certain general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the School District's basic financial statements. On August 1, 2017, a portion of these bonds were redeemed. At June 30, 2018, $44,880,000 of bonds outstanding are considered defeased.
Note 17: Tax Abatement
The public purpose of the Cherokee County Development Authority is promoting and expanding for the public good and welfare, industry and trade within Cherokee County and reducing unemployment to the greatest extent possible. The Cherokee County Development Authority, in coordination with Cherokee County government, provide a tax incentive program for qualified industries locating/located in Cherokee County. The purpose of this program is to encourage additional investment from new and existing industries to grow and diversify the tax base and local economy. Eligibility for the tax abatement program is based off the number and quality of jobs created as well as the amount of capital investment. There are claw-back provisions should the recently located company not meet their committed jobs and capital investment numbers.
For the fiscal year ended June 30, 2018, the Cherokee County Development Authority abated property taxes due to the School District that were levied on July 18, 2017 and due on December 20, 2017 totaling $1,714,265.

56

Required Supplementary Information

CHEROKEE COUNTY SCHOOL DISTRICT Required Supplementary Information
Schedule of Proportionate Share of Net Pension Liability Teachers Retirement System of Georgia For Years Ended June 30

Year Ended

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

2018 2017 2016 2015

1.92% $ 356,627,528 $

1.93%

397,351,768

1.92%

291,638,386

1.88%

237,742,125

1,429,396 1,736,108 1,357,677 1,057,565

Total
$ 358,056,924 $ 399,087,876 $ 292,996,063 $ 238,799,690

School District's covered payroll
$ 231,484,139 221,443,384 212,135,952 203,096,846

School District's proportionate
share of the net pension liability as
a percentage of its covered payroll

Plan fiduciary net position as a percentage
of the total pension liability

154.06% 179.44% 137.48% 117.06%

79.33% 76.06% 81.44% 84.03%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.
57

CHEROKEE COUNTY SCHOOL DISTRICT Schedule of Contributions - Teachers Retirement System of Georgia
For the Fiscal Years Ended June 30

Year Ended

Contractually required contribution

Contributions in relation to the contractually required
contribution

Contribution deficiency (excess)

2018 $

38,784,465 $

38,784,465 $

-

2017

32,062,007

32,062,007

-

2016

30,323,698

30,323,698

-

2015

26,600,262

26,600,262

-

2014

23,551,556

23,551,556

-

School District's covered payroll

Contribution as a percentage of covered
payroll

$ 231,484,139 221,443,384 212,135,952 203,096,846 192,776,926

16.75% 14.48% 14.29% 13.10% 12.22%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.
58

CHEROKEE COUNTY SCHOOL DISTRICT Required Supplementary Information
Schedule of Proportionate Share of Net Pension Liability Employees' Retirement System of Georgia For the Fiscal Years Ended June 30

Year Ended
2018 2017 2016 2015

School District's proportion of the
net pension liability

School District's proportionate
share of the net pension liability

0.00% $ 0.00% 0.00% 0.00%

112,661 126,823
-

School District's covered payroll

School District's proportionate share of the net pension liability
as a percentage of covered payroll

Plan fiduciary net position as a percentage of
total net pension liability

$

-

68,045

-

-

0.00% 186.38%
0.00% 0.00%

76.33% 72.34%
0.00% 0.00%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.
59

CHEROKEE COUNTY SCHOOL DISTRICT Schedule of Contributions - Employees' Retirement System of Georgia
For the Fiscal Years Ended June 30

Year Ended

Contractually required contribution

2018 $ 2017

16,882

Contributions in relation to the contractually required contribution

$

-

16,882

Contribution deficiency (excess)

$

-

-

School District's covered payroll

$

-

68,045

Contribution as a percentage of covered
payroll
0.00% 24.81%

This schedule is intended to show information for 10 years. Additional year will be displayed as they become available.
60

CHEROKEE COUNT SCHOOL DISTRICT Schedule of Proportionate Share of Net Pension Liability Public School Employees Retirement System of Georgia
For the Fiscal Years Ended June 30

Year Ended

School District's proportion of the
net pension liability

School District's proportionate
share of the net pension liability

State of Georgia's proprotionate share of the net pension liaibility associated
with the School District

Total

2018 2017 2016 2015

0.00% 0.00% 0.00% 0.00%

-

$

2,850,834 $ 2,850,834

-

3,719,948

3,719,948

-

2,375,349

2,375,349

-

1,997,884

1,997,884

School District's covered payroll
$ 9,967,544 10,091,040 8,638,876 8,399,160

School District's proportionate share of the net pension
liability as a percentage of its covered payroll

Plan fiduciary net position as a percentage
of the total pension liability

N/A

85.69%

N/A

81.00%

N/A

87.00%

N/A

88.29%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.
61

CHEROKEE COUNTY SCHOOL DISTRICT
Required Supplementary Information Schedule of Proportionate Share of Net Pension Liability
School OPEB Fund For the Year Ended June 30

Year Ended

School District's proportion of the
net OBEP liability

School District's proportionate
share of the net OPEB liability
(asset)

2018

2.18% $ 306,413,183

State of Georgia's proprotionate share
of the net OPEB liaibility associated
with the School District

$

-

Total $ 306,413,183

School District's covered payroll
$ 201,098,305

School District's proportionate
share of the net OPEB liability as a percentage of its
covered payroll

Plan fiduciary net position as a percentage
of the total OPEB liability

N/A

1.61%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.
62

CHEROKEE COUNTY SCHOOL DISTRICT Required Supplementary Information
Schedule of Contributions - School OPEB Fund For the Year Ended June 30

Year Contractually required

Ended

contribution

Contributions in relation to the contractually required contribution

2018 $

11,415,245 $

11,415,245

Contribution deficiency (excess)

$

-

School District's covered payroll
$ 201,098,305

Contribution as a percentage of covered
payroll
5.68%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.
63

CHEROKEE COUNTY SCHOOL DISTRICT Notes to the Required Supplementary Information
For the Fiscal Year Ended June 30, 2018
Teachers Retirement System Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP-2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience. On November 18, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. The expectation of retired life mortality was changed to RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males).
Employees' Retirement System Changes of assumptions: On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases.
Public School Employees Retirement System Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP-2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement and withdrawal. The expectation of retired life mortality was changed to the RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females).
School OPEB Fund Changes of benefit terms: In June 30, 2010 actuarial valuation, there was a change of benefit terms to require Medicare-eligible recipients to enroll in a Medicare Advantage plan to receive the State subsidy. Changes in assumptions: In the revised June 30, 2017 actuarial valuation, there was a change relating to employee allocation. Employees were previously allocated based on their Retirement System membership, and currently employees are allocated based on their current employer payroll location. In the June 30, 2015 actuarial valuation, decremental and underlying inflation assumptions were changed to reflect the Retirement Systems' experience studies. In the June 30, 2012 actuarial valuation, a data audit was performed and data collection procedures and assumptions were changed.
64

Special Reports Section

CHEROKEE COUNTY SCHOOL DISTRICT Schedule of Expenditures of Educational Local Option Sales Tax Proceeds For the Fiscal Year Ended June 30, 2018

2012 ELOST

PROJECT

ORIGINAL
ESTIMATED COST (1)

