Clarke County Board of Education, Athens, Georgia, annual financial report for the fiscal year ended June 30, 2010 (including independent auditor's reports)

CLARKE COUNTY BOARD OF EDUCATION
ATHENS, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30,2010
(Including Independent Auditor's Reports)

CLARKE COUNTY BOARD OF EDUCATION
- TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENTAUDITOR'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, EXPENDITURESAND 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

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL FUND

CLARKE COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION I
SCHEDULES SUPPLEMENTARY INFORMATION
2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND -QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENTAUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WlTH GOVERNMENT AUDITING STANDARDS INDEPENDENTAUDITOR'S REPORT ON COMPLIANCE WlTH REQUIREMENTSTHAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133
SECTION Ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

CLARKE COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS -
SECTION V MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I
FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404)656-2174

DEPARTMENOFTAUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
April 26,2011

Honorable Nathan Deal, 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 of the 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, 2010, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the 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 of America and the standards applicable to financial audits contained in GovernmentAudimg Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to previously 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, 2010, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Audting Standards, we have also issued our report dated April 26, 2011, on our consideration of the Clarke County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and

not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
Accounting principles generally accepted in the United States of America require that the Management's Discussionand Analysis and the Schedule of Revenues, Expendituresand Changes in
Fund Balances - Budget and Actual, as presented on pages i through x and page 27 respectively, be
presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reportingfor placingthe basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures, to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during the audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Clarke County Board of Education's financial statements as a whole. The accompanying supplementary information consists 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, Audit3 of States, L m l Governments, and Nun-Profit Organizations are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,
dell W. Hinton, CPA, CGFM
State Auditor

CLARKE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSIONAND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010
INTRODUCTION
The School District's financial statements for the fiscal year ended June 30, 2010, includes a series of basic financial statements that report financial information for the School District as a whole, its funds, and its fiduciary responsibilities. The Statement of Net Assets and the Statement of Activities provide financial information about all of the School District's activities and present both a short-term and long-term view of the School District's finances on a global basis. The fund financial statements provide information about all of the School District's funds. Information about these funds, such as the School District's General Fund, is important in its own right, but will also give insight into the School District's overall soundness as reported in the Statement of Net Assets and the Statement of Activities.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2 0 1 0 are as follows:
On the District-wide financial statements:
District-wide net assets at June 30, 2010, were $243.4 million. Net assets reflect the difference between all assets of the School District (including capital assets, net of depreciation) and all liabilities, both short-term and long-term. The net assets at June 30, 2010, of $243.4 million represented an increase of $18.5 million in net assets when compared to the prior year as restated.
The School District had $158.7 million in expenses relating to governmental activities; only $80.7 million of these expenses were offset by program specific charges for services, grants and contributions. However, general revenues (primarily property and sales taxes) of $96.5 million were adequate to provide for these programs.
As stated above, general revenues accounted for $96.5 million or about 54.5% of all revenues totaling almost $177.2 million. Program specific revenues in the form of charges for services, grants, and contributions accounted for the balance of these revenues.
,, Source of Revenues -General Revenue
39.7%
-General Revenue Sales Taxes 11.6%
- 7 G e n e r a l Revenue -All Other 3.2%

CLARKE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010
On the fund financial statements:
Among major funds, the General Fund had over $154.6 million in revenues and $151.3 million in expenditures. The General Fund balance of $26.1 million at June 30, 2010, increased by almost $3.4 million from the prior year.
OVERVIEW OF THE FINANCIAL STATEMENTS
These financial statements consists of three parts; management's discussion and analysis (this section), the basic financial statements including notes to the 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. In the case of the Clarke County School District, the General Fund, Capital Projects Funds, and Debt Service Funds are all considered to be major funds. The School District has no nonmajor funds as defined by GASB Statement 3 4 for the purposes of this report.
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 understandingof 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 Districtwide financial statements, a reader might ask the question, are we in a better financial position now 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 account 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, student-teacher ratios, and other factors.

CLARKE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDEDJUNE 30,2010
When analyzing District-wide financial statements, it is important t o remember these statements are prepared using an economic resources measurement focus (accrual accounting) and involve the following steps to format the Statement of Net Assets:
Capitalize current outlays for capital assets Depreciate capital assets Report long-term debt as a liability Calculate revenue and expense using the economic resources measurement focus and the accrual basis of accounting Allocate net assets as follows:
o NetAssets investedin capitalassets, net ofrelateddebt o Restrictednetassetsare those with constraints placed on the use by external sources
such as creditors, grantors, contributors or laws and regulations. o Unmtrictednetassetsare net assets that do not meet any of the above restrictions.
Fund Financial Statements
The School District uses many funds or sub-funds to account for a multitude of financial transactions during the fiscal year. The fund financial statements presented in this report provide detail information about the School District's significant or major funds. As discussed previously, the School District has no nonmajor funds as defined by generally accepted accounting principles.
The School District has two kinds of funds as discussed below:
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 year-end 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 be 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 differences between government activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are reconciled in the financial statements.
Fiduciarv Funds - The School District is the trustee, or fiduciary, for assets that belong to clubs, organizations and others 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
Net assets, which is the difference between total assets and total liabilities, is one indicator of the financial condition of the School District. When revenues exceed expenses, the result is an increase in net assets. When expenses exceed revenues, the result is a decrease in net assets. The relationship between revenues and expenses can be thought of as the School District's operating results. The School District's net assets, as measured in the Statement of Net Assets, can be one way to measure the School District's financial health, or financial position. Over time, increases or decreases in the School District's net assets as measured in the Statement of Activities are one

CLARKE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDEDJUNE 30,2010
indicator of whether its financial health is improving or deteriorating. However, the School District's goal and mission is to provide success for each child's education, not to generate profits as private corporations do. For this reason, many other nonfinancial factors should be considered in assessing the overall health of the School District.
In the case of the Clarke County School District, assets exceeded liabilities by $243.4 million at June 30, 2010. To better understand the School District's actual financial position and ability to deliver services in future periods, it is necessary to review the various components of the net asset category. For example, of the $243.4 million of net assets, about $51.6 million was restricted for continuation of Federal programs, debt service and ongoing capital projects. Accordingly, these funds were not available to meet the School District's ongoing obligations to citizens and creditors.
In addition, the School District had $176.9 million (net of related debt) invested in capital assets (e.g., land, buildings, and equipment). The School District uses these capital assets to provide educational services to students within geographic boundaries served by the School District. Because of the very nature and on-going use of the assets being reported in this component of net assets, it must be recognized that this portion of the net assets is notavailable for future spending.
The remaining balance of unrestriidednet assets of almost $14.9 million may be used to meet the School District's ongoing obligations to citizens and creditors.
Table 1provides a summary of the School District's net assets for this fiscal year as compared to the prior fiscal year.

