CLARKE COUNTY BOARD OF EDUCATION ATHENS, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS Russell W. Hinton State Auditor CLARKE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS EXHIBITS BASIC FINANCIAL STATEMENTS DISTRICT-WIDE FINANCIAL STATEMENTS A STATEMENT OF NET ASSETS B STATEMENT OF ACTIVITIES FUND FINANCIAL STATEMENTS C BALANCE SHEET GOVERNMENTAL FUNDS D RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS E STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS F RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES G STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS H NOTES TO THE BASIC FINANCIAL STATEMENTS SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND Page 3 4 6 7 8 9 11 12 29 CLARKE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 30 3 SCHEDULE OF STATE REVENUE 32 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 34 5 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM 35 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS CLARKE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION V MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES SECTION I FINANCIAL Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 June 13, 2005 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Clarke County Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Clarke County Board of Education, as of and for the year ended June 30, 2004, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Clarke County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our op1mons. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Clarke County Board of Education, as of June 30, 2004, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. 2004ARL-11 In accordance with Government Auditing Standards, we have also issued our report dated June 13, 2005, on our consideration ofthe Clarke County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope ofour testing of internal control over financial reporting and compliance and the results ofthat testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through vii and page 29 respectively, are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Clarke County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code of Georgia Annotated section 506-24. Respectfully submitted, RWH:as 2004ARL-11 Rus ell W. Hinton State Auditor CLARKE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Introduction The discussion and analysis of Clarke County Board of Education's financial performance provides an overall review of the School District's financial activities for the fiscal year ended June 30, 2004. 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 2004 are as follows: On the District-wide financial statements, the assets of the School District exceeded liabilities by $127.0 million. Of this amount, $0.9 million is unrestricted and is available for spending at the School District's discretion. The School District has $119.3 million in expenses relating to governmental activities; only $62.4 million of these expenses are offset by program specific charges for services, grants, and contributions. General revenues (primarily property and sales taxes) of $69.7 million were adequate to provide for these programs. As stated above, general revenues accounted for $69.7 million for 52.7% of all revenues totaling $132.2 million. Program specific revenues in the form of charges for services, grants and contributions accounted for the rest. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts; management's discussion and analysis (this section), the basic financial statements and required supplementary information. The basic financial statements include two levels of statements that present different views of the School District. These include the District-wide and fund financial statements. The District-wide financial statements include the 'Statement of Net Assets' and 'Statement of Activities'. These statements provide information about the activities of the School District presenting both short-term and long-term information about the School District's overall financial status. The fund financial statements focus on individual parts of the School District, reporting the School District's operation in more detail. The 'Governmental Funds' statements disclose how basic services are financed in the short-term as well as what remains for future spending. The 'Fiduciary Funds' 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. In the case of the Clarke County School District, the General Fund, District-wide Capital Projects Fund and Debt Service Fund are the most significant funds. - 1- CLARKE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. Additionally, other supplementary information (not required) is also presented that further supplements understanding of the financial statements. District-wide Statements Since Clarke County School District has no operations that have been classified as "Business Activities", the District-wide financial statements are basically a consolidation of all of the School District's operating funds into one column called governmental activities. In reviewing the District-wide financial statements, a reader might ask the question, are we in a better financial position than last year? The 'Statement of Net Assets' and the 'Statement of Activities' provides the basis for answering this question. These financial statements include all School District's assets and liabilities and uses the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into accounts all of the current year's revenues and expenses regardless of when cash is received or paid. These two statements report the School District's net assets and any changes in those assets. The change in net assets is important because it tells the reader that, for the School District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the results of many factors, including those not under the School District's control, such as the property tax base, facility conditions, required educational programs and other factors. The 'Statement of Net Assets' and the 'Statement of Activities' reflects the School District's governmental activities. Fund Financial Statements The School District uses many funds to account for a multitude of financial transactions during the fiscal year. However, the fund financial statements presented in this report provide detail information about only the School District's significant or major funds. Governmental Funds - Most of the School District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at yearend available for spending in future periods. These funds are reported using the modified accrual method of accounting which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the 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 difference between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is reconciled in the financial statements. - 11 - CLARKE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Fiduciary Funds - The School District is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the principals' accounts. