COWETA COUNTY BOARD OF EDUCATION NEWNAN, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS Russell W. Hinton State Auditor 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 31 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 INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS COWETA COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION V MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES SECTION I FINANCIAL Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S. W., Suite 214 Atlanta, Georgia 30334-8400 May 17, 2005 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 of the 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, 2004, 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 of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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 opm10ns. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Coweta County Board of Education, as of June 30, 2004, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. 2004ARL-1 l In accordance with Government Auditing Standards, we have also issued our report dated May 17, 2005, 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 grant agreements and other matters. The purpose ofthat report is to describe the scope ofour testing of internal control over financial reporting and compliance and the results ofthat testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through 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-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code of Georgia Annotated section 506-24. Respectfully submitted, RWH:as 2004ARL-11 sell W. Hinton State Auditor COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 The discussion and analysis ofCoweta County Board of Education's financial performance provides an overall review of the Board's financial activities for the fiscal year ended June 30, 2004. 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 2004 are as follows: In total, net assets increased $8.9 million which represents a 6.0% increase from 2003. This total increase was due to governmental activities since the Board has no business-type activities. General revenues accounted for $72.3 million in revenue or 46.6% of all revenues. Program specific revenues in the form of charges for services and sales, grants and contributions accounted for $82.8 million or 53.4% of total revenues of $155.1 million. The Board had $146.3 million in expenses related to governmental activities; only $82.8 million ofthese expenses were offset by program specific charges for services, grants or contributions. General revenues (primarily taxes) of $72.3 million were adequate to provide for these programs. Among major funds, the general fund has $140.0 million in revenues, $141.6 million in expenditures and $0.4 in other financing uses. The general fund's fund balance decreased to $10.8 million from $12.8 million. Due to the financial condition of the State of Georgia, the State again reduced the Board's funding. The current reduction is $3.3 million which follows a $1.6 million reduction for 2003. The Board has already been informed that the reduction will be $3.9 million for 2005. 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. - 1- COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Reporting the Board as a Whole Statement ofNet Assets and the Statement ofActivities While this document contains the large number of funds 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 2004?" 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 governmental funds is reconciled in the financial statements. - 11 - COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 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 2004 compared to fiscal year 2003. Table 1 Net Assets (in Thousands) Governmental Activities Fiscal Fiscal Year 2004 Year 2003 Assets Current and Other Assets Capital Assets, Net $ 75,931 163,577 $ 83,957 147,243 Total Assets $ 239,508 $ 231,200 Liabilities Current and Other Liabilities Long-Term Liabilities $ 18,470 63,693 $ 16,473 66,252 Total Liabilities $ 82,163 $ 82,725 Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted $ 111,451 30,778 15,116 $ 105,496 24,706 18,273 Total Net Assets $ 157,345 $ 148,475 Total net assets increased $8.9 million in fiscal year 2004. Table 2 shows the changes in net assets for fiscal year 2004 compared to the changes in net assets for fiscal year 2003. - l1l - COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 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 Services 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 2004 Year 2003 $ 5,808 76,619 403 $ 82,830 $ 5,556 79,221 953 $ 85,730 $ 50,015 9 14,960 2,792 2,036 680 1,801 $ 72,293 $ 155,123 $ 95,323 3,381 2,764 2,537 1,016 9,360 1,187 11,780 6,221 1,424 931 690 1,148 6,109 2,382 $ 146,253 $ 8,870 $ 46,688 360 40 13,943 2,912 406 3,912 918 322 $ 69,501 $ 155,231 $ 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 - IV - COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Governmental Activities Governmental program expenses are comprised of the following: Instruction 65.2%, Support Service 27.7%, Operations ofNoninstructional Services 5.5% and Interest on Short-Term and LongTerm Debt 1.6%. 