CURRENT
ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

TOTAL COMPLETION
COST

ESTIMATED COMPLETION
DATE

Payment of a portion of the principal and interest on the Series 2003, Series 2006, Series 2007, Series 2009, Series 2010, and Series 2011 General Obligation Bonds along with acquisition, construction, equipping, adding to, renovating, improving school facilities; acquiring, installing, and equipping portable classrooms; acquiring, installing, and implementing system-wide technology improvements; acquiring school buses; acquiring any property useful or desirable both real and personal
$ 170,000,000 $ 170,000,000 $

1,439,811 $ 168,322,162 $ 169,761,973

Complete

Totals

$ 170,000,000 $ 170,000,000 $ 1,439,811 $ 168,322,162 $ 169,761,973

2017 ELOST PROJECT

ORIGINAL
ESTIMATED COST (1)

CURRENT
ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

TOTAL COMPLETION
COST

ESTIMATED COMPLETION
DATE

Payment of a portion of the principal and interest on the Series 2009, Series 2010, Series 2012, Series 2014, Series 2015, Series 2016 and Series 2017 General Obligation Bonds previously issued along with acquiring, constructing, and equipping new school, adminstrative, athletic and other buildings and facilities; adding to, renovating, repairing, improving and equipping existing school, administrative, atheltic and other buildings and facilities; acquiring, installing, and equipping portable classrooms; acquiring buses and other vehicles; acquiring, installing, and implementing system-wide technology improvements; acquiring land; and acquiring any property useful or desirable both real and personal.
$ 210,000,000 $ 210,000,000 $ 16,236,111 $

Totals

$ 210,000,000 $ 210,000,000 $ 16,236,111 $

- $ 16,236,111 - $ 16,236,111

Ongoing

(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 Cherokee 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. Collections on the 2012 EPLOST began January 2013. The tax expired in December 2017. This schedule is prepared on the modified accrual basis of accounting.

65

Statistical Section

CHEROKEE COUNTY SCHOOL DISTRICT Net Position By Component Last Ten Fiscal Years (Accrual Basis of Accounting)

2009

2010

2011

2012

Governmental Activities

Net Investment in Capital Assets Restricted Unrestricted

$ 227,307,914 $ 167,841,613 $ 250,543,819 $ 198,889,424 $

73,253,360

104,524,173

27,577,489

69,142,615

33,711,898

34,976,202

38,480,335

28,229,850

Total Governmental Activities Net Position $ 334,273,172 $ 307,341,988 $ 316,601,643 $ 296,261,889 $

2013

2014

2015

2016

2017

2018

209,490,954 24,271,421 36,878,982
270,641,357

$ 171,145,712 37,776,874 38,528,714
$ 247,451,300

$ 175,561,454 $ 135,165,188 $ 144,651,983 $

84,492,945

58,795,136

52,384,239

(306,529,001) (226,709,526) (251,624,907)

$ (46,474,602) $ (32,749,202) $ (54,588,685) $

110,975,930 90,376,401
(558,790,206)
(357,437,875)

66

CHEROKEE COUNTY SCHOOL DISTRICT Changes In Net Position Last Ten Fiscal Years
(Accrual Basis of Accounting)

Expenses Governmental Activities:
Instruction Support Services:
Pupil Services Improvement of Instruction Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operations Student Transportation Services Central Support Services Other Support Services Operations of Noninstructional Services: Community Service Operations Food Services Operations Facilities Acquisition and Construction Interest on Long-term Debt
Total Governmental Activities Expenses
Total Primary Government Expenses
Program Revenues Governmental Activities:
Charges for Services: Instruction General Administration Business Administration Maintenance and Operations Community Service Operations Food Services Operations
Operating Grants and Contributions Capital Grants and Contributions Total Governmental Activities Program Revenues

2009
$ 239,434,129
10,535,628 7,847,112 4,986,679 2,908,265
18,454,331 2,053,822
24,173,796 15,928,201
3,303,995 11,792,633
1,947,735 14,106,425 25,318,668 11,737,716 394,529,135
$ 394,529,135
$ 11,294,787 563,223 -
7,410,622 173,576,409
14,884,679 207,729,720

2010
$ 244,240,005
12,383,247 6,273,468 5,636,537 3,186,746
18,214,381 1,959,238
22,886,999 16,357,565
3,895,301 2,489,980
1,788,949 13,842,322 24,976,907 18,495,387 396,627,032
$ 396,627,032
$ 13,412,695 -
6,996,515 176,815,801
832,886 198,057,897

2011
$ 229,912,480
12,614,695 18,128,121
4,701,743 3,062,324 20,872,771 1,949,435 24,283,934 17,779,976 3,256,299 3,613,012
1,784,746 14,351,126
17,633,165 373,943,827
$ 373,943,827
$ 10,970,071 -
6,641,791 194,856,735
5,869,397 218,337,994

2012
$ 224,253,725
12,632,830 17,786,353
4,952,041 3,968,602 19,865,744 1,873,681 31,471,536 17,516,187 3,176,410 4,246,668
1,890,012 15,726,874
14,370,208 373,730,871
$ 373,730,871
$ 10,424,061 18,995
416,051 -
6,639,408 178,815,914
4,733,176 201,047,605

2013
$ 255,242,260
13,016,180 7,113,092 4,428,764 6,541,184
19,650,890 2,173,043
21,532,537 16,780,714
3,239,231 279,915
1,886,019 15,467,829
15,992,704 383,344,362
$ 383,344,362
$ 11,092,020 -
3,868,800 -
2,412,222 6,439,499 185,238,986 14,623,703 223,675,230

2014

2015

2016

2017

2018

$ 250,405,679
14,141,755 8,055,042 4,349,943 4,256,475
19,786,635 3,082,503
24,186,081 17,938,166
3,346,549 330,053
24,802 15,310,576
17,569,037 382,783,296
$ 382,783,296

$ 263,918,820
15,035,928 8,139,358 4,349,249 4,625,077
18,605,572 2,173,419
19,651,349 17,972,099
3,691,062 295,785
23,820 16,012,913
17,687,324 392,181,775
$ 392,181,775

$ 268,277,389
15,585,477 10,728,571
4,223,845 4,417,958 20,992,806 2,307,908 24,048,694 18,706,517 4,192,381
326,095
1,974,761 16,221,840
19,922,135 411,926,377
$ 411,926,377

$ 304,154,371
18,457,952 12,314,950
4,341,011 4,639,969 22,616,547 3,596,089 25,171,126 22,969,715 4,228,809
58,350
2,001,908 16,377,079
22,271,369 463,199,245
$ 463,199,245

$ 307,545,475
18,963,817 13,800,487
4,714,223 4,665,197 25,260,871 2,792,043 25,712,187 24,470,133 5,144,624
-
2,133,240 16,709,035
14,683,311 466,594,643
$ 466,594,643

$ 11,665,861 24,473
512,126 -
6,190,901 182,302,687
4,914,187 205,610,235

$ 11,699,841 61,156
282,082 -
6,284,294 206,318,462
10,288,788 234,934,623

$ 12,482,920 67,686
177,618 -
6,544,616 213,577,923
8,650,087 241,500,850

$ 13,209,819 55,650
155,831 -
7,135,331 221,016,968
2,079,785 243,653,384

$ 12,515,944 -
227,793 -
7,042,849 233,948,283
4,600,742 258,335,611

67

CHEROKEE COUNTY SCHOOL DISTRICT Changes In Net Position (continued) Last Ten Fiscal Years (Accrual Basis of Accounting)