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations. FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE Recall that the Statement of Net Assets provided the perspective of the School District as a whole. Table 1 provides a summary of the School District's net assets for fiscal year 2004 compared to fiscal year 2003. Table 1 Net Assets Governmental Activities Fiscal Fiscal Year 2004 Year 2003 Assets Current and Other Assets Capital Assets, Net $ 66,474,416 $ 70,842,221 107,750,375 93,862,890 Total Assets $ 174,224,791 $ 164,705,111 Liabilities Current and Other Liabilities Long-Term Liabilities $ 17,966,090 $ 14,202,413 29,196,202 36,583,893 Total Liabilities $ 47,162,292 $ 50,786,306 Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted $ 99,355,543 26,778,364 928,592 $ 90,923,598 21,543,922 1,451,285 Total Net Assets $ 127,062,499 $ 113,918,805 Table 2 shows the Changes in Net Assets for fiscal year 2004 compared to the changes in net assets for fiscal year 2003. - 111 - CLARKE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Table 2 Change in Net Assets Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Fiscal Fiscal Year 2004 Year 2003 $ 2,411,842 57,428,863 2,603,424 $ 2,569,591 57,867,540 Total Program Revenues $ 62,444,129 $ 60,437,131 General Revenues: Taxes Property Taxes For Maintenance and Operations $ Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous 45,210,726 33,929 17,857,960 1,252,160 110,847 1,504,658 1,370,872 2,390,877 $ 40,903,838 17,040,092 965,615 188,298 1,419,273 1,237,075 1,858,113 Total General Revenues $ 69,732,029 $ 63,612,304 Total Revenues $ 132,176,158 $ 124,049,435 Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt $ 70,153,904 4,110,490 4,958,242 1,859,544 1,765,707 5,501,420 2,206,909 9,585,629 7,872,805 2,917,260 735,946 371,011 863,962 5,454,629 983,038 $ 68,504,483 3,800,427 2,822,341 1,829,292 1,784,114 5,700,392 2,508,017 9,232,651 8,421,037 3,264,686 540,233 333,057 997,713 5,293,701 1,275,475 Total Expenses $ 119,340,496 $ 116,307,619 Increase in Net Assets $ 12,835,662 $ 7,741,816 - IV - CLARKE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Government Activities The Statement of Activities shows the cost of program services and the charges for services and grants offsetting these services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services comparing fiscal year 2004 with fiscal year 2003. Net cost of services can be defined as the total cost less fees generated by the activities and intergovernmental revenue provided for specific programs. Table 3 Governmental Activities Total Cost of Services Fiscal Fiscal Year 2004 Year 2003 Net Cost of Services Fiscal Fiscal Year 2004 Year 2003 Instruction $ 70,153,904 $ 68,504,483 $ 27,956,662 $ 25,810,767 Support Services Pupil Services 4,110,490 3,800,427 2,242,039 2,224,282 Improvement of Instructional Services 4,958,242 2,822,341 2,279,108 1,588,272 Educational Media Services 1,859,544 1,829,292 908,424 912,475 General Administration 1,765,707 1,784,114 -179,790 91,365 School Administration 5,501,420 5,700,392 3,295,515 3,589,220 Business Administration 2,206,909 2,508,017 2,192,967 2,490,132 Maintenance and Operation of Plant 9,585,629 9,232,651 6,735,089 6,541,256 Student Transportation Services 7,872,805 8,421,037 6,563,492 7,092,053 Central Support Services 2,917,260 3,264,686 2,715,259 3,259,788 Other Support Services 735,946 540,233 281,455 74,157 Operations of Non-Instructional Services Enterprise Operations 371,011 333,057 -40,142 -41,386 Community Services 863,962 997,713 810,329 858,187 Food Services 5,454,629 5,293,701 152,922 104,445 Interest on Short-Term and Long-Term Debt 983,038 1,275,475 983,038 1,275,475 Total Expenses $119,340.496 $116,307.619 $ 56,896.367 $ 55,870.488 FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS The School District's governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues and other financing sources of $135.4 million and total expenditures of $141.4 million. General Fund Budgeting Highlights The School District's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund. During the course of fiscal year 2004, the School District amended its general fund budget as needed. For the General Fund, the final actual revenues and other financing sources of $113.9 million exceeded the original budgeted amount of $107.1 million by $6.8 million. This difference (final - V- CLARKE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 actual vs. original budget) was primarily due to an increase in state revenues over original budget of $1.1 million, property tax revenues over original budget of $1.6 million, sales tax revenues over original budget of $0.8 million, charges for services over original budget of $0.9 million, and other financing sources over original budget of $0.6 million. The actual revenues and other financing sources of $113.9 million exceeded the final budgeted amounts by $3.2 million. Conservative budgeting for property taxes, sales taxes and state funds more than offset any shortfall in other revenue categories. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At fiscal year end June 30, 2004 the School District has $107.7 million invested in capital assets, all in governmental activities. Table 4 reflects a summary of these balances net of accumulated depreciation. Table 4 Capital Assets (Net of Depreciation) Governmental Activities Fiscal Fiscal Year 2004 Year 2003 Land Construction in Progress Buildings Equipment Land Improvements $ 684,305 18,922,684 83,409,436 3,822,200 911,750 $ 125,000 8,325,603 80,621,042 3,836,055 955,190 Total $ 107!750!375 $ 93!862!890 The School District has numerous construction projects including new buildings, additions and renovations. Debt At fiscal year end June 30, 2004, the School District had $26.6 million in bonds outstanding and $2.6 million in other long-term debt. Table 5 summarizes the School District's debt for general obligation bonds, capital leases and compensated absences outstanding. - Vl - CLARKE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Table 5 Debt at June 30 Governmental Activities Fiscal Fiscal Year 2004 Year 2003 General Obligation Bonds Capital Leases Compensated Absences Long-Term Notes Payable $ 26,625,000 2,022,557 548,645 $ 34,000,000 2,027,060 479,415 77 418 Total $ 29!196!202 $ 36!583!893 At June 30, 2004, the School District's assigned bond ratings was "Aa2" and "AA" as determined by Moody's Investor Service, Inc. and Standard and Poor's Rating Services. Current Issues Athens-Clarke County is the cultural and business center of Northeast Georgia, fifty miles from Atlanta at the foot of the North Georgia Mountains. It is home to the University of Georgia, a strong manufacturing base, and growing high tech and biotech industries. Major international fortune 500 companies as well as home-grown entrepreneurs have found Athens' business climate, educational institutions, location and quality of life conducive to success in business as well as a great place for families. The county has population of 103,691 with a labor force of 54,348. Unemployment was 3.4% in May 2004, well below the state averages for the same date. Contacting the Board's Financial Management This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional information contact Tom Guthrie, Director of Finance and Business Services at Clarke County School District, 240 Mitchell Bridge Road, Athens, Georgia or email at guthriet@clarke.k12.ga.us. - vu - CLARKE COUNTY BOARD OF EDUCATION CLARKE COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30. 2004 ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Other Prepaid Items Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation Total Assets LIABILITIES Accounts Payable Salaries Payable Contracts Payable Retainages Payable Deposits and Deferred Revenues Long-Term Liabilities Due Within One Year Due in More Than One Year Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Continuation of Federal Programs Debt Service Capital Projects Unrestricted Total Net Assets Total Liabilities and Net Assets The notes to the basic financial statements are an integral part of this statement. -3- EXHIBIT"A" GOVERNMENTAL ACTIVITIES $ 14,495,376 39,962,581 3,499,379 6,383,359 1,765,261 130,997 14,792 222,671 684,305 18,922,684 1,101,843 107,870,692 12,455,186 -33,284,335 $ ===17=4=,2=2=4=7'=91= $ 4,840,889 8,917,104 2,971,279 1,211,662 25,156 8,763,605 20,432,597 $ 47,162,292 $ 99,355,543 1,740,268 8,063,790 16,974,306 928,592 $ 127,062,499 $ ===17=4=,2=2==4'=7=91= CLARKE COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2004 GOVERNMENTAL ACTIVITIES Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt Total Governmental Activities General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Debt Services For Capital Projects Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous Total General Revenues Change in Net Assets Net Assets - Beginning of Year Net Assets - End of Year EXPENSES CHARGES FOR SERVICES $ 70,153,904 $ 4,110,490 4,958,242 1,859,544 1,765,707 5,501,420 2,206,909 9,585,629 7,872,805 2,917,260 735,946 371,011 863,962 5,454,629 983,038 $ 119 340 496 $ 770,290 32,674 411,153 1,197,725 2 411 842 The notes to the basic financial statements are an integral part of this statement. -4 - EXHIBIT"B" PROGRAM REVENUES OPERATING CAPITAL GRANTS AND GRANTS AND CONTRIBUTIONS CONTRIBUTIONS NET (EXPENSES) REVENUES AND CHANGES IN NET ASSETS $ 39,555,953 $ 1,868,451 2,457,741 951,120 1,882,183 2,205,905 13,942 2,765,617 1,075,355 56,828 454,491 53,633 4,087,644 $ 57,428,863 $ 1,870,999 $ 221,393 63,314 52,249 233,958 145,173 16,338 2,603,424 $ -27,956,662 -2,242,039 -2,279,108 -908,424 179,790 -3,295,515 -2,192,967 -6,735,089 -6,563,492 -2,715,259 -281,455 40,142 -810,329 -152,922 -983,038 -56,896,367 $ 45,210,726 33,929 8,298,848 9,559,112 1,252,160 110,847 1,504,658 1,370,872 2,390,877 $ 69,732,029 $ 12,835,662 114,226,837 $ ===12=7=,0=6=2'e:49=9= -5- CLARKE COUNTY BOARD OF EDUCATION BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30. 