COLUMBIA COUNTY BOARD OF EDUCATION EVANS# GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30# 2008 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS Russell W. Hinton State Auditor COLUMBIA COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS EXHIBITS BASIC FINANCIAL STATEMENTS DISTRICT-WIDE FINANCIAL STATEMENTS A STATEMENT OF NET ASSETS 1 B STATEMENT OF ACTIVITIES 2 FUND FINANCIAL STATEMENTS C BALANCE SHEET GOVERNMENTAL FUNDS 4 D RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS 5 E STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 6 F RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES 7 G STATEMENT OF NET ASSETS PROPRIETARY FUNDS 8 H STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS 9 I STATEMENT OF CASH FLOWS PROPRIETARY FUNDS 10 J STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS 11 K NOTES TO THE BASIC FINANCIAL STATEMENTS 13 COLUMBIA COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION 1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND 31 SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 32 3 SCHEDULE OF STATE REVENUE 33 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 34 5 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM 35 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS COLUMBIA COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS - SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 February 2, 2009 Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education and Superintendent and Members of the Columbia County Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through K) ofthe Columbia County Board of Education, as of and for the year ended June 30, 2008, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Columbia County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Columbia County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. 2008ARL-11 In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position ofthe governmental activities, each major fund, and the aggregate remaining fund information ofthe Columbia County Board of Education, as of June 30, 2008, and the respective changes in financial position and cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February 2, 2009, on our consideration of the Columbia 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 ofour testing ofinternal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through x and page 31 respectively, are not a required part ofthe basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Columbia County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. Respectfully submitted, -~~~n~~:\4-=-s.. State Auditor RWH:gp 2008ARL-11 COLUMBIA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The discussion and analysis of Columbia County School District's financial performance provides an overall review of the School District's financial activities for the fiscal year ended June 30, 2008. The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the notes to the basic financial statements and financial statements to enhance their understanding of the School District's financial performance. FINANCIAL HIGHLIGHTS Key financial highlights for 2007 - 2008 are as follows: The Columbia County voters passed the third one percent sales tax for educational purposes for another five years (July, 2007 - June, 2012) along with approving the issuance of$30.0 million in short-term general obligation bonds on March 15, 2005. The School District just completed a middle school that opened the fall of 2008. A high school is now in construction that will open in the fall of 2009. The School District recently received news that the state would be cutting approximately $2.1 million from the state QBE funds for 2008 - 2009 school year due to short falls in projections for sales tax revenue. Currently, the School District has adequate reserves to cover this short fall in revenue. The School District continues to grow with an average increase of 622 students per year over the last five years. Therefore, the School District continues to hire additional teachers and support staff to accommodate the growth. Net assets increased $27.0 million, which represents a 15% increase from 2007. The total increase was due to governmental activities since the Board has no business-type activities. General revenues accounted for $93.0 million in revenue or 41 % of all revenues. Program specific revenues in the form of charges for services, grants, and contributions accounted for $131.3 million or 59% of total revenues of $224.3 million. The Board had $197.5 million in expenses related to governmental activities; only $131.3 million of these expenses were offset by program specific charges, grants, or contributions. General revenue (primarily property and sales taxes) of $93.0 million was adequate to provide for these programs. Among major funds, the general fund had $194.1 million in revenues and $190.0 million in expenditures. The general fund balance increased from $28.0 million to $32.2 million. The Board designated some of general fund balance for future capital projects. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand Columbia County School District as a financial whole, an entire operating entity. Table 1 summarizes the major features of the School District's financial statements, including the portion of the School District's activities they cover and the types of information they contain. COLUMBIA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Table 1 Major Features of the District-wide and Fund Financial Statements Figure I Ma.ior Features of the District-wide and Fund Financial Statements District-wide Fund Financial Statements Statements Government Funds Proprietary Funds Fiduciary Funds Scope Entire School District The activities ofthe Activities the School Instances in which (except fiduciary funds) School District that District operates the School District are not proprietary or similar to private administers fiduciary, such as businesses: food resources on behalf special education services and adult of someone else, and building education such as scholarship maintenance programs and student activities monies Required Statement of net Balance sheet Statement of net Statement of financial assets assets fiduciary net assets statements Statement of Statement of activities revenues, Statement ofcash Statement of expenditures, and flows changes in fiduciary changes in fund net assets balances Accounting Basis Accrual accounting and Modified accrual Accrual accounting Accrual accounting and measurement economic resources accounting and and economic and economic focus focus current financial resources focus resources focus focus Type of All assets and liabilities, Generally assets All assets and All assets and asset/liability both financial and expected to be used liabilities, both liabilities, both information capital, short-term and up and liabilities that financial and capital, short-term and long- Jong-term come due during the and short-term and term; funds do not year or soon long-term currently contain thereafter; no capital capital assets, assets or Jong-term although they can liabilities included Type of All revenues and Revenues for which All revenues and All additions and inflow/outflow expenses during year, cash is received expenses during the deductions during information regardless of when cash during or soon after year, regardless of the year, regardless is received or paid the end ofthe year; when cash is of when cash is expenditures when received or paid received or paid goods or services have been received and the related liability is due and payable DISTRICT-WIDE STATEMENTS The Statement of Net Assets and Statement of Activities provide information about the School District as a whole using accounting methods similar to industry. The increases and decreases in the School District's net assets are an indicator of whether the School District's financial position is improving or deteriorating. There are many factors that can affect the overall financial condition of the School District such as the School District's property tax base, Stat~ and Federal funding, and the condition of buildings and equipment. 