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Total Primary Government Program Revenues

$ 207,729,720 $ 198,057,897 $ 218,337,994 $ 201,047,605 $ 223,675,230 $ 205,610,235 $ 234,934,623 $ 241,500,850 $ 243,653,384 $ 258,335,611

Total Primary Government Net (Expense)
General Revenues and Other Changes in Net Position
Governmental Activities: Taxes: Property, Levied for General Purposes Property, Levied for Debt Services Educational Local Option Sales Tax Other Unrestricted Grants and Contributions Restricted Investment Earnings Unrestricted Investment Earnings Miscellaneous Gain(Loss) on Asset Disposal Transfers
Total Governmental Activities
Total Primary Government
Change in Net Position Governmental Activities
Total Primary Government

$ (186,799,415) $ (198,569,135) $ (155,605,833) $ (172,683,266) $ (159,669,132) $ (177,173,061) $ (157,247,152) $ (170,425,527) $ (219,545,861) $ (208,259,032)

$ 146,876,374 3,154,743
28,380,430 -
1,486,289 22,418 -
179,920,254
$ 179,920,254

$ 139,983,508 2,981,836
28,374,227 90,905 -
378,568 1,262,619
253,631 -
173,325,294
$ 173,325,294

$ 132,517,956 2,760,023
25,865,204 111,564 105,477 744,811 -
162,105,035
$ 162,105,035

$ 125,631,535 2,530,486
30,332,685 55,369
837,491 144,910
-
159,532,476
$ 159,532,476

$ 119,504,969 2,413,668
30,330,461 -
151,814 166,183
62,175 -
152,629,270
$ 152,629,270

$ 115,437,762 2,440,652
31,148,497 3,795,929 379,995 14,958 1,472,405 8,912 -
154,699,110
$ 154,699,110

$ 128,425,998 277,364
33,612,150 4,625,155 969,255 431,733 27,131 (243,336) -
168,125,450
$ 168,125,450

$ 143,581,684 266,606
34,898,795 -
4,492,797 555,927 82,046 273,072 -
184,150,927
$ 184,150,927

$ 156,267,252 288,004
36,129,915 -
4,153,299 623,996 183,067 60,845 -
197,706,378
$ 197,706,378

$ 158,505,094 4,120,032
38,528,529 7,003,050 945,547 467,627 1,492,706 (868,961) -
210,193,624
$ 210,193,624

$ (6,879,161) $ (25,243,841) $ $ (6,879,161) $ (25,243,841) $

6,499,202 6,499,202

$ (13,150,790) $ (7,039,862) $ (22,473,951) $ 10,878,298 $ (13,150,790) $ (7,039,862) $ (22,473,951) $ 10,878,298

$ 13,725,400 $ 13,725,400

$ (21,839,483) $ $ (21,839,483) $

1,934,592 1,934,592

68

CHEROKEE COUNTY SCHOOL DISTRICT Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting)

General Fund Nonspendable Restricted Committed Assigned Unassigned Reserved Unreserved
Total General Fund

2009

$

-

-

-

-

-

382,981

33,958,467

$ 34,341,448

2010

$

-

-

-

-

-

518,503

33,590,487

$ 34,108,990

2011
$ 401,447 -
4,205,106 30,770,934
-
$ 35,377,487

2012
$ 304,618 -
26,470,133 -
$ 26,774,751

2013

$

-

-

-

-

28,089,633

-

-

$ 28,089,633

2014
$ 272,721 -
25,467,356 -
$ 25,740,077

2015
$ 716,582 948,100
8,075,632 -
39,209,291 -
$ 48,949,605

2016
$ 730,560 -
8,622,378 -
44,671,277 -
$ 54,024,215

2017
$ 797,246 -
9,248,303 -
46,279,801 -
$ 56,325,350

2018
$ 750,379 -
9,596,893 -
50,465,938 -
$ 60,813,210

All Other Governmental Funds Nonspendable Restricted Committed Unassigned Reserved Unreserved

$

-

-

-

-

73,524,581

-

Total All Other Governmental Funds $ 73,524,581

$

-

-

-

-

104,880,553

3,842,359

$ 108,722,912

$ 344,312 104,858,111 7,023,643 (116,216) -
$ 112,226,066

$ 299,790 69,142,615 7,283,442 -
$ 76,725,847

$ 337,702 68,433,335 7,024,264 -
$ 75,795,301

$ 329,765 67,584,818 7,757,858 -
$ 75,672,441

$

-

83,544,845

-

-

-

-

$ 83,544,845

$

-

58,788,413

-

-

-

-

$ 58,788,413

$

-

52,384,239

-

-

-

-

$ 52,384,239

$

-

90,333,208

-

-

-

-

$ 90,333,208

69

CHEROKEE COUNTY SCHOOL DISTRICT Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting)

Revenues
Local Sources State Funds Federal Funds Investment Earnings Miscellaneous Total Revenues
Expenditures
Instruction Pupil Services Improvements of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operations Student Transportation Services Community Services School Nutrition Program Other Support Services
Capital Outlay Debt Service
Principal Retirement Interest and Fees Issuance Costs Total Expenditures
Excess of Revenues Over (Under) Expenditures
Other Financing Sources (Uses) Transfers In Transfers Out Bond Issuance Bond Premium Proceeds From Sale of Capital Assets Payment to Bond Escrow Agent
Total Other Financing Sources (Uses)
Increase (Decrease) in Reserve for Inventory
Net Change in Fund Balances

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

$ 175,930,339 161,753,221 20,778,648 1,486,289 25,220,270
385,168,767

$ 186,313,132 138,740,801 37,105,970 378,568 6,996,515
369,534,986

$ 164,872,023 183,088,305 34,643,647 789,490 -
383,393,465

$ 186,715,705 153,824,014 21,599,195 221,796 -
362,360,710

$ 175,240,513 177,263,453 22,065,148 241,262 -
374,810,376

$ 174,908,700 160,644,859 23,850,274 394,952 2,873,240
362,672,025

$ 187,039,576 190,486,206 27,145,626 458,864 -
405,130,272

$ 199,359,911 198,705,638 26,442,730 637,972 -
425,146,251

$ 214,388,005 199,131,369 24,215,467 807,064 2,948,053
441,489,958

$ 228,385,473 211,496,126 23,111,998 1,413,174 3,915,065
468,321,836

229,000,808 10,535,628 7,847,112 4,986,679 2,630,639 18,426,580 2,053,822 24,022,688 13,403,078 1,947,735 14,078,715 40,415,296 83,246,328
11,596,494 12,037,339
476,228,941
(91,060,174)

230,430,068 12,380,477 6,271,686 5,634,983 2,674,002 18,179,357 1,934,625 22,743,806 13,506,867 1,788,456 13,822,742 31,720,753 48,498,809
13,156,279 16,844,973
439,587,883
(70,052,897)

211,396,899 12,614,695 18,128,121 4,701,743 2,369,849 20,829,774 1,905,287 24,149,353 14,954,266 1,784,746 14,335,400 6,869,311 46,941,008
14,781,853 16,788,011
521,415 413,071,731
(29,678,266)