2004 EXHIBIT"C" ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Other Prepaid Items Inventories GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 12,588,666 $ 1,906,710 $ 140,142 39,822,439 3,175,329 5,599,068 1,765,261 128,329 14,792 222,671 3,003,998 784,291 2,668 0 $ 14,495,376 39,962,581 6,179,327 6,383,359 1,765,261 130,997 14,792 222,671 Total Assets $ 23,634,258 $ 45,520,106 $ =======o= $ 69,154,364 LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Salaries Payable Contracts Payable Retainages Payable Deposits and Deferred Revenue $ 4,617,235 $ 223,654 8,917,104 2,971,279 1,211,662 25156 Total Liabilities $ 13,559,495 $ 4,406,595 FUND BALANCES Reserved for: Arbitrage Rebate Tax Continuation of Federal Programs $ Debt Service Inventories Capital Projects Unreserved Designated for Court Ordered Restitution Payments Designated for Dental Plan Designated for Self-Insurance Undesignated Reported in: General Fund $ 1,564,241 222,671 466,086 8,063,790 $ 32,583,635 37,428 620,290 47,788 7,582,345 Total Fund Balances $ 10,074,763 $ 41113 511 $ $ 4,840,889 8,917,104 2,971,279 1,211,662 25,156 $ 17,966,090 $ 0 466,086 1,564,241 8,063,790 222,671 32,583,635 37,428 620,290 47,788 7,582,345 0 $ 51,188,274 Total Liabilities and Fund Balances $ 23,634,258 $ 45,520,106 $ =======o= $ 69,154,364 The notes to the basic financial statements are an integral part of this statement. -6 - CLARKE COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30. 2004 EXHIBIT "D" Total Fund Balances - Governmental Funds (Exhibit "C") Amounts reported for Governmental Activities in the Statement of Net Assets are different because: Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of: Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation Total Capital Assets Some of the School District"s property tax revenues will be collected after year-end but are not available soon enough to pay for the current period"s expenditures. Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: Bonds Payable Capital Leases Compensated Absences Total Long-Term Liabilities $ 51.188.274 $ 684,305 18,922,684 1,101,843 107,870,692 12,455,186 -33,284,335 107,750,375 -2,679,948 $ -26,625,000 -2,022,557 -548 645 -29,196,202 Net Assets of Governmental Activities (Exhibit "A") $ 127,062,499 The notes to the basic financial statements are an integral part of this statement. -7- CLARKE COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30. 2004 EXHIBIT "E" REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation Capital Outlay Debt Services Principal Interest Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES Capital Leases Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 47,638,478 1.363,007 $ 45,151,236 14,081,778 2,411,842 222,973 2,241,002 9,559,112 $ 2,346,558 1,147,899 155,871 $ 8,298,848 47.638,478 19,220,967 47,497,794 14,081,778 2,411,842 1,370,872 2 396,873 $ 113,110,316 $ 13,209,440 $ 8,298,848 $ 134,618,604 $ 64,647,125 $ 64,647,125 4,109,636 4,128,850 1,859,544 1,536,551 5,507,707 2,214,103 9,459,757 7,535,794 2,392,777 734,591 371,011 863,962 5,396,158 22,409 $ 21,401,734 4,109,636 4,128,850 1,859,544 1,536,551 5,507,707 2,214,103 9,459,757 7,535,794 2,392,777 734,591 371,011 863,962 5,396,158 21,424,143 870,485 59,190 $ 7,375,000 923,848 8,245,485 983,038 $ 111,709,650 $ 21 401,734 $ 8,298,848 $ 141,410,232 $ 1,400,666 $ -8, 192,294 $ 0 $ -6,791,628 788,564 $ 2,189,230 $ -8, 192,294 $ 7,885,533 49,305,805 788,564 0 $ -6,003,064 0 57,191,338 $ 10074763 $ 41113511 $===~0~ $ 51188274 The notes to the basic financial statements are an integral part of this statement. -8- CLARKE COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30. 2004 EXHIBIT"F" Total Net Change in Fund Balances - Governmental Funds (Exhibit "E") $ Amounts reported for Governmental Activities in the Statement of Activities are different because: Capital Outlays are reported as expenditures in Governmental Funds. However. in the Statement of Activities. the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period. these amounts are: Capital Outlay Depreciation Expense Excess of Capital Outlay over Depreciation Expense $ 17.322.819 -3,429,338 Because some property taxes will not be collected for several months after the School District's fiscal year ends. they are not considered "available" revenues. In the Statement of Activities. only the gain on the sale of the land and building is reported. whereas in the Governmental Funds. the entire proceeds from the sale increase financial resources. Thus. the change in net assets differs from the change in fund balances by the cost of the land and carrying value of the building sold. Some of the Capital Assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets, the lease obligation is reported as a Long-Term Liability. Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of: Bond Principal Retirements Capital Lease Payments Long-Term Notes Payable Payments Total Long-Term Debt Repayments $ 7,375,000 793,067 77 418 Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of: Increase in Compensated Absences -6.003.064 13.893.481 -2.436.450 -5,996 -788,564 8,245.485 -69 230 Change in Net Assets of Governmental Activities (Exhibit "B") $ 12,835,662 The notes to the basic financial statements are an integral part of this statement. -9- CLARKE COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30. 2004 ASSETS Cash and Cash Equivalents LIABILITIES Funds Held for Others EXHIBIT"G" AGENCY FUNDS $ ==2=20='=99=5= $ =====2=20='=99=5= The notes to the basic financial statements are an integral part of this statement. - 11 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY REPORTING ENTITY The Clarke County Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Clarke County Board of Education. District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. The Statement 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 ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. The School District reports the following major governmental funds: - 12 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund. District-wide Capital Projects Fund accounts for financial resources including Bond Proceeds, grants from Georgia State Financing and Investment Commission and Special Purpose Local Option Sales Tax proceeds to be used for the acquisition, construction or renovation of major capital facilities. Debt Service Fund accounts for taxes (sales) legally restricted for the payment of general longterm principal, interest and paying agent's fees. The School District reports the following fiduciary fund type: Agency funds account for assets held by the School District as an agent for various funds, governments or individuals. BASIS OF ACCOUNTING The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt and compensated - 13 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources. The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, - 14 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia. RECEIVABLES Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Clarke County Board ofCommissioners fixed the property tax levy for the 2003 tax digest year (calendar year) on July 3, 2003 (levy date). Taxes were due on October 20, 2003 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2003 tax digest are reported as revenue in the governmental funds for fiscal year 2004. The Clarke County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes 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, 2004, for maintenance and operations amounted to $47,604,549. The tax millage rate levied for the 2003 tax year (calendar year) for the Clarke County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): School