Coweta County Board of Education, Newnan, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2003

COWETA COUNTY BOARD OF EDUCATION NEWNAN, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2003
STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor

COWETA 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

3

B

STATEMENT OF ACTIVITIES

4

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

6

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

7

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

8

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

9

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

10

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

11

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

27

COWETA COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

28

3 SCHEDULE OF STATE REVENUE

30

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

32

5 ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

BY PROGRAM

35

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING 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

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
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
August 2, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Coweta County Board of Education
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Ladies and Gentlemen:
We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Coweta County Board of Education, as of and for the year ended June 30, 2003, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Coweta 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 ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opm1ons.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective position ofthe governmental activities, each major fund, and the aggregate remaining fund information of the Coweta County Board of Education, as of June 30, 2003, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
2003-34ARL-11

In accordance with Government Auditing Standards, we have also issued our report dated August 2, 2004, on our consideration ofthe Coweta County Board ofEducation's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through ix and page 27 respectively, are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Coweta 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-13 3, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code ofGeorgia Annotated section 506-24.
Respectfully submitted,
RWH:as 2003-34ARL-11

COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
The discussion and analysis ofCoweta County Board ofEducation's financial performance provides an overall review of the Board's financial activities for the fiscal year ended June 30, 2003. The intent of this discussion and analysis is to look at the Board's financial performance as a whole; readers should also review the notes to the basic financial statements and the financial statements to enhance their understanding of the Board's financial performance.
Financial Highlights
Key financial highlights for 2003 are as follows:
In total, net assets increased $9.2 million which represents a 6.6 percent increase from 2002. This total increase was due to governmental activities since the Board has no business-type activities.
General revenues accounted for $69.5 million in revenue or 44.8 percent of all revenues. Program specific revenues in the form ofcharges for services and sales, grants and contributions accounted for $85.7 million or 55.2 percent of total revenues of $155.2 million.
The Board had $146.0 million in expenses related to governmental activities; only $85.7 million ofthese expenses were offset by program specific charges for services, grants or contributions. General revenues (primarily taxes) of $69.5 million were adequate to provide for these programs.
Among major funds, the general fund has $138.6 million in revenues, $140.0 million in expenditures and $0.3 in other financing uses. The general fund's fund balance decreased to $12.8 million from $14.5 million.
Due to the financial condition of the State of Georgia, the State reduced the funding to the Board by $1.6 million after the beginning of the fiscal year.
Using the Basic 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 the Coweta County Board of Education as a financial whole, or as an entire operating entity.
The Statement ofNet Assets and Statement ofActivities provide information about the activities of the whole Board, presenting both an aggregate view ofthe Board's finances and a longer-term view of those finances. Fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. In the case ofthe Coweta County Board ofEducation, the general fund is by far the most significant fund.

COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Reporting the Board as a Whole
Statement ofNet Assets and the Statement ofActivities
While this document contains the large number offunds used by the Board to provide programs and activities, the view of the Board as a whole looks at all financial transactions and asks the question, "How did we do financially during 2003?" The Statement of Net Assets and the Statement of Activities answers this question. These statements include all assets and liabilities using the accrual basis ofaccounting similar to the accounting used by most private-sector companies. The accrual basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the Board's net assets and changes in those assets. This change in net assets is important because it tells the reader that, for the Board as a whole, thefinancial position of the Board has improved or diminished. The causes ofthis change may be the result ofmany factors, some financial, some not. Nonfinancial factors include the Board's property tax base, facility conditions, required educational programs and other factors.
In the Statement of Net Assets and the Statement of Activities, the Board has one distinct type of activity:
Governmental Activities - All ofthe Board's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, after school program, principal's accounts and various others.
Reporting the Board's Most Significant Funds
Fund Financial Statements
Fund financial reports provide detailed information about the Board's major funds. The Board uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the Board's most significant funds. The Board's major governmental funds are the general fund, the capital projects fund and the debt service fund.
Governmental Funds Most of the Board's activities are reported in governmental funds, which focus on how money flows into and out ofthose funds and the balances left at year-end available for spending in future periods. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all otherfinancial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view ofthe Board'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 ofNet Assets and the Statement ofActivities) and governmentalfunds is reconciled in the financial statements.
11

COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

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

The Board as a Whole

The perspective of the statement of net assets is of the Board as a whole. Table 1 provides a summary of the Board's net assets for fiscal year 2003 compared to fiscal year 2002.

Table 1 Net Assets (in Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2003 Year 2002

Assets Current and Other Assets Capital Assets, Net

$ 83,957 $ 86,314

147,243

142,793

Total Assets

$ 231,200 $ 229,107

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 16,473 $ 17,819

66,252

72,058

Total Liabilities

$ 82,725 $ 89,877

Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted

$ 105,496 $ 24,706 18,273

92,813 27,597 18,820

Total Net Assets

$ 148,475 $ 139,230

Total net assets increased $9.2 million in fiscal year 2003.

Table 2 shows the changes in net assets for fiscal year 2003 compared to the changes in net assets for fiscal year 2002.

111

COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Table 2 Change in Net Assets
(in Thousands)
Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions
Total Program Revenues
General Revenues: Taxes Property Taxes For Maintenance and Operations For Debt Service Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Debt Service Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Total Revenues
Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations ofNon-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Expenses
Increase in Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2003

Year 2002

$

5,556 $

4,064

79,221

72,463

953

6,556

$ 85,730 $ 83,083

$ 46,688 $ 38,004

360

4,153

40

44

13,943 2,912
406
3,912 918 322
$ 69,501
$ 155,231

13,847 2,130
321
4,594 833
2,147
$ 66,073
$ 149,156

$ 94,151

3,119 2,738 2,668
792 10,219
1,164 10,976 6,119 2,692
835

638 1,108 5,878 2,889

$ 145,986

$

9,245

$ 84,693
2,756 2,357 2,624
781 7,536 1,330 10,161 5,618
904 529
497 901 5,661 2,231
$ 128,579
$ 20,577

IV

COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Governmental Activities

Governmental program expenses are comprised ofthe following: Instruction 64.5 percent, Support Service 28.2 percent, Operations ofNoninstructional Services 5.2 percent and Interest on Short-Term and Long-Term Debt 2.1 percent. Interest expense was attributable to capital leases, short-term borrowings to meet cash flow needs and the outstanding bonds for capital projects.