220,448,351 12,632,830 17,786,353 4,952,041 2,243,598 19,807,593 1,829,533 22,015,748 14,511,835 1,890,012 15,716,145 7,423,078 32,343,332
17,505,000 15,336,985
406,442,434
(44,081,724)

236,435,348 13,016,180 7,113,092 4,428,764 5,962,426 19,590,374 2,128,895 26,509,286 14,365,864 1,886,019 15,457,698 3,519,146 23,791,145
19,770,000 15,870,743
409,844,980
(35,034,604)

236,061,634 14,151,619 8,063,646 4,350,082 3,816,469 19,695,117 2,015,498 24,789,844 15,788,454 26,684 15,320,006 3,678,212 30,417,113
16,150,000 18,073,797
712,137 413,110,312
(50,438,287)

257,718,118 15,512,529 8,395,425 4,508,107 4,036,345 19,263,667 2,204,431 19,691,594 16,999,251 26,043 16,018,774 4,068,800 32,819,163
16,230,000 19,183,376
974,949 437,650,572
(32,520,300)

261,187,809 16,038,553 11,042,810 4,363,287 3,735,252 21,604,006 2,337,761 24,044,944 18,467,658 1,974,761 16,274,962 4,589,366 21,055,286
17,635,000 20,673,022
512,472 445,536,949
(20,390,698)

279,380,706 17,874,635 11,957,788 4,192,494 3,844,437 22,387,656 2,716,300 24,881,022 21,380,221 2,001,908 16,263,629 4,139,123 17,862,414
19,210,000 19,437,238
325,591 467,855,162
(26,365,204)

284,762,125 18,577,288 13,570,161 4,616,997 3,823,016 24,482,989 2,688,671 25,345,889 22,805,197 2,133,240 16,261,941 5,108,539 8,718,559
21,575,000 19,925,553
448,703 474,843,868
(6,522,032)

287,124 (287,124)
318,761 -
318,761

415,364 (415,364) 101,255,000 4,098,874 262,530 (615,395)
105,001,009

298,570 (298,570) 43,525,000 285,248
49,400 (3,715,362)
40,144,286

1,628,680 (1,628,680)
94,985 -
94,985

2,589,783 (2,589,783) 35,930,000 7,461,201
62,175 -
43,453,376

335,661 (335,661) 81,315,000 13,311,060 226,518 (40,703,827)
54,148,751

18,150,889 (18,150,889) 108,960,000 23,515,260
38,144 (70,387,328)
62,126,076

138,578 (138,578) 42,685,000 8,766,142 196,403 (50,938,669)
708,876

13,421 (13,421) 18,175,000 4,023,835 63,330
-
22,262,165

5,889,760 (5,889,760) 39,685,000 6,663,214 2,610,647
-
48,958,861

-

-

-

-

-

-

-

-

-

-

$ (90,741,413) $ 34,948,112 $ 10,466,020 $ (43,986,739) $ 8,418,772 $ 3,710,464 $ 29,605,776 $ (19,681,822) $ (4,103,039) $ 42,436,829

70

CHEROKEE COUNTY SCHOOL DISTRICT Assessed Value and Estimated Actual Value
Last Ten Fiscal Years

Fiscal Year3

Residential Property

Commercial Property

Industrial Property

Agricultural Property

Preferential & Conservation Use Property

Utility Property

Motor Vehicles and
Mobile Homes1

Other Property

Less: Tax Exempt Property

Total Taxable Assessed Value

Total Direct
Tax Rate2

Estimated Actual Taxable Value

Annual Percentage
Change

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$ 5,470,481,391 $ 1,198,212,207 $

5,168,810,680

1,224,749,686

4,747,831,128

1,148,108,530

4,461,226,249

1,084,627,347

4,069,650,746

1,068,209,415

4,199,340,719

1,064,149,402

4,832,876,519

1,216,647,055

5,396,734,955

1,266,253,828

5,983,542,756

1,359,167,290

6,603,865,308

1,541,757,711

234,112,030 $ 1,243,216,990 $ 331,850,440 $ 142,645,080 $ 585,094,980 $ 251,458 $ 1,378,141,983 $ 7,827,722,593 1.89% $ 19,569,306,483

241,412,998

1,203,570,512 348,822,160

151,363,240 662,781,240

279,810 1,469,174,114

7,532,616,212 1.89% 18,831,540,530

222,552,172

1,088,036,429 309,113,640

146,101,478 581,685,690

3,123,326 1,448,932,993

6,797,619,400 1.99% 16,994,048,500

207,025,618

1,003,201,600 276,210,080

146,613,177 578,431,040

2,679,521 1,439,817,130

6,320,197,502 1.99% 15,800,493,755

197,280,131

869,750,160 227,143,440

137,171,378 625,032,150

2,091,836 1,369,698,949

5,826,630,307 1.99% 14,566,575,768

196,788,435

872,496,502 219,791,440

157,632,680 655,289,690

2,679,124 1,431,414,715

5,936,753,277 1.99% 14,841,883,193

205,104,883

918,398,745 231,497,160

154,919,480 544,063,160

3,336,647 1,623,570,343

6,483,273,306 1.95% 16,208,183,265

211,917,799

1,008,183,024 260,445,760

155,810,960 407,304,844

2,520,952 1,866,128,237

6,843,043,885 1.95% 17,107,609,713

236,563,490

1,060,893,640 269,460,760

158,606,240 314,363,550

2,401,230 2,070,919,374

7,314,079,582 1.95% 18,285,198,955

267,734,818

1,200,231,760 297,671,080

158,861,840 235,689,450

2,777,488 2,318,265,927

7,990,323,528 1.95% 19,975,808,820

3.52% -3.77% -9.76% -7.02% -7.81% 1.89% 9.21% 5.55% 6.88% 9.25%

Source: State of Georgia Department of Revenue, Tax Digest Consolidation Summary, School, https://apps.dor.ga.gov/digestconsolidation/default.aspx

Property in Cherokee County is reassessed annually. The county assesses property at 40 percent of actual value for all types of real and personal property. Estimated actual value is calculated by dividing the assessed value by this percentage.
1 As of March 1, 2013, only motor vehicles titles prior to March 1, 2013 are subject to ad valorem tax. Motor vehicles titles after that date are subject instead to a one-time state and local title fee. As a result of this change in law, the assessed value of motor vehicles subject to ad valorem tax decreased by approximately $247.6 million from 2013 to 2015, and the District expects the assessed value of motor vehicles to continue to decrease in future years as motor vehicles subject to ad valorem tax come out of service.
2 Per $1,000 of assessed value.
3 The tax year is one year prior to the fiscal year.