Operations 19.25 mills SALES TAXES Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $17,857,960 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. - 15 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVENTORIES CONSUMABLE SUPPLIES INVENTORY Inventories of consumable supplies are reported at weighted average cost. The School District uses the consumption method to account for consumable supplies inventory whereby supplies are recorded as an asset when purchased and expenses are recorded as the inventory items are used. FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. CAPITAL ASSETS Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows: Capitalization Policy Estimated Useful Life Land Land Improvements Buildings and Improvements Equipment All NIA $ 5,000 15 to 99 years $ 5,000 up to 99 years $ 5,000 3 to 10 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. - 16 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GENERAL OBLIGATION BONDS The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets. Note 3: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts. Acceptable security for deposits consists of any one of or any combination of the following: (1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, (5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose, (6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and - 17 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 3: DEPOSITS AND INVESTMENTS (7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS At June 30, 2004, the bank balances were $17,560,073. The amounts ofthe total bank balances are classified into three categories of credit risk: Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name. Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name. Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.) The School District's deposits are classified by risk category at June 30, 2004, as follows: Risk Category Bank Balance 1 $ 277,237 2 12,933,830 3 4,349,006 Total $ 17,560.073 CATEGORIZATION OF INVESTMENTS Investments are classified as to risk by the three categories described below: Category 1 - Insured or registered, or securities held by the School District or the School District's agent in the School District's name. Category 2 - Uninsured or unregistered, with securities held by the counterparty's trust department or agent in the School District's name. Category 3 - Uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent but not in the School District's name. Funds invested in an investment pool managed by another government are not required to be categorized unless the investing entity owns specific, identifiable investment securities in the pool. - 18 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 3: DEPOSITS AND INVESTMENTS At June 30, 2004, the carrying value of the School District's total investments was $39,938,588 which is materially the same as fair value. The investments are classified as to risk categories as follows: Ty12e of Investment U.S. Government Local Government Investment Pools Total Investments Risk Categories 2 3 $ 16 696 261 $ $ Carrying Amount Fair Value $ 16,696,261 $ 16,696,261 23,242,327 23,242,327 $ 39 938 588 $ 39 938 588 The carrying amounts shown above includes amounts maintained in an investment pool by the State ofGeorgia, Office ofTreasury and Fiscal Services in which the School District owns no identifiable securities. The investment policy ofthe State ofGeorgia, Office ofTreasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows: The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the Securities and Exchange Commission (SEC) as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 of the Investment Company Act of 1940. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated daily and reported to the rating agency weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed at the pool's share price, $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds ofGeorgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund. Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U.S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2004, was 24 days. The average investment duration for Fund 6 on June 30, 2004, was 0.22 years. - 19 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"H" Note 4: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories Note 5: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year: Balances July 1, 2003 Increases Balances Decreases June 30, 2004 Governmental Activities Capital Assets, Not Being Depreciated: Land Construction in Progress $ 125,000 $ 564,305 $ 5,000 $ 684,305 8,325,603 14,970,785 4,373,704 18,922,684 Total Capital Assets Not Being Depreciated $ 8,450,603 $ 15,535,090 $ 4,378,704 $ 19,606,989 Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements $ 102,909,033 $ 11,338,985 1,084,070 5,027,459 $ 1,116,201 17,773 65,800 $ 107,870,692 12,455,186 1,101,843 Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements 22,287,991 7,502,930 128,880 2,238,069 1,130,056 61,213 64,804 24,461,256 8,632,986 190,093 Total Capital Assets, Being Depreciated, Net $ 85,412,287 $ 2,732,095 $ 996 $ 88,143,386 Governmental Activity Capital Assets - Net $ 93,862,890 $ 18,267,185 $ 4,379,700 $ 107,750,375 Capital assets being acquired under capital leases as of June 30, 2004, are as follows: Governmental Funds Equipment Less: Accumulated Depreciation $ 2,247,165 440,600 $ 1~806~565 - 20 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"H" Note 5: CAPITAL ASSETS Current year depreciation expense by function is as follows: Instruction Support Services Improvements of Instructional Services General Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Food Services $ 2,248,503 320,423 91,635 75,620 459,402 210,109 23,646 $ 3,429,338 Note 6: RESTRICTED ASSETS Special Purpose Local Option Sales Tax (SPLOST), general obligation bond proceeds and Georgia State Financing and Investment Commission (GSFIC) funds are reported as restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory prov1S1ons. Restricted assets at June 30, 2004, were as follows: District-wide Capital Projects Bond SPLOST Proceeds GSFIC Restricted Cash and Cash Equivalents: Capital Acquisitions Restricted Investments: Debt Services Capital Acquisitions $ 125,776 $ 3,835,874 $ 2,308,652 $ 8,063,790 $ 15,062,387 $ 16,696,262 Note 7: RISK MANAGEMENT The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God; unemployment compensation and dental, optical and hearing care. The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of - 21 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 7: RISK MANAGEMENT claims brought against members of the system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse) and automobile risks. Payment of excess insurance for the system varies by line of coverage. The School District has established a limited risk management program for dental, optical and hearing insurance claims. A premium is charged by the General Fund to each user fund on the basis of employee participation in order to cover estimated claims budgeted by management based on known claims and prior experience. The School District accounts for claims with expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. Changes in the dental, optical and hearing claims liability during the last two fiscal years are as follows: Beginning of Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability 2003 2004 $ 0 $ 885,087 $ 885,087 $ 0 $ 0 $ 980,248 $ 980,248 $ 0 The School District is self-insured with regard to unemployment compensation claims. A premium is charged when needed by the General Fund to each user program on the basis ofthe percentage of that fund's payroll to total payroll in order to cover estimated claims budgeted by management based on known claims and prior experience. The School District accounts for claims with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: Beginning of Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability 2003 2004 $ 0 $ 21 907 $ 21 907 $ 0 $ 0 $ 18 125 $ 18,125 $ 0 - 22 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 7: RISK MANAGEMENT The School District participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1, 1992, to develop, implement, and