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 ofservices comparing fiscal year 2004 with fiscal year 2003. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements. Table3 Governmental Activities (in Thousands) Total Cost of Services Fiscal Fiscal Year 2004 Year 2003 Net Cost of Services Fiscal Fiscal Year2004 Year 2003 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 $ 95,323 $ 94,151 $ 36,363 $ 32,022 3,381 2,764 2,537 1,016 9,360 1,187 11,780 6,221 1,424 931 3,119 2,738 2,668 792 10,219 1,164 10,976 6,119 2,692 835 2,411 1,635 962 -942 6,257 1,187 7,214 3,710 1,424 626 2,223 1,463 996 -1,000 7,014 1,156 6,246 3,524 2,692 596 690 1,148 6,109 2,382 638 1,108 5,878 2,889 135 25 34 2,382 233 91 111 2,889 Total Expenses $ 146.253 $ 145.986 $ 63,423 $ 60,256 Although program revenues make up a majority of the revenues, the Board is still dependent upon tax revenues for governmental activities. Taxes and other general revenues support 38.1 % of instructional activities; for all governmental activities general revenue support is 43.4%. -v- COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 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 $158.4 million and expenditures and other financing uses of$168.0 million. There was a decrease of $17.3 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 $1.9 million and debt service funds had an increase of $9.6 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 2004, 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 $142.2 million exceeded the original budgeted amount of$135.5 million by $6.7 million. This difference was due to an increase in miscellaneous revenues of$6.0 million and an increase in Federal revenues of$0.7 million. The miscellaneous revenues budgeted increased due to the inclusion of the principals' accounts in our financial statements and the Federal revenues increased due to an increase in the Federal grants. The actual revenues and other financing sources of $141.2 million fell short of the budgeted amount by $1.0 million. The final budgeted expenditures and other financing uses of $147.7 million exceeded the original budgeted amount of $141.0 million by $6.7 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 $0.7 million with minor adjustments in other expenditures making up the remainder. The actual expenditures and other financing uses of$143.2 million was $4.5 million less than budgeted. This difference is primarily due to system-wide cutbacks made by the Board corresponding with reductions in State funding. General Fund expenditures and other financing uses exceeded revenues and other financing sources by $1.9 million. State funds were reduced by $3 .3 million due to the financial condition ofthe State of Georgia. - Vl - COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Capital Assets and Debt Administration Capital Assets At the end offiscal 2004 the Board had $163 .6 million invested in capital assets, all in governmental activities. Table 4 shows fiscal year 2004 balances compared with fiscal year 2003 balances. Table 4 Capital Assets at June 30 (Net of Depreciation, in Thousands) Governmental Activities Fiscal Fiscal Year 2004 Year 2003 Land Construction in Progress Buildings and Building Improvements Equipment Land Improvements $ 6,224 11,551 128,913 10,986 5,903 $ 6,224 4,054 122,203 9,791 4 971 Total $ 163,577 $ 147,243 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, 2004 the Board had $61.2 million in bonds outstanding with $10.2 million due within one year and $1.3 million in capital leases outstanding with $0.5 million due within one year. Table 5 summarizes general operations bonds, capital leases, compensated absences outstanding and unamortized bond premium. During the year, the capital leases increased due to additions in transportation and technology. Table 5 shows fiscal year 2004 balances compared with fiscal year 2003 balances. -vu - COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Table 5 Debt at June 30 (in Thousands) Governmental Activities Fiscal Fiscal Year 2004 Year 2003 General Obligation Bonds Capital Leases Compensated Absences Unamortized Bond Premium $ 61,235 1,265 482 711 $ 64,350 630 310 962 Total $ 63!693 $ 66!252 At June 30, 2004, the Board's overall legal bonding authority was $277,546,145. The Board maintains an AA3 bond rating. Current Issues Coweta County's economy reflected an upturn in state and national economic growth by mid-2004. The county continued to show high rates of residential growth and increases in retail development, which shows some promise of growth in the tax digest. Additionally, some significant interest in industrial development in the county - while not yet realized - has been shown by investors. Significant new industrial development or existing industrial expansion has not occurred within the past year; however, 53% of Coweta County's active workforce was employed outside ofthe county in 2001, a figure that has risen from 46% 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 of large employers within Fulton, Fayette and Clayton counties). The unemployment rate in Coweta County declined to 3.8% in June, 