71

CHEROKEE COUNTY SCHOOL DISTRICT Direct and Overlapping Property Tax Rates2
Last Ten Fiscal Years (rate per $1,000 of assessed taxable value)

Direct-School District: Maintenance and
operations3 Debt service

2009

2010

2011

2012

2013

2014

2015

2016

18.450 0.400

18.450 0.400

19.450 0.400

19.450 0.400

19.450 0.400

19.450 0.400

19.450 0.000

19.450 0.000

Total Direct-School District

18.850

18.850

19.850

19.850

19.850

19.850

19.450

19.450

Overlapping:1 Cherokee County Fire District Parks State of Georgia

4.381 2.742 0.000 0.250

4.381 2.742 0.580 0.250

4.720 2.950 0.628 0.250

5.365 3.129 0.641 0.250

5.825 3.394 0.780 0.200

5.798 3.373 0.776 0.150

5.728 3.436 0.744 0.100

5.728 3.436 0.744 0.050

Total Overlapping

7.373

7.953

8.548

9.385

10.199

10.097

10.008

9.958

Additional Overlapping Rates:1 City of Ball Ground City of Canton City of Holly Springs City of Mountain Park City of Nelson City of Waleska City of Woodstock

5.121 5.950 7.370 4.000 1.538 0.000 6.530

5.194 6.800 7.607 11.780 1.546 0.000 6.530

5.194 6.800 8.098 11.780 1.538 0.000 7.016

5.194 6.800 8.598 10.780 1.538 3.983 7.292

5.194 6.800 9.449 10.780 1.546 4.278 7.889

6.000 6.800 9.373 10.780 1.250 3.550 7.889

5.375 6.196 8.936 13.330 1.124 4.250 7.250

5.139 5.850 8.751 13.220 1.085 4.250 6.992

1 Overlapping rates are those of governments that overlap the School District's geographic boundaries. 2 The tax year is one year prior to the fiscal year. 3 The legal limit is 20 mils.

Source: Cherokee County Tax Commissioner (Cherokee County Board of Commissioners FY17 CAFR), Georgia Department of Revenue

2017
19.450 0.000
19.450
5.680 3.374 0.609 0.000
9.663
4.916 5.600 8.460 12.900 1.289 4.285 6.992

2018
18.950 0.500
19.450
5.483 3.298 0.581 0.000
9.362
8.037 5.400 8.148 12.880 4.256 4.220 6.808

72

CHEROKEE COUNTY SCHOOL DISTRICT Principal Property Taxpayers Current and Nine Years Ago

Taxpayer

December 31, 2017

Taxable Assessed
Value

Rank

Percentage of Total Taxable
Assessed Value

December 31, 2008

Taxable Assessed
Value

Rank

Percentage of Total Taxable
Assessed Value

Georgia Power Atlanta Gas Light Company Cobb EMC Cole Mountain Market Place Bll Fund V Woodstock LLC Universal Alloy Corporation Walton Woodstock Apartments Georgia Transmission Mid-American Apartments Comm Laurelwood Drive Owner
Bell South Telecom AllTel CH Realty IV / Woodstock, LLC DDRM Riverstone Plaza LLC Forestar Real Estate Group, Inc.
Totals

$

50,427,943 1

34,570,552 2

24,260,052 3

22,596,120 4

20,824,480 5

17,617,403 6

15,591,360 7

15,430,596 8

15,056,040 9

14,958,880 10

$ 231,333,426

0.63% 0.43% 0.30% 0.28% 0.26% 0.22% 0.20% 0.19% 0.19% 0.19%
2.90%

$

32,755,787 1

31,993,446 2

21,840,352 3

15,064,549 6 11,357,160 10
14,232,294 7 18,577,760 4 18,243,330 5 13,969,440 8 12,387,480 9
$ 190,421,598

0.36% 0.35% 0.24%
0.16% 0.12%
0.15% 0.20% 0.20% 0.15% 0.13%
2.07%

Information is available only by calendar year; therefore, data reported is for December 31, 2017 and December 31, 2009 Source: Cherokee County Tax Commissioner (Series 2018 Bond Issue)

73

CHEROKEE COUNTY SCHOOL DISTRICT Property Tax Levies and Collections of Property by Type
Last Ten Fiscal Years

Fiscal Year

Taxes Levied1

Collected Within the Fiscal Year of the Levy2

Amount1

Percentage of Levy

Collections In Subsequent
Years3

Total Collections to Date

Amount1

Percentage of Levy

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$ 150,711,907 $ 129,034,511

142,018,249

128,153,706

129,519,549

125,668,016

125,172,134

114,358,307

115,386,331

105,622,442

117,580,492

105,808,883

125,807,610

114,268,043

132,824,435

123,875,257

141,975,756

135,094,205

155,152,909

146,572,095

85.62% 90.24% 97.03% 91.36% 91.54% 89.99% 90.83% 93.26% 95.15% 94.47%

$ 8,871,313 $ 10,322,214 2,653,321 2,657,933 2,240,564 1,379,810 1,566,497 1,192,117 1,074,399 1,183,176

137,905,824 138,475,920 128,321,337 117,016,240 107,863,006 107,188,693 115,834,540 125,067,374 136,168,604 147,755,271

91.50% 97.51% 99.07% 93.48% 93.48% 91.16% 92.07% 94.16% 95.91% 95.23%

Source: Cherokee County Tax Commissioner (Series 2018 and 2014a Bond Issue)

1 Relates to preceeding calendar year tax digest. 2 Amounts shown are net of collection fees of 2.50% paid to Cherokee County for fiscal years 2009 through 2013, 2.30% paid
to Cherokee County for fiscal years 2014, 2.10% paid to Cherokee County for fiscal years 2015, and 2.00% paid to Cherokee County for fiscal years 2016 through 2018. 3 2018 Collections are through November 30, 2018.

74

CHEROKEE COUNTY SCHOOL DISTRICT Ratios of Total Debt Outstanding By Type Last Ten Fiscal Years

Fiscal Year
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Governmental Activities

General Obligation
Bonds

Bond Premiums

Capital Leases

Total Primary Government

Annual Personal Income (thousands)1

Estimated Population

Debt as a Percentage of Personal
Income

Total Debt Per
Capita

$ 253,765,000 342,380,000 375,503,204 350,705,000 366,865,000 396,530,000 425,260,000 405,430,000 404,395,000 422,505,000

$ 1,125,798 4,831,204 7,998,523
14,505,760 25,594,630 45,515,819 49,308,763 48,463,109 48,598,225

$ 1,611,377 1,095,099 558,246 -

$ 256,502,175 $ 7,841,331

348,306,303

7,621,819

376,061,450

7,822,541

358,703,523

8,369,366

381,370,760

8,907,672

422,124,630

9,132,064

470,775,819

9,855,842

454,738,763

10,709,537

452,858,109

11,548,667

471,103,225

12,147,718

208,271 212,232 215,189 217,820 220,773 224,487 230,396 235,424 241,600 247,573

3.27% $ 4.57% $ 4.81% $ 4.29% $ 4.28% $ 4.62% $ 4.78% $ 4.25% $ 3.92% $ 3.88% $

1,232 1,641 1,748 1,647 1,727 1,880 2,043 1,932 1,874 1,903

Note: Details regarding the Board's outstanding debt can be found in the notes to the financial statements. 1 Information obtained from the U.S. Bureau of Economic Analysis

75

CHEROKEE COUNTY SCHOOL DISTRICT Ratios of General Bonded Debt Outstanding
Last Ten Fiscal Years

Fiscal Year

Estimated Population1

Estimated Actual Value

General Obligation
Bonds

Percentage of Estimated
Actual Taxable Value of Property

Net General Bonded Debt Per
Capita

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

208,271 212,232 215,189 217,820 220,773 224,487 230,396 235,424 241,600 247,573

$ 19,569,306,483 18,831,540,530 16,994,048,500 15,800,493,755 14,566,575,768 14,841,883,193 16,208,183,265 17,107,609,713 18,285,198,955 19,975,808,820

$ 253,765,000 342,380,000 375,503,204 350,705,000 366,865,000 396,530,000 425,260,000 405,430,000 404,395,000 422,505,000

1.30% 1.82% 2.21% 2.22% 2.52% 2.67% 2.62% 2.37% 2.21% 2.12%

$ 1,218.44 1,613.23 1,744.99 1,610.07 1,661.73 1,766.38 1,845.78 1,722.13 1,673.82 1,706.59

Note: Details about the School Board's outstanding debt can be found in the notes to the financial statements.