CLARKE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010

Table 1 Net Assets
Assets Current and Other Assets Capital Assets, Net
Total Assets
Liabilities Current and Other Liabilities Long-Term Liabilities
Total Liabilities
Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted
Total Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2010

Year 2009

Total net assets increased almost $20.0 million in fiscal year 2010 from the prior year net assets as shown above. This increase includes a $1.5 million restatement of Net Assets at July 1,2009 for various accounting matters related to deferred bond issuance costs and construction costs of the Rutland Psychoeducational Center. The remaining change in net assets of $18.5 million is further summarized in Table 2 as presented below.

CLARKE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDEDJUNE 30,2010

Table 2 Change in Net Assets

Governmental Activities

Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions C a ~ i t aGl rants and Contributions Total Program Revenues
General Revenues: Property Taxes Sales Taxes Investment Earnings Miscellaneous (Loss) on Disposal of Capital Assets
Total General Revenues
Total Revenues
Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Expenses

$

2,411,008

78,250.882

$ 80,661,890

$

2,398,470

70,547.985

216.330

$ 73,162,785

$ 177,172,043 $ 165,978,882

1,656,569

2,556,889

Increase in Net Assets

$ 18,468,102

$

9,508,536

The total increase in net assets for fiscal year 2010 of $18.5 million, as restated, was significantly greater than the increase in net assets that occurred in fiscal year 2009. The School District believes this fact is due a combination of controlling costs and significantly increased Federalfunding in fiscal year 2010.

CLARKE COUNW BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDEDJUNE 30,2010

Cost of ProvidingServices
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. Net cost of services can be defined as the total cost less fees generated by the activities and intergovernmental revenue provided for specific programs. The net cost reflects the financial burden on the School District's taxpayers by each activity as compared to the prior fiscal year.
Table 3
Cost of Services

Total Cost of Services

Net Cost of Services

Instruction Support Services
Pupil Services Improvementof InstructionalServices Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student TransportationServices Central Support Services Other Support Services Operations of Non-InstructionalServices Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Expenses
Expenses for fiscal year 2010 increased about 1.5% from prior year expenses, while the net cost of services decreased a little over 6.3%. Even though total expenses increased in fiscal year 2010, the School District was able to achieve a decrease in its net costs of services because Federal revenues increased from the prior fiscal year by $12.4 million or about 65%. The School District does not expect to sustain this level of Federal revenues in the future.
FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS
Information about the School District's governmental funds is presented starting on Exhibit "C" of this report. Governmental funds are accounted for using the modified accrual basis of accounting. The governmental funds had total revenues of $177.4 million and total expenditures of $192.1 million in fiscal year 2010. Total governmental fund balances of $74.0 million at June 30, 2010, decreased $14.6 million from the prior year. This decrease in fund balance resulted primarily from the School District making capital outlay expenditures in fiscal year 2010 from reserves that had been accumulated in prior fiscal years.

CLARKE COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010

General Fund Budget 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 2010, the School District amended its general fund budget as needed.

The School District budget is adopted at the aggregate level and maintained at the program, function, object, and site levels to facilitate budgetary control. The budgeting systems are designed to control the total budget, but provide flexibility to meet the ongoing programmatic needs. The budgeting systems are also designed to control total site budgets but provide flexibility for site management as well.

For the General Fund, the final actual revenues of over $154.6 million were less than the final budgeted almost of $156.8 million by over $2.1 million. This difference (final actual vs. final budget) was primarily attributable to a combination of revenues for Federal Funds less than the final budget of over $6.6 million, and revenues for miscellaneous revenues over final budget of almost $2.3 million. The School District did not include revenues for school activity accounts (included in miscellaneous revenues) in the final budget.

The General Fund's final actual expenditures of almost $151.3 million were less than the final budget amount of $167.5 million by $16.2 million. This difference (final vs. budget) was primarily attributable to expenditures for instruction were less than the final budget of $12.9 million and expenditures for pupil services were less than the final budget of $1.8 million.

CAPITAL ASSETS AND DEBT ADM INlSTRATlON

Capital Assets

At June 30, 2010, the School District had $202.3 million invested in capital assets, net of accumulated depreciation, all in governmental activities. These assets are made up of a broad range of items including buildings; land; land improvements; and food service, transportation and maintenance equipment. Table 4 reflects a summary of these balances, net of accumulated depreciation, as compared to the prior fiscal year.

Table 4
Capital Assets at June 30
(Net of Depreciation)

Governmental Activities

P/ 2 0 1 0

FY 2 0 0 9

Land Construction in Progress Land Improvements Buildings and Improvements Equipment

Total

Additional information about the School District's Capital Assets can be found in the Notes to the Basic FinancialStatements.

CLARKE COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010
Debt
At June 30, 2010, the School District had $33.6 million in total debt outstanding which consisted of $31.2 million in bond debt, $1.0 million capital lease debt, $0.9 million in compensated absences debt, and almost $0.5 million in unamortized bond premiums on bonds sold. Table 5 summarizes the School District's debt as compared to the prior fiscal year.
Table 5 Change in Debt
Governmental Activities
Bonds Payable Capital Leases Compensated Absences Unamortized Premiums on Bonds Sold
Total
Additional information about the School District's debt can be found in the Notes to the Basic Financial Statements.
FACTORS BEARING ON THE SCHOOL DISTRICTS FUTURE
Currently known circumstances that are expected to have a significant effect on financial position or results of operations in future years are as follows:
The School District is financially stable. The School District's operating millage for fiscal year 2010 was 20, which produced approximately $3.5 million per mill. The School District continues to construct additional facilities to accommodate the growth and reduce portable classrooms at various schools as needed. The School District plans to fund additional capital outlays with the one percent local option sales tax revenue and state capital outlay grants.
The School District is financially challenged by a combination of locally declining property values, which affect local revenues, and the State's declining revenues and subsequent reduction of state revenue appropriations to local school districts. State revenues for General Fund operations in fiscal year 2010 were about 9.6% less than the prior year. Further reductions of State Funding are budgeted for fiscal year 2011. Additionally, sales taxes have also slowed which have negatively affected both operating and construction revenues provided through those sources. In spite of these challenges, the School District will continue to be a good steward of tax dollars while providing a quality educational opportunity.
The School District will continue to face challenges from the implementation of the A+ Education Reform Act, which mandates lower teacher to student ratios. The School District will also continue to be impacted by the remedial actions required for schools under the No Child Left Behind Act. In the midst of these challenges, the School District remains confident in the ability to maximize resources to provide the best possible educational experience for all of our students.

