COWETA COUNTY BOARD O r EDUCATION ' ANNUAL FINANCIAL REPORT NEWNAN, GEORGIA ;FORTHE FIBCAL YEAR HNIDED JUNN SO, 9010 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 B STATEMENT OF ACTlVlTlES FUND FINANCIAL STATEMENTS C BALANCE SHEET GOVERNMENTAL FUNDS D RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS E STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS F RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES G STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS H NOTES TO THE BASIC FINANCIAL STATEMENTS SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION 1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND COWETA COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAlTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WlTH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133 SECTION Ill AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL Russell W. Hinton STATE AUDITOR (404) 6563174 DEPARTMENOTF AUDITSAND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 3 0 . 2 0 1 1 Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the 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, 2010, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Coweta County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Coweta County Board of Education, as of June 30, 2010, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with GovernmentAuditng Standards, we have also issued our report dated March 30, 2011, on our consideration of the Coweta County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessingthe results of our audit. Accounting principles generally accepted in the United States of America require that the Management's Discussionand Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through ix and page 25 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures, to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during the audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Coweta County Board of Education's financial statements as a whole. The accompanying supplementary information consists of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, L m l Governments, and Non-Profit Organkations, are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. Respectfully submitted, Russell W. Hinton, CPA, CGFM State Auditor COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010 The discussion and analysis of Coweta County Board of Education's financial performance provides an overall review of the Board's financial activities for the fiscal year ended June 30, 2010. 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 understandingof the Board's financial performance. Financial Highlights Key financial highlights for 2010 are as follows: R In total, net assets increased $20.9 million which represents a 7.7 percent increase from 2009. This total increase was due to governmental activities since the Board has no business-type activities. 0 General revenues accounted for $102.6 million in revenue or 47.6 percent of all revenues. Program specific revenues in the form of charges for services and sales, grants and contributions accounted for $112.9 million or 52.4 percent of total revenues of $215.5 million. O The Board had $194.6 million in expenses related to governmental activities; only $112.9 million of these expenses were offset by program specific charges for services, grants or contributions. General revenues (primarily taxes) of $102.6 million were adequate to provide for these programs. Among major funds, the general fund had $192.3 million in revenues, $187.1 million in expenditures and $ 1 million in other financing uses. The general fund's fund balance increased to $25.6 million from $21.4 million. Due to the financial condition of the State of Georgia, the State again reduced the Board's funding. The current reduction is $19.1 million which follows a $7.0 million reduction for 2009, a $1.8 million reduction for 2008, $2.1 million reduction for 2007, a $3.9 million reduction for 2006, a $3.9 million reduction for 2005, a $3.3 million reduction for 2004, and a $1.6 million reduction for 2003. The reduction will be $14.4 million for 2011. Usingthe 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 of Net Assets and Statement of Adivities provide information about the activities of the whole Board, presenting both an aggregate view of the 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 of the Coweta County Board of Education, the general fund is by far the most significant fund. COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010 Reporting the Board as a Whole Statement o f NetAssets and the Statemento fActivities 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 2010?" The Statement of Net Assets and the Statement of Activities answers this question. These statements include all assets and IiabiIiOesusing the accrual basis o f accounting 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 netasseband changes in those assets. This change in net assets is important because it tells the reader that, for the Board as a whole, the financialposition of the Board has improved or diminished. The causes of this change may be the result of manyfactors, 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: O Governmental Activities - All of the 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 FundFinancialSstatements 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. Governmenfa/ Funds Most of the Board's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using an accounting method called modifed accrualaccounting, which measures cash and all other financialassetsthat can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the 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 of Net Assets and the Statement of Activities) and governmental funds is reconciled in the financial