2004, down from 5.2% in June, 2003, and 5.3% the year earlier. The 2004 unemployment statistics for Coweta County are slightly better than the average in the Metropolitan Atlanta Statistical area (4.6%) and the five-county West Georgia RDC area (5.2%), and the state of Georgia as a whole (5.1 %). While some industrial employers, such as the Newnan Excel Corporation and Yamaha Motor Manufacturing, have continued to expand or hold firm on employment, others trends - such as the closure ofthe K-Mart Distribution Center in Newnan - have resulted in job losses. The Coweta Development Authority has reported an increase in industrial development inquires to their office. Though there has currently been little industrial job creation as a result, the potential for significant job creation exists in existing industry expansion as the economy improves, and in the interest of the Patillo Construction Company of Stone Mountain, Georgia, to develop a 800-plus acre industrial park - Vlll - COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 southwest oflnterstate-85 exit 41 in Coweta County, pending negotiation of sewer services with Coweta County and the City ofNewnan. Retail investment during the coming year looks promising, as Coweta County continues to develop as a regional retail destination, particularly in the Newnan Crossing area surrounding Interstate 85 exit 47 in Coweta County which is being developed rapidly by investor Stan Thomas. Sales tax revenues grew by 5.44% over the prior year (fiscal year 2003 to fiscal year 2004). That increase is promising given that sales tax collection growth rates as high as 10% in the late 1990's had fallen as low as 1.91 % for fiscal year 2002 and 0.72% for fiscal year 2003. The school system's M&O tax digest for 2004 increased by 3.43%, slightly less than the increase of 4.79% in fiscal year 2003. The U. S. Census estimates Coweta County's current population at 105,376, up almost 4,000 residents from the estimate of 101,395 in June, 2003, which in turn had increased by more than 4,000 from June, 2002. School enrollment increased by about 800 students to approximately 18,800 at the end of 2002, and the school system's enrollment growth is expected to increase again in the coming year. New housing starts continue to remain high, particularly in the eastern corridor of the city of Newnan, following a trend of new housing into the City of Newnan after the Coweta County Commission doubled the minimum lot size for homes in 1997. Development and population growth has similarly accelerated in smaller cities such as Grantville and Senoia, and the county's overall growth rates have remained as high as they have been since the early 1990's. Though higher sales tax revenue growth and the prospect for future tax digest growth is a positive development, there are serious short or mid-term revenue concerns for the Coweta County School System. First, population growth continues to outstrip tax digest growth and, second, state revenue austerity cuts have continued for a third year, with a recently-announced cut for fiscal year 2005 almost $600,000 higher than that of fiscal year 2004. Contacting the Board's Financial Management This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the 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 ofEducation, 237 Jackson Street, Newnan, Georgia 30263. You may also email your questions to keith.chapman@cowetaschools.net. - lX - COWETA COUNTY BOARD OF EDUCATION COWETA COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30. 2004 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 EXHIBIT"A" GOVERNMENTAL ACTIVITIES $ 4,533,442 54,778,452 5,945,894 8,985,842 1,505,278 10 182,475 6,223,819 11,550,449 8,036,723 151,191,196 16,124,065 -29,549,403 $ ===23=9=!:,5=0=8=,2=42= $ 3,524,935 12,352,967 1,893,530 688,007 10,601 11,443,410 52,249,208 $ 82,162,658 $ 111,450,696 799,729 29,403,422 576,067 15 115 670 $ 157 345 584 $ ===23=9=,5=0=8=,2=42= The notes to the basic financial statements are an integral part of this statement. -3- COWETA COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2004 GOVERNMENTAL ACTIVITIES Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt Total Governmental Activities General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Sales Taxes Special Purpose Local Option Sales Tax For Debt Services Intangible Recording Tax 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 $ 95,322,565 $ 3,381,912 2,763,848 2,536,728 1,015,712 9,360,157 1,186,945 11,780,496 6,220,756 1,424,064 931,464 689,934 1,147,ggo 6,108,684 2,382,152 $ 146,253,407 $ 1,384,800 554,611 1,122,878 2,745,568 5 807 857 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 $ 57,574,602 971,045 1,129,184 1,575,207 1,957,729 3,103,304 4,566,576 2,107,215 $ 305,275 3,328,828 $ 76,618,965 $ $ 403,447 403 447 $ -36,363, 163 -2,410,867 -1,634,664 -961,521 942,017 -6,256,853 -1,186,945 -7,213,920 -3,710,094 -1,424,064 -626,189 -135,323 -25, 112 -34,288 -2,382,152 -63,423, 138 $ 50,015,208 8,904 14,960,371 2,791,985 2,036,425 680,172 1,800,101 $ 72,293,166 $ 8,870,028 148,475,556 $ ===1=57=,3=4=5=,5=84= -5- COWETA COUNTY BOARD OF EDUCATION BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30. 