CLARKE COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30.2010
CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District's finances and to show the School District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Mr. Tom Guthrie, Director of Finance and Business Services, Clarke County Board of Education, 240 Mitchell Bridge Road, Athens, Georgia 30606. You may also email your questions to Mr. Guthrie at guthriet@Clarke.kl2.ga.u~.

CLARKE COUNTY BOARD OF EDUCATION

CLARKE COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30,2010
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable,Net
lnterest Taxes State Government Federal Government Other Inventories Prepaid Items Capitalized Bond IssuanceCosts CapitalAssets, Non-Depreciable CapitalAssets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable lnterest 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 Restrictedfor
Continuationof Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets
The notesto the basic financial statements are an integral part of this statement.
- 1-

EXHIBIT "A"
GOVERNMENTAL ACTlVlTl ES

CLARKE COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30.2010

EXHIBIT "6"

GOVERNMFNTALACTIVITIES
Instruction Support Services
Pupil Sewices improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportat~onServices Central Support Services Other Support Services Operationsof Non-lnstruct~onalServlces Enterprise Operations Community Services Food Sewices Interest on Short-Term and Long-TermDebt
Total GovernmentalActivities
General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginningof Year (Restated)
Net Assets - End of Year

EXPENSES

PROGRAM REVENUES

OPERATING

CHARGES FOR

GRANTS AND

SERVICES

CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

The notes to the basic financial statements are an integral part of this statement. -2-

CLARKE COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30,2010

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

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

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracts Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Resewed for: Continuation of Federal Programs Debt Service Capital Projects Warehouse Inventory
Unreserved Designatedfor Student Activities UndesignatedReported in: General Fund
Total Fund Balances
Total Liabilities and Fund Balances

EXHIBIT "C" TOTAL

The notes to the basic financial statements are an integral part of this statement -3-

CLARKE COUNTY BOARD OF EDUCATION RECONCILIATION OFTHE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30,2010
- Total Fund Balances GovernmentalFunds (Exhibit "C")
Amounts reportedfor GovernmentalActivities in the Statement of Net Assets are different because:
CapitalAssets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Constructionin Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Taxes that are not available to pay for current period expendituresare deferred in the funds.
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. LoneTerm Liabilities at year-end consist of:
Bonds Payable Accrued Interest Capital Leases Payable Compensated Absences Capitalized Bond and Other Debt Issuance Costs Unamortized Bond Premiums
Total Long-Term Liabilities
NetAssets of Governmental Activities (Exhibit "A")

EXHIBIT "Dm

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

CLARKE COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30,2010

REVENUES
Propew Taxes Sales Taxes State Funds Federal Funds Chargesfor Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvementof Instructional Services EducationalMedia Services General Administration School Administration Business Administration Maintenanceand Operationof Plant Student Transportat~onServices Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Capital Outlay Debt Services
Principal Dues and Fees Interest
Total Expenditures
Net Change in Fund Balances
Fund Balances- Begrnning(Restated)
Fund Balances- Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

EXHIBIT "E" TOTAL

The notes to the basic financial statements are an integral part of this statement -5-

CLARKE COUNlY BOARD OF EDUCATION RECONCILIATIONOFTHE GOVERNMENTALFUNDS STATEMENTOF
REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30.2010
- Total Net Change in Fund Balances Governmental Funds (Exhibit "En)
Amounts reportedfor Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However. in the Statementof Activities. the cost of Capital Assets IS allocatedover their estimated useful lives as depreciationexpense. In the current period. these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Deprec~ationExpense
Becausesome taxes will not be collectedfor several months after the School District's fiscal year ends, they are not considered"availableVevenues.
Deferred Property Taxes June 30,2009 June 30.2010
Deferred Sales Taxes June 30.2009 June 30.2010 Total Deferred Revenue
The net effect of various miscellaneous transactions involvingcapital assets (i.e.. sales, trade-ins, donations, and disposals) is to decrease net assets.
Bond issuance costs, when debt is first issued are reportedas an expenditurein Governmental Funds. but are reported as deferred charges on the Statement of Net Assets and amortized over the term of the debt. usingthe straight-linemethod. The details of this difference in the current period are as follows:
Unamortized Bond lssuance Costs June 30,2009 June 30,2010 Total Unamortized Bond lssuance Costs
Repaymentof Lon&Term Debt is reportedas an expenditurein Governmental Funds, but the repaymentreduces Long-TermLiabil~tiesin the Statement of Net Assets. In the current year, these amounts consist of:
Bond Principal Retirements Capital Lease Payments
Total Long-TermDebt Repayments
Some items reported in the Statementof Activities do not requirethe use of current financial resources and therefore are not reportedas expendituresin Governmental Funds. These activities consist of:
Accrued Interest Expense June 30,2009 June 30,2010
Compensated Absences June 30.2009 June 30,2010
Amortization of Bond Premiums Total Additional Expenditures
Change in Net Assets of GovernmentalActivities (Exhibit "B")
The notesto the basic financial statements are an integral part of this statement.
-6-

EXHIBIT "F

CLARKE COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 3 0 , 2 0 1 0
ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS

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

(This page left intentionally blank)

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORT1NG ENTITY
The Clarke County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANTACCOUNTING 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.
Disfrict-wide StatementsThe Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchangetransactions.
The Statement of Activities presents a comparison between direct expenses and program revenues each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, includingall taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. There were no funds reported as nonmajor funds.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) and Bond Proceedsto 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, clubs, governments or individuals.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental 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 absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, 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.
The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1- June 30) and paid over a twelve month contract period, generally September 1through August 31. In accordance with the respective rules and regulations

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2010, the School District adopted the Governmental Accounting and Standards Board (GASB) Statement No. 51, Accounting and Reporting for Intangible Assets. The provisions of this Statement generally require retroactive reportingfor intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated.
In addition, the School District adopted GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. The provisions of this Statement impacts disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 3.
RESTATEMENT OF PRIOR YEAR NET ASSETS AND FUND BALANCES
For fiscal year 2010, the School District restated the following items due to errors and omissions:
An error was discovered in the recording of the School District's costs in fiscal year 2009 related to the construction of the Rutland Psychoeducational Center. The result of this error was overstatement of capital outlay expenditures in the Capital Projects Fund and governmental activity expenses. Beginning net assets in governmental activities and beginning fund balance in the Capital Projects Fund were increased by $1,326,385.28.
The School District also increased beginning Net Assets in governmental activities for unrecorded deferred bond issuance costs at June 30, 2009 of $158,571.43.
CASH AND CASH EQUIVALENTS
Composition of Deposits Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
Composition of lnvestments lnvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. 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

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:

(1) Obligations issued by the State of Georgia or by other states,

(2) Obligations issued by the United States government,

(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,

(4) Obligations of any corporation of the United States government,

(5) Prime banker's acceptances,

(6) The Georgia Fund 1administered by the State of Georgia, Office of Treasury and Fiscal Services.