The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows, for governmental activities, the total cost ofservices and the net cost of services comparing fiscal year 2003 with fiscal year 2002. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements.

Table 3 Governmental Activities
(in Thousands)

Total Cost of Services

Fiscal

Fiscal

Year2003 Year2002

Net Cost of Services

Fiscal

Fiscal

Year2003 Year2002

Instruction

$

Support Services

Pupil Services

Improvement of Instructional Services

Educational Media Services

General Administration

School Administration

Business Administration

Maintenance and Operation of Plant

Student Transportation Services

Central Support Services

Other Support Services

Operations of Non-Instructional Services

Enterprise Operations

Community Services

Food Services

Interest on Short-Term and Long-Term Debt

94,151 $
3,119 2,738 2,668
792 10,219
1,164 10,976 6,119 2,692
835
638 1,108 5,878 2,889

84,693 $
2,756 2,357 2,624
781 7,536 1,330 10,161 5,618
904 529
497 901 5,661 2,231

32,022 $
2,223 1,463
996 -1,000 7,014 1,156 6,246 3,524 2,692
596
233 91 Ill
2,889

26,124
1,961 1,403
839 -1,074 4,570 1,280 5,234 1,919
904 352
-65 -20 -161 2,230

Total Expenses

$ 145,986 $ 128,579 $ 60,256 $ 45 496

Although program revenues make up a majority of the revenues, the Board is still dependent upon tax revenues for governmental activities. Over 34.0 percent of instruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 41.3 percent.

V

COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
The Board's Funds
The Board's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues and other financing sources of $175.8 million and expenditures and other financing uses of$182.2 million. There was a decrease of$13.8 million in the capital projects fund due to sales tax revenue being used for construction and debt repayment. The general fund had a decrease of $1.7 million and debt service funds had an increase of $9.0 million. The decrease in the general fund for the year reflects the reduction in State funding. The increase in debt service funds is due to the accumulation of sales tax collections for future debt service payments.
General Fund Budgeting Highlights
The Board's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund.
During the course of fiscal year 2003, the Board amended its general fund budget as needed. The Board uses site-based budgeting. The budgeting systems are designed to tightly control total site budgets but provide flexibility for site management.
For the General Fund, the final budgeted revenues and other financing sources of $137.0 million exceeded the original budgeted amount of$126.5 million by $10.5 million. This difference was due to an increase in miscellaneous revenues of $6.0 million and an increase in property taxes of $4.5 million. The miscellaneous revenues budgeted increased due to the inclusion of the principals' accounts in our financial statements and the property taxes increased due to an increase in the millage rate. The actual revenues and other financing sources of $139.7 million exceeded the budgeted amount by $2.7 million.
The final budgeted expenditures and other financing uses of $139.9 million exceeded the original budgeted amount of $133.3 million by $6.6 million. The majority of this difference was due to an increase in instruction of $4.5 million and an increase in enterprise activities of $1.5 million due to the inclusion of the principals' accounts in our financial statements. The budget for other uses increased $0.4 million with minor adjustments in other expenditures making up the remainder. The actual expenditures and other financing uses of $141.4 million was $1.5 million more than budgeted. This difference is primarily due to debt service expenditures being included in the general fund where they are not budgeted.
General Fund expenditures and other financing uses exceeded revenues and other financing sources by $1.7 million. State funds were reduced by $1.6 million dollars after the Board had begun its fiscal year.
VI

COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Capital Assets and Debt Administration

Capital Assets

At the end of fiscal 2003 the Board had $147.2 million invested in capital assets, all in governmental activities. Table 4 shows fiscal year 2003 balances compared with fiscal year 2002 balances.

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

Governmental Activities

Fiscal

Fiscal

Year 2003 Year 2002

Land Construction in Progress Buildings and Building Improvements Equipment Land Improvements

$

6,224 $

6,224

4,054

914

122,203

120,820

9,791

10,374

4 971

4 461

Total

147,243 $ 142,793

The primary increases occurred in construction in progress due to ongoing construction and in buildings and building improvements due to completed construction.

Debt

At June 30, 2003 the Board had $64.4 million in bonds outstanding with $3.1 million due within one year and $0.6 million in capital leases outstanding with less than $0.01 million due within one year. Table 5 summarizes general operations bonds, capital leases, compensated absences outstanding and unamortized bond premium. During the year the Board paid off the capital lease with the Coweta County Development Authority. Table 5 shows fiscal year 2003 balances compared with fiscal year 2002 balances.

Vll

COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003

Table 5 Debt at June 30 (in Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2003 Year 2002

General Obligation Bonds Capital Leases
Coweta County Development Authority Other Compensated Absences Unamortized Bond Premium

$ 64,350 $ 66,680

7,825

630

905

310

148

962

1,213

Total

$ 66,252 $ 76 771

At June 30, 2003, the Board's overall legal bonding authority was $269,235,306. The Board maintains an AA3 bond rating.

Current Issues

Coweta County's economy echoed state and national declines in economic growth by mid-2003. The county continued to show high rates ofresidential growth and has begun to show some signs ofnew retail development, which shows some promise of growth in the tax digest. New industrial development or existing industrial expansion has not occurred within the past year, however. 53 percent of Coweta County's active workforce was employed outside ofthe county in 2001, a figure that has risen from 46 percent in 1996, and has likely continued to rise in subsequent years. Thus Coweta County's unemployment rates are increasingly tied to the Atlanta region's economic performance (particularly to the performance oflarge employers within Fulton, Fayette and Clayton counties). The trends also imply that the growth ofthe local population continues to grow at a faster rate than the tax digest. The unemployment rate in Coweta County dropped to 5.2 percent in June 2003, virtually unchanged from rates of 5.3 percent the year earlier. The 2003 unemployment statistics for Coweta County are slightly better than the average in the Metropolitan Atlanta Statistical area (5.4 percent) and the five-county West GeorgiaRDC area (6.0 percent). While some industrial employers, such as the Newnan Excel Corporation, have continued to expand or hold firm on employment, others such as Bon-L Manufacturing and the K-Mart Distribution Center in Newnan are concerned about their companies' long-term competitiveness and are decreasing jobs or projecting lower employment. Retail investment continues to grow as Coweta County continues to develop as a regional retail destination, particularly in the area surrounding Interstate 85 exit 47 in Coweta County.