administer a program ofworkers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $400,000 loss per occurrence, up to $1,000,000. The School District has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent All Employees Board President Board Vice-President $ 250,000 $ 250,000 $ 25,000 $ 25,000 Note 8: SHORT-TERM DEBT The School District obtains temporary loans in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution ofthe State of Georgia limits the aggregate amount of short-term debt to 75 percent 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 is as follows: Beginning Balance Issued Redeemed Ending Balance Temporary Loans $=====0 $ 3,000,000 $ 3,000,000 $=====0 Note 9: LONG-TERM DEBT CAPITAL LEASES The Clarke County Board of Education has entered into various lease agreements as lessee for buses and computer equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception. - 23 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 9: LONG-TERM DEBT COMPENSATED ABSENCES Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences. GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: Purpose Interest Rates Amount General Government - Series 2002 General Government - Series 2003 2.00% - 4.00% 2.38% $ 22,625,000 4,000,000 $ 26,625.000 Voters have authorized $6,000,000 in general obligation debt for the funding of capital outlay projects which was not issued as of June 30, 2004. The changes in Long-Term Debt during the fiscal year ended June 30, 2004, were as follows: Capital Leases Governmental Funds Long-Term Compensated Notes Absences Payable General Obligation Bonds Total Balance July I, 2003 Additions Capital Leases Annual Leave Earned $ 2,027,060 $ 479,415 $ 788,564 412,835 77,418 $ 34,000,000 $ 36,583,893 788,564 412,835 Deductions Annual Leave Utilized Debt Retired 793 067 343,605 77 418 7 375 000 343,605 8,245,485 Balance June 30, 2004 $ 2,022,557 $ 548,645 $ 0 $ 26 625 000 $ 29 196,202 Portion of Long-Term Debt Due within One Year $ 760,0Q0 $ 343 605 $ 0 $ 7 660 000 $ 8 763 605 At June 30, 2004, payments due by fiscal year which includes principal and interest for these items are as follows: - 24 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 9: LONG-TERM DEBT Fiscal Year Ended June 30 Capital Leases Principal Interest 2005 2006 2007 2008 $ 760,000 $ 795,678 327,130 139 749 92,258 56,579 19,361 5 464 Total Principal and Interest $ 2.022.557 $ 173.662 Fiscal Year Ended June 30 General Obligation Debt Principal Interest 2005 2006 2007 2008 $ 7,660,000 $ 7,975,000 8,310,000 2,680,000 701,605 457,255 191,332 31,892 Total Principal and Interest $ 26.625.000 $ 1.382.084 Note 10: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $1,329,010 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $1,318,244 Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $10,766 - 25 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 11: SIGNIFICANT COMMITMENTS The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2004: Project Unearned Executed Contracts Alps Road Elementary School 04-629-009 Barnett Shoals Elementary School 04-629-011 Barrow Elementary School Cedar Shoals High School Chase Street Elementary School Clarke Central High School 04-629-008 Clarke County Middle School Classic City Performance Leaming Center Fourth Street Elementary School Gaines Road Elementary School 0lS-629-230 Whit Davis Elementary School $ 2,771,891 1,083,416 1,917,044 50 3,029,633 148 2,785,676 55,675 1,082,982 2,285,347 647 817 $ 15,659,679 The amounts described in this note are not reflected in the basic financial statements. Note 12: SIGNIFICANT CONTINGENT LIABILITIES ARBITRAGE REBATE TAX The Federal Tax Reform Act of 1986 requires issuers of tax-exempt debt to make payments to the United States Treasury oflnvestment Income received at yields that exceed the issuer's tax-exempt borrowing rates. The U. S. Treasury requires payment every five years. The estimated future liability of $466,086 at June 30, 2004, is based on tax exempt debt subject to the Tax Reform Act. The estimated liability will be updated annually for any tax-exempt issuances or changes in yields through September 1, 2006, at which time payment ofthe final calculated liability for the five-year period is required to be remitted. Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements. - 26 - CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"H" Note 13: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2004 2003 2002 100% 100% 100% $ 5,360,297 $ 5,211,277 $ 4,799,435 - 27 - CLARKE COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30. 2004 SCHEDULE "1" REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation Capital Outlay Debt Service Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Other Sources Other Uses Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning Adjustments Fund Balances - Ending NONAPPROPRIATED BUDGETS ORIGINAL(1) FINAL(1) ACTUAL AMOUNTS $ 46.013.845 $ 46,013,845 $ 47,638,478 600,000 600,000 1,363,007 44,071,781 44,419,695 45,151,236 13,236,687 16,364,712 14,081,778 1,541,835 1,536,835 2,411,842 245,500 245,500 222,973 1215613 1,229,080 2 241 002 $ 106,925,261 $ 110 409 667 $ 113110316 $ 65,125,987 $ 66,093,766 $ 64,647,125 3,863,977 3,484,669 1,879,188 1,689,925 5,705,254 1,259,628 9,788,170 7,141,108 2,841,522 729,551 920,293 5,437,243 50,842 4,575,861 4,709,831 1,974,745 1,838,537 5,728,636 1,260,658 9,841,216 7,484,745 2,626,765 819,387 904,702 5,439,043 35,000 4,109,636 4,128,850 1,859,544 1,536,551 5,507,707 2,214,103 9,459,757 7,535,794 2,392,777 734,591 371,011 863,962 5,396,158 22,409 929 675 $ 109 917 357 $ 113,332,892 $ 111 709 650 $ -2,992,096 $ -2,923,225 $ 1 400666 $ 225,000 $ 245,500 $ 788,564 -225,000 -245 500 $ 0 $ 0 $ 788 564 $ -2,992,096 $ -2,923,225 $ 2,189,230 5,973,299 5,973,299 7,885,533 70 992 70 992 $ 3 052 195 $ 3 121 066 $ 10 074 763 Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts. The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. -29- CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 2004 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program Total Child Nutrition Cluster Other Programs Pass-Through From Georgia Department of Education Food Donation (1) Total U. S. Department of Agriculture Corporation for National and Community Service Pass-Through From Georgia Department of Education Learn and Serve America School and Community Based Programs Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants Total Special Education Cluster Other Programs Direct Impact Aid Smaller Learning Communities Pass-Through From Georgia Department of Education Education for Homeless Children and Youth English Language Acquisition Grants Enhancing Education Through Technology Program Even Start Improving Teacher Quality State Grants Reading Excellence - Local Reading Improvement Safe and Drug-Free Schools and Communities State Grants for Innovative Programs Title I Grants to Local Educational Agencies Twenty-First Century Community Learning Centers Vocational Education - Basic Grants to States Pass-Through From Hall County Board of Education d/b/a Piedmont Migrant Education Agency Migrant Education Total U. S. Department of Education Health and Human Services, U. S. Department of Direct Head Start Pass-Through From Georgia Department of Human Resources Child Care and Development Block Grant Total U.S. Department of Health and Human Services CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD 10.553 10.555 NIA NIA $ $ (2) 4,938,652 4,938,652 10.550 N/A $ 152,628 5,091,280 94.004 NIA $ 686 84.027 84.173 N/A $ NIA $ 1,848,174 76,844 1,925,018 84.041 84.215 84.196 84.365 84.318 84.213 84.367 84.338 84.186 84.298 84.010 * 84.287 84.048 84.011 N/A N/A N/A NIA N/A N/A N/A N/A N/A N/A N/A NIA $ (3) 39,544 75,478 240,096 255,636 649,118 766,494 402,643 100,779 54,627 3,796,886 436,713 132,314 118,292 8,993,638 93.600 93.575 $ NIA $ 931,013 54,217 985,230 - 30 - CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 2004 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT National Science Foundation Pass-Through From University of Georgia Partnership for Reform in Science and Mathematics (PRISM) Defense, U.S. Department of Direct Department of the Army R.O.T.C. Program CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD 47.076 NIA $ _ _ _ _1_3_4~,9_3_1 $ 387,039 (4) Total Federal Financial Assistance N/A = Not Available $ ===1=5=,5=9=2,=8=04= Notes to the Schedule of Expenditures of Federal Awards (1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year. (2) Expenditures for the funds earned on the School Breakfast Program ($882,687) were not maintained separately and are included in the 2004 National School Lunch Program. (3) Funds earned on the Impact Aid Program, in the amount of $42,627, do not require reporting of expenditures. (4) Expenditures for this program were supported by $141,566 in Federal assistance and the balance from State, and/or local funds. Major Programs are identified by an asterisk (*) in front of the CFDA number. The School District did not provide Federal Assistance to any Subrecipient. The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Clarke County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 31 - CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2004 SCHEDULE "3" AGENCY/FUNDING GOVERNMENTAL FUND TYPES CAPITAL GENERAL PROJECTS FUND FUND GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program $ 2,341,718 $ Community Affairs, Georgia Department of Governor's Emergency Funds 30,423 Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Principal Supplements Migrant Education Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs Health Insurance Mentor Teachers National Teacher Certification Preschool Handicapped Program School Improvement (Georgia's Choice) Statewide After School Program 4-8 Statewide Reading Program K-3 Student Information System (Conversion) Student Information System (Reporting) 2,696,615 318,994 5,633,237 958,861 2,746,788 761,965 4,730,254 4,411,371 1,283,438 484,785 1,195,650 4,287,938 790,938 173,686 2,114,233 70,079 387,868 836,279 877,141 258,782 192,795 1,184,579 2,044,100 2,600,152 1,003,774 233,958 215,759 44,119 5,706 175,644 302,856 132,985 -2,486,309 1,318,244 8,743 51,599 217,742 73,000 91,862 155,845 132,456 48,166 - 32 - TOTAL 2,341,718 30,423 2,696,615 318,994 5,633,237 958,861 2,746,788 761,965 4,730,254 4,411,371 1,283,438 484,785 1,195,650 4,287,938 790,938 173,686 2,114,233 70,079 387,868 836,279 877,141 258,782 192,795 1,184,579 2,044,100 2,600,152 1,003,774 233,958 215,759 44,119 5,706 175,644 302,856 132,985 -2,486,309 1,318,244 8,743 51,599 217,742 73,000 91,862 155,845 132,456 48,166 CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2004 SCHEDULE "3" AGENCY/FUNDING GRANTS Georgia State Financing and Investment Commission Reimbursement on Construction Projects Office of Treasury and Fiscal Services Public School Employees Retirement CONTRACTS Education, Georgia Department of Middle School After School Program Labor. Georgia Department of Vocational Rehabilitation GOVERNMENTAL FUND TYPES CAPITAL GENERAL PROJECTS FUND FUND TOTAL $ 2,346.558 $ 2.346,558 $ 10,766 10,766 1.152 500 1.152 500 $ 45,151,236 $ 2,346,558 $ 47 497 794 See notes to the basic financial statements. - 33 - CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30. 2004 SCHEDULE "4" PROJECT Providing funds to pay the costs of acquiring, constructing and equipping a new Cedar Shoals High School. Adding to, renovating, repairing, improving and equipping Clarke Central High School. Acquiring any necessary real or personal property and equipment and adding to, renovating, repairing, improving and equipping existing educational buildings, properties and facilities of the School District and paying expenses incident thereto, at a cost of approximately $68,000,000 Providing funds for the purpose of replacing approximately 80 portable classrooms with permanent classrooms, which may involve additions to existing schools or may involve the construction of new school facilities, renovations and or additions to Clarke Central High School, Clarke Middle School, Alps Road Elementary School, Gaines Elementary School, Cedar Shoals High School, Barnett Shoals Elementary School, Barrow Elementary School, Burney-Harris-Lyons Middle School, Chase Street Elementary School, Cleveland Road Elementary School, Coile Middle School, Fourth Street Elementary School, Fowler Drive Elementary School, H. T. Edwards Building, Hilsman Middle School, Oglethorpe Avenue Elementary School, Timothy Road Elementary School, West Broad School Building (which currently houses the Rutland Center), Whit Davis Road Elementary School, Whitehead Road Elementary School, Winterville Elementary School, the acquisition, construction and equipping of an alternative learning center, acquiring any necessary real or personal property and equipment (including acquiring improved or unimproved land and existing buildings to renovate for future school sites) and adding to, renovating, repairing, improving and equipping other existing educational buildings, properties and facilities of the School District, including, without limitation, Old Winterville High School, athletic, transportation, maintenance and plant services facilities, and technology upgrades to all School District facilities, and paying expenses incident thereto, at a cost of approximately $87,849,000 ORIGINAL ESTIMATED COST(1) CURRENT ESTIMATED COSTS(2) AMOUNT EXPENDED IN CURRENT YEAR (3) (4) AMOUNT EXPENDED IN PRIOR YEARS (3) (4) PROJECT STATUS $ 68,000,000 $ 62,284,524 $ 1,712,277 $ 58,614,136 Ongoing 87,849,000 90,833,192 19,689,457 3 712 886 Ongoing $ 155,849,000 $ 153,117,716 $ 21 401 734 $ 62,327,022 (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 Clarke County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. (4) In addition to the expenditures shown above, the School District has incurred interest to provide advance funding for the above projects as follows: Prior Years $ 9,335,374 Current Year 923,848 Total $ 10,259,222 See notes to the basic financial statements. -34- CLARKE COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2004 SCHEDULE "5" DESCRIPTION Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) TOTAL DIRECT INSTRUCTIONAL PROGRAMS Media Center Program Staff and Professional Development ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL $ 3,456,592 $ 3,092,563 $ 59,463 $ 3,152,026 389,228 225,971 2,446 228,417 7,291,740 9,151,359 223,777 9,375,136 1,209,189 1,152,576 6,438 1,159,014 3,528,305 5,357,225 60,967 5,418,192 982,147 6,065,883 5,655,823 1,630,082 8,863,506 2,702,097 90,714 496,248 1 051 138 656,653 7,946,591 6,898,620 1,161,487 59,084 639,814 7,867,142 279,289 64,211 2,853,589 90,306 561,079 900,613 5,412 145 141,654 234,633 293,118 10,800 20,920 100,013 18,668 5,560 43,637 446 4,436 4 349 662,065 145 8,088,245 7,133,253 1,454,605 69,884 660,734 7,967,155 297,957 69,771 2,897,226 90,752 565,515 904 962 $ 43,412,692 $ 48,958,172 $ 1,236,882 $ 50,195,054 1,121,778 245,751 1,689,362 50,088 112,572 170,065 1,801,934 220 153 TOTAL QBE FORMULA FUNDS $ 44,780,221 $ 50,697,622 $ 1,519,519 $=~5~2,,;;;,21;.;,7,i,;,1.,;,4,;,.1 (1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State budget austerity reduction. See notes to the basic financial statements. - 35 - SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 June 13, 2005 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Clarke County Board of Education REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Clarke County Board of Education as of and for the year ended June 30, 2004, which collectively comprise Clarke County Board of Education's basic financial statements and have issued our report thereon dated June 13, 2005. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered Clarke County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide an opinion on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Clarke County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. Reportable conditions are described in the accompanying Schedule of Findings and Questioned Costs as items FS-6291-04-01, FS-6291-04-02 and FS-6291-04-03. 