1 Population data can be found in the Schedule of Demographic and Economic Statistics table

76

CHEROKEE COUNTY SCHOOL DISTRICT Direct and Overlapping Governmental Activities Debt
As of June 30, 2018

Governmental Unit

Amount of Outstanding Debt (Less Sinking Fund)

Direct General Obligation Debt:
Cherokee County Board of Education General Obligation Bonds2

$

422,505,000

Overlapping General Obligation Debt: Cherokee County, Georgia
General Obligation Bonds Resources Recovery
Development Authority of Cherokee County (securing its Solid Waste Disposal Revenue Bonds)3

61,360,000 15,280,000

Estimated Percentage Applicable1
100%
100%
100%

Estimated Share of Overlapping
Debt

$

422,505,000

61,360,000 15,280,000

Total Direct and Overlapping Debt

$

499,145,000

$

499,145,000

Sources: Assessed value data used to estimate applicable percentages provided by the Cherokee County Tax Commissioner (2018 Bond Issue). All amounts shown were obtained as of April 1, 2018 unless indicated otherwise.
1 The percentage of each overlapping entity's outstanding debt chargeable to property in the District is calculated by dividing the gross assessed valuation of property in the District by the gross assessed valuation of property on the overlapping entity. 2 As of June 30, 2018

77

CHEROKEE COUNTY SCHOOL DISTRICT Legal Debt Margin
Last Ten Fiscal Years

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Assessed Value

$ 7,827,722,593 $ 7,532,616,212 $ 6,797,619,400 $ 6,320,197,502 $ 5,826,630,307 $ 5,936,753,277 $ 6,483,273,306 $ 6,843,043,885 $ 7,314,079,582 $ 7,990,323,528

Debt Limit1

$ 782,772,259 $ 753,261,621 $ 679,761,940 $ 632,019,750 $ 582,663,031 $ 593,675,328 $ 648,327,331 $ 684,304,389 $ 731,407,958 $ 799,032,353

Total Net Debt Applicable to Limit: General Obligation Bonds

253,765,000

342,380,000

375,503,204

350,705,000

366,865,000

396,530,000

425,260,000

405,430,000

404,395,000

422,505,000

Legal Debt Margin

$ 529,007,259 $ 410,881,621 $ 304,258,736 $ 281,314,750 $ 215,798,031 $ 197,145,328 $ 223,067,331 $ 278,874,389 $ 327,012,958 $ 376,527,353

Total Net Debt Applicable to the Limit as a Percentage of Debt Limit

32.42%

45.45%

55.24%

55.49%

62.96%

66.79%

65.59%

59.25%

55.29%

52.88%

Source: Cherokee County Tax Commissioner, District Records (Assessed Value Statistical table)
1 Under Article 9, Section 5, Paragraph 1 of the State of Georgia Constitution, the School District's outstanding general obligation debt should not exceed 10% of the assessed value of the taxable property loicated withing the School District.

78

CHEROKEE COUNTY SCHOOL DISTRICT Demographic and Economic Statistics Last Ten Fiscal Years

Calendar Year Population1*

Personal Income (thousands)1*

Per Capita Income1*

Median Age2*

School Enrollment3

Unemployment Rate4*

2008

208,271

$

7,841,331 $ 37,650

33.50

37,199

5.30%

2009

212,232

7,621,819

35,913

35.30

38,225

8.90%

2010

215,189

7,822,541

36,352

36.40

38,636

8.80%

2011

217,820

8,369,366

38,423

36.70

38,761

8.20%

2012

220,773

8,907,672

40,344

37.00

39,222

7.10%

2013

224,487

9,132,064

40,680

37.30

39,644

6.10%

2014

230,396

9,855,842

42,778

37.20

40,517

5.50%

2015

235,424

10,709,537

45,490

37.70

41,169

4.70%

2016

241,600

11,548,667

47,801

38.70

41,769

4.20%

2017

247,573

12,147,718

49,067

39.60

42,148

3.70%

Note: Student Enrollment is based on the data for the 20 day count for the school year (July through June) which occurs within the calendar year.

* County-wide data

1 Information obtained from the U.S. Bureau of Economic Analysis
2 Information obtained from the United States Census Bureau 3 Annual 20 day report for School Enrollment record
4 Information obtained from the United States Department of Labor, Bureau of Labor Statistics

79

CHEROKEE COUNTY SCHOOL DISTRICT Principal Employers
Current and Nine Years Ago

Employer
Cherokee County School Distric1t Northside Hospital-Cherokee Cherokee County Inalfa Roof System Pilgim's Pride Corporation Chart Industries, Inc. Piolax Corporation Universal Alloy Corporation Belnick, Inc. Meyn America, LLC Reinhart College City of Woodstock

December 31, 2017

Employees

Rank

Percentage of Total County Employment

4,645

1

2,145

2

1,628

3

1,000

4

760

5

715

6

615

7

559

8

490

9

267 10

4.61% 2.13% 1.61% 0.99% 0.75% 0.71% 0.61% 0.55% 0.49% 0.26%

Totals

$

12,824

12.72%

December 31, 2008

Employees Rank

Percentage of Total County Employment

4,851

1

*

740

3

*

1,330

2

*

850

4

*

262

7

*

250

8

*

500

5

*

285

6

*

205

9

*

193 10

*

$

9,466

*

Information is available only by calendar year; therefore, data reported is for December 31, 2017 and December 31, 2008. Principal Employers within the county provided by Series 2018 Bond issuance and 2008 Cherokee County Government CAFRs.
Source: District Records, Cherokee County Government, and U.S. Bureau of Economic Analysis 1 Information for the school district is reported as of June 30, 2018 and June 30, 2009. * Information is not readily available

80

CHEROKEE COUNTY SCHOOL DISTRICT Employees by Function Last Ten Fiscal Years

Function
Instruction Pupil Services Improvement of instructional services Educational media services Federal Grants administration General administration School administration Business administration Maintenance and operation of plant Student transportation services Central services Other supporting services Food service operations Facilities acquisition and construction
Total

2009
* * * * * * * * * * * * * *
-

2010
2,809 144 84 41 10 316 32 303 448 27 312 -
4,526

2011
2,813 150 83 49 11 307 27 299 452 22 311 -
4,524

2012
2,757 165 87 50 11 309 27 301 446 22 300 -
4,475

2013
2,688 174 84 49 11 290 27 297 441 22 294 -
4,377

2014
2,726 177 86 49 11 275 26 58 435 21 289 -
4,153

2015
2,889 178 96 49 11 283 26 58 445 21 292 -
4,348

2016
3,003 203 97 48 11 289 26 65 467 25 294 -
4,528

2017
3,163 184 118 46 11 287 29 66 489 27 291 -
4,711

2018
3,184 200 120 46 12 302 30 69 507 28 291 -
4,789

Percentage Change from Prior Fiscal Year

*

0.00%

-0.04%

-1.08%

-2.19%

Source: Cherokee County School District Payroll historical records as of the end of the fiscal year. * Information is not readily available