statements. Fiduciary Funds The board is the trustee, or fiduciay, 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. COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010 The Board as a Whole 0 The perspective of the statement of net assets is of the Board as a whole. Table 1provides a summary of the Board's net assets for fiscal year 2010 compared to fiscal year 2009. Table 1 Net Assets (In Thousands) Governmental Activities Fiscal Fiscal Year 2 0 1 0 Year 2 0 0 9 Assets Current and Other Assets Capital Assets, Net Total Assets Liabilities Current and Other Liabilities Long-Term Liabilities Total Liabilities Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Net Assets Total net assets increased $20.9 million in fiscal year 2010. Table 2 shows the changes in net assets for fiscal year 2010 compared to the changes in net assets for fiscal year 2009. COWETA COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010 Table 2 Change in Net Assets (In Thousands) Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contribut~ons Caoital Grants and Contributions Total Program Revenues General Revenues: Taxes Property Taxes For Maintenance and Operations For Debt Services Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Debt Services For Capltal Projects Intangible RecordingTax Real Estate Grants and Contributions not Restricted to Specif~cPrograms Investment Earnings Miscellaneous Total General Revenues Special Items: Loss on Sale of Capital Assets Total Revenues and Speclal Items Program Expenses: Instruction Support Services Pupil Services Improvement of Instructional Servlces Educational Media Services General Administration School Administration Business Admin lstratlon Maintenance and Operation of Plant Student Transportation Servlces Central Support Servlces Other Support Servlces Operat~onsof Non-InstructionalServices Enterprise Operations Communlty Services Food Services Interest on Short-Termand Long-TermDebt Total Expenses Increase In Net Assets Governmental Activities Fiscal Year Fiscal Year 2010 2009 COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCALYEAR ENDED JUNE 30,2010 GovernmentalActivities Governmental program expenses are comprised of the following: Instruction 63.2 percent, Support Services 30.1 percent, Operations of Non-Instructional Services 5.8 percent and lnterest on ShortTerm and Long-Term Debt 0.9 percent. lnterest expense was attributable to capital leases 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 of services and the net cost of services comparing fiscal year 2010 with fiscal year 2009. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements. Table 3 Governmental Activities (In Thousands) Total Cost of Services Fiscal Fiscal Year 2010 Year 2009 Net Cost of Services Fiscal Fiscal Year 2010 Year 2009 lnstruction Support Services: Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenanceof Operation of Plant Student Transportation Services Central Support Servlces Other Support Servlces Operations of Non-InstructionalServices: Enterprise Operations Community Services Food Services lnterest on Short-Term and Long-Term Debt Total Expenses 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 35.4 percent of instructional activities; for all governmental activities, general revenue support is 41.9 percent. 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 $213.1 million and expenditures and other financing uses of $205.4 million. There was an increase of $3.6 million in the capital projects fund due to the spending restrictions implemented by the administration in COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010 response to declining sales tax revenues and investment earnings, and the accumulation of the sales tax proceeds for the payment of bond debt. The general fund had an increase of $4.2 million. The increase in the general fund for the year is due to the continuation of the spending restrictions implemented by the administration due to reduced state revenues and lower investment earnings. General Fund Budgeting Highlights The Board's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund. During the course of fiscal year 2010, 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 $209.8 million exceeded the original budgeted amount of $195.6 million by $14.2 million. This difference was due to an increase in miscellaneous revenues of $7.2 million, an increase in state revenues of $1.9 million (for on-behalf payments), and an increase in Federal revenues of $5.2 million. The miscellaneous revenues budgeted increased due to the inclusion of the principals' accounts in our financial statements, the state revenues increased due to the inclusion of the on-behalf payments, and the Federal revenues increased due to an increase in the Federal grants. The final budgeted revenues and other financing sources of $209.8 million exceeded the actual revenues and other financing sources by $17.5 million. The final budgeted expenditures and other financing uses of $209.9 million exceeded the original budgeted amount of $195.9 million by $14.0 million. The majority of this difference was due to an increase in instruction of $8.3 million ($1.2 million of this increase was for on-behalf payments and $5.5 million was due to the inclusion of the principals' accounts) and an increase in enterprise activities of $1.5 million due to the inclusion of the principals' accounts in our financial statements. The original budgeted ending fund balance increased $0.3 million. The actual expenditures and other financing uses of $188.1 million was $21.8 million less than budgeted. General Fund revenues and other financing sources exceeded expenditures and other financing uses by $4.2 million. Capital Assets and Debt Administration Capital Asseb At the end of fiscal year 2010 the Board had $239.1 million invested in