2004 EXHIBIT"C" ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Other Inventories GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 4,179,277 $ 221,104 $ 133,061 $ 4,533,442 9,959,245 18,331,621 26,487,586 54,778,452 1,854,563 8,926,448 1,505,278 10 182,475 59,394 2,701,006 4,555,569 8,985,842 1,505,278 10 182 475 Total Assets $ 26,607,296 $ 18,612,119 $ 29,321,653 $ 74,541,068 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 $ 3,395,479 $ 12,352,967 10,601 $ 15,759,047 $ 129,456 1,893,530 688,007 2,710,993 $ 3,524,935 12,352,967 1,893,530 688,007 10,601 $ 18,470,040 $ 617,254 $ 617,254 $ 29,321,653 29,321,653 182,475 182,475 $ 11,080,399 11,080,399 3,425,126 3,425,126 6,623,394 4,820,727 6,623,394 4,820,727 $ 10,848,249 $ 15,901,126 $ 29,321,653 $ 56,071,028 Total Liabilities and Fund Balances $ 26,607,296 $ 18,612,119 $ 29,321,653 $ 74 541 068 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. 2004 EXHIBIT "D" Total Fund Balances - Governmental Funds (Exhibit "C") Amounts reported for Governmental Activities in the Statement of Net Assets are different because: Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of: Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation Total Capital Assets Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures. Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: Bonds Payable Capital Leases Compensated Absences Unamortized Bond Premiums Total Long-Term Liabilities $ 56,071,028 $ 6,223,819 11,550,449 8,036,723 151,191,196 16,124,065 -29,549,403 163,576,849 1,390,325 $ -61,235,000 -1,265,242 -481,249 -711127 -63,692,618 Net Assets of Governmental Activities (Exhibit "A") $ 157,345,584 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, 2004 EXHIBIT "E" REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation Capital Outlay Debt Services Principal Interest Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES {USES) Capital Leases Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 50,268,712 2,791,985 69,501,718 9,557,119 5,807,857 163,903 $ 1,929,992 $ 140,021,286 $ $ 86,470 $ 14,960,371 266,260 250,009 50,355,182 17,752,356 69,501,718 9,557,119 5,807,857 680,172 1,929,992 266,260 $ 15,296,850 $ 155,584,396 $ 93,103,956 $ 93,103,956 3,371,500 2,753,733 2,465,079 1,045,055 9,291,872 1,112,837 $ 10,839,013 6,816,743 1,417,261 926,787 686,890 1,073,245 6,085,701 160 $ 101,949 19,048,241 23,345 3,371,500 2,753,733 2,465,079 1,045,055 9,291,872 1,136,342 10,940,962 6,816,743 1,417,261 926,787 686,890 1,073,245 6,085,701 19,048,241 567,896 25,508 3,115,000 2,607,630 3,682,896 2,633,138 $ 141,583,076 $ 19,150,350 $ 5,745,975 $ 166,479,401 $ -1,561,790 $ -18,884,090 $ 9,550,875 $ -10,895,005 $ 1,203,282 $ $ 1,569,120 -1,569,120 $ -365,838 $ 1,569,120 $ $ -1,927,628 $ -17,314,970 $ 9,550,875 $ 12,775,877 33,216,096 19,770,778 1,203,282 1,569,120 -1,569,120 1,203,282 -9,691,723 65,762,751 $ 10,848,249 $ 15,901,126 $ 29,321,653 $ 56,071,028 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. 2004 EXHIBIT"F" Total Net Change in Fund Balances - Governmental Funds (Exhibit "E") $ Amounts reported for Governmental Activities in the Statement of Activities are different because: Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are: Capital Outlay Depreciation Expense Excess of Capital Outlay over Depreciation Expense $ 19,863,645 -3,321,944 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. Some of the Capital Assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets, the lease obligation is reported as a Long-Term Liability. Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of: Amortized Bond Premium Bond Principal Retirements Capital Lease Payments Total Long-Term Debt Repayments $ 250,986 3,115,000 567,896 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 -9,691,723 16,541,701 -331,070 -207,983 -1,203,282 3,933,882 -171 497 Change in Net Assets of Governmental Activities (Exhibit "B") $ ==8,=87=0=-=,0=2=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, 2004 ASSETS Cash and Cash Equivalents Investments Certificate of Deposit Total Assets LIABILITIES Funds Held for Others EXHIBIT"G" AGENCY FUNDS $ 381,739 46,639 $ ==4=28='=37=8= $ ==4=28='=37=8= 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, 2004 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 of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting 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, 2004 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund. District-wide Capital Projects Fund accounts for financial resources including Bond Proceeds 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 of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis 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, 2004 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. CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia. - 13 - COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 of Commissioners fixed the property tax levy for the 2003 tax digest year (calendar year) on September 30, 2003 (levy date). Taxes were due on December 19, 2003 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2003 tax digest are reported as revenue in the