Sales tax revenues grew by 0.72 percent over the prior year (fiscal year 2002 to fiscal year 2003), below the rate of 1.91 percent during the previous year, which was also far below the rate of

Vlll

COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2003
preceding years. The maintenance and operations (Mand 0) tax digest for 2003 increased by 4.79 percent. The U.S. Census estimates the county's current population at 101,395 as of2003, up more than 4,000 from the year before and estimated to continue at similar high rates. School enrollment increased by over 500 students to approximately 18,000 at the end of 2002, and general population growth is expected in school system enrollment growth again in the coming year. New housing starts continue to remain high, particularly in the eastern corridor ofthe City ofNewnan, following a trend ofnew housing into the City ofNewnan after the Coweta County Commission raised minimum lot sizes in 1997. But that change in growth seems to be mainly a shift in new growth patterns, and the apparent population growth rate shows signs ofactually accelerating, even as new housing starts shift to Newnan and smaller cities in the county such as Grantville and the City of Senoia. Though lower sales tax revenue growth is a concern for the short term, there are more serious mid- or longterm revenue concerns for the growing Coweta County School District, such as recent announcements that state revenue would decline through austerity cuts for fiscal year 2004. Contacting the Board's Financial Management This financial report is designed to provide our citizen's, taxpayers, investors and creditors with a general overview of the Board's finances and to show the Board's accountability for the money it receives. Ifyou have questions about this report or need additional financial information, contact W. Keith Chapman, CPA, Comptroller at the Coweta County Board of Education, 23 7 Jackson Street, Newnan, Georgia 30263. You may also email your questions to keith.chapman@cowetaschools.net.
IX

COWETA COUNTY BOARD OF EDUCATION

COWETA COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2003
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable. Net
Taxes State Government Federal Government Other Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation
Total Assets
LIABILITIES
Accounts Payable Salaries Payable Contracts Payable Retainages Payable Deposits and Deferred Revenues Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets
The notes to the basic financial statements are an integral part of this statement.
-3-

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

4,203,644

63,222,366

6,047,261 9,227,352 1,089,331
335 166,804

6,223,819 4,054,033 6,862,139 142,050,059 14,685,205 -26,632,124

$ ===2=3=1='2=00='=22=4=

$

3,326,397

12,201,868

570,210

363,998

10,474

3,686,994 62 564,727

$

82,724,668

$

105.495,978

801,895 19,930,113
3,974,740 18 272,830

$

148 475,556

$ ===23=1=,2=0=0,=22=4=

COWETA COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30. 2003

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Debt Services Intangible Recording Tax Real Estate Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

$

94,150,516 $

3,119,555 2,738,450 2,668,195
791,741 10,218,946
1,164,196 10,975,783
6,119,028 2,692,106
834,719

637,733 1,108,185 5,877,850 2,888,952

$

145,985,955 $

1,461,075
404,953 1,017,401 2,672,726 5,556,155

The notes to the basic financial statements are an integral part of this statement. -4-

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$

60,140,204 $

896,264 1,274,529 1,645,538 1,789,526 3,197,268

4,523,188 2,458,151

238,871

3,057,899

$

79,221,438 $

526,890 $
1,340 26,896
2,387 7,630 8,358 206,126 137,245
35,720
952 592 $

-32,022,347
-2,223,291 -1,462,581
-995,761 1,000,172 -7,014,048 -1,155,838 -6,246,469 -3,523,632 -2,692,106 -595,848
-232,780 -90,784
-111,505 -2,888,952
-60,255,770

$

46,688,436

360,060

39,547

13,943,225 2,912,442 406,007 3,912,167 917,802 321,452

$

69,501,138

$

9,245,368

139,230,188

$ ===1=4=8=4=75===55=6=

-5 -

COWETA COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30. 2003

EXHIBIT"C"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 3,189,313 $

816,665 $

197,666 $

12,834,680

33,233,451

17,154,235

1,906,989 9,127,164 1,089,331
335 166,804

100,188

2,418,877

4,203,644 63,222,366
4,325,866 9,227,352 1,089,331
335 166,804

Total Assets

$ 28,314,616 $ 34,150,304 $ 19,770,778 $ ====8=2.,,,2=35='=69=8=

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries Payable Contracts Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Debt Service Inventories Capital Projects
Unreserved Designated for Self-Insurance Undesignated Reported in: General Fund Capital Projects
Total Fund Balances

$ 3,326,397

$

12,201,868

$

570,210

363,998

10,474

$ 15,538,739 $

934,208

$

$

635,091

$

$ 19,770,778

166,804

$ 27,550,956

3,177,752

8,796,230

5,665,140

$ 12,775,877 $ 33,216,096 $ 19,770,778 $

3,326,397 12,201,868
570,210 363,998
10,474
16,472,947
635,091 19,770,778
166,804 27,550,956
3,177,752
8,796,230 5,665,140
65,762,751

Total Liabilities and Fund Balances

$ 28,314,616 $ 34,150,304 $ 19,770,778 $ ===8=2..,,2=3=5'!::69=8=

The notes to the basic financial statements are an integral part of this statement. -6 -

COWETA COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30. 2003

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures.
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable Capital Leases Compensated Absences Unamortized Bond Premiums
Total Long-Term Liabilities

$ 65,762,751

$

6,223,819

4,054,033

6,862,139

142,050,059

14,685,205

-26,632, 124

147,243,131

1,721,395

$ -64,350,000 -629,856 -309,752 -962, 113

-66,251,721

Net Assets of Governmental Activities (Exhibit "A")

$ 148,475,556

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

COWETA COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30 2003

EXHIBIT"E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Capital Outlay Debt Services
Principal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES {USES)
Accrued Interest on Bonds Sold Proceeds of Refunding Bonds - Par Value Premiums on Bonds Sold Payment to Bond Refunding Escrow Agent Refunding Bond Issuance Cost Capital Leases Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 46,045,393 3,215,814
73,006,398 $ 9,242,886 5,556,155 201,190 1 321,774
$ 138,589,610 $

$ 952,592
551,153 2 425

313,396 $ 14,045,860
170,220

46,358,789 17,261,674 73,958,990
9,242,886 5,556,155
922,563 1 324 199

1,506,170 $ 14,529,476 $ 154,625,256

$ 91,862,046

3,112,645 2,743,845 2,548,676
779,188 10,116,333
843,727 $ 10,062,709
5,497,099 2,673,516
834,719 637,733 1,107,507 5,717,287