(7) Repurchaseagreements, and

(8) Obligations of other political subdivisions of the State of Georgia.

The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.

RECEIVABLES

Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.

PROPERTY TAXES

The Clarke County Board of Commissioners fixed the property tax levy for the 2009 tax digest year (calendar year) on July 7, 2009 (levy date). Taxes were due on October 20,2009 (lien date). Taxes collected within the current fiscal year or within 6 0 days after year-end on the 2009 tax digest are reported as revenue in the governmental funds for fiscal year 2010. The Clarke County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2010, for maintenance and operations amounted to $69,921,323.50.

The tax millage rate levied for the 2009 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

a mills

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted -to $20,552,272.87 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. The most recent authorization expires on June 30,2012.

INVENTORIES

Consumable Supplies lnventories lnventories of consumable supplies are reported at cost using the weighted average method. The School District uses the consumption method to account for inventories whereby consumable supplies are recorded as an asset when purchased and expenses are recorded as inventory items are used.

Food Inventories On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first in-first out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

PREPAID ITEMS

Payments made to vendors for services that will benefit periods subsequent to June 30, 2010, are recorded as prepaid items.

CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted a t depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year 2010, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District.

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

Capitalization

Estimated

Policy

Useful Life

Land Land Improvements Buildings and lmprovements Equipment

All

$

5,000.00

$

5,000.00

$

5,000.00

N/A
1 5 to 99years up to 99years 3 to 10years

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.
COMPENSATED ABSENCES
Vacation leave of up to 6 0 days may be accrued for all full time personnel employed on a twelve month basis. No other employees are eligible to earn vacation leave. Employees who depart from the District may be paid for unused accumulated leave up to the maximum allowed Members of the Teachers Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School District's financial statements.
A comparison of the changes in compensated absences liability for the previous three fiscal years is presented below:

Beginningof Year Liability

Increases

Decreases

End of Year Liability

GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the debt.
In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
N ET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Restricted net assets -These represent resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.
FUND BALANCES
Reserved Reserves represent those portions of fund balance equity that are legally segregated for a specific future use.
Unreserved - Designated
Designatedfund balances represent tentative plans for future use of financial resources.
USE OF EST1MATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
Note 3: DEPOSITS AND INVESTMENTS
COLIATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 1 1 0 percent of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) lnsurance on accounts provided by the Federal Deposit lnsurance 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,

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,

(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan MortgageAssociation, and the Federal National MortgageAssociation.

CATEGORIZATION OF DEPOSITS

Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2010, the bank balances were $39,998,739.06. The amounts exposed to custodial credit risk are classified into three categories as follows:

Category 1Category 2 -
Category 3 -

Uncollateralized, Cash collateralized with securities held by the pledgingfinancial institution, or Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name.

The School District's deposits by custodial credit risk category a t June 30,2010, are as follows:

Custodial Credit Risk Categow

Bank Balance

Total

$ 39,175,465.80

CATEGORIZATION OF INVESTMENTS

The School District's investments as of June 30, 2010, are presented below. All investments are presented below by investment type and have a maturity of less than one year:

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

lnvestmentT Y D ~
Other Investments U. S. Treasuty Money Market Funds
lnvestment Pools Office of Treasury and Fiscal Services Georgia Fund 1
Total lnvestments

Fair Value $ 33,530,995.57
10,835,633.62

The Georgia Fund 1,formerly referred to as LGIP, administered by the State of Georgia, Office of Treasury and Fiscal Services is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of Treasury and Fiscal Services for the Georgia Fund 1(Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1is disclosed in the State of GeorgiaComprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at htt~://www.audits.aa.aov/SGD/cafr.html.
The Primary Liquidity Portfolio consists of Georgia Fund 1which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the lnvestment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1may not exceed 6 0 days. The weighted average maturity for Georgia Fund 1on June 30,2010, was 46 days.

The U. S. Treasury Money Market Funds of $33,530,995.57 are in the Advantage Government Money Market Fund managed by Wells Fargo Funds Management LLC. This fund is rated AAAm by Standard and Poor's and Aaa by Moody's. The weighted average of the fund is approximately 3 2 days.
Note 4: NON-MONETARYTRANSACTIONS

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

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 5: CAPITAL ASSETS

The following is a summary of changes in the Capital Assets during the fiscal year:

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

Balances July 1,2009

Increases

Decreases

Balances June 30,2010

Total Capital Assets, Not Being Depreciated

Capital Assets, Being Depreciated: Buildings and lmprovements Equipment Land lmprovements

Less: Accumulated Depreciation: Buildings and lmprovements Equipment Land lmprovements

Total Capital Assets, Being Depreciated. Net

$ 144,750,756.47$ 21,197,125.26$ 1,964,716.91$ 163,983,164.82

GovernmentalActivity Capital Assets - Net

$ 179,007,142.03$ 50,465,312.24$ 27,152,181.02$ 202,320,273.25

Capital assets being acquired under capital leases as of June 30,2010, are as follows:
Governmental Funds
Equipment Less: Accumulated Depreciation

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010
Current year depreciation expense by function is as follows:
Instruction Support Services
Improvement of InstructionalServices General Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Food Services

EXHIBIT "H"

Note 6: 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 for employees.
The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1,1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium t o 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), errors and omissions, crime 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 claims for its employees. A premium is charged when needed by the General Fund to each user program 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 expenses/expenditures and the associated liability reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.
Changes in 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

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

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 of the 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 associated Iiability 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:

Claims and

Beginningof Year

Changes in

Claims

End of Year

Liability

Estimates

Paid

Liability

The School District participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1,1992, to develop, implement, and administer a program of workers' compensation self-insurance for its member organizations. 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 $500,000.00 loss per occurrence, up to the statutory limit. Employers' Liability insurance coverage is also provided by Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of $500,000.00 loss per occurrence, up to $2,000,000.00.