capital assets, all in governmental activities. Table 4 shows fiscal year 2010 balances compared with fiscal year 2009 balances. COWETA COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010 Table 4 Capital Assets (Net of Depreciation, in Thousands) Governmental Activities Fiscal Fiscal Year 2010 Year 2009 Land $ Construction In Progress Buildings and Building Improvements Equipment Land Improvements 9,848 $ 198,459 13,942 16,902 9,139 16,961 188,960 14,079 13,371 Total The primary increases occurred in buildings and building improvements due to the construction program associated with the bonds issued in fiscal year 2006. Debt At June 30, 2010, the Board had $37.0 million in bonds outstanding with $11.9 million due within one year. Table 5 summarizes general operations bonds, capital leases, compensated absences outstanding and unamortized bond premium. Table 5 shows fiscal year 2010 balances compared with fiscal year 2009 balances. Table 5 Debt at June 30 (in Thousands) GovernmentaI Activities Fiscal Fiscal Year 2010 Year 2009 General Obligation Bonds $ Capital Leases Compensated Absences Unamortized Bond Premium Total 37,000 $ 1,095 1,175 48,750 901 1,119 1,630 At June 30, 2010, the Board's overall legal bonding authority was $406,019,575. The Board maintains a Moody's bond rating of Aa2 and a Standard and Poor's bond rating of AA+. COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30.2010 Current Issues Coweta County's population growth and retail and residential development continued to remain stagnant in 2009 and into the middle of 2010. Trends in school system enrollment and in the local tax digest growth clearly showed that Coweta County continued to be affected by a turn-down in the national economy in the form of slower growth rates. U. S. Census estimates placed Coweta County's population at 127,111 in June, 2009, up from 122,924 in June, 2008 and 118,936 in June, 2007. The 2010 Census would place Coweta's total population at 129,842. This represents a 45% increase from the 2000 Census count of 89,215 residents, and a 2% increase in estimated population from the year before. The county's population was projected to grow to approximately 150,000 residents by 2015, assuming the same growth trends. The average rate of enrollment for the school system in the period 2001-2006 was approximately 4.6%. In fact, the school system had averaged 4% or higher average annual enrollment growth for any 5-year period since 1991, and enrollment increases of 500 to 1,200 students each year were consistently experienced by Coweta County Schools. Enrollment grew from 20,500 students to 21,354 students from spring to fall of 2006. Enrollment grew to only 21,739 students, however, by fall of 2007 - enrollment growth of only 385 students, or 1.8%. Enrollment increased by the start of the next school year, in 2008-2009, to 22,151 (an increase of 412 students, or 1.9%), and by a similar amount the following year, to approximately 22,400 students in 2009-2010. This slowing in student enrollment matched a similar slowing in Coweta County's housing permits, tax digest growth, and unemployment figures. In 2007, some 645 housing permits valued at $160.7 million were issued in Coweta County. In 2008, only 263 housing permits valued at $74.7 million were issued in Coweta County. In the summer of 2009, fewer than 100 housing permits, valued at under $30.0 million, had been issued, promising a continuation of the trend. Unemployment figures for the county and region show a similar trend. The unemployment rate in Coweta County had declined to 4.1% in June, 2007, down from 4.6% in June, 2006 and 5.1% in June, 2005. This compared to similar rates of 5.6% (2006), 5.3% (2006) and 5.7% (2005) for Carroll County, Georgia, and 3.9% (2006) 4.6% (2006) and 4.4% (2005) for Fayette County, Georgia. Carroll and Fayette are adjacent to Coweta County, and are similar to Coweta in population and labor force. By January 2009, Coweta County's unemployment rate had risen t o 8.0%, and by June 2009 it had risen again to 11.2%. By May, 2010, however, it had dropped to 9.8%. While poor in many respects, Coweta County's unemployment rate was better than all surrounding counties in the Three Rivers Development region. The job situation in the 10-county Three Rivers area held steady in May at 11.1%. Coweta also compared favorably to Georgia's unemployment rate of l o % ,which was up from 9.9% in July and 10% in August 2009. Coweta County School System Special Purpose Local Option Sales Tax revenues grew from annual collections of $17,392,619 between March 2005 and February 2006, growth of 14.3%, and sales tax collections for the same period ending in February 2007 equaled $20,319,270, or 16.83% growth. Sales tax collections over the period ending in January, 2008, however, were $20,924,083, or growth of only 3.78%, and those ending in January, 2009 actually shrank over the period to $20,745,121, or -0.86% growth. COWETA COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2010 Sales tax revenues shrank considerably in 2010, to annual collections of $19,227,087 July 1,2009 to July 2010 (a 7.29% decrease). In Coweta County, growth in the retail and services sector has slowed or stalled, despite the county's recent development as a regional retail destination, with Thomas Enterprises' development of the Ashley Park retail center and other developments. Several "big box" retailers have located at the Ashley Park shopping district in just the last year - including JC Penney, Dillard's Department Store, Barnes and Noble Booksellers and Belk's Department Store, though rates of new occupancies had slowed considerably in 2009 and 2010. One bright spot was the construction of a Sam's Club Superstore in eastern Coweta County, expected to open in the winter of 2011. Despite a slowdown in housing construction