-5.12%

4.70%

4.14%

4.04%

1.66%

81

CHEROKEE COUNTY SCHOOL DISTRICT Teacher Salary Schedule Last Ten Fiscal Years

Fiscal Year

School District's Minimum Salary1

School Minimum District's % of State Salary2,3 State Minimum3

School District's Maximum Salary1

School District's Average Salary1

State-wide Average3

School District's % of
State Average3

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$

35,145 $

31,586

35,145

31,586

35,145

31,586

35,145

31,586

35,145

31,586

35,145

31,586

35,496

31,586

35,496

31,586

35,496

31,586

36,222

32,217

111% $ 111% 111% 111% 111% 111% 112% 112% 112% 112%

86,669 $ 86,669 86,669 86,669 86,669 86,669 89,254 89,254 90,146 91,960

60,907 $ 60,907 60,907 60,907 60,907 60,907 62,375 62,375 62,821 64,091

52,823 52,823 52,823 52,871 52,871 52,871 50,950 52,800 52,880
*

115% 115% 115% 115% 115% 115% 122% 118% 119%
*

Data Source: 1 Annual CCSD Salary Handbooks 2 Georgia Department of Education 3 Georgia Governor's Office of Achievement
* Information is not readily available

82

CHEROKEE COUNTY SCHOOL DISTRICT School Buildings Capacity Last Ten Fiscal Years

School Name

2009

Arnold Mill ES Capacity Enrollment
Avery ES Capacity Enrollment
Ball Ground ES Capacity Enrollment
Bascomb ES Capacity Enrollment
Boston ES Capacity Enrollment
Canton ES Capacity Enrollment
Carmel ES Capacity Enrollment
Clark Creek ES Capacity Enrollment
Clayton ES Capacity Enrollment
Free Home ES Capacity Enrollment
Hasty ES Capacity Enrollment
Hickory Flat ES Capacity Enrollment
Holly Springs ES Capacity Enrollment
Indian Knoll ES Capacity Enrollment
Johnston ES Capacity Enrollment
Knox ES Capacity Enrollment
Liberty ES Capacity Enrollment
Little River ES Capacity Enrollment
Macedonia ES Capacity Enrollment
Mountain Road ES Capacity Enrollment
Oak Grove ES Capacity Enrollment

1,150 1,143
1,125 1,133
488 427
1,169 1,255
897 859
1,119 779
1,463 1,551
-
444 409
313 277
1,138 617
1,119 1,022
1,400 1,130
-
1,000 988
1,163 786
1,538 1,319
1,169 959
738 834
613 532
856 769

2010
1,138 1,035
1,137 1,147
488 423
1,175 1,124
938 846
1,138 830
1,425 1,269
-
588 418
312 303
1,138 678
1,125 993
1,418 1,225
-
1,025 988
1,175 798
1,556 1,400
1,162 1,166
850 809
637 550
862 793

2011
1,113 846
1,137 1,175
488 417
1,175 1,036
938 888
1,150 843
1,325 1,274
-
663 352
312 299
1,156 720
1,050 954
1,412 1,266
-
1,000 890
1,175 847
1,556 1,391
1,143 1,099
838 822
643 555
868 787

2012
1,118 820
1,143 1,152
488 400
1,188 989
938 841
1,168 866
1,300 1,269
-
663 326
306 334
1,150 750
1,063 586
1,418 979
1,150 907
1,000 572
1,162 823
1,538 1,343
1,168 1,169
850 846
643 556
862 808

2013
1,156 835
1,143 1,110
1,175 529
1,188 926
925 500
1,168 854
1,300 1,226
1,200 905
650 314
306 311
1,156 809
895 551
1,418 990
1,150 1,007
1,006 543
1,168 831
1,538 1,332
1,143 1,236
850 799
637 463
862 455

2014
1,131 830
1,143 1,061
1,200 520
1,231 1,082
883 590
1,168 885
1,325 1,208
1,175 948
663 296
306 330
1,156 846
895 539
1,418 967
1,156 1,052
750 550
1,168 847
1,550 1,281
1,137 1,335
850 795
637 569
883 533

2015
1,137 851
1,150 1,034
1,188 559
1,231 1,013
887 599
1,175 755
1,337 1,179
1,175 952
462 226
356 328
1,181 858
913 545
1,438 953
1,162 1,094
763 566
1,143 749
1,562 1,252
1,143 1,369
856 760
643 561
891 563

2016
1,062 781
1,150 983
1,163 500
1,237 1,016
887 615
1,163 820
1,275 1,061
1,175 1,011
462 246
350 307
1,193 891
913 522
1,406 938
1,150 1,130
643 571
1,143 773
1,562 1,234
1,509 1,361
862 774
631 537
793 575

2017
1,113 788
1,175 1,015
1,175 508
1,263 981
891 617
1,163 826
1,287 1,020
1,200 1,082
456 232
362 314
1,187 907
925 473
1,250 805
1,193 991
875 570
1,193 741
1,575 1,207
1,512 1,338
862 770
713 419
775 512

2018
1,100 783
1,150 1,011
1,163 524
1,250 943
883 593
1,150 767
1,275 1,041
1,193 1,159
462 227
362 325
1,163 882
918 513
1,187 754
1,187 931
687 584
1,187 781
1,575 1,196
1,506 1,324
862 785
687 429
687 466

83

CHEROKEE COUNTY SCHOOL DISTRICT School Buildings Capacity Last Ten Fiscal Years

School Name R. M. Moore ES
Capacity Enrollment Sixes ES Capacity Enrollment Woodstock ES Capacity Enrollment Chapman IS Capacity Enrollment Creekland MS Capacity Enrollment Dean Rusk MS Capacity Enrollment E. T. Booth MS Capacity Enrollment Freedom MS Capacity Enrollment Mill Creek MS Capacity Enrollment Teasley MS Capacity Enrollment Woodstock MS Capacity Enrollment Cherokee HS Capacity Enrollment Creekview HS Capacity Enrollment Etowah HS Capacity Enrollment River Ridge HS Capacity Enrollment Sequoyah HS Capacity Enrollment Woodstock HS Capacity Enrollment

2009
694 585
1,013 1,034
1,213 1,096
1,013 1,156
1,238 1,338
906 732
1,131 1,152
1,150 1,011
306 358
975 916
969 754
2,013 2,089
1,838 1,548
2,225 2,067
-
1,650 1,598
2,163 2,309

2010
725 581
1,018 1,053
1,187 988
1,018 1,205
1,275 1,278
900 789
1,131 1,168
1,163 1,009
1,163 1,019
1,012 745
968 1,025
2,075 2,072
1,775 1,645
2,506 2,132
-
1,731 1,760
2,262 2,141

2011
1,063 604
1,025 1,010
1,187 1,005
988 1,215
1,275 1,305
912 834
1,062 1,165
1,175 1,068
1,163 1,117
912 787
1,113 1,048
2,093 2,041
1,775 1,730
2,500 2,116
2,013 705
1,725 1,699
2,100 1,992

2012
1,075 615
1,025 872
1,187 1,004
1,000 1,125
1,275 1,385
918 838
1,062 1,199
1,175 1,138
1,175 1,152
912 801
1,125 1,081
2,093 2,031
1,800 1,700
2,488 2,211
2,000 1,081
1,725 1,560
2,100 1,927