2004YB-30 A material weakness is a reportable condition in which the design or operation of one or more ofthe internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe none of the reportable conditions described above is a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether Clarke County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the management and members of the Clarke County Board ofEducation and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, RWH:as 2004YB-30 Ru sell W. Hinton State Auditor Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 June 13, 2005 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Clarke County Board of Education REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 Ladies and Gentlemen: Compliance We have audited the compliance of Clarke County Board of Education with the types of compliance requirements described in the US. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2004. Clarke County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Clarke County Board of Education's management. Our responsibility is to express an opinion on Clarke County Board of Education's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Clarke County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Clarke County Board of Education's compliance with those requirements. 2004SA-30 In our opinion, the Clarke County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2004. Internal Control Over Compliance The management of Clarke County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Clarke County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133. We noted certain matters involving the internal control over compliance and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over compliance that, in our judgment, could adversely affect the Clarke County Board of Education's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. Reportable conditions are described in the accompanying Schedule ofFindings and Questioned Costs as items FA-6291-04-01, FA-6291-04-02 and FA-6291-04-03. A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level ofrisk that noncompliance with the applicable requirements of laws, regulations, contracts and grants caused by error or fraud that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe none of the reportable conditions described above is a material weakness. This report is intended solely for the information and use ofthe management, members ofthe Clarke County Board of Education, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, lA)~,.k RWH:gp 2004SA-30 State Auditor SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS CLARKE COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-6291-02-01 FS-6291-02-04 FS-6291-03-01 FS-6291-03-02 Further Action Not Warranted Previously Reported Corrective Action Implemented Unresolved - See Corrective Action/Reponses Unresolved - See Corrective Action/Reponses CORRECTIVE ACTION/RESPONSES CASH AND CASH EQUIVALENTS REVENUE/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Finding Control Number: FS-6291-03-01 The School District is assessing the needs for additional procedures and staff to separate duties in order to provide satisfactory internal control over the school's bookkeeping function. INVENTORIES Inadequate Inventory Procedures Finding Control Number: FS-6291-03-02 Inventory procedures have been changed by a new, experienced warehouse manager. New results are expected. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FA-6291-03-01 FA-6291-03-02 Unresolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented - 1- CLARKE COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES ACTIVITIES ALLOWED OR UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES SPECIAL TESTS AND PROVISIONS Fiscal Requirements of School-wide Program Not Fully Implemented Finding Control Number: FA-6291-03-01 The School District has developed procedures to consolidate the funding sources of the school-wide program and allocate the school-wide program costs to the respective Federal funds in a reasonable manner. -2- SECTION IV FINDINGS AND QUESTIONED COSTS CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Clarke County Board of Education's financial statements was unqualified. 2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Clarke County Board of Education disclosed financial statement reportable conditions related to the following control categories. Cash and Cash Equivalents Inventories Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements Capital Assets None ofthe reportable conditions described above are considered to be material weaknesses. 3. Noncompliance Material to the Financial Statements The audit ofthe Clarke County Board ofEducation disclosed no instances ofnoncompliance that were deemed to be material to the financial statements. 4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Clarke County Board ofEducation disclosed reportable conditions in internal control over major programs for the following compliance requirements. Allowable Costs/Cost Principles Matching, Level of Effort and Earmarking Special Tests and Provisions The reportable conditions described above are not considered to be material weaknesses. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Clarke County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Required to be Reported by Section .5 lO(a) of 0MB Circular A-133 The Clarke County Board of Education's audit disclosed audit findings required to be reported by section .510(a) of 0MB Circular A-133. These audit findings are included in section IV of this report. 7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 84.287 Twenty-First Century Community Leaming Centers 84.338 Reading Excellence - Local Reading Improvement - 1- CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 I SUMMARY OF AUDITOR'S RESULTS 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $461,699. 9. Low Risk Auditee The Clarke County Board of Education qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133. II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-6291-04-01 Our examination of the principal's accounts disclosed weaknesses in internal control as discussed below: Cash and Cash Equivalents The bank reconciliation function is not separated from the record keeping and voucher payment functions. Revenues/Receivables/Receipts Deposit preparation was not separated from the record keeping and cash custody functions. Based on a review of 65 items, fourteen receipts had a deposit date before the receipt date. Expenditures/Liabilities/Disbursements The check writing function was not separated from the record keeping or processing of signed checks. Based on a review of 75 items, four vouchers did not have proper approval and fourteen vouchers did not have an approved purchase order. These deficiencies were a result ofmanagement's decision to limit the number ofadministrative staff made responsible, at the various principal account sites, for the accounting functions and their failure to ensure established controls were functioning as designed. Management should implement additional procedures to ensure that the key accounting functions of custody, record keeping and authorization are segregated. -2 - CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS INVENTORIES Inadequate Inventory Procedures Reportable Condition Finding Control Number: FS-6291-04-02 A review ofthe School District's Central Supply Inventory revealed that controls were not in place to provide adequate internal control over the Central Supply Inventory. The following problem areas were noted: 1. Of the 24 items selected, seven did not agree with the perpetual records. 2. There was no evidence of performance of physical inventory counts and, therefore, no reconciliation to the general ledger amounts was performed. 