and retail construction, the county continued to see some significant new industrial development including construction of the new Piedmont Newnan Hospital to the east of Newnan - a $180.0 million project - and pending development of the Cancer Treatment Center of America's southeastern location, at Ashley Park in Newnan (an estimated $125.0 million project, expected to begin early in 2011). Future promising trends include the pending completion of construction of a Kia automobile manufacturing plant in nearby Troup County, and possible industrial projects considering location at the 800-plus acre industrial park at the Georgia Highway 154/exit 5 1area on the 1-85 corridor, built by Atlanta-based Patillo Corporation. While not experiencing harsher trends that had affected other Georgia counties' school enrollment counts, tax collections, and tax digests, and while experiencing some cause for optimism, Coweta County still faced a continuation of difficult trends during 2010. 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. If you have questions about this report or need additional financial information, you may contact W. Keith Chapman, CPA, Assistant Superintendent for Financial Services at the Coweta County Board of Education, 237 Jackson Street, Newnan, Georgia 30263. You may also email your questions to keith.chapman@cowetaschooIs.net. COWETA COUNTY BOARD OF EDUCATION COWETA COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30,2010 ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Other Inventories Capital Assets Land Land Improvements Buildings Equipment Less: Accumulated Depreciat~on Total Assets LIABILITIES Accounts Payable Salaries Payable Claims Incurred But Not Reported (IBNR) Interest Payable Deferred Revenue Arbitrage Rebate Tax Payable Long-Term Liabilities Due Within One Year Due in More Than One Year Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Continuation of Federal Programs Debt Service Capital Projects Unrestricted Total Net Assets Total L~ab~litieasnd Net Assets The notes to the basic financial statements are an ~ntegrapl art of this statement. - 1- EXHIBIT " A GOVERNMENTAL ACTIVITIES COWETA COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES FOR THE YEAR ENDEDJUNE 30.2010 GOVERNMENTAL ACTIVITIES Instruction Support Services Pup11Servlces Improvement of Instructional Services Educational Med~aServices General Administration School Admin~strat~on Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operationsof Non-Instructional S e ~ i c e s Enterprise Operations Community Services Food Services Interest on Short-Term and Long-TermDebt Total Governmental Activities General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Railroad Cars Sales Taxes Special Purpose Local Optlon Sales Tax For Debt Services For Capital Projects Intangible RecordingTax Real Estate Grants and Contributions not Restrictedto Specific Programs Investment Earnings Miscellaneous Total General Revenues Change in Net Assets Net Assets - Beglnnlng of Year Net Assets - End of Year EXPENSES CHARGESFOR SERVICES The notes to the basic financial statements are an Integral part of this statement. -2- EXHIBIT "B" PROGRAM REVENUES OPERATING GRANTS AND CONTRIBUTIONS CAPITAL GRANTS AND CONTRIBUTIONS NET (EXPENSES) REVENUES AND CHANGES IN NET ASSETS COWETA COUNTY BOARD OF EDUCATION BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30,2010 GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND Cash and Cash Equivalents Investments Accounts Receivable. Net Taxes State Government Federal Government Other Inventories Total Assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Salaries Payable Deferred Revenue Total Liabilities FUND BALANCES Resewed for: Arbitrage Rebate Tax Continuation of Federal Programs Debt Service Capital Projects Unre~ewed UndesignatedReported in: General Fund Capltal Projects Total Fund Balances Total Liabilities and Fund Balances DEBT SERVICE FUND TOTAL The notes to the basic financial statements are an integral part of this statement. -4- COWETA COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30,2010 - Total Fund Balances Governmental Funds (Exhibit "C") Amounts reported for Governmental Act~vit~eIns the Statement of Net Assets are different because: Capital Assets used In GovernmentalAct~vitiesare not financial resources and therefore are not reported in the funds. These assets conslst of: Land Land Improvements Build~ngsand lmprovements Equipment Accumulated Depreciation Total Capital Assets Taxes that are not available to pay for current per~od expenditures are deferred in the funds. Property Taxes Only the portion of the arbitrage rebate tax liability that represents the use of current financial resourceswould be reported at the fund level. Since the liability will not be paid out over the next fiscal year, it is not reported in the funds. Long-TermLiabilities, ~ncludingBonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-TermLiabilities at yearend consist of: Bonds Payable Compensated Absences Unamortized Bond Premiums Claims Incurred but not Reported (IBNR) Interest Payable Total Long-Term Liabilities Net Assets of Governmental Actlvltles (Exhlblt "A") EXHIBIT " D The notes to the basic financial statements are an integral part of thls statement. -5- COWETA COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30.2010 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 lnstruct~onaSl ervices Educational Media Services General Adm~nistration School Admin~strat~on Business Admlnistration Ma~ntenanceand Operation of Plant Student Transportation Sewlces Central Support Services Other Support Services Enterprise Operations Community Services Food Sewices Operation Cap~taOl utlay Debt Services Pr~ncipal Interest Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other F~nancingSources (Uses) Net Change in