2013
1,075 574
1,038 820
1,193 1,023
975 921
1,263 1,393
918 836
1,062 1,191
1,150 1,173
1,175 1,160
912 828
1,125 1,096
2,081 2,051
1,825 1,732
2,488 2,285
1,975 1,425
1,725 1,521
2,100 1,851

2014
1,075 546
1,038 774
1,213 1,100
-
1,306 1,420
925 861
1,631 1,634
1,150 1,174
1,175 1,216
912 870
1,125 1,116
2,063 2,080
1,813 1,745
2,363 2,374
1,975 1,502
1,725 1,593
1,862 1,949

2015
1,062 417
1,050 768
1,231 1,111
-
1,281 1,392
925 894
1,650 1,679
1,187 1,114
1,187 1,286
1,525 1,399
1,131 1,178
2,087 2,293
1,838 1,818
3,175 2,356
2,025 1,567
1,688 1,644
1,900 2,108

2016
1,062 397
879 724
10,231 1,138
-
1,287 1,456
925 927
1,650 1,688
1,125 1,163
1,250 1,437
1,538 1,388
1,125 1,124
2,163 2,465
1,900 1,873
3,150 2,377
2,025 1,658
1,650 1,765
1,962 2,208

2017
1,062 420
883 684
1,237 1,176
-
1,287 1,494
1,600 1,479
1,663 1,763
1,187 1,165
1,293 1,416
1,550 1,418
1,088 1,157
2,387 2,589
1,925 1,993
3,175 2,381
2,050 1,725
1,737 1,848
2,413 2,274

2018
1,062 384
883 716
1,200 1,163
-
1,287 1,543
1,650 1,522
1,650 1,786
1,187 1,163
1,287 1,414
1,518 1,522
1,075 1,193
2,512 2,647
1,975 1,995
3,175 2,421
2,025 1,809
2,375 1,912
2,393 2,308

Source: Cherokee County School District available records (Planning and Facilities, Division of Support Services) and annual 20-day enrollment report. Capacity schedule does not include information on preschools and center locations within the school district.

84

CHEROKEE COUNTY SCHOOL DISTRICT Number of Personnel and Ratio of Pupils to Professional Personnel
Last Ten Fiscal Years

Professional Personnel1

Other Operating Personnel2

Service Personnel3

Total Personnel

Student Enrollment4

Ratio of Pupils to Professional
Personnel

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2,867 2,795 2,727 2,666 2,676 2,811 2,963 3,097 3,172 3,231

750

1,028

4,645

37,199

13.0 to 1

697

999

4,491

38,225

13.7

764

1,001

4,492

38,636

14.2

752

1,010

4,428

38,761

14.5

733

938

4,347

39,222

14.7

763

748

4,322

39,644

14.1

791

776

4,530

40,517

13.7

851

749

4,697

41,169

13.3

838

765

4,775

41,769

13.2

841

779

4,851

42,148

13.0

Source: Historical personnel records from Human Resource Department as of the beginning of the fiscal year.
1 Professional personnel consists of all certified personnel including teachers, librarians, counselors, supervisors, consultants, coordinators, principals, assitant principals and other leadership personnel. 2 Other Operating peronnel includes non-certified leadership personnel, classroom aides, secretarial and clerical employees, and other technicians. 3 Service personnel includes food service personnel, custodial employees, bus drivers and maintenance/warehouse employees. 4 Annual 20 day report for School Enrollment record

85

CHEROKEE COUNTY SCHOOL DISTRICT Operating Statistics Last Ten Fiscal Years

Fiscal Year

Expenditures1

Daily Enrollment2

Cost per Pupil Enrolled

2009 $

394,529,135

37,199

$

2010

396,627,032

38,225

2011

373,943,827

38,636

2012

373,730,871

38,761

2013

383,344,362

39,222

2014

382,783,296

39,644

2015

392,181,775

40,517

2016

411,926,377

41,169

2017

463,199,245

41,769

2018

466,594,643

42,148

10,606 10,376
9,679 9,642 9,774 9,656 9,679 10,006 11,090 11,070

Source:

1 Financial Trend Net asset statistical table 2 Annual 20 day report for School Enrollment record

Percentage of Change
-3.48% -2.17% -6.72% -0.38% 1.37% -1.21% 0.25% 3.37% 10.83% -0.17%

86

Compliance Section

87

88

89

90

CHEROKEE COUNTY SCHOOL DISTRICT Schedule of Expenditures of Federal Awards
For the Fiscal Year Ended June 30, 2018

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 # After School Snack School Lunch Equipment
Total Child Nutrition Cluster
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education High Cost Fund Pool Flow Through Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Career and Technical Education - Program Improvement Career and Technical Education - Basic Grants to States Arts in Education - Model Development and Dissemination Grants Prog Title IV,Part A Student Support and Academic Enrichment Title III, Part A Language Instruction for English Learners Title III, Part A Language Instruction for Immigrant Students Title II, Improving Teacher Quality State Grants Title II, Advance Placement Title I Improving the Academic Achievement of the Disadvantaged
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 Pass-Through from Ninth District Opportunity, Inc.: Georgia Prekindergarten Transition Program
Total Child Care and Development Fund Cluster
Total U. S. Department of Health and Human Services
Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program
Total U. S. Department of Defense

CFDA NUMBER
10.553 10.555 10.555 10.579
84.027 84.027 84.173
84.048 84.048 84.351 84.424 84.365 84.365 84.367 84.367 84.010
93.600 93.575
12.000

PASSTHROUGH ENTITY ID NUMBER

EXPENDITURES IN PERIOD

16165GA324N1099 $ 16165GA324N1099 16165GA324N1099 16163GA350N8103

1,605,836 7,526,005
115,372 35,010
9,282,223
9,282,223

H027A150073 H173A150081
V048A150010
S365A150010 S367A150001 S010A150010

75,849 6,112,155
189,511
6,377,515
233,759 24,182
463,320 73,327
372,397 18,600
565,000 7,200
4,533,486
6,291,271
12,668,786

387,722 130,420 518,142 518,142
402,855 402,855

Total Expenditures of Federal Awards

$

22,872,006

Notes to the Schedule of Expenditures of Federal Awards
Note 1. Basis of Presentation
The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of the Cherokee County Board of Education (the "Board") under programs of the federal government for the year ended June 30, 2018. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position or changes in net assets of the Board.
Note 2. Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following, as applicable, either the cost principles in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments , or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards , wherein certain types of expenditures are not allowable or are limited as to reimbursement. The School District has elected not to use
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 Cherokee County School District 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.
Total federal revenues presented in the Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds on page 10 differ from the total federal expenditures presented in this schedule due to federal payments received that were not associated with a specific federal program. Those differences totaled $239,992.
# Includes the federally assigned value of donated commodities for the Food Donation Program in the amount of $1,282,378.

91

92

93

CHEROKEE COUNTY SCHOOL DISTRICT DR. BRIAN V. HIGHTOWER
SUPERINTENDENT OF SCHOOLS
SCHOOL BOARD MEMBERS
Kyla Cromer, School Board Chair Mike Chapman, School Board Vice-Chair
John Harmon Patsy Jordan Clark Menard Kelly Poole Robert Rechsteiner