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

Position Covered

Amount

Superintendent All Employees Board Chairperson Board Vice Chairperson

Note 7: OPERATING LEASES

The Clarke County Board of Education has entered into a lease as lessee to provide copiers to various locations throughout the District. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2010, for governmental funds amounted to $218,400.00. Future minimum lease payments for these leases are as follows:

Year Ending

Governmental Funds

Total

$

236,600.00

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Note 8: LONG-TERM DEBT
CAPITAL LEASES
The Clarke County Board of Education entered into various agreements 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.
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 2007

The changes in Long-Term Debt during the fiscal year ended June 30,2010, were as follows:

Balance July 1,2009

Additions

Governmental Funds

Balance

Deductions

June 30,2010

Due Within One Year

G. 0. Bonds
Capital Leases Compensated Absences Unamortized Bond Premium

$ 40,815,000.00 1,414,580.61 661,422.43 $ 695.193.67

$
599.913.87

9,575,000.00$ 31,240,000.00$

417,873.64

996,706.97

351,062.35

910,273.95

234,082.74

461,110.93

9,985.000.00 518,424.77 75,000.00 234.082.74

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

At June 30, 2010, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30:

Capital Leases

Principal

Interest

Total Principal and lnterest Fiscal Year Ended June 30:

General Obligation Debt

Principal

Interest

Unamortized Bond Premium

Total Principal and lnterest
Note 9: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $469,209.65 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 $270,180.36
Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $139,220.52
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 $59,808.77
Note 10: SIGNIFICANT COMMITMENTS
The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30,2010, together with funding available:

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

Project
H. T. Edwards Complex Whitehead Road Elementary School Winterville Elementary School Hilsman Middle School Timothy Road Elementary School Fowler Drive Elementary School District Services Building Cedar Shoals High School J. J. Harris Elementary School

Unearned Executed Contracts

EXHIBIT "H"
Funding Available From State

The amounts described in this note are not reflected in the basic financial statements.
Note 11:SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 12: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL EMPLOYEES POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-Employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Insurance Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board).
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of the health insurance coverage.

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not t o exceed thirty years.

The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30,2010:
For certificated teachers, librarians and regional educational service agencies:

July 2009 August 2009 -October 2009 November 2009 -June 2010

18.534% of covered payroll for August Coverage
14.492% of covered payroll for September - November Coverage 18.534% of covered payroll for December- July Coverage

For non-certificated school personnel:

July 2009 -June 2010

$162.72 per member per month plus Department of Education contribution of $22,838,311.00

No additional contribution was required by the Board for fiscal year 2010 nor contributed to the State OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other post-employment benefits and are subject to appropriation.

The School District's combined active and retiree contributions to the health insurance plans, which

equaled the required contribution, for the current fiscal year and the preceding two fiscal years were

as follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

Note 13: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 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.
On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The

CLARKE COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2010

EXHIBIT "H"

purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1,1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.

TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 1 0 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.

Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 6 0 or by 7% for each year or fraction thereof by which the member has less than 3 0 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 1 0 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2010, were 5.25% of annual salary. The member contribution rate will increase to 5.53% effective July 1,2010. Employer contributions required for fiscal year 2010 were 9.74% of annual salary as required by the June 30, 2007, actuarial valuation. The employer contribution rate will increase to 10.28% effective July 1,2010.

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

Fiscal Year

Percentage Contributed

Required Contribution

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CLARKE COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDEDJUNE 30,2010

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

Propem Taxes Sales Taxes State Funds Federal Funds Chargesfor Services Investment Earnings Miscellaneous
Total Revenues

Current Instruction Support Services Pupil Services Improvementof Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation Enterprise Operations Community Services Operations
Capital Outlay Debt Services
Total Expenditures
Excess of Revenues over (under) Expenditures

Operating Transfers from Other Funds Operating Transfers to Other Funds
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

Fund Balances- Ending
Notes to the Schedule of Revenues. Exoenditures and Chanees in Fund Balances Budmt and Actual The accompanyingschedule 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.

SCHEDULE "ln
ACTUAL AMOUNTS

CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30,2010

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 Services Fresh Fruit and Vegetable Program
Total U. S. Department of Agriculture
Education, U. S. Departmentof ImpactAid Cluster Direct lmpact Aid
Education of Homeless Children and Youth Cluster Pass-ThroughFrom Georgia Departmentof Education
ARRA - Education for Homeless Children and Youth
Education for Homeless Childrenand Youth
Total Education of Homeless Children and Youth Cluster
Education Technology State Grants Cluster Pass-ThroughFrom Georgia Departmentof Education Education Technology State Grants
Special Education Cluster Pass-Through From Georgia Department of Education Special Education
ARRA - Grants to States ARRA - PreschoolGrants
Grantsto States Preschool Grants
Total Special Education Cluster
State Fiscal Stabilization Fund Cluster Pass-Through From Georgia Department of Education ARRA- Education State Grants
Title I. Part A Cluster Pass-ThroughFrom Georgia Departmentof Education ARRA- Title IGrants to Local EducationalAgencies Title I Grants to Local EducationalAgencies
Total Title I. Part A Cluster
Other Programs Direct Early ReadingFirst

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDEDJUNE 30,2010

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Education, U. S. Department of Other Programs Pass-Through From Georgia Departmentof Education
Career and Technical Education - Basic Grants to States
English Language Acquisition Grants ImprovingTeacher QualityState Grants Mathematics and Science Partnerships Migrant Education-State Grant Program Reading First State Grants
Safe and DrueFree Schools and Communities - State Grants
Twenty-First Century Community LearningCenters
Total Other Programs
Total U. S. Departmentof Education
Health and Human Services. U. S. Departmentof Child Care and DevelopmentFund Cluster Pass-Through From Bright From the S t a t Georgia Department of Early Care and Learning ARRA- Child Care and Development Block Grant
Head Start Cluster Direct
ARRA - Head Start - ARRA Early Head Start
Head Start
Total Head Start Cluster
Total U. S. Departmentof Health and Human Services
Defense. U. S. Departmentof Direct Department of the Army R.O.T.C. Program

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

Total Federal FinancialAssistance
N/A = Not Available
Notesto the Schedule of Exoendituresof FederalAwards
(1) Includesthe Federallyassigned value of donated commodities for the Food Donation Program in the amount of $590,215.28.
(2) Expendituresfor the funds earned on the School Breakfast Program ($1,689,340.02) were not maintained separatelyand are included in the 2010 National School Lunch Program.
(3) Funds earned on the ImpactAid Program. in the amount of $42,549.04, do not require reporting of expenditures.
Major Programsare identified by an asterisk (*) in front of the CFDA number.
The School District did not provide FederalAssistance to any Subrecipient.
The accompanyingscheduleof expendituresof Federal awards includes the Federalgrant activity of the Clarke County Boardof Educationand is presentedon the modified accrual basis of accountingwhich is the basis of accounting used in the presentation of the fund financial statements.
See notesto the basic financial statements.