11 COLUMBIA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The Statement of Activities reflects the governmental activities of the School District by programs and services and distinguishes the revenue sources for these activities. The statement also helps identify how much local revenue is required to support the School District's activities. Fund Financial Statements Fund financial reports provide detailed information about the School District's major funds. Funds are accounting devices the School District uses to keep track of general operations, Federal and state grants, building programs, debt payments, and worker's compensation claims. 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 balances left at year-end available for spending in the future periods. These funds are reported using modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is reconciled in the financial statements. The School District's major governmental funds are the general fund, capital projects fund, and debt service fund. Proprietary Funds: Services for which the School District charges a fee are generally reported in proprietary funds. Proprietary funds are reported in the same way as the District-wide statements. The School District's enterprise funds (one type of proprietary fund) are the same as its business-type activities but provide more detail and additional information, such as cash flows. The School District uses internal service funds (the other kind of proprietary fund) to report activities that provide supplies and services for other programs and activities. The School District's only internal fund is the worker's compensation fund. Fiduciary Funds: The School District is the trustee, or fiduciary, for assets that belong to others, such as the scholarship fund and some of the student activity funds. The student activity funds are local school accounts the principal uses to collect funds for fieldtrips, school fundraisers, athletic events, and school clubs. The school clubs and fieldtrips are considered to be agency funds. The School District excludes these activities from the District-wide statements because it cannot use these assets to finance its operations. THE SCHOOL DISTRICT AS A WHOLE The perspective of the statement of net assets is of the School District as a whole. Table 2 provides a summary of the School District's net assets for 2007 compared to 2008. 111 COLUMBIA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Table 2 Net Assets Governmental Activities Fiscal Fiscal Year 2008 Year 2007 Assets Current and Other Assets Capital Assets, Net $ 56,869,530 $ 62,085,931 200,514,281 173,315,310 Total Assets $ 257,383,811 $ 235,401,241 Liabilities Current and Other Liabilities Long-Term Liabilities $ 18,293,690 $ 16,238,335 32,273,794 39,126,874 Total Liabilities $ 50,567,484 $ 55,365,209 Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted $ 170,972,639 7,325,137 28,518,551 $ 136,888,666 18,971,735 24,175,631 Total Net Assets $ 206,816.327 $ 180,036,032 Total assets of governmental activities increased by $21,982,570 as cash and cash equivalents decreased by $986,528, investments decreased by $5,821,298, receivables increased by $1,646,709, and capital assets increased by $27,198,971. Unrestricted net assets, the part of net assets that can be used to finance day-to-day activities without constraints established by grants or legal requirements, of the School District increased by $4,342,920. Table 3 shows the changes in net assets for fiscal year 2007 compared to 2008. iv COLUMBIA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Table 3 Change in Net Assets Revenues Program Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Fiscal Fiscal Year 2008 Year 2007 % Change $ 9,205,617 $ 8,819,984 109,298,928 102,547,330 12,772,749 6,321,425 4.37% 6.58% 102.05% Total Program Revenues $ 131,277,294 $ 117,688,739 11.55% General Revenues: Taxes Property Taxes $ 61,496,754 $ 55,297,183 Sales Taxes 19,466,186 19,387,632 Grants and Contributions not Restricted to Specific Programs 8,206,933 7,852,247 Investment Earnings 1,921,923 2,792,865 Miscellaneous 1,860,384 1,668,878 Special Item Gain on Sale of Property 47 999 2,081,740 11.21% 0.41% 4.52% -31.18% 11.48% 97.69% Total General Revenues and Special Item $ 93,000,179 $ 89,080,545 4.40% Total Revenues $ 224,277,473 $ 206,769,284 8.47% 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 ofNon-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt $ 133,797,424 3,752,087 4,196,476 4,072,686 1,179,389 12,611,270 1,252,771 12,890,679 8,310,647 906,103 55,774 3,945,204 8,822,823 1,703,845 $ 121,213,301 3,305,777 3,985,889 3,857,794 1,316,029 11,204,665 1,213,545 12,385,186 7,461,322 920,703 46,268 3,503,453 5,027 7,408,677 1,954,125 10.38% 13.50% 5.28% 5.57% -10.38% 12.55% 3.23% 4.08% 11.38% -1.59% 20.55% 12.61% -100.00% 19.09% -12.81% Total Expenses $ 197,497.178 $ 179,781,761 9.85% Increase in Net Assets $ 26,780.295 $ 26,987.523 V -0.77% COLUMBIA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 GOVERNMENTAL ACTIVITIES Instruction comprises 68% of governmental program expenses. Support service expenses make up 25% of the expenses. Interest expense was 1%. Interest expense was attributable to the outstanding bonds for capital projects. The State's QBE funding does not provide an adequate level of funding to provide basic education services and to adequately maintain facilities. The School District levies a millage rate of 17.09 to provide the additional local funding along with a 1% (SPLOST) sales tax. The Statement of Activities shows the cost of program services and the changes for services and grants offsetting those services. Table 4 shows, for governmental activities, the total cost of services and the net cost of services. It identifies the cost of these services supported by tax revenue and unrestricted State entitlements. Table4 Governmental Activities Total Cost of Services Fiscal Fiscal Year 2008 Year 2007 Net Cost of Services Fiscal Fiscal Year 2008 Year 2007 Instruction $133,797,424 $121,213,301 $ 40,726,471 $ 39,549,686 Support Services Pupil Services 3,752,087 3,305,777 2,444,836 2,246,824 Improvement of Instructional Services 4,196,476 3,985,889 2,554,789 2,297,980 Educational Media Services 4,072,686 3,857,794 672,261 958,558 General Administration 1,179,389 1,316,029 -1,600,311 -1,279,742 School Administration 12,611,270 11,204,665 6,657,033 5,842,998 Business Administration 1,252,771 1,213,545 1,225,346 1,192,812 Maintenance and Operation ofPlant 12,890,679 12,385,186 6,076,886 5,614,505 Student Transportation Services 8,310,647 7,461,322 5,383,094 4,303,968 Central Support Services 906,103 920,703 887,756 908,869 Other Support Services 55,774 46,268 12,659 -297 Operations ofNon-Instructional Services Enterprise Operations 3,945,204 3,503,453 -743,575 -989,719 Community Services 5,027 5,027 Food Services 8,822,823 7,408,677 218,794 -512,572 Interest on Short-Term and Long-Term Debt 1,703,845 1,954,125 1,703,845 1,954,125 Total Expenses $197.497.178 $179.781.761 $ 66.219.884 $ 62.093.022 Instructional expenses include activities directly dealing with the teaching of pupils and the interaction between teacher and pupil. Pupil Services are activities designed to assess and improve the well being of students and to supplement the teaching process. vi COLUMBIA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Improvement of instruction are activities which are designed primarily for assisting instructional staff in planning, developing, and evaluating the process of providing challenging learning experiences for students. Educational media is directing, managing, and operating educational media centers. General administration establishes and administers policy for operating the local School District. School administration includes principals, assistant principals, and clerical staff who administer the school operations. Business administration includes the financial and