7,033 $ 70,803
8,635,853

1,393,937 69 969

7,825,000 168 227

$ 140,000,936 $ 16,706,916 $

$ -1,411,326 $ -15,200,746 $

$ 91,862,046

20,589

3,112,645 2,743,845 2,548,676
779,188 10,116,333
871,349 10,133,512
5,497,099 2,673,516
834,719 637,733 1,107,507 5,717,287 8,635,853

3,010,000 2,516,106

12,228,937 2,754,302

5,546,695 $ 162,254,547

8,982,781 $ -7,629,291

$

57,357 $

57,357

18,175,000

18,175,000

377,728

377,728

-18,315,721

-18,315,721

-237,007

-237,007

$

1,118,600

1,118,600

$ 1,404,900

1,404,900

-1,404,900

-1 404 900

$

-286 300 $ 1 404,900 $

57357 $

1175 957

$ -1,697,626 $ -13,795,846 $ 9,040,138 $ -6,453,334

14 473 503

47,011 942

10,730,640

72,216,085

Fund Balances - Ending

$ 12 775,877 $ 33,216,096 $ 19,770,778 $ 65,762,751

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

-8-

COWETA 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. 2003

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

Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues.

In the Statement of Activities, only the gain on the sale of the 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 equipment sold.

Bond proceeds provide current financial resources to Governmental Funds; however, issuing debt increases Long-Term Liabilities in the Statement of Net Assets. In the current period, proceeds were received from:

Refunding Bonds Issued

Some small value assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets, the lease obligation is reported as a Long-Term Liability.

Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:

Amortized Bond Premium

$

Bond Principal Retirements

Capital Lease Payments

Payments to Bond Refunding Agent

Total Long-Term Debt Repayments

Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:

Change in Compensated Absences

$ -6,453,334

7,789,846 -3,216,040

4,573,806 729,254

-123,187

-18,175,000 -1,118,600

250,986 3,010,000 9,218,937 17,495,000

29,974,923

-162,494

Change in Net Assets of Governmental Activities (Exhibit "B")

$ =====9=,2=45=,3=6===8

The notes to the basic financial statements are an integral part of this statement. -9-

COWETA COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2003
ASSETS Cash and Cash Equivalents Investments
Certificate of Deposit
Total Assets
LIABILITIES Funds Held for Others

EXHIBIT"G"

AGENCY FUNDS

$

276,757

45,924

$ ==3=2=2,=68=1=

$ =====3=2=2,=68=1=

The notes to the basic financial statements are an integral part of this statement. - 10 -

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Coweta County Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Coweta County Board of Education.
District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
- 11 -

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Bond Proceeds, grants from Georgia State Financing and Investment Commission and Special Purpose Local Option Sales Tax proceeds to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless ofwhen the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis 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.
- 12 -

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
A substantial number of personnel of the School District were employed for a one hundred and ninety day period beginning in August 2002 and ending in early June 2003. Employment contracts for these employment periods typically specify that compensation be paid in twelve equal monthly payments beginning in September 2002 and ending in August 2003. State grants to fund the State's share of these contracts are disbursed to the School District in the same twelve month period. In accordance with generally accepted accounting principles, salary and fringe benefit costs and the related revenue from the State to fund these contracts are recorded in the fiscal period covered by these financial statements.
CASH AND CASH EQUIVALENTS
COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the Board to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.
INVESTMENTS
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code 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,

- 13 -

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(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 of Georgia, Office of Treasury and Fiscal Services,

(7) Repurchase agreements, and

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

RECEIVABLES

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

PROPERTY TAXES

The Coweta County Board ofCommissioners fixed the property tax levy for the 2002 tax digest year (calendar year) on October 15, 2002 (levy date). Taxes were due on December 20, 2002 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2002 tax digest are reported as revenue in the governmental funds for fiscal year 2003. The Coweta County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% oftaxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2003, for maintenance and operations amounted to $46,010,196 and for school bonds amounted to $309,046.

The tax millage rate levied for the 2002 tax year (calendar year) for the Coweta County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

17.94 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $13,943,225 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.

- 14 -

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVENTORIES

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

CAPITAL ASSETS
Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time ofpurchase. On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art.
Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:

Land Land Improvements Buildings and Improvements Equipment

Capitalization Policy

Estimated Useful Life

All

NIA

$

10,000 20 to 80 years

$

10,000 25 to 80 years

$

10,000 10 to 50 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. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. 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 of the government. The outstanding amount of these bonds is recorded in the Statement ofNet Assets.

- 15 -

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum ofmoney which has not been secured by surety bond, by guarantee ofinsurance, 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. If a depository elects the pooled method (OCGA 45-8-13 .1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by 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, 2003, the bank balances were $16,202,420. The amounts ofthe total bank balances are classified into three categories of credit risk:

- 16 -

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 3: DEPOSITS AND INVESTMENTS

Category 1 - Cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the School District or by the School District's agent in the School District's name.
Category 2 - Cash collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name.
Category 3 - Uncollateralized deposits. (This includes any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the School District's name.)

The School District's deposits are classified by risk category at June 30, 2003, as follows:

Risk Category

Bank Balance

1

$ 1,296,836

2

0

3

14,905,584

Total

$ 16,202.420

CATEGORIZATION OF INVESTMENTS At June 30, 2003, the carrying value of the School District's total investments was $63,222,366 which is materially the same as fair value. This investment consisted entirely of funds invested in the Local Government Investment Pool administered by the State ofGeorgia, Office ofTreasury and Fiscal Services which are not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy ofthe State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows:

The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the SEC as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 of the Investment Company Act of 1940. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated daily and reported to the rating agency to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed at the pool's share price, $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds of Georgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.

- 17 -

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 3: DEPOSITS AND INVESTMENTS

Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U.S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2003, was 30 days. The average investment duration for Fund 6 on June 30, 2003, was 0.39 years.