3. Inventory listings contained items with no assigned value. The School District should reassess internal control procedures for inventories to ensure they are in place and operating effectively. An annual physical count should be performed and reconciled to the inventory listing and variances should be documented and explained. Administrative review should be performed to ensure the accuracy of inventory records and amounts recorded in the general ledger. CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Reportable Condition Finding Control Number: FS-6291-04-03 A test and review ofthe School District's Capital Assets Inventory revealed that controls were not in place to provide adequate internal control over the Capital Assets. The following problem areas were noted: Two School Food Service equipment items totaling $26,178 were omitted from the Capital Asset Listing resulting in an understatement in the capital asset balance at year end. The Capital Asset Listing included one equipment item that had been disposed of during the year under review and another equipment item that was below the School District's capitalization threshold. These two items totaling $11,988 caused an overstatement in the capital asset balance at year end. One equipment item was included on the Capital Asset Listing for $16,904 more than the actual cost causing a further overstatement in the capital asset balance at year end. No proper physical inventory procedures appear to be in place. The School District failed to perform an annual physical inventory in both the prior fiscal year and the current fiscal year. -3 - CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Reportable Condition Finding Control Number: FS-6291-04-03 The Capital Asset Listing did not contain all ofthe required information (i.e., serial numbers, bus numbers, location of item and funding source). The School District should reassess internal control procedures for the Capital Assets Inventory to ensure they are in place and operating effectively. An annual physical inventory will ensure inventory items are included on the Capital Asset Listing. Administrative review should be performed to ensure the accuracy of inventory records and amounts recorded in the general ledger. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ALLOWABLE COSTS/COST PRINCIPLES Lack of Internal Controls Regarding Payroll Records Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-6291-04-01 The School District could not provide documentation to support the activities of the split-funded and/or hourly employees that were charged to the Reading Excellence - Local Reading Improvement (CFDA No. 84.338) and Twenty-First Century Community Learning Centers (CFDA No. 84.287) programs during the fiscal year under review. Supporting documentation is required by 0MB Circular A-87, which states, in part, as follows: "Where employees work on multiple activities or cost objectives, a distribution oftheir salaries or wages will be supported by personnel activity reports or equivalent documentation (that) meets the following standards: (a) They must reflect an after-the-fact distribution ofthe actual activity ofeach employee, (b) They must account for the total activity for which the employee is compensated, (c) They must be prepared at least monthly and must coincide with one or more pay periods, and (d) They must be signed by the employee. Such documentary support will be required where employees work on: (a) More than one Federal award, or (b) A Federal award and a non-Federal award." -4 - CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ALLOWABLE COSTS/COST PRINCIPLES Lack of Internal Controls Regarding Payroll Records Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-6291-04-01 This condition occurred because the School District did not have adequate control procedures in place to ensure that an after-the-fact distribution ofactual program activity was appropriately charged to each Federal and non-Federal award in question according to employee time and attendance records on file. The School District should implement procedures to ensure that all split funded salaries are charged to the accounting records according to time and attendance records as required by 0MB Circular A-87. The Georgia Department of Education should review this matter to determine if a refund is appropriate. MATCHING, LEVEL OF EFFORT, EARMARKING Supplement, Not Supplant, Requirements Not Supported by Adequate Documentation Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-6291-04-02 During fiscal year 2004, the School District received a grant for the Twenty-First Century Community Leaming Centers (21 st CCLC) (CFDA No. 84.287) program for the first time. According to grant award documents, these funds were used to operate after school programs at four middle schools. Auditors identified that two ofthe middle schools, Clarke Middle and Coile Middle, had after school programs in the previous year. 0MB Circular A-133, Part 3-G, states that a presumption that supplanting has occurred if; "The LEA used Federal funds to provide services that the LEA provided with non-Federal funds in the prior year." The School District could not provide documentation to identify whether the 21 st CCLC funding was used in addition to amounts previously provided with non-Federal funds for the two middle schools identified. This deficiency occurred because management failed to monitor the 21 st CCLC Program requirements as set forth in 0MB Circular A-133, Part 3-G. Procedures should be established providing that adequate monitoring ofprogram expenditures, both Federal and non-Federal funding, are performed to ensure that supplement, not supplant requirements are met. The Georgia Department of Education should review this matter to determine if a refund is appropriate. -5- CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS SPECIAL TESTS AND PROVISIONS Failure to Invite Private Schools to Participate Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-6291-04-03 The School District could not provide documentation of contact with appropriate private schools officials to determine whether they intended to participate in the Twenty-First Century Community Leaming Centers (CFDA No. 84.287) program. This contact is required by 34 CFR 200.10 which states, in part, as follows: "An LEA may receive funds under this part only if it implements programs, activities, and procedures for the involvement ofparents ofparticipating public and private school children." This deficiency occurred because ofthe School District's failure to monitor the Twenty-First Century Community Leaming Centers program requirements as set forth in 34 CFR 200.10. Procedures should be established to ensure that all eligible private schools are invited to include their eligible students in the participation of the Twenty-First Century Community Leaming Centers program as required. -6- SECTION V MANAGEMENT'S RESPONSES CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30, 2004 Finding Control Number: FS-6291-04-01 We concur with this finding. The Board will begin the process of examining procedures in the schools to ascertain which duties may be distributed to other employees in order to comply with internal control requirements. This examination should be completed by December, 2005. Finding Control Number: FS-6291-04-02 We concur with this finding. The Board intends to develop control procedures and perform at least one physical inventory count per year. This procedure should be in place by June, 2006. Finding Control Number: FS-6291-04-03 We concur with this finding. The Board will begin the process ofpreparing tighter controls to ensure that capital assets are identified at the correct amounts and are recorded on the capital assets listing. Also, the Board will perform annual physical inventories. These new procedures should be in place by June, 2006. Finding Control Number: FA-6291-04-01 We concur with this finding. Subsequent to this finding, the Board did find additional documentation to support this activity and will, in the future, provide information to support the activities of the split-funded and hourly employees that are charged to the Reading Excellence Local Reading Improvement and the Twenty-First Century Community Learning Centers Programs. Finding Control Number: FA-6291-04-02 We concur with this finding. The Board has subsequently provided additional documentation and will continue to tighten procedures and controls to ensure that requirements of Federal Programs regarding supplementing, not supplanting, are followed. Finding Control Number: FA-6291-04-03 We concur with this finding. The Board will ensure that all eligible private schools are invited to include their eligible students in the participation ofthe Twenty-First Century Community Learning Centers program as required. Contact Person: Tom Guthrie, Director of Business Services Phone: (706) 546-7721 extension 18229 Fax: (706) 357-5398 E-mail Address: guthnet@clarke.k12.ga.us