warehouse operations of the School District. Maintenance and operation of plant activities involve keeping the school grounds, buildings, and equipment in an effective working condition. Student transportation includes activities involved with the conveyance of students to and from school, as well as to and from school activities, as provided by State law. Central support includes personnel services, strategic planning, and public relations activities. Other support services include all other support services. Community services are student activity accounts used to collect money from students for various fundraisers for the school. The proceeds are spent on media center materials, instructional supplies, and other school needed supplies. Food services prepares and serves breakfast, lunch, and snacks to the students of the School District. Interest involves the transactions associated with the payment of interest related to the School District's outstanding bonds. Although program revenues make up a majority of the revenue, the School District is still dependent upon tax revenues for governmental activities. Over 30% of instructional activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 33.5%. THE SCHOOL DISTRICT'S FUNDS The School District's governmental funds are accounted for using the modified accrual basis of accounting. All governmental funds had total revenues of $224,226,326 and expenditures of $231,891,735. The net change in fund balance for the year was significant in the general fund and the capital projects funds, which had an increase of $4,138,476 and a decrease of $11,449,743, respectively. vii COLUMBIA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The general fund operations increase was due to increase in intangible taxes collected, State QBE funds, and the school nutrition program revenues. The decrease in capital projects was due to the use of resources to complete a middle school and construction of a high school. GENERAL FUND BUDGETING HIGHLIGHTS The School District's budget is prepared according to Georgia law. The most significant budgeted fund is the general fund. The general fund consists of the general operations, special revenue grants, and school nutrition program. During 2008, the Board amended its general fund budget numerous times, which resulted in increasing revenue budget by $31,572 or 0% and increasing expenditure budget by $726,354 or 0.4%. The increase in the revenue budget is due to amending the budget for the final tax digest and Federal and State grants. The original revenue and expenditure budgets only reflect the anticipated funding for Federal and State grants and are amended to reflect the final award. The School District uses site-based budgeting and the budgeting systems are designed to tightly control total site budgets but to provide flexibility for site management. The majority of the variances between the final budget and actual revenue in 2008 are due to the student activity funds of $4.9 million that are not budgeted; increase of intangible and real taxes of$750,000; on behalf payments for health and retirement of $3.5 million not budgeted; increase in QBE accounts receivable of $900,000 not budgeted; and an increase in miscellaneous revenue of $900,000 which is reimbursement for salaries from the schools. The variances between the final budgeted expenditures and actual are due to over estimates in various areas; on behalf payments for health and retirement not budgeted; and the School District does not currently budget for the $5.1 million in student activity funds. This explains the major differences in final budget for revenue ($11.0 million increase) and expenditures ($6.2 million increase) vs. the actual amounts for general fund. CAPITAL ASSETS At the end of the fiscal year 2008, the School District had $200,514,281 invested in land, construction in progress, buildings, equipment, and buses. Table 5 shows fiscal 2008 balances compared to 2007. Vlll COLUMBIA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Table 5 Capital Assets (Net of Depreciation) Governmental Activities Fiscal Fiscal Year 2008 Year 2007 Land Construction in Progress Buildings and Building Improvements Equipment Land Improvements $ 7,018,736 23,236,185 154,597,653 15,119,503 542,204 $ 7,018,737 24,706,524 126,878,969 14,106,467 604,613 Total $ 2001514,281 $ 17313151310 Overall capital assets increased $27,198,971 from fiscal year 2007 to fiscal year 2008. Increases in capital assets (buildings and building improvements, equipment, and land improvements) were offset by depreciation expense for the year. The increase in construction in progress/increase in buildings was due to the completion of a new middle school; current construction of a high school; and other various small projects within the School District. Most of the equipment purchased during fiscal year 2008 was for classroom computers and network equipment for the schools and departments. DEBT At June 30, 2008, the School District had $31.6 million in general obligation bonds outstanding with $3.7 million due within one year. The voters of Columbia County approved on March 18, 1997, the first one percent sales tax for educational purposes for five years (July, 1997 - June, 2002). On March 20, 2001, the voters approved the second one percent sales tax for educational purposes for another five years (July, 2002 - June, 2007). On March 15, 2005, the voters approved the third one percent sales tax for educational purposes for another five years (July, 2007 - June, 2012) along with approving $30.0 million in short-term bonds which $15.0 has been issued. The School Board no longer levies a debt millage, instead the proceeds from the sales tax is used to pay the debt. Table 6 summarizes general obligation bonds and compensated absences outstanding. IX COLUMBIA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Table 6 Outstanding Debt and Compensated Absences at June 30 Governmental Activities Fiscal Fiscal Year 2008 Year 2007 Compensated Absences General Obligation Bonds $ 628,794 $ 596,874 31,645.000 38.530.000 Total $ 32,273,794 $ 39,126.874 CURRENT FINANCIAL ISSUES AND CONCERNS The Columbia County School District is financially stable. The School District millage is 17.09, which produces approximately $3.8 million per mill for 2008 - 2009. The tax digest has continued to grow at an average rate of 10.69% over the last five years. The residential community is continuing to grow increasing the tax digest at a steady rate. The Columbia County Tax Commissioner's office collects taxes for the School District and the average collection rate has been 98% over the last five years. The School District does not anticipate any significant changes in the local tax digest in the immediate future. The School District continues to grow with an average increase of 622 students per year over the last five years. The School District plans to construct additional schools in the next several years to accommodate the growth and reduce portable classrooms at various schools. The School District plans to fund the additional capital outlays with the one percent local sales tax revenue, general obligation bonds, and State capital outlay grants. The Quality Basic Education Act (QBE) was enacted into law by the 1985 session of the Georgia General Assembly. The Act set out the provisions for educational funding for grades kindergarten through twelve in the State of Georgia. The funding is based on student counts with the expectation that local school districts fund part of the cost with local tax monies. The School District received approximately 52% of the revenues budgeted for the General Fund from QBE. The School District received $1,851,592 less in funding for 2008. The reductions in QBE funding were due to the economic downturn in the State and the QBE funding for 2009 was reduced by $1,216,914 and is expected to be reduced by another $2.1 million in 2010. Currently, the School District has adequate reserves for 2009 to handle the reduction in QBE funding. 