Note 4: NON-MONETARY TRANSACTIONS

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

Note 5: CAPITAL ASSETS

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

Balances July 1, 2002

Increases

Balances Decreases June 30, 2003

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

$ 6,223,819 914,321 $ 3,905,353 $

$ 6,223,819

765,641

4,054,033

Total Capital Assets Not Being Depreciated $ 7,138,140 $ 3,905,353 $ 765,641 $ 10,277,852

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$ 138,310,604 $ 14,752,844 6,138,486

3,739,455 187,026 $ 723,653

$ 142,050,059 254,665 14,685,205
6,862,139

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

17,491,213 4,378,622 1,677,727

2,355,697 646,747 213,596

131,478

19,846,910 4,893,891 1,891,323

Total Capital Assets, Being Depreciated, Net $ 135,654,372 $ 1,434,094 $ 123,187 $ 136,965,279

Governmental Activity Capital Assets - Net $ 142,792.512 $ 5,339.447 $ 888.828 $ 147,243.131

Capital assets being acquired under capital leases as of June 30, 2003, are as follows:

- 18 -

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 5: CAPITAL ASSETS
Land Improvements Less: Accumulated Depreciation

Governmental Funds
$ 175,000 -43 750

Current year depreciation expense by function is as follows:

Instruction Support Services
Improvements of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Food Services

$ 1,778,832

$

4,523

90,802

8,058

25,760

28,219

695,900

463,351

1,316,613 120,595

$ 3,216,040

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST), general obligation bond proceeds and property tax levied specifically for retirement of outstanding bond principal, interest and paying agent's fees (Debt Service Funds) are reported as restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2003, were as follows:

District-wide Capital Projects

Bond

SPLOST

Proceeds

Debt Service Funds

Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions
Restricted Investments: Debt Services Capital Acquisitions

$ 1,152,660

$ 197,666

$ 17,154,235 $ 3,238,837 $ 24,655,963

- 19 -

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2003, consisted of the following:

Transfer to

Transfers From General Fund

District-wide Capital Projects

$ 1,404,900

Transfers are used to move property tax revenues collected by the General Fund to the District-wide Capital Projects Fund as required match or supplemental funding source for capital construction projects.

Note 8: RISK MANAGEMENT

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.

The School District has obtained commercial insurance for risk ofloss associated with torts, assets, errors or omissions. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Board's insurance coverage in any ofthe past three years.

The School District has elected to self-insure for all losses related to acts of God. The School District has not experienced any losses related to this risk in the past three years.

The School District has established a limited risk management program for workers' compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. An excess coverage insurance policy covers individual claims in excess of $250,000 loss per occurrence, up to the statutory limit.

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

2002 2003

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

$

0 $ 274,300 $ 274,300 $

0

$

0 $ 452,348 $ 452,348 $

0

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.

- 20-

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "H"

Note 8: RISK MANAGEMENT

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

2002 2003

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

$

0 $

24,726 $

24,726 $

0

$

0 $

19 101 $

19 101 $

0

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

Position Covered

Amount

Superintendent Comptroller Board Treasurer All Employees

$

20,000

$

10,000

$

10,000

$ 250,000

Note 9: LONG-TERM DEBT

CAPITAL LEASES On July 1, 1998, the Coweta County Board ofEducation has entered into a lease agreement with the Coweta County Development Authority whereby Certificates ofParticipation were issued to finance the acquisition, construction and equipping ofcertain governmental facilities. During the year under review, the Board retired the outstanding balance of this lease agreement. The Coweta County Board of Education also entered into lease agreements as lessee for equipment. The above lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception.

COMPENSATED ABSENCES Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. The School District uses the vesting method to compute compensated absences.

ADVANCE REFUNDING During fiscal year 2003, the Coweta County Board of Education issued $18,175,000 in General Obligation Refunding Bonds to advance refund $17,495,000 ofoutstanding bonds. The bond issue of $18,175,000 plus premium of $377,728 less underwriters and bond issue cost of $237,007 provided net proceeds of$18,315,721. The total net proceeds were deposited in an irrevocable trust with an escrow agent to provide for future debt service payments on the 1993 Refunding Bond

- 21 -

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 9: LONG-TERM DEBT

issues. As a result, the 1993 Refunding Series Bonds are considered defeased, and the liability for this bond series has been removed from the District-wide Statement of Net Assets. The Coweta County Board of Education refunded the aforementioned bonds to reduce its total Debt Service payments over 10 years beginning subsequent to fiscal year 2003 by $1,552,498 and to obtain an economic gain (difference between the present values oftotal debt service payments and the old and new debt) of $1,356,750.

GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

Amount

General Government - Series 1992 General Government - Series 1998 General Government - Refunding - Series 2002 General Government - Refunding - Series 2002

3.75% - 6.35% 3.95% - 4.85% 3.25% - 5.00% 1.80% - 4.00%

$ 1,180,000 16,625,000 30,000,000 16,545,000

$ 64,350.000

The changes in Long-Term Debt during the fiscal year ended June 30, 2003, were as follows:

Balance July 1, 2002

CaJ!ital Leases

Coweta

County

Development

Authorih'.

Other

Governmental Funds

Compensated Absences

General Obligation
Bonds

Unamortized Bond
Premium

Total

$ 7,825,000 $ 905,193 $ 147,258 $ 66,680,000 $ 1,213,099 $ 76,770,550

Additions Capital Leases Annual Leave Earned G. 0. Bonds

1,118,600

403,513

18,175,000

1,118,600 403,513
18,175,000

Deductions Annual Leave Utilized Debt Retired Bonds Defeased Bond Premiums Amortized

7,825,000

1,393,937

241,019

3,010,000 17,495,000

250,986

241,019 12,228,937 17,495,000
250,986

Balance June 30, 2003

$

0 $ 629 856 $ 309.752 $ 64,350.000 $ 962,113 $ 66,251,721

Portion of Long-Term Debt Due Within One Year $

0 $

11,256 $ 309,752 $ 3,115,000 $ 250,986 $ 3,686,994

At June 30, 2003, payments due by fiscal year which includes principal and interest for these items are as follows:

-22 -

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT "H"

Note 9: LONG-TERM DEBT

Fiscal Year Ended June 30

Capital Leases

Principal

Interest

2004 2005 2006 2007 2008 2009 - 2013

$

11,256

145,671 $

151,500

157,562

163,867

24,753 18,924 12,862 6,557

Total Principal and Interest

$ 629,856 $

63 096

Fiscal Year Ended June 30

General Obligation

Debt

Principal

Interest

Unamortized Bond
Premium

2004 2005 2006 2007 2008 2009 - 2013

$ 3,115,000 $ 10,170,000 9,780,000 10,395,000 13,005,000 17,885,000

2,607,630 $ 2,363,679 1,994,339 1,597,720 1,095,908 2,030,974

250,986 250,986 250,986 209,155

Total Principal and Interest $ 64,350.000 $ 11,690.250 $ 962,113

Note 10: PRIOR YEAR DEFEASEMENT OF DEBT

In fiscal year 1998, the School District defeased certain general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the School District's basic financial statements. At June 30, 2003, $15,330,000 ofbonds are outstanding and are considered defeased.