governmental funds for fiscal year 2004. The Coweta County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.5% of taxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2004, for maintenance and operations amounted to $50,268,712 and for school bonds amounted to $86,470. The tax millage rate levied for the 2003 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 18.61 mills SALES TAXES Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $14,960,371 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. INVENTORIES FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. - 14 - COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT"H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CAPITAL ASSETS Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows: Capitalization Policy Estimated Useful Life Land Land Improvements Buildings and Improvements Equipment 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 of Net Assets. Note 3: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than - 15 - COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 3: DEPOSITS AND INVESTMENTS 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, 2004, the bank balances were $12,150,424. 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, 2004 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, 2004, as follows: Risk Category Bank Balance 1 $ 1,031,016 2 0 3 11,119,408 Total $ 12,150.424 CATEGORIZATION OF INVESTMENTS At June 30, 2004, the carrying value of the School District's total investments was $54,778,452 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 weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed at the pool's share price, $1.00 per share. Pooled cash and cash equivalents and investments are reported at cost. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds 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, 2004 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, 2004, was 24 days. The average investment duration for Fund 6 on June 30, 2004, was 0.22 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, 2003 Increases Decreases Balances June 30, 2004 Governmental Activities Capital Assets, Not Being Depreciated: Land Construction in Progress $ 6,223,819 $ 6,223,819 4,054,033 $ 17,958,361 $ 10,461,945 11,550,449 Total Capital Assets Not Being Depreciated $ 10,277,852 $ 17,958,361 $ 10,461,945 $ 17,774,268 Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements $ 142,050,059 $ 14,685,205 6,862,139 9,141,137 2,051,508 $ 1,174,584 $ 151, 191, 196 612,648 16,124,065 8,036,723 Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements 19,846,910 4,893,891 1,891,323 2,430,898 649,060 241,986 404,665 22,277,808 5,138,286 2,133,309 Total Capital Assets, Being Depreciated, Net $ 136,965,279 $ 9,045,285 $ 207,983 $ 145,802,581 Governmental Activity Capital Assets - Net $ 147,243.131 $ 27,003.646 $ 10,669,928 $ I63,576,849 Capital assets being acquired under capital leases as of June 30, 2004, are as follows: - 18 - COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 5: CAPITAL ASSETS Governmental Funds Equipment Less: Accumulated Depreciation $ 1,195,632 -23,913 $ 1,171,719 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 Central Support Services Enterprise Operations Community Services Food Services $ 1,795,687 $ 4,523 90,802 8,058 30,934 27,703 704,163 474,373 1,454 2,454 60,255 1,404,719 121,538 $ 3,321.944 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, 2004, were as follows: - 19 - COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 6: RESTRICTED ASSETS District-wide Capital Projects Bond Proceeds Debt Service Funds Restricted Cash and Cash Equivalents: Debt Services Restricted Investments: Debt Services Capital Acquisitions $ 133,061 $ 26,487,586 $ 13,206,433 Note 7: INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2004, consisted of the following: Transfer to Transfers From General Fund District-wide Capital Projects $ 1,569.120 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 and errors or omissions. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the 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 these risks in the past three years. - 20 - COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 8: RISK MANAGEMENT The School District has established a limited risk management program for workers' compensation claims. In connection with this program, a self-insurance reserve has been established within the General Fund by the School District. 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: Beginning of Year Liability Claims and Changes in Estimates Claims Paid End ofYear Liability 2003 2004 $ 0 $ 452,348 $ 452,348 $ 0 $ 0 $ 497,120 $ 497,120 $ 0 The School District is self-insured with regard to unemployment compensation claims. In connection with this program, a self-insurance reserve has been established within the General Fund by the School District. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: Beginning of Year Liability Claims and Changes in Estimates Claims Paid End ofYear Liability 2003 2004 $ 0 $ 19 I 01 $ 19 I 01 $ 0 $ 0 $ 41,002 $ 41,002 $ 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 - 21 - COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 9: SHORT-TERM DEBT The School District obtains temporary loans in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred. Short-term debt activity for the fiscal year is as follows: Beginning Balance Issued Redeemed Ending Balance Temporary Loans $=====0 $ 8,000.000 $ 8,000.000 $===0 Note 10: LONG-TERM DEBT CAPITAL LEASES The Coweta County Board of Education has entered into various lease agreements as lessee for buses and equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception. COMPENSATED ABSENCES Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences. GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: Purpose Interest Rates Amount General Government - Series 1998 General Government - Refunding - Series 2002 General Government - Refunding - Series 2002 3.95% - 4.85% 3.25%- 5.00% 1.80% - 4.00% $ 16,440,000 30,000,000 14,795,000 $ 61,235.000 The changes in Long-Term Debt during the fiscal year ended June 30, 2004, were as follows: - 22 - COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 10: LONG-TERM DEBT Capital Leases Governmental Funds General Compensated Obligation Absences Bonds Unamortized Bond Premium Total Balance July I, 2003 $ 629,856 $ 309,752 $ 64,350,000 $ 962,113 $ 66,251,721 Additions Capital Leases Annual Leave Earned 1,203,282 466,385 1,203,282 466,385 Deductions Annual Leave Utilized Debt Retired Bond Premiums Amortized 567,896 294,888 3,115,000 250,986 294,888 3,682,896 250,986 Balance June 30, 2004 $ 1265242 $ 481.249 $ 61,235,000 $ 711 127 $ 63 692 618 Portion of Long-Term Debt Due within One Year $ 541 175 $ 481,249 $ 10,170,000 $ 250,986 $ 11,443,410 At June 30, 2004, payments due by fiscal year which includes principal and interest for these items are as follows: Fiscal Year Ended June 30 2005 2006 2007 Total Principal and Interest Fiscal Year Ended June 30 2005 2006 2007 2008 2009 2010 - 2013 Total Principal and Interest Cagital Leases Princigal Interest $ 541,175 $ 558,008 166,059 40,973 24,140 6 764 $ 1,265.242 $ 71 877 General Obligation Debt Princigal Interest Unamortized Bond Premium $ 10,170,000 $ 9,780,000 10,395,000 13,005,000 3,655,000 14,230,000 2,363,679 $ 1,994,339 1,597,720 1,095,908 738,748 1,292,226 250,986 250,986 209,155 $ 61.235.000 $ 9,082,620 $ 711.127 - 23 - COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2004 EXHIBIT "H" Note 11: PRIOR YEAR DEFEASEMENT OF DEBT In fiscal years 1998 and 2003, 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, 2004, $30,030,000 of bonds are outstanding and are considered defeased. Note 12: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $1,227,633 for health insurance paid on the School District's behalf by the following State Agency. Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $1,227,633 Note 13: SIGNIFICANT COMMITMENTS The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2004, together with funding available: Project 0SG-638-005 Amco-Sargent Elementary School Cafeteria East Coweta Middle School Gym Northgate High School Gym Unearned Executed Contracts $ 551,433 820,461 277,919 1,973,371 $ 3,623.184 Funding Available From State $ 2,638,789 $ 2,638,789 The amounts described in this note are not reflected in the basic financial statements. Note 14: 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, 2004 EXHIBIT"H" 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 2004 2003 2002 100% 100% 100% $ 7,499,882 $ 7,024,615 $ 6,366,553 - 25 - COWETA COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30. 2004 SCHEDULE "1" REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation 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(1) ACTUAL AMOUNTS $ 48.121.049 $ 48,121.049 $ 50,268,712 1,800,000 1,800,000 2,791,985 70,367,557 70,367,557 69,501,718 10,195.357 10,866.357 9,557,119 4,233,033 4,233,033 5,807,857 140,000 140,000 163,903 481 260 6 481 260 1929992 $ 135 338 256 $ 142,009,256 $ 140 021,286 $ 92,291.320 $ 96,791.320 $ 93,103,956 3,961,555 3,263,207 2,461,852 893,339 9,645,157 1,169,612 10,803,115 5,525,361 1,409,892 353,372 1,539,033 5,926,290 3,961,555 3,263,207 2,461,852 893,339 9,645,157 1,169,612 10,803,115 5,525,361 1,409,892 353,372 1,500,000 1,539,033 5,926,290 3,371,500 2,753,733 2,465,079 1,045,055 9,291,872 1,112,837 10,839,013 6,816,743 1,417,261 926,787 686,890 1,073,245 6,085,701 593 404 $ 139 243 105 $ 145 243 105 $ 141583076 $ -3 904 849 $ -3 233 849 $ -1 561 790 $ 170,000 $ 170,000 $ 1,203,282 -1 767 970 -2 438 970 -1 569 120 $ -1 597 970 $ -2 268 970 $ -365 838 $ -5,502,819 $ -5,502,819 $ -1,927,628 13 431 965 13431 965 12 775 877 Fund Balances - Ending $ 7 929 146 $ 7 929 146 $ 10 848 249 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. The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 27 - COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 2004 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program Total Child Nutrition Cluster Other Programs Pass-Through From Georgia Department of Education Food Donation (1) Total U.S. Department of Agriculture Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants Total Special Education Cluster Other Programs Pass-Through From Georgia Department of Education Comprehensive