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 Pat Sullivan, Controller at Columbia County Board of Education, 4781 Hereford Farm Road, Evans, Georgia 30809 or email at psullivan@ccboe.net. X COLUMBIA COUNTY BOARD OF EDUCATION COLUMBIA COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2008 Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Other Prepaid Items Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation Total Assets LIABILITIES Accounts Payable Salary and Benefits Payable Deferred Revenue Contracts Payable Retainages Payable Long-Term Liabilities Due Within One Year Due in More Than One Year Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Bus Replacement Continuation of Federal Programs Debt Service Capital Projects Unrestricted Total Net Assets Total Liabilities and Net Assets The notes to the basic financial statements are an integral part of this statement. -1- EXHIBIT"A" GOVERNMENTAL ACTIVITIES $ 10,640,601 27,613,183 3,924,163 13,958,958 574,966 5,942 44,211 107,506 7,018,736 23,236,185 857,043 200,816,651 37,855,447 (69,269,781) $ 257,383,811 $ 2,313,555 11,490,588 346,245 1,993,136 2,150,166 3,665,000 28,608,794 $ 50,567,484 $ 170,972,639 317,119 1,241,682 355,150 5,411,186 28,518,551 $ 206,816,327 $ 257,383,811 COLUMBIA COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2008 GOVERNMENTAL ACTIVITIES Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Operation Interest on Short-Term and Long-Term Debt Total Governmental Activities General Revenues Taxes Property Taxes For Maintenance and Operations Sales Taxes Special Purpose Local Option Sales Tax For Debt Service For Capital Projects Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous Special Item Gain on Sale of Property Total General Revenues and Special Item Change in Net Assets Net Assets - Beginning of Year Net Assets - End of Year EXPENSES CHARGES FOR SERVICES $ 133,797,424 $ 3,752,087 4,196,476 4,072,686 1,179,389 12,611,270 1,252,771 12,890,679 8,310,647 906,103 55,774 3,945,204 8,822,823 1,703,845 $ 197,497,178 $ 167,427 4,664,892 4,373,298 9,205,617 The notes to the basic financial statements are an integral part of this statement. -2 - EXHIBIT"B" PROGRAM REVENUES OPERATING CAPITAL GRANTS AND GRANTS AND CONTRIBUTIONS CONTRIBUTIONS NET (EXPENSES) REVENUES AND CHANGES IN NET ASSETS $ 81,942,572 $ 10,960,954 $ 1,307,251 1,641,687 2,777,643 2,779,700 5,456,012 27,425 6,813,793 2,610,434 18,347 43,115 622,782 498,225 317,119 23,887 3,857,062 373,669 $ 109,298,928 $ 12,772,749 $ (40,726,471) (2,444,836) (2,554,789) (672,261) 1,600,311 (6,657,033) (1,225,346) (6,076,886) (5,383,094) (887,756) (12,659) 743,575 (218,794) (1,703,845} (66,219,884) $ 61,496,754 8,271,926 8,958,623 1,788,820 446,817 8,206,933 1,921,923 1,860,384 47,999 $ 93,000,179 $ 26,780,295 180,036,032 $ 206,816,327 -3- COLUMBIA COUNTY BOARD OF EDUCATION BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2008 EXHIBIT"C" ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Other Prepaid Items Inventories Total Assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Salary and Benefits Payable Deferred Revenue Contracts Payable Retainages Payable Total Liabilities FUND BALANCES Reserve for: Continuation of Federal Programs Bus Replacement Debt Service Inventories Capital Projects Unreserved Designated for Student Activities Designated for Future Capital Projects Undesignated Reported in: General Fund Total Fund Balances Total Liabilities and Fund Balances GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 7,700,428 $ 2,046,252 23,067,628 4,507,324 $ 937,822 13,376,130 574,966 5,942 44,211 107,506 2,986,341 582,828 $ 9,746,680 38,231 27,613,183 3,924,163 13,958,958 574,966 5,942 44,211 107,506 $ 45,814,633 $ 10,122,745 $ 38,231 $ 55,975,609 $ 1,765,507 11,490,588 346,245 $ 251,338 1,993,136 2,150,166 $ 13,602,340 $ 4,394,640 $ 2,016,845 11,490,588 346,245 1,993,136 2,150,166 $ 17,996,980 $ 1,134,176 317,119 $ 316,919 $ 107,506 5,411,186 1,676,748 2,900,000 26,076,744 $ 32,212,293 $ 5,728,105 $ 38,231 $ 1,134,176 317,119 355,150 107,506 5,411,186 1,676,748 2,900,000 26,076,744 38,231 $ 37,978,629 $ 45,814,633 $ 10,122,745 $ 38,231 $ 55,975,609 The notes to the basic financial statements are an integral part of this statement. -4- COLUMBIA COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30, 2008 EXHIBIT"D" Total Fund Balances - Governmental Funds (Exhibit "C") Amounts reported for Governmental Activities in the Statement of Net Assets are different because: Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of: Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation Total Capital Assets An Internal Service Fund is used by the School District's management to account for the worker's compensation risk financing related activities. The assets and liabilities of the Internal Service Fund are reported with governmental activities. Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: Bonds Payable Compensated Absences Total Long-Term Liabilities $ 37,978,629 $ 7,018,736 23,236,185 857,043 200,816,651 37,855,447 (69,269,781) 200,514,281 597,211 $ (31,645,000) (628,794) (32,273,794) Net Assets of Governmental Activities (Exhibit "A") $ 206,816,327 The notes to the basic financial statements are an integral part of this statement. -5- COLUMBIA COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2008 EXHIBIT"E" REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 61,496,754 2,235,637 $ 108,095,993 9,726,987 9,205,617 1,478,167 1,893,225 $ 194,132,380 $ 8,958,623 $ 12,455,630 392,533 21,806,786 $ $ 61,496,754 8,271,926 19,466,186 120,551,623 9,726,987 9,205,617 15,234 1,885,934 1,893,225 8,287,160 $ 224,226,326 EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation Capital Outlay Debt Service Principal Interest Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES {USES) Transfers In Transfers Out Special Item Proceeds From Sale of Property Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ 128,673,604 $ 3,750,966 4,147,650 4,068,169 1,131,529 12,579,497 1,228,332 13,188,783 7,796,695 912,858 55,612 3,980,739 8,499,322 2,074,824 462 16,879 5,738 88,681 $ 177,709 61,052 30,859,332 $ 190,013,756 $ 33,284,677 $ $ 4,118,624 $ {11,477,891 l $ $ 130,748,428 4,457 3,750,966 4,148,112 4,085,048 1,137,267 12,668,178 1,232,789 13,366,492 7,796,695 912,858 55,612 3,980,739 8,560,374 30,859,332 6,885,000 1,703,845 6,885,000 1,703,845 8,593,302 $ 231,891,735 {306,142) $ {7,665,409) $ 19,852 $ (19,852) 48,000 $ 19,852 $ 28,148 $ 4,138,476 $ (11,449,743) $ 28,073,817 17,177,848 $ 32,212,293 $ 5,728,105 $ $ $ (306,142) $ 344,373 38,231 $ 19,852 (19,852) 48,000 48,000 (7,617,409) 45,596,038 37,978,629 The notes to the basic financial statements are an integral part of this statement. -6- COLUMBIA COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2008 EXHIBIT"F" Total Net Change in Fund Balances - Governmental Funds (Exhibit "E") Amounts reported for Governmental Activities in the Statement of Activities are different because: Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are: Capital Outlay Depreciation Expense Excess of Capital Outlay over Depreciation Expense In the Statement of Activities, only the gain on the sale of the land and equipment is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the land and equipment sold. Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of: Bond Principal Retirements Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of: Increase in Compensated Absences An Internal Service Fund is used by the School District's management to account for the worker's compensation risk financing related activities. The net revenue of the Internal Service Fund is reported with governmental activities. $ (7,617,409) $35,054,540 {7,822,728) 27,231,812 (32,841) 6,885,000 (31,920) 345,653 Change in Net Assets of Governmental Activities (Exhibit "B") $26,780,295 The notes to the basic financial statements are an integral part of this statement. -7- COLUMBIA COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2008 ASSETS Current Assets Cash and Cash Equivalents EXHIBIT"G" INTERNAL SERVICE FUND $ 893,921 LIABILITIES Current Liabilities Accounts Payable $ 296,710 NET ASSETS Unrestricted 597,211 Total Liabilities and Net Assets $ 893,921 The notes to the basic financial statements are an integral part of this statement. -8- COLUMBIA COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2008 EXHIBIT "H" OPERATING REVENUES INTERNAL SERVICE FUND Charges for Services $ 628,472 OPERATING EXPENSES Contractual Services Insurance Claims and Expenses $ 204,315 114,493 Total Operating Expenses $ 318,808 Operating Gain $ 309,664 NONOPERATING REVENUES Interest and Investment Revenue 35,989 Changes in Net Assets $ 345,653 Total Net Assets - Beginning 251,558 Total Net Assets- Ending $ 597,211 The notes to the basic financial statements are an integral part of this statement. -9- COLUMBIA COUNTY BOARD OF EDUCATION STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2008 CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Charges for Services Cash Paid for Excess Worker's Compensation Insurance Cash Paid for Other Purchased Services Cash Paid for Worker's Compensation Claims Net Cash Used by Operating Activities EXHIBIT"!" INTERNAL SERVICE FUND $ 629,380 (56,277) (148,038) (369,537) $ 55,528 CASH FLOWS FROM INVESTING ACTIVITIES Interest and Dividends Net Decrease in Cash and Cash Equivalents Balances - Beginning of Year Balances - End of Year $ 35,989 $ 91,517 802,404 $ 893,921 RECONCILIATION OF OPERATING GAIN TO NET CASH USED BY OPERATING ACTIVITIES Operating Gain Change in Net Assets and Liabilities Receivables, Net Accounts and Other Payables Net Cash (Used) By Operating Activities $ 309,664 908 (255,044) $ 55,528 The notes to the basic financial statements are an integral part of this statement. - 10 - COLUMBIA COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2008 ASSETS Cash and Cash Equivalents EXHIBIT"J" AGENCY FUNDS $ 582,739 LIABILITIES Funds Held for Others $ 582,739 The notes to the basic financial statements are an integral part of this statement. - 11 - (This page left intentionally blank) COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY REPORTING ENTITY The Columbia County Board of Education (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Columbia County Board of Education. District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting ofinternal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. The Statement ofActivities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental, proprietary, and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. - 13 - COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The School District reports the following major governmental funds: General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund. District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation ofmajor capital facilities. Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or from ancillary activities. Enterprise fund operating revenues are related to charges for workers' compensation risk financing related activities. The primary nonoperating revenues are interest and investment revenues. Principal operating expenses are the costs of providing goods or services and include contractual services and insurance claims and expenses. The School District reports the following major proprietary fund: Internal Service Fund - the fund used to account for the School District's workers' compensation risk financing related activities. The School District reports the following fiduciary fund type: Agency funds account for assets held by the School District as an agent for various funds, governments or individuals. BASIS OF ACCOUNTING The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental, proprietary and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include - 14 - COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources. The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code ofGeorgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported - 15 - COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT"K" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State ofGeorgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia. The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit 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 Columbia County Board of Commissioners fixed the property tax levy for the 2007 tax digest year (calendar year) on July 24, 2007 (levy date). Taxes were due on November 15, 2007 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2007 tax - 16 - COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES digest are reported as revenue in the governmental funds for fiscal year 2008. The Columbia County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2008, for maintenance and operations amounted to $61,482,340. The tax millage rate levied for the 2007 tax year (calendar year) for the Columbia County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): School Operations 17.09 mills SALES TAXES Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $17,230,549 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. INVENTORIES FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. PREPAID ITEMS Payments made to vendors for services that will benefit periods subsequent to June 30, 2008, 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 - 17 - COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows: Capitalization Policy Estimated Useful Life Land Land Improvements Buildings and Improvements Computers, Televisions, Laser Disk Players, Digital Cameras and Video Cameras Monitors, Printers, Scanners, and Band Equipment All Other Equipment $ 1,000 NIA $ 1,000 10 to 20 years $ 1,000 50 years All 5 to 8 years $ 100 5 to 15 years $ 1,000 5 to 15 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. 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 and 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. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit ofthe government. The outstanding amount ofthese bonds is recorded in the Statement of Net Assets. - 18 - COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NET ASSETS The School District's net assets in the District-wide Statements are classified as follows: Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties. Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and my be used at the discretion of the Board to meet current expenses for those purposes. Note 3: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. Acceptable security for deposits consists of any one of or any combination of the following: ( 1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or ofthe State of Georgia, (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, - 19 - COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 3: DEPOSITS AND INVESTMENTS (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 ofdevelopment authorities created by the laws of the State of Georgia, and (7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS At June 30, 2008, the bank balances were $12,030,945. The amounts of the total uninsured bank balances are classified into three categories of custodial credit risk: Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name. The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2008, as follows: Custodial Credit Risk Category Bank Balance 1 $ 0 2 733,589 3 10,797,356 Total $ 11,530.945 CATEGORIZATION OF INVESTMENTS The School District's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity. - 20- COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 3: DEPOSITS AND INVESTMENTS Investment Type Fair Value Other Investments Equity Securities - Domestic Common Stock $ 103,784 Investment Pools Office of Treasury and Fiscal Services Georgia Fund 1 27,509,399 Total Investments $ 27,613.183 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 ofthe State ofGeorgia, Office ofTreasury and Fiscal Services for the Georgia Fund 1 (Primary Liquidity Portfolio and Extended Asset Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department ofAudits and Accounts at http://www.audits.state.ga.us/intemet/searchRpts.html. The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2008, was 40 days. Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value ofan investment. The School District does not have a formal policy for managing interest rate risk. Note 4: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories - 21 - COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 5: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year: Balances July 1, 2007 Increases Decreases Balances June 30, 2008 Governmental Activities Capital Assets, Not Being Depreciated: Land Construction in Progress $ 7,018,737 $ 1 $ 7,018,736 24,706,524 $ 22.331.962 23.802.301 23.236.185 Total Capital Assets Not Being Depreciated $ 31.725.261 $ 22,331.962 $ 23,802.302 $ 30,254,921 Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements $ 169,077,010 $ 31,739,641 34,951,518 4,785,239 $ 857,043 $ 200,816,651 1,881,310 37,855,447 857,043 Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements 42,198,041 20,845,051 252,430 4,020,957 3,739,362 62,409 1,848,469 46,218,998 22,735,944 314.839 Total Capital Assets, Being Depreciated, Net $ 141,590.049 $ 28,702,152 $ 32.841 $ 170.259.360 Governmental Activity Capital Assets - Net $ 173,315,3 lQ $ 51,03~,ll~ $ 23,835,143 $ 200,514,281 Current year depreciation expense by function is as follows: Instruction Support Services Pupil Services Improvements of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Community Services Food Services $ 6,239,403 $ 7,892 82,873 17,697 45,014 33,370 33,127 240,600 789,966 13,634 1,509 1,265,682 11,242 306,401 $ 7,822.728 - 22 - COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT"K" Note 6: RESTRICTED ASSETS Special Purpose Local Option Sales Tax (SPLOST), general obligation bond proceeds, and property tax levied specifically for retirement ofoutstanding bond principal, interest and paying agent's fees (Debt Service Funds) are restricted assets in the Statement ofNet Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2008 were as follows: District-wide Capital Projects Bond SPLOST Proceeds Debt Service Funds Restricted Cash and Cash Equivalents: Capital Acquisitions Restricted Investments: Debt Services Capital Acquisitions $ 2,046,252 $ 316,919 $ 4,190,363 $ $ 42 38,231 Note 7: INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2008 consisted of the following: Transfer to Transfers From District-wide Capital Projects General Fund $===19-,8-5_2 The capital projects fund prepaid for computers for the new Stalling Island Middle School which should come out of a grant in general fund for 2008 - 2009 school year. Note 8: RISK MANAGEMENT The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation. The School District 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 ofthe system. The School District pays an annual premium to the - 23 - COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 8: RISK MANAGEMENT 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 workers' compensation claims. A premium is charged when needed by the Internal Service Fund to the General Fund to cover actual claims and to build a level ofretained earnings. A premium is charged by the Internal Service Fund to the Food and Nutrition Program to cover actual claims. The School District accounts for claims with expense and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. An excess coverage insurance policy covers individual claims in excess of$300,000 loss per occurrence, up to the statutory limit. Changes in the workers' compensation claims liability during the last two fiscal years are as follows: 2007 2008 Beginning ofYear Liability Claims and Changes in Estimates Claims Paid EndofYear Liability $ 638,431 $ 228,584 $ 315,261 $ 551,754 $ 551,754 $ 114,493 $ 369,537 $ 296,710 The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: Beginning of Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability 2007 2008 $ 10,345 $ 1 040 $ 11,385 $ 0 $ 0 $ 0 $ 0 $ 0 The School District has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent All Employees $ 50,000 $ 200,000 - 24 - COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 9: LONG-TERM DEBT COMPENSATED ABSENCES Compensated absences represent obligations ofthe 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 1994A 3.50% - 7.00% General Government - Refunding - Series 1998 3.10% - 4.35% General Government- Refunding- Series 2001A 3.50% - 4.00% General Government - Refunding - Series 2003 2.60% General Government - Series 2005 3.25% - 5.00% $ 6,395,000 5,760,000 1,555,000 2,935,000 15,000,000 $ 31,645.000 Voters have authorized $15,000,000 in general obligation debt for capital outlay purposes which was not issued as of June 30, 2008. The changes in Long-Term Debt during the fiscal year ended June 30, 2008, were as follows: - 25 - COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 9: LONG-TERM DEBT Governmental Funds General Compensated Obligation Absences (1) Bonds Total Balance July 1, 2007 $ 596,874 $ 38,530,000 $ 39,126,874 Additions Annual Leave Earned 647,299 647,299 Deductions Annual Leave Utilized Debt Retired 615,379 6,885,000 615,379 6,885,000 Balance June 30, 2008 $ 628,794 $ 31,645.000 $ 32,273,794 Portion of Long-Term Debt Due within One Year $ 0 $ 3,665,000 $ 3,665,000 (1) The portion of Compensated Absences due within one year has been determined to be immaterial to the basic financial statements. At June 30, 2008 payments due by fiscal year which includes principal and interest for these items are as follows: Fiscal Year Ended June 30 General Obligation Debt Principal Interest 2009 2010 2011 2012 2013 $ 3,665,000, $ 1,464,287 3,960,000 1,278,547 5,985,000 1,022,286 8,815,000 642,450 9,220,000 258.187 Total Principal and Interest $ 31,645,000 $ 4,665,757 Note 10: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $3,508,894 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. - 26- COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 10: ON-BEHALF PAYMENTS Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $3,459,581 Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $25,801 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 $23,512 Note 11: SIGNIFICANT COMMITMENTS The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2008 together with funding available: Project Unearned Executed Contracts Funding Available From State 07-636-016/07G-636-021 Grovetown High School $ 582,828 $ 15,364,854 3,846,596 $ 15!3641854 $ 4A29A24 The amounts described in this note are not reflected in the basic financial statements. Note 12: SIGNIFICANT CONTINGENT LIABILITIES Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial positio_n. The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements. - 27 - COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 13: POSTEMPLOYMENT BENEFITS Georgia Retiree Health Benefit Fund PLAN DESCRIPTION The School District contributes to the Georgia Retiree Health Benefit Fund ("GRHBF"), a costsharing multiple-employer defined benefit postemployment healthcare plan administered by the Department of Community Health. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries. Pursuant to Title 45, Chapter 18 of the Official Code of Georgia Annotated, the authority to establish and amend the benefit provisions ofthe plan is assigned to the Board of Community Health. The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department of Community Health at 2 Peachtree Street, Atlanta, Georgia 30303. FUNDING POLICY The contribution requirements ofplan members and participating employers are established and may be amended by the Board of Community Health. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) of the cost of health insurance coverage. Participating employers are statutorily required to contribute in accordance with the employer contribution rate established by the Board of Community Health. This contribution rate is established to fund both the active and retired employee health insurance plans based on projected pay-as-you-go financing requirements. The employer contribution rates for the combined active and retiree plans for the fiscal year ended June 30, 2008, were as follows: Teachers Non-Certificated Employees 18.534% of state-based salaries $162.72 per month The School District's contribution to the health insurance plans for the fiscal year ended June 30, 2008, was $16,507,615, which equaled the required contribution. Note 14: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. - 28 - COLUMBIA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "K" Note 14: RETIREMENT PLANS TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2008 2007 2006 100% 100% 100% $ 9,919,328 $ 9,776,525 $ 8,338,175 -29 - (This page left intentionally blank) COLUMBIA COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2008 SCHEDULE "1" REVENUES Property Taxes Sales Tax State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenue NONAPPROPRIATED BUDGETS ORIGINAL (1) FINAL (1) ACTUAL AMOUNTS $ 61,668,192 $ 61,393,317 $ 61,496,754 1,500,000 1,500,000 2,235,637 103,704,531 103,868,601 108,095,993 9,533,595 9,675,972 9,726,987 4,785,000 4,785,000 9,205,617 1,585,000 1,585,000 1,478,167 420,000 420,000 1,893,225 $ 183,196,318 $ 183,227,890 _$.___1_94_.,_13_2.._,3_80_ ' EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING USES Other Uses Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ 127,956,470 $ 128,097,240 $ 128,673,604 3,912,994 4,320,001 3,723,791 1,179,379 10,896,743 1,237,929 12,932,215 7,288,470 978,255 58,129 8,573,459 4,017,266 4,326,880 3,699,324 1,199,540 10,900,212 1,237,929 12,939,144 7,745,763 989,694 57,738 8,573,459 3,750,966 4,147,650 4,068,169 1,131,529 12,579,497 1,228,332 13,188,783 7,796,695 912,858 55,612 3,980,739 8,499,322 $ 183,057,835 $ 183,784,189 $ 190,013,756 $ 138,483 $ (556,299) $ 4,118,624 . 19,852 $ 138,483 $ (556,299) $ 4,138,476 28,888,092 21,855,429 28,073,817 ============== $ 29,026,575 $ 21,299,130 $ 32,212,293 Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts. The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 31 - COLUMBIA COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2008 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program Total Child Nutrition Cluster Other Programs Pass-Through From Georgia Department of Education Food Donation (1) Total U. S. Department of Agriculture CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD 10.553 10.555 10.550 NIA (2) NIA $ _ _ ___:.7.1.:,4::28::.,;,7'-'1-'-7 $ 7,428,717 NIA 595,698 $ _ _ _ _,::;8,c::c02:::4:.,,;,4;:..;1~5 Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants Total Special Education Cluster Other Programs Direct Impact Aid Pass-Through From Georgia Department of Education Education for Homeless Children and Youth English Language Acquisition Grants Improving Teacher Quality State Grants Safe and Drug-Free Schools and Communities - State Grants State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States Total U. S. Department of Education 84.027 84.173 84.041 84.196 84.365 84.367 84.186 84.298 84.010 84.048 NIA $ NIA $ NIA N/A N/A NIA N/A NIA N/A $ 3,173,155 g2,060 3,265,215 (3) 12,601 35,354 493,816 48,095 24,487 1,901,901 125,854 5,907,323 Defense, U. S. Department of Direct Department of the Army R.O.T.C. Program Department of the Navy R.O.T.C. Program Total U.S. Department of Defense Total Federal Financial Assistance NIA = Not Available Notes to the Schedule of Expenditures of Federal Awards (1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year. (2) Expenditures for the School Breakfast Program ($459,510) were not maintained separately and are included in the 2008 National School Lunch Program. (3) Funds earned on the Impact Aid program, in the amount of $218,619, do not require reporting of expenditures. $ 167,873 51,016 $ _ _ _ _-=2c.:..18::..,.,8;:;.;8:..;;..9 $ ====1;.;4~,1,;;,50~,6;;;2;;,.7 Major Programs are identified by an asterisk (*) in front of the CFDA number. The School District did not provide Federal Assistance to any Subrecipient. The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Columbia County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. -32- COLUMBIA COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2008 SCHEDULE "3" AGENCY/FUNDING GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Vocational Supervisors Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Health Insurance High School Graduation Coach Middle School Graduation Coach Middle School Remediation National Teacher Certification Preschool Handicapped Program Teachers' Retirement Virtual Schools Grant Georgia State Financing and Investment Commission Reimbursement on Construction Projects Office of Treasury and Fiscal Services Public School Employees Retirement GENERAL FUND GOVERNMENTAL FUND TYPES CAPITAL PROJECTS FUND TOTAL $ 1,677,150 $ 1,677,150 6,974,347 256,469 16,808,248 674,161 8,129,261 424,463 14,384,811 14,325,499 2,752,211 586,463 470,109 4,776,952 1,405,101 583,169 1,947,095 748,053 1,167,112 203,763 2,308,043 753,242 406,601 2,050,862 4,448,620 5,670,551 1,833,116 317,119 380,420 34,654 7,988,314 474,906 134,213 -1,804,557 3,459,580 266,722 294,672 14,218 376,518 320,029 25,801 9,400 $ 23,512 12,455,630 6,974,347 256,469 16,808,248 674,161 8,129,261 424,463 14,384,811 14,325,499 2,752,211 586,463 470,109 4,776,952 1,405,101 583,169 1,947,095 748,053 1,167,112 203,763 2,308,043 753,242 406,601 2,050,862 4,448,620 5,670,551 1,833,116 317,119 380,420 34,654 7,988,314 474,906 134,213 -1,804,557 3,459,580 266,722 294,672 14,218 376,518 320,029 25,801 9,400 12,455,630 23,512 OTHER Community Affairs, Georgia Department of Local Assistance Grant 15,000 15,000 $ 108,095,993 $ 12,455,630 $ ===1=2.,.0,..,55=1=,6=23= See notes to the basic financial statements. -33- COLUMBIA COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2008 SCHEDULE "4" Revenues Sales Tax 2002-2007 Proceeds Sales Tax 2007-2012 Proceeds 2005 Bond Proceeds State Proceeds Local Proceeds Interest Total Revenue BUDGET $ 68,265,548 91,200,000 15,664,805 35,022,135 19,968,000 1,900,000 $ 232,020,488 (1) SPLOST-2002;2007 Current Year ~ Year (2) SPLOST 2007-2012 BONDS SALES TAX PROCEEDS Current Year Prior Year Current Year Prior Year STATE AND LOCAL FUNDING Current Year Prior Year TOTAL $ 68,265,548 $ $ 329,352 997,052 $ 329,352 $ 69,262,600 $ 0 $ $ 17,230,549 $ 15,664,805 456,715 62454 0 $ 16,121,520 $ 17,293,003 $ 0 $ 0 $ 12,455,631 $ 4,248,000 16,703,631 $ 13,719,938 15,720,000 29,439,938 $ 68,265,548 17,230,549 15,664,805 26,175,569 19,968,000 1,845,573 $ 149,150,044 PERCENTAGE COMPLETION 100% 19% 100% 75% 100% 97% Expenditures Debt Payments $ 83,006,732 $ 4,054,853 $ 39,855,349 $ Audit Fees 35,250 4,000 11,250 Capital Projects 124,935,597 274,847 11,291,144 Equipment, Buses, & Portables 20,412,194 1,609,061 5,403,023 Total Expenditures $ 228,389,773 $ 5,942,761 $ 56,560,766 $ Proceeds for Current and Future Projects $ 3,630,715 $ (5,613,409) $ 12,701,834 $ 0 $ 1,531,774 $ 4,217,072 $ 14,589,627 13,555,995 0 $ 16,121,401 $ 17,773,067 $ 0 $ 49,659,048 60% 15,250 43% $ 17,507,348 $ 29,245,876 86,464,837 69% 7,012,084 34% 0 $ 17,507,348 $ 29,245,876 $ 143,151,219 0 $ 119 $ (480,064) $ 0 $ (803,717) $ 194,062 $ 5,998,825 The voters of Columbia County approved the imposition of a 1% sales tax (SPLOST) for 2002-2007 and 2007-2012 to fund the above projects and retire debt. The amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. (1) The School District's original cost estimate as specified in the resolution for the 2002-2007 SPLOST was (1) for the cost of acquiring, constructing, and equipping one new elementary school and one new middle school, adding and equipping new classrooms at existing high schools, acquiring land for future schools, adding to, renovating, repairing, improving, and equipping existing school buildings and other buildings and facilities useful or desirable in connection therewith, and acquiring any necessary property therefor, both real and personal, (2) the cost of acquiring instructional and administrative technology improvements for existing schools and acquiring school buses, the maximum cost of the projects described in clauses (1) and (2) above to be $42,067,795 and (3) the cost of paying debt due on April 1, 2003 through October 1, 2007, in the maximum amount of $27,932,205 for a total of $70,000,000. The taxpayers also approved the sale of $16,000,000 in bonds in order to advance fund the projects. The principal and interest on the $16,000,000 was paid with SPLOST proceeds which is not reflected in the $27,932,205. (2) The School District's original cost estimate as specified in the resolution for the 2007-2012 SPLOST was (1) to acquire, construct, and equip two new elementary schools, three new middle schools, and one new high school, acquire land for future schools and instructional and administrative technology improvements for existing schools, add to, renovate, repair, improve, and equip existing school buildings and other buildings and facilities useful or desirable in connection therewith, and acquiring any necessary property therefor, both real and personal, (2) and to acquire school buses, the maximum cost of the projects described in clauses (1) and (2) above to be $95,100,000 and (3) the cost of paying debt due on April 1, 2008 through October 1, 2012, in the maximum amount of $19,900,000 for a total of $115,000,000. The taxpayers also approved the sale of $30,000,000 in bonds in order to advance fund the projects. At this time only $15,000,000 of the bonds have been sold. The principal and interest on the $15,000,000 will be paid with SPLOST proceeds which is not reflected in the $19,900,000. See notes to the basic financial statements. -34- COLUMBIA COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2008 SCHEDULE "5" DESCRIPTION ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL Direct Instructional Programs Kindergarten Program $ Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades Early Intervention Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) 8,083,574 $ 8,961,550 $ 288,849 199,564 19,363,779 24,583,921 790,360 666,747 9,444,173 11,777,110 495,018 472,117 16,731,432 19,566,689 16,594,980 19,602,160 3,150,970 2,569,506 9,066,774 357,595 534,453 10,315,063 237,565 214,134 2,221,130 2,184,455 802,133 369,990 1,353,123 1,068,280 234,782 262,080 282,504 $ 2,141 853,373 9,698 473,137 4,538 863,333 733,371 179,579 9,244,054 201,705 25,437,294 676,445 12,250,247 476,655 20,430,022 20,335,531 2,749,085 12,402 12,544 692,858 26,699 25,107 62,889 6,090 11,687 10,472 369,997 546,997 11,007,921 264,264 239,241 2,247,344 376,080 1,079,967 272,552 TOTAL DIRECT INSTRUCTIONAL PROGRAMS $ 88,621,077 $ 103,942,979 $ 4,262,422 $ 108,205,401 Media Center Program Staff and Professional Development 2,672,867 475,198 3,168,704 89,518 398,670 345,166 3,567,374 434,684 TOTAL QBE FORMULA FUNDS $==========9=1=,7=6=9,=1=42= $ 107,201,201 $ (1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment. 5,006,258 $ 112,207,459 See notes to the basic financial statements. - 35 - SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 February 2, 2009 Honorable Sonny Perdue, Governor Members ofthe General Assembly Members ofthe State Board of Education and Superintendent and Members of the Columbia County Board of Education REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Columbia County Board of Education as of and for the year ended June 30, 2008, which collectively comprise Columbia County Board ofEducation's basic financial statements and have issued our report thereon dated February 2, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered Columbia County Board ofEducation'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 ofexpressing an opinion on the effectiveness of the Columbia County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness ofthe Columbia County Board of Education's internal control over financial reporting. A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Columbia County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally 2008YB-10 accepted accounting principles such that there is more than a remote likelihood that a misstatement ofthe Columbia County Board ofEducation's financial statements that is more than inconsequential will not be prevented or detected by the Columbia County Board of Education's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Columbia County Board of Education's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether Columbia County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we have reported to management of Columbia County Board of Education in a separate letter dated February 2, 2009. This report is intended solely for the information and use ofmanagement, members ofthe Columbia 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, RWH:gp 2008YB-10 Ru sell W. Hinton, CPA, CGFM State Auditor Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 February 2, 2009 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members ofthe Columbia County Board of Education REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 Ladies and Gentlemen: Compliance We have audited the compliance of Columbia County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2008. Columbia County Board ofEducation's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each ofits major Federal programs is the responsibility of Columbia County Board of Education's management. Our responsibility is to express an opinion on Columbia County Board of Education's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Columbia 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 Columbia County Board ofEducation's compliance with those requirements. 2008SA-10 In our opinion, the Columbia County Board ofEducation complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2008. Internal Control Over Compliance The management of Columbia County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Columbia County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Columbia County Board of Education's internal control over compliance. A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use ofmanagement, members ofthe Columbia County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~AJ-.i..rul ~~~ Russell W. Hinton, CPA, CGFM State Auditor RWH:gp 2008SA-10 SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS COLUMBIA COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FA-6361-06-01 Unresolved - See Corrective Action/Responses CORRECTIVE ACTION/RESPONSES ACTIVITIES ALLOWED OR UNALLOWED Inadequate Internal Control Procedures U.S. Department of Education Through Georgia Department of Education Hurricane Education Recovery (CFDA 84.938) Finding Control Number: FA-6361-06-01 No longer have the grant. AUDITOR NOTE: In a May 11, 2007 communication to the Board's Superintendent, Georgia Department ofEducation advised the Board that this finding is pending review by its Financial Review Section. SECTION IV FINDINGS AND QUESTIONED COSTS COLUMBIA COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Columbia County Board of Education's financial statements was unqualified. 2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Columbia County Board of Education did not disclose any significant deficiencies related to the financial statements. 3. Noncompliance Material to the Financial Statements The audit of the Columbia County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements. 4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Columbia County Board of Education did not disclose any significant deficiencies in internal control over major programs. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Columbia County Board of Education's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Required to be Reported by Section .510(a) ofOMB Circular A-133 The Columbia County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133. 7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $431,077. 9. Low Risk Auditee The Columbia County Board of Education qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133. II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. - 1- COLUMBIA COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. -2 -