Note 11: ON-BEHALF PAYMENTS

The Board has recognized revenues and costs in the amount of$1,380,434 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $1,112,416

- 23 -

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 11: ON-BEHALF PAYMENTS

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 $268,018

Note 12: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2003:

Project

Unearned Executed Contracts

Arnall Middle School Addition Coweta County Fine Arts Building East Coweta Middle School Gym Northgate High School Concession Stand Northgate High School Gym Northgate High School Tennis Courts Western Elementary School Multi-Purpose Building

$ 824,805 4,300,641 1,454,920 174,116 4,606,320 170,851 627,259

$ 12,158,912

The amounts described in this note are not reflected in the basic financial statements.

Note 13: SIGNIFICANT CONTINGENT LIABILITIES

Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.

The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance 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.

- 24-

COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2003

EXHIBIT"H"

Note 14: ACCUMULATED EMPLOYEES' LEAVE

The School District's twelve-month hourly employees may earn annual leave on a monthly basis from July 1 through June 30 at a rate of .833 days per month. In addition, these hourly employees may earn one additional day of annual leave for each full year ofservice completed through the tenth year for a maximum oftwenty days earned. Unused days may be carried forward to the next fiscal year. All annual leave days not used by the end ofthe next fiscal year will be forfeited. All unused annual leave is paid to employees at their current rate of pay upon retirement or termination of employment.

Twelve-month salaried employees may be awarded two days ofannual leave for each year ofservice with the School District up to a maximum of ten days after completing five years. Unused days in excess oftwenty days will be forfeited at June 30. Unused annual leave up to a maximum oftwenty days is paid to employees at their current rate ofpay upon retirement or termination of employment. See Note 9 - Compensated Absences

Note 15: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.24% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2003 2002 2001

100% 100% 100%

$ 7,024,615 $ 6,366,553 $ 7,050,125

- 25 -

COWETA COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30. 2003

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Other Sources Other Uses
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL

ACTUAL AMOUNTS

$

41,758,220 $

46,305,760 $

46,045,393

1,500,000

1,500,000

3,215,814

70,827,432

70,827,432

73,006,398

7,656,586

7,656,586

9,242,886

4,126,548

4,126,548

5,556,155

250,000

250,000

201,190

368,585

6,368,585

1,321,774

$

126,487,371 $

137 034 911 $

138,589,610

$

89,969,749 $

94,469,749 $

91,862,046

3,140,040 2,242,754 2,591,992
820,011 8,932,222 1,141,695 10,250,612 5,509,691
785,714 219,692
1,458,748 5,389,331

3,162,976 2,297,714 2,591,992
827,334 8,951,704 1,190,859 10,283,342 5,514,307
814,588 219,692 1,500,000 1,458,748 5,389,331

3,112,645 2,743,845 2,548,676
779,188 10,116,333
843,727 10,062,709
5,497,099 2,673,516
834,719 637,733 1,107,507 5,717,287 1,463,906

$

132,452,251 $

138,672,336 $

140,000,936

$

-5,964,880 $

-1,637,425 $

-1 411 326

$

1,118,600

$

-750 870 $

-1, 163,853

-1,404,900

$

-750,870 $

-1 163 853 $

-286 300

$

-6,715,750 $

-2,801,278 $

-1,697,626

13,344,609

13,344,609

14 473 503

Fund Balances - Ending

$

6,628,859 $

10543331 $===12=7=7=5=8=77=

Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual (1) Original Budget amounts do not include budgeted revenues or expenditures of the various principal accounts. See notes to the basic financial statements.
- 27 -

COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30. 2003

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U.S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food and Nutrition Program Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food and Nutrition Program Food Distribution Program (1)
Total U.S. Department of Agriculture
Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Individuals with Disabilities Education Act Part B - Special Education Flow Through Capacity Building Improvement Preschool
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education Elementary and Secondary Education Act Title I Comprehensive School Reform Demonstration Grant Grants to Local Educational Agencies School Improvement Title 11 Enhancing Education Through Technology Improving Teacher Quality Title Ill Immigrant Education Limited English Proficient Title IV Safe and Drug-Free Schools and Communities TitleV Innovative Education Program Strategies TitleX Charter Schools Vocational Education - Basic Grants to States High School Program Basic Grant Pass-Through From Bright From the Start Georgia Department of Early Care and Learning Elementary and Secondary Education Act Title II Eisenhower Professional Development
Total U.S. Department of Education

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

N/A

N/A

$

$

(2) 4 968,221
4,968,221

10.550

N/A
$

332,961 5,301,182

84.027 84.027 84.173

NIA $ N/A N/A
$

2,105,140 59,696 192 702
2,357,538

84.332

N/A

84.010

N/A

84.010

N/A

84.318

N/A

84.367

N/A

84.365

N/A

84.365

NIA

84.186

N/A

84.298

N/A

84.282

N/A

84.048

N/A

66,749 2,646,247
29,955
78,892 623,681
2,761 22,718
110,694
95,314
347,727
111,687

84.281

N/A
$

1,387 6,495,350

-28-

COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2003

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Defense, U.S. Department of Direct Department of the Air Force R.O.T.C. Program Department of the Marine Corps R.O.T.C. Program
Total U.S. Department of Defense

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

$

50,817

54,926

$ _ _ _ _10_5~,7_4_3

Total Federal Financial Assistance NIA = Not Available

$ =====11=,9=0=2"=,2=7=5

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts shown for the Food Distribution Program represent the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year.
(2) Expenditures for the funds earned on the School Breakfast Program ($456,207) were not maintained separately and are included in the 2003 National School Lunch Program.

Major Programs are identified by an asterisk (*) in front of the CFDA number.
The School District did not provide Federal Assistance to any Subrecipient.
The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Coweta 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 basic financial statements.

See notes to the basic financial statements.