School Reform Demonstration English Language Acquisition Grants Enhancing Education Through Technology Program Improving Teacher Quality State Grants Safe and Drug-Free Schools and Communities State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States Total U.S. Department of Education 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 Total Federal Financial Assistance N/A = Not Available CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD * 10.553 * 10.555 NIA N/A $ $ (2) 5,287,406 5,287,406 10.550 N/A $ 389,201 5,676,607 84.027 84.173 N/A $ N/A $ 2,505,396 143,464 2,648,860 84.332 84.365 84.318 84.367 84.186 84.298 84.010 84.048 N/A N/A N/A N/A N/A N/A N/A N/A $ 66,150 22,249 67,774 668,437 117,860 92,585 2,718,144 123,221 6,525,280 $ 53,826 58,279 $ 112 105 $==1~2~,3~13~,9~9~2 - 28 - COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30. 2004 SCHEDULE "2" Notes to the Schedule of Expenditures of Federal Awards (1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year. (2) Expenditures for the funds earned on the School Breakfast Program ($500.863) were not maintained separately and are included in the 2004 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 fund financial statements. See notes to the basic financial statements. - 29 - COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30. 2004 AGENCY/FUNDING GRANTS Bright From the Start: Georgia Department of Early Care and Leaming Pre-Kindergarten Program Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Principal Supplements Education Equalization Funding Grant Food Services Vocational Education Austerity Reduction Other State Programs 4-8 Statewide After School Program Apprenticeship Program Extended Day Agriculture Extended Year Agriculture Health Insurance Limited School Choice Program Mentor Teachers National Teacher Certification Pay for Performance Preschool Handicapped Program Technology/Career Extended Day Technology/Career Industry Certification Technology/Career Industry Supervision Lottery Program Student Information System See notes to the basic financial statements. - 31 - SCHEDULE "3" GOVERNMENTAL FUND TYPE GENERAL FUND $ 1,874,343 4,857,807 385,485 10,079,629 1,531,528 5,050,906 1,065,502 9,153,262 7,979,124 1,476,768 982,077 935,607 5,928,505 1,566,567 373,156 1,511,648 66,401 692,878 284,820 1,483,251 459,404 321,821 1,569,666 2,969,527 4,564,169 1,699,970 403,447 345,865 70,396 808,884 409,094 1,250 -3,569,974 108,158 50,000 5,268 2,218 1,227,633 223,911 17,150 66,692 65,930 232,882 40,443 15,000 63,053 50 597 $ 69 501 718 COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30. 2004 SCHEDULE "4" PROJECT ORIGINAL ESTIMATED COST(1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3) (4) (5) AMOUNT EXPENDED IN PRIOR YEARS (3) (4) PROJECT STATUS Construction of improvements. renovations, modifications, additions and equipment $ 67,705,750 $ 80,004,293 $ 4,688,059 $ 75,316,234 Completed 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 4,445,630 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, Arnco-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 13 061 367 4 599 277 Ongoing $ 165,689,011 $ 177 987 554 $ 22,195,056 $ 79 915 511 - 32- COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30 2004 SCHEDULE "4" (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 and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. (4) In addition to the expenditures shown above, the School District has incurred interest to provide advance funding for the above projects as follows: Prior Years $ 957,750 Current Year 1,277,000 Total $ 2,234,750 (5) The Series 1993 Bonds were retired through the sale of Series 2002 Refunding Bond Issue. The School District will utilize the SPLOST proceeds budgeted for this project, 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, 2004 SCHEDULE "5" DESCRIPTION Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle 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) 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 $ 5,824,234 $ 5,861,000 $ 194,322 $ 6,055,322 479,820 308,729 1,937 310,666 12,261,092 13,578,483 581,164 14,159,647 1,829,851 1,330,486 4,146 1,334,632 6,125,026 7,634,983 434,824 8,069,807 1,273,435 11,055,509 9,650,914 1,780,621 11,842,609 1,772,779 78,968 836,593 333,835 910,773 11,145,055 12,430,770 2,146,520 280,004 1,324,059 9,566,252 337,852 255,074 2,302,631 21,423 761,990 444 640 3,749 920,675 342,607 92,607 12,795 33,876 160,422 18,519 957 19,476 180 16147 914,522 12,065,730 12,773,377 2,239,127 292,799 1,357,935 9,726,674 356,371 256,031 2,322,107 21,603 761,990 460 787 $ 65,145,286 $ 70,640,724 $ 2,838,403 $ 73,479,127 1,788,232 389,018 2,153,730 289,169 157,485 164,604 2,311,215 453,773 TOTAL QBE FORMULA FUNDS $ 67,322,536 $ 73,083,623 $ 3, 160,492 $ ===,i,7~6;;,24,;,,4;,.,,1;,,;1~5 (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 May 17, 2005 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 INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Coweta County Board of Education as of and for the year ended June 30, 2004, which collectively comprise Coweta County Board of Education's basic financial statements and have issued our report thereon dated May 17, 2005. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered 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 an opinion on the internal 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-6381-04-01. 2004YB-30 A material weakness is a reportable condition in which the design or operation ofone or more ofthe internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe the reportable condition described above is not a material weakness. Compliance and Other Matters 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 grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the management and members of the Coweta County Board ofEducation and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, lA~ RWH:as 2004YB-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 May 17, 2005 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 of Coweta 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, 2004. 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 of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the 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. 2004SA-10 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 ofits major Federal programs for the year ended June 30, 2004. 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. Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level ofrisk that noncompliance with applicable requirements oflaws, regulations, contracts and grants caused by error or fraud that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. 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, '::;>~~-~. ~):sell W. Hinton State Auditor RWH:as 2004SA-10 SECTION Ill 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, 2004 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-6381-02-01 FS-6381-03-01 Further Action Not Warranted Partially Resolved - See Corrective Action/Responses CORRECTIVE ACTION/RESPONSES REVENUES/RECEIVABLES/RECEIPTS Inadequate Separation of Duties Finding Control Number: FS-6381-03-01 Due to the limited number ofadministrative staff, the segregation ofduties will continue to be an issue in the individual schools; however, compensating controls have been put into place and will be implemented in fiscal year 2005. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS F A-6381-03-01 Unresolved - See Corrective Action/Reponses CORRECTIVE ACTION/RESPONSES SPECIAL TESTS AND PROVISIONS Fiscal Requirements of School-wide Program Not Fully Implemented Finding Control Number: FA-6381-03-01 The Coweta County Board of Education has put procedures in place where other Federal programs are pooled together to support the Title I School-wide program for the fiscal year 2005. Auditor's Note: The School District has implemented changes to resolve this finding in fiscal year 2005 and this finding will be shown as resolved in the fiscal year 2005 audit report. SECTION IV FINDINGS AND QUESTIONED COSTS COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Coweta County Board ofEducation'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 ofEducation disclosed a financial statement reportable condition related to the following control categories. Expenditures/Liabilities/Disbursements 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 did not disclose any reportable conditions in internal control over major programs. 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 ofEducation's audit did not disclose audit findings required to be reported by section .510(a) of 0MB Circular A-133. 7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $369,420. 9. Low Risk Auditee The Coweta County Board ofEducation qualified as a low risk auditee as defined by Section .530 ofOMB Circular A-133. - 1- COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Internal Control Procedures Reportable Condition Finding Control Number: FS-6381-04-01 Our examination of the principal's accounts disclosed weaknesses in internal control as discussed below: Revenues/Receivables/Receipts Deposit preparation was not separated from the record keeping function. Based on a test of 50 items, 12 were deposited to the bank account in an untimely manner. Expenditures/Liabilities/Disbursements Based on a test of 50 items, 13 had purchase orders dated after the invoice date. These deficiencies were a result ofmanagement's decision to limit the number ofadministrative staff made responsible, at the various principal account sites, for the accounting functions and their failure to ensure established controls were functioning as designed. Management should implement procedures to ensure that the key accounting functions ofcustody and record keeping 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 No matters were reported. -2- SECTIONV MANAGEMENT'S RESPONSES COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30, 2004 Finding Control Number: FS-6381-04-01 We concur with this finding. Additional guidance will be provided to the schools on proper accounting procedures Also, we will continue our attempts to implement compensating controls where possible. Contact Person: Keith Chapman, Comptroller Phone: (770) 254-2801 Fax Number: (770) 254-2807 E-mail Address: keithchapman@cowetaschools.org