(This page left intentionally blank)

CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDEDJUNE 30.2010
GRANTS Bright From the Start Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georaa Department of Quality Basic Education Direct Instructional Cost Kindergarten Program
Kindergarten Program - Early lntervention Program
Primary Grades (1-3) Program
Primary Grades - Early lntervention (1-3) Program
Upper Elementary Grades (4-5) Program
Upper Elementary Grades - Early Intervention (4-5) Program
Middle Grades (88) Program Middle School (88) Program High School General Education (9-12) Program Vocational Laboratory(9-12) Program Students with Disabilities
Gifted Student - Category VI
Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Admin~stration School Adm~nistration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Nursing Services Vocational Supervisors Migrant Education F w d Services Vocational Education Amended Formula Adjustment Other State Programs CTAE-MiddleSchool Grant Dual Enrollment Health Insurance National Teacher Certification Preschool Handicapped Program Rule 1 0 Special EducationState Grant Teachers' Retirement Tuition for the Multi-Handicapped Virtual Schools Grant
Governor's Office of HighwaySafety Driver's Education Grant
Office of Treasury and FiscalServices Public School Employees Retirement
CONTRACTS Human Resources, Georgia Department of Family Connection Program Right Start Program
See notes to the basic financial statements.

SCHEDULE "3"
GOVERNMENTAL FUND TYPE GENERAL FUND

CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDEDJUNE 30.2010

SCHEDULE "4'

Providingfunds for the purpose of replacing

approximately8 0 portable classroomswith

permanent classrooms, which may involve

additions to exlstingschools or may involve

the construction of new school facilities,

renovationsand/or additions to Clarke Central

High School. Clarke Middle School. Alps Road

Elementary School. Galnes Elementary School.

Cedar Shoals High School. Barnett Shoals

ElementarySchool. Barrow ElementarySchool,

Burney-Harris-LyonsMiddle School, Chase Street

Elementary School. Cleveland Road Elementary

School, Coiie Middle School, FourthStreet

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 housesthe

Rutland Center), Whit Davis Road Elementary

School, Whitehead Road Elementary School,

Winterville ElementarySchool, the acquisition

constructionand equippingof an alternative

learningcenter, acqulrlng any necessaryreal or

penonal propertyand equipment (including

acquiring improvedor unimprovedland and

existing buildings to renovatefor future school

sites) and adding to, renovating, repairing.

improvingand equippingother existing

educational buildings, properties and facilities of

the School District, including, without limitation,

Old Winterville High School, athletic.

transportation. maintenanceand plant services

facilities and technology upgradesto all School

Dlstrict facilities, and payingexpensesincident

thereto. at a cost of approximately

$87,849,000.00.

$

Providingfundsto pay the costs of acquiring additions real property(improvedor un~mproved) for future school sites; constructionof new school facilities; construction of facilities for vocationalinstruction; constructionof, renovations of, additions to, repairs and improvementsto and equippingof existing educational buildings, properties and facilities of the School District, which may include, without limitation, existingschools includln& Alps Road ElementarySchool, BarnettShoals Elementary School. David C. Barrow Elementary School. Chase Street Elementary School, Cleveland Road ElementarySchool. FourthStreet Elementary School, Fowler Drive Elementary School, Gaines Elementary School. Ogiethorpe Avenue ElementarySchool, Timothy Road Elementary School. Whlt Davis Elementary School. Whitehead Road Elementary School. Winterville ElementarySchool. Burney-HarrlsLyons Middle School. Clarke Middle School. W. R. Coile Middle School. Hilsman Mlddle School, Cedar Shoals High School, Clarke Central High School, Clarke County Alternative Education Program, H. T. EdwardsSr. Teachingand LearningCenter and Classic City High School - A Performance LearningCenter,

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED IN PRIOR YEAR (3) (4)

PROJECT STATUS

87.849.000.00 $ 107,718.870.00 $ 8.709.792.23 $ 86.102.190.22 Ongoing

CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDEDJUNE 30.2010

SCHEDULE "4"

ORIGINAL EST1MATED
COST (1)

CURRENT EST1MATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED IN PRIOR YEAR (3) (4)

PROJECT STATUS

athletic facilities. transportation facilities

(including bus driver trainingfacilities).

maintenancefacilities and district services

facilities; technology upgrades and additionsto

School District Faclllties; security upgradesto

School District Facilities: purchaseand/or lease

payoff of school buses; conversion of School

District facilities currentlyon septlc systemsto

publ~csewer; the acquisit~onand installationof

software for adminlstratlve and educational

purposes; reimbursementof the School District's

expendituresfor the 10year strategic plan for

facliities; and payingexpensesincidentthereto

(includingthe payment of any capitalized interest),

at a cost of approximately $104.000,000.00.

$

104,000.000.00 $

107,153.149.05 $ 20,842,001.54 $

36,638,064.83

Ongoing

( I ) The School District's original cost estimate as specified In the resolutioncalling for the lmpositlon of the Local Option Sales Tax.

(2) The School District'scurrent estimate of total cost for the projects. Includesall cost from project inceptionto completion.

(3) The voters of Clarke County approvedthe imposition of a 1%sales tax to fund the above projectsand retire associateddebt. Amounts expendedfor these projects may includesales 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 Distrlct has incurred interest to provide advance funding for the above projectsas follows:

Prlor Years

$

15,581,233.67

Current Year

1.672.150.00

Total

$ 17.253.383.67

See notes to the basicfinancial statements.

(This page left intentionally blank)

CLARKE COUNN BOARD OF EDUCATION
GENERAL FUND - QUALIN BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY PROGRAM
YEAR ENDEDJUNE 30.2010

SCHEDULE "5"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early lntervention Program Primary Grades (1-3) Program Primary Grades-Early lntervention (1-3) Program Upper ElementaryGrades (4-5) Program Upper Elementaly Grades-Early Inte~ention(4-5) Program Middle Grades (6-8)Program Middle School (M)Program High School General Education (912) 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 ProfessionalDevelopment

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

TOTAL QBE FORMULA FUNDS

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

See notes to the bas~cfinancial statements.