- 29 -

COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2003

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Community Affairs, Georgia Department of Governor's Emergency Funds
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Principal Supplements Vocational Supervisors Education Equalization Funding Grant Food Services Austerity Reduction Other State Programs Apprenticeship Program Extended Day Middle School Agriculture Extended Day Technology/Career Health Insurance Mentor Teachers National Teacher Certification PayforPertormance Preschool Handicapped Program Technology Career/High Schools That Work Lottery Programs Assistive Technology Computers in the Classroom Post Secondary Options
- 30-

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

1,837,813

7,860

$

1,837,813

7,860

4,484,188 494,341
10,456,503 1,460,918 5,192,896 1,006,043 8,966,445 7,968,288 1,459,060
1,068,583 1,061,907 5,605,775 1,659,400
294,330 1,173,413
52,009 682,307 225,896 1,463,065 491,150 316,219
1,529,099 2,935,331 4,521,202
1,786,908 400,436 329,978 71,059 52,897
2,531,642 416,106
-1,820,898
61,750 5,341
49,067 1,112,416
18,260 39,962 96,900 243,483
4,000
30,493 356,874
10,716

4,484,188 494,341
10,456,503 1,460,918 5,192,896 1,006,043 8,966,445 7,968,288 1,459,060
1,068,583 1,061,907 5,605,775 1,659,400
294,330 1,173,413
52,009 682,307 225,896 1,463,065 491,150 316,219
1,529,099 2,935,331 4,521,202
1,786,908 400,436 329,978 71,059 52,897
2,531,642 416,106
-1,820,898
61,750 5,341
49,067 1,112,416
18,260 39,962 96,900 243,483
4,000
30,493 356,874
10,716

COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2003

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Georgia Institute of Technology Lottery Programs Student Information System
Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Office of Treasury and Fiscal Services Public School Employees Retirement
CONTRACTS Education, Georgia Department of After School Programs Reading First Program
OTHER Community Affairs, Georgia Department of Local Assistance Grant

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

185,521

$

185,521

$ 952,592 268,018

952,592 268,018

124,542 206,886

124,542 206,886

10 000

10 000

$ 73,006,398 $

952,592 $ ====7=3=,9=5='8,=99=0=

See notes to the basic financial statements.

- 31 -

COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30 2003

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST(1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4) (5) (6)

AMOUNT EXPENDED
IN PRIOR YEARS (3) (5)

PROJECT STATUS

Construction of improvements, renovations, modifications, additions and equipment

$ 67,705,750 $ 75,316,234 $

11,555,677 $ 63,760,557 Ongoing

The payment of all of the principal and interest due on the School District's Series 1992 Bonds, Series 1993 Bonds, and Series 1998 Bonds with the result that no additional ad valorem taxes will need to be collected in order to pay principal and interest on such bonds

36,974,261

36,974,261

Ongoing

The construction and equipment of a new middle school and two new elementary schools; and renovation of, modification of, making of new additions to, and equipping of the following schools or facilities: Arbor Springs Elementary School, Arnall Middle School, Amee-Sargent Elementary School, Atkinson Elementary School, Canongate Elementary School, Central Education Center, East Coweta High School, East Coweta Middle School, Eastside Elementary School, Elm Street Elementary School, 0. P. Evans Middle School. Winston Dowdell Academy, Jefferson Parkway Elementary School, Madras Middle School, Maggie Brown Pre-K Moreland Elementary School, Newnan Crossing Elementary School, Newnan High School, Northgate High School, Northgate Elementary School, Poplar Road Elementary School, Ruth Hill Elementary School, Smokey Road Middle School, Thomas Crossroads Elementary School, Western Elementary School, Westside Burwell, White Oak Elementary School and school on Willis Road; the acquisition of land for the foregoing purpose, the furnishing and equipping of the Fine Arts Center; the acquisition of additional transportation facilities and school buses; the acquisition construction, and equipping of additions at facilities system-wide; and the addition of new technology and modification to existing technology system-wide

61,009,000

61,009,000

4 599,277

Ongoing

$ 165,689,011 $ 173,299,495 $

16,154,954 $ 63,760,557

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.

(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.

(3) The voters of Coweta County approved the imposition of a 1% sales tax to fund the above projects. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

(4) In addition to the expenditures shown above, the School District has incurred interest to provide advance funding for the above projects as follows:

Current Year

$ ==9=5=7=7,=5=0

- 32 -

COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30. 2003

SCHEDULE "4"

(5) The School District entered into a lease purchase agreement with the Coweta County Development Authority for $11,090,000 for the construction and equipping of facilities for the above projects. As lease (principal and interest) payments are made the expenditures will be reflected above. In the year under review, the School District made $7,993,227 in lease payments.
(6) The Series 199.3 Refunding Bonds were retired through the sale of Series 2002 Refunding Bond Issue. The School District will utilize the SPLOST proceeds budgeted for the projects, plus any excess SPLOST proceeds to retire the Series 2002 Refunding Bond Issue.

See notes to the basic financial statements.

- 33 -

COWETA COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30. 2003

SCHEDULE "5"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category 111 Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

5,274,020 $ 5,417,284 $

136,114 $

5,553,398

538,175

304,281

2,181

306,462

12,284,513

13,269,644

595,225

13,864,869

1,619,350

1,352,993

16,752

1,369,745

6,048,223

6,898,325

361,141

7,259,466

1,129,453 10,492,737
9,248,151 1,672,206 11,368,408
1,369,489 67,701
793,707 257,560

1,009,091 10,552,469 11,434,937
1,941,897
278,090 1,268,834 9,234,055
435,185 230,457 1,587,848
45,653 692,254 352,507

10,495 666,528 749,282
57,136
10,341 49,127 162,758 18,236
5,428 14,010
14,359

1,019,586 11,218,997 12,184,219
1,999,033
288,431 1,317,961 9,396,813
453,421 235,885 1,601,858
45,653 692,254 366,866

$

62,163,693 $ 66,305,804 $

2,869,113 $

69,174,917

1,710,199 373,290

2,085,955 179,052

344,238 311,711

2,430,193 490,763

TOTAL QBE FORMULA FUNDS

$

64,247,182 $ 68,570,811 $

3,525,062 $ ===72:!'=09=5=,8=7=3

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State budget austerity reduction.

See notes to the basic financial statements.

- 35 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

RUSSELL W. HINTON
STATE AUDITOR (404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
August 2, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Coweta County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING 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 Coweta County Board of Education as of and for the year ended June 30, 2003, which collectively comprise Coweta County Board of Education's basic financial statements and have issued our report thereon dated August 2, 2004. 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.
Compliance
As part of obtaining reasonable assurance about whether Coweta 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 grants, noncompliance with which could have a direct and material effect on the determination offinancial 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 ofour tests disclosed no instances ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Coweta County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal
2003-34YB-30

control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect Coweta County Board ofEducation's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. The reportable condition is described in the accompanying Schedule ofFindings and Questioned Costs as item FS-6381-03-01.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe the reportable condition described above is not a material weakness.
This report is intended solely for the information and use of the management, members of the Coweta 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,

RWH:as 2003-34YB-30

State Auditor

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W. Suite 214 Atlanta, Georgia 30334-8400
August 2, 2004

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the Coweta 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 ofCoweta County Board ofEducation with the types ofcompliance requirements described in the US. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2003. Coweta County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is the responsibility of Coweta County Board of Education's management. Our responsibility is to express an opinion on Coweta County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A133, Audits 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 ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Coweta 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 Coweta County Board of Education's compliance with those requirements.
2003SA-30

In our opinion, the Coweta County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2003.
Internal Control Over Compliance
The management of Coweta 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 Coweta County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
We noted a certain matter involving the internal control over compliance and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over compliance that, in our judgment, could adversely affect the Coweta County Board of Education's ability to administer a major Federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. The reportable condition is described in the accompanying Schedule of Findings and Questioned Costs as item FA-6381-03-01.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level of risk that noncompliance with the applicable requirements oflaws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe the reportable condition described above is not a material weakness.
This report is intended solely for the information and use of the management, members of the Coweta 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,
lh~
RWH:as 2003SA-30

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

COWETA COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2003

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6381-02-01

Partially Resolved

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS Inadequate Separation of Duties Finding control Number: FS-6381-02-01

Due to the timing of the audit, corrective action was not possible for fiscal year 2003.

SECTION IV FINDINGS AND QUESTIONED COSTS

COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
I SUMMARY OF AUDITOR'S RESULTS
1. Type of Report Issued on the Financial Statements The auditor's opinion on the Coweta County Board of Education's financial statements was unqualified.
2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the Coweta County Board of Education disclosed a financial statement reportable condition related to the following control category.
Revenues/Receivables/Receipts
The reportable condition described above is not considered to be a material weakness.
3. Noncompliance Material to the Financial Statements The audit of the Coweta County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.
4. Reportable Conditions in Internal Control Over Major Programs The audit report for the Coweta County Board of Education disclosed a reportable condition in internal control over major programs for the following compliance requirement.
Special Tests and Provisions
The reportable condition described above is not considered to be a material weakness.
5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Coweta County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified.
6. Audit Findings Required to be Reported by Section .510(a) of 0MB Circular A-133 The Coweta County Board of Education's audit disclosed an audit finding required to be reported by section .510(a) ofOMB Circular A-133. This audit finding is included in section IV of this report.
7. Major Programs Federal awards audited as major programs are as follows: 84.0IO Elementary and Secondary Education Act - Title I - Grants to Local Educational Agencies 84.010 Elementary and Secondary Education Act - Title I - School Improvement 84.367 Elementary and Secondary Education Act - Title II - Improving Teacher Quality
8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $354,659.
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COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
I SUMMARY OF AUDITOR'S RESULTS
9. Low Risk Auditee The Coweta County Board ofEducation qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133.
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUES/RECEIVABLES/RECEIPTS Inadequate Separation of Duties Reportable Condition Finding Control Number: FS-6381-03-01
Our examination of the principals' accounts disclosed a weakness in internal control as discussed below:
Revenues/Receivables/Receipts - Deposit preparation was not separated from the record keeping and cash custody functions.
The deficiency was a result of management's decision to limit the number of administrative staff made responsible for accounting functions and failure to ensure established controls were functioning as designed. Management should implement procedures to ensure that key accounting functions of custody, record keeping and authorization are segregated. Additionally, controls should be revised and monitored to provide reasonable assurance that transactions are processed according to established procedures.
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
SPECIAL TESTS AND PROVISIONS Fiscal Requirements of School-wide Program Not Fully Implemented Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-6381-03-01
During the year in review, the School District identified seven schools that participated in a schoolwide program. Federal provisions prescribe that multiple funding sources (Federal, State or Local) are required to support a school-wide program. The Title I program, the Title II Enhancing Education Through Technology program, the Title II Improving Teacher Quality program, the Title III Immigrant Education program, the Title III Limited English Proficient program, the Title IV Safe and Drug-Free School and Communities program and the Title V Innovative Education Program Strategies program supported the school-wide program at seven of the District's schools. Although required by U.S. Department of Education and 0MB Circular A-133 Compliance Supplement
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COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2003
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
SPECIAL TESTS AND PROVISIONS Fiscal Requirements of School-wide Program Not Fully Implemented Reportable Condition U.S. Department of Education Through Georgia Department of Education Finding Control Number: FA-6381-03-01
provisions, we found that the School District had not consolidated the different Federal funds for each of those schools that participated in a school-wide program. Furthermore, we noted that the School District arbitrarily charged each Federal fund with individual school-wide expenditures rather than using a prescribed cost allocation plan to distribute school-wide program expenditures to each funding source.
In accordance with provisions ofU. S. Department of Education Instructions and 0MB Circular A133, Compliance Supplement provisions, eligible schools are able to use their Title I, Part A funds, in combination with other Federal, State and local funds, in order to upgrade the entire educational program ofthe school and to raise academic achievements for all students. By combining funds from Title I and other eligible U. S. Department ofEducation funded programs in support ofa school-wide program, U. S. Department of Education Instructions provide that specific school-wide program costs lose their identity but only in those circumstances when funds are combined in a schoolwide program. In line with 0MB Circular A-87 requirements, school-wide expenditures should be charged to those Federal funding sources supporting the school wide program in a reasonable manner. When more than one Federal program supports a school-wide program, then school-wide program expenditures may be allocated to specific Federal funds in proportion to the different Federal funds provided in support ofthe school-wide program. To distribute such costs, provisions of 0MB Circular A-87, Attachment E, F.3 state that a cost allocation plan should be developed, documented, maintained for audit. The School District personnel were unaware of these requirements and it was the School District's understanding that school-wide program expenditures lose their identity and therefore any school-wide program cost can be charged to Title I and other Federal funding programs.
The School District should implement procedures to (1) combine such funds as prescribed by U.S. Department of Education and (2) in line with 0MB Circular A-87 provisions allocate such schoolwide program costs to the respective Federal fund in a reasonable manner. The School District should seek Georgia Department of Education guidance in implementing fiscal procedures for combining and allocating school-wide program expenditures to Federal programs.
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