SECTION I I COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell W. Hinton
STATE AUDITOR
(404)656-2174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
April 26,2011

Honorable Nathan Deal, 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 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING 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, 2010, which collectively comprise Clarke County Board of Education's basic financial statements and have issued our report thereon dated April 26, 2011. 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 Re~orting
In planning and performing our audit, we considered Clarke County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Clarke County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Clarke County Board of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses and therefore, there can be no assurances that all deficiencies, significant deficiencies or material weaknesses have been identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control over financial reporting that we consider to be material weaknesses.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider items FS-6291-10-01, FS-6291-10-02 and FS-6291-10-03 to be material weaknesses.
Comeliance 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.
We noted certain matters that we have reported to management of Clarke County Board of Education in a separate letter dated April 26, 2011.
Clarke County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Clarke County Board of Education's response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of management, members of the Clarke County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
usd dell W. Hinton, CPA, CGFM
State Auditor

Russell W. Hinton
STATE AUDITOR
(404)6563174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
April 26, 2 0 1 1

Honorable Nathan Deal, 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 REPORT ON COMPLIANCE WlTH REOUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133
Ladies and Gentlemen:

We have audited Clarke County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010. 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 Auditng Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, iml Governments/ and Nun-Profit Organizaons. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the 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.
As described in item FA-6291-10-01 in the accompanying Schedule of Findings and Questioned Costs, Clarke County Board of Education did not comply with requirements regarding Matching, Level of Effort and Earmarking that are applicable to its Special Education Cluster (CFDA 84.027 and 84.391). Compliance with such requirements is necessary, in our opinion, for Clarke County Board of Education to comply with requirements applicable to that program.

In our opinion, except for the noncompliance described in the preceding paragraph, Clarke County Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30,2010.
Internal Control Over Com~liance
Management of Clarke County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal programs. In planning and performing our audit, we considered Clarke County Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Clarke County Board of Education's internal control over compliance.
Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified a certain deficiency in internal control over compliance that we consider to be a material weakness.
A deficiency in internal control over comphnce exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiency in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as item FA-6291-10-01to be a material weakness.
A signifimnt deficiency in internal control over comp/iance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Clarke County Board of Education's response to the finding identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Clarke County Board of Education's response and, accordingly, we express no opinion on the response.

This report is intended solely for the information and use of management, members of the Clarke County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
-,+dl2 de&% Rus ell W. Hinton, CPA, CGFM
~ t a f Aeuditor

SECTION Ill 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 30,2010

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6291-08-01 FS-6291-08-02 FS-6291-08-03 FS-6291-09-01 FS-6291-09-02 FS-6291-09-03

Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved- See Corrective Action/Responses Unresolved- See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS lnadequate Internal Control Procedures Finding Control Number: FS-6291-09-01

The Board has instituted new procedures including hiring an outside consultant to help with reconciliations and giving instructions to members of the accounting department to correct certain deficiencies. These actions will be completed duringfiscal year 2012.

CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Finding Control Number: FS-6291-09-02

The Board is attempting to tighten its procedures over capital assets. A fixed asset coordinator is now in place to take annual physical inventories and to monitor new acquisitions. This action will be finalized duringfiscal year 2011.

FINANCIAL REPORTING lnadequate Controls over Financial Reporting Finding Control Number: FS-6291-09-03

The Board is continuing to tighten controls and develop procedures to ensure the correct preparation of financial statements. This action will be completed duringfiscal year 2011.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30.2010

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information

Unqualified

Internal control over financial reporting: Material weaknesses identified?
= Significant deficiency identified?

Yes None Reported

Noncompliance material to financial statements noted:

Federal Awards

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

Yes None Reported

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

Unqualified for all major programs except for Special Education Cluster, which was qualified.

Any audit findings disclosed that are required to be reported in

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

Yes

Identification of major programs:

CFDA Num ber(s1

Name of Federal Program or Cluster

Title I, Part A Cluster Special Education Cluster State Fiscal Stabilization Fund Cluster Head Start Cluster

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

Auditee qualified as low-risk auditee?

CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30.2010
1I FINANCIALSTATEMENT FINDINGSAND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Material Weakness Finding Control Number: FS-6291-10-01
Condition: This is a repeat finding (FS-6291-09-01 and FS-6291-08-01) from the years ended June 30, 2009, and June 30, 2008, respectively. The School District's accounting procedures were insufficient to provide for adequate internal controls over cash and cash equivalents.
Criteria: The School District's management is responsible for designing and maintaining an adequate system of internal controls that ensure that all cash accounts are supported by and reconciled to either cash on hand or bank accounts held at authorized financial institutions.
Questioned Cost: N/A
Information: Weaknesses in internal controls related to Cash and Cash Equivalents were as follows:
A variance of $184,379.20 existed between the reconciled cash total and cash recorded on the financial statements. The reconciliations of the Local Account, SPLOST II Account, SPLOST Ill Account, SPLOST Ill Construction Account, School Nutrition Account, and Dental Reimbursement Account were not performed in a timely manner. Reconciliations were not performed at June 30, 2010, for the Operating Account and Payroll Account. An examination of certain bank reconciliations disclosed no evidence of supervisory review. The reconciliation of the School Nutrition Account contained $594,686.59 in reconciling items dating back to fiscal year 2008 that have not been corrected. The SPLOST IllAccount contains $4,363.00 in reconciling items that appear to be invalid. The entity's policies and procedures for handling unclaimed property (outstanding checks) do not appear to be in accordance with the Disposition of Unclaimed Property Act. The School District currently cancels outstanding checks and redistributes the funds back into their current year operations. The School District does not report any unclaimed property to the Georgia Department of Revenue. There were numerous outstanding vendor checks greater than five years old in the operating account and employee checks greater than one year old in the payroll account that should be remitted to the Georgia Department of Revenue.
Cause: These deficiencies were a result of management's failure to ensure that internal control policies and procedures were established, implemented and functioning as intended with regard t o Cash and Cash Equivalents.

CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
I1 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Internal Control Procedures Material Weakness Finding Control Number: FS-6291-10-01
Effect: The lack of adequate control over cash increases the risk of theft, fraud, or misuse of School District resources that may result in errors and/or irregularities which would not be detected in a timely manner.
Recommendation: The School District should establish policies and procedures to ensure that bank reconciliations are completed in a timely manner, all bank accounts are recorded in the School District's accounting records, and administrative reviews are performed t o determine that bank reconciliations are correct and that all required adjustments have been made.
CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Material Weakness Finding Control Number: FS-6291-10-02
Condition: This is a repeat finding (FS-6291-09-02, FS-6291-08-02 and FS-6291-07-01) from the years ended June 30, 2009, June 30, 2008, and June 30, 2007, respectively. The School District failed to adequately maintain the capital assets records.
Criteria: Chapter 3 7 Implementing a Gpital Asset3 Management System of the Financial Management for Georgia Local Units of Administration indicates that School Districts must establish fixed asset policies, define system requirements, implement a fixed asset system and maintain fixed asset inventory records
Questioned Cost: N/A
Information: A review of the School District's capital assets records noted the following deficiencies and errors or omissions:
Current year additions to Construction in Progress projects were calculated and posted to the accounting records using incorrect expenditure amounts. This resulted in an understatement of Construction in Progress of $466,984.75. Equipment items totaling $213,314.33 were not properly capitalized. Audit procedures detected current year land additions of $1,063,102.25 that were added to the capital assets listings in prior fiscal years. Buildings with a net book value of $1,963,419.69 were demolished during the fiscal year and were not removed from the capital assets listing.

CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIALSTATEMENT FINDINGSAND QUESTIONED COSTS
CAPITAL ASSETS Failure to Adequately Maintain Capital Assets Material Weakness Finding Control Number: FS-6291-10-02
Based on our analysis of construction contracts and payments during the fiscal year, additions to construction in progress appear to be understated by $886,088.21. Certain building and land improvements were replaced during the fiscal year; however the old assets, which were fully depreciated, were not removed from the capital assets listing. The School District does not utilize asset identification tags, which, in some cases, makes it impossible to identify specific assets on the capital assets listing.
Cause: The School District failed to ensure that adequate accounting procedures were in place to process, record and report capital assets and related activity.
Effect: The failure of the School District to maintain a complete and accurate capital assets listing can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles.
Recommendation: The School District should review its capital assets records and make appropriate adjustments to ensure that the capital assets are properly maintained and correctly reported.
FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-6291-10-03
Condition: This is a repeat finding (FS-6291-09-03 and FS-6291-08-03) from the years ended June 30, 2009, and June 30, 2008, respectively. The School District did not have adequate controls in place to ensure the accuracy of the financial statement information presented for audit.
Criteria: Chapter 22A Annual Financial Reporting of the Financial Management for Georpia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles.
Questioned Cost: N/A
Information: Several correcting entries were proposed and accepted by the School District to properly present the School District's fund level and entity-wide financial statements, including note disclosures.

CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010
II FINANCIALSTATEMENT FINDINGSAND QUESTIONEDCOSTS
FINANCIAL REPORTING Inadequate Controls over Financial Reporting Material Weakness Finding Control Number: FS-6291-10-03
Cause: The School District did not implement an adequate system of internal control over the financial reporting process.
Effect: The School District did not comply with the requirements of the Georgia Department of Education regarding financial reporting. Several adjustments were necessary in order for the School District's financial statements to be in conformity with generally accepted accounting principles.
Recommendation: The School District should implement controls over the financial statement reporting process to ensure the completeness and accuracy of all activity recorded in the financial statement information presented for audit.
Ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
MATCHING, LEVEL OF EFFORT, EARMARKING Failure to Meet Maintenance of Effort Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027 and 84.391) Finding Control Number: FA-6291-10-01
Condition: The School District did not meet the maintenance of effort requirement.
Criteria: 3 4 CFR 300.203(a) and the Compliance Supplement, Part 4 (4-84.027, 111, G.2.1, IDEA, Part B) indicate that funds received by a Local Educational Agency (LEA) cannot be used, except under certain limited circumstances, to reduce the level of expenditures for the education of children with disabilities made by the LEA from local funds below the level of those expenditures for the preceding fiscal year. To meet this requirement, an LEA must expend, in any particular fiscal year, an amount of local funds for the education of children with disabilities that is at least equal to the amount of local funds expended for this purpose by the LEA in the prior fiscal year.
Questioned Cost: $556,724.20

CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30,2010

Ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

MATCHING, LEVEL OF EFFORT, EARMARKING Failure to Meet Maintenance of Effort Material Weakness Material Noncompliance U. S. Department of Education Through Georgia Department of Education Special Education Cluster (CFDA 84.027 and 84.391) Finding Control Number: FA-6291-10-01

Information:

State and Local funds for the education of children with disabilities decreased both in aggregate and

per pupil during the year under review.

Fiscal

Fiscal

Year 2010

Year 2009

State and Local Expenditures

$ 13,571,733.00 $ 14,128,457.20

Number of Students

1,526

1.567

State and Local Expenditures per Student

$

8,893.67 $

9,016.25

Cause: The School District did not properly manage their funds to meet the maintenance of effort requirements related to the education of children with disabilities.
Effect: Failure to monitor expenditures for compliance with maintenance of effort requirements can lead to a material noncompliance with the provisions of the Federal grant.
Recommendation: The School District should implement appropriate procedures to ensure that maintenance of effort is met regarding the education of children with disabilities. The Georgia Department of Education should review this matter to determine if a refund is appropriate.

SECTION V MANAGEMENT'S RESPONSES

CLARKE COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES
YEAR ENDEDJUNE 30,2010

Finding Control Number: FS-6291-10-01

We concur with this finding. The Board is in the process of instituting new procedures to ensure that bank reconciliations are completed on a timely basis. Other items showing in the finding will be given a high priority to be resolved. This action will be completed duringfiscal year 2012.

FindingControl Number: FS-6291-10-02

We concur with this finding. The Board continues to tighten controls through its newly created position of Fixed Asset Coordinator. Physical inventories will be completed annually and acquisitions monitored monthly. This action will be completed during fiscal year 2012.

Finding Control Number: FS-6291-10-03

We concur with this finding. The Board will implement a system for financial statement reporting which will include learning what entries need to be made to eliminate this finding. This action will be completed duringfiscal year 2012.

Finding Control Number: FA-6291-10-01

We concur with this finding. The Board will tighten controls to ascertain that local funds spent for the education of children with disabilities meets or exceeds funds spent in the prior fiscal year. This action will be completed during fiscal year 2011.

Contact Person: Telephone: Fax: Email:

Tom Guthrie, Finance Director (706) 546-7721, ext 18229 (706) 357-5398 guthriet@clarke.kl2.ga.u~