Fund Balances Fund Balances - Beginning - Fund Balances End~ng GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL The notes t o the basic financial statements are an integral part of this statement. -6- COWETA COUNTY BOARD OF EDUCATION RECONCILIATIONOF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30,2010 Total Net Change In Fund Balances - Governmental Funds (Exhibit"E") Amounts reported for GovernmentalActivities in the Statement of Activities are different because: Cap~taOl utlays are reported as expenditures in GovernmentalFunds. However, in the Statement of Acbvitles, the cost of Capltal Assets is allocated over their estimated useful lives as depreciat~onexpense. In the current period, these amounts are: Capital Outlay Depreciation Expense Excess of Capital Outlay over Depreciation Expense Taxes reported in the Statement of Activ~tiesthat do not provide current financial resources are not reported as revenues in the funds. Property Taxes Sales Taxes Total Revenues not Reported In the Statement of Activities, only the loss on the sale of 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 cost of the carrying value of the assets sold. Repayment of LongTerm Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liab~lit~eInsthe Statement of Net Assets. In the current year, these amounts consist of: Bond Prlnclpal Ret~rements Capital Lease Payments Amortized Bond Premium Total Long-Term Debt Repayments Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of: lncrease in Arbitrage Tax Liability Decrease in CompensatedAbsences Decrease in Clams Incurred but Not Reported (IBNR) Decrease in Interest Payable Total Addittonal Expenditures Change in Net Assets of GovernmentalActivities (Exhibit " B ) The notes to the basic financial statements are an integral part of this statement. -7- COWETA COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30,2010 Cash and Cash Equivalents Investments Cert~flcateof Deposit Total Assets LIABILITIES Funds Held for Others EXHIBIT "G" AGENCY FUNDS The notes to the basic financial statements are an Integral part of this statement. -8 - COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "H" Note 1: DESCRIPTION OF SCHOOL DISTRICTAND REPORTING ENTITY REPORTING ENTITY The Coweta County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. Blended Component Unit The Central Education Center (Charter School) is responsible for the public education of all students attending its school. The Charter School was created through a contract between the School District and the Charter School whereby all State funding associated with the students attending the Charter School and certain specified local funds are turned over to the Charter School t o cover the cost of its operations. The financial statements of the Charter School have been blended with the School District's general fund. Note 2: SUMMARY OF SIGNIFICANTACCOUNTING POLICIES BASIS OF PRESENTATION The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Coweta County Board of Education. District-wide Statements: The Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other 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 of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, 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 of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "H" The School District reports the following major governmental funds: General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund. District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation 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 payingagent's fees. The School District reports the following fiduciary fund type: Agency funds account for assets held by the School District as an agent for various funds, governments or individuals. BASIS OF ACCOUNTING The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, 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. COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "H" The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1- June 30) and paid over a twelve month contract period, generally September 1through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition. NEW ACCOUNTING PRONOUNCEMENTS In fiscal year 2010, the School District adopted the Governmental Accounting and Standards Board (GASB) Statement No. 51, Accounting and Reporting for Intangible Assets. The provisions of this Statement generally require retroactive reportingfor intangible assets acquired after June 30, 1980, with the exception of those intangible assets that have indefinite useful lives and those that are considered internally generated. For fiscal year 2010, the School District did not have any intangible assets that met the capitalization threshold. In addition, the School District adopted GASB Statement No. 53, Accounting and Financia/ Reporting for Derivative Instrumen&. The provisions of this Statement impacts disclosure regarding derivative instruments entered into by the state and local governments. Derivative disclosures, if any, will be identified in Note 3. CASH AND CASH EQUIVALENTS Composition of Deposits Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations. lNVESTMENTS Composition of Investments lnvestments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "H" (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Georgia Fund 1administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia. The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks. RECEIVABLES Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Coweta County Board of Commissioners fixed the property tax levy for the 2009 tax digest year (calendar year) on August 18, 2009 (levy date). Taxes were due on December 1,2009 (lien date). Taxes collected within the current fiscal year or within 6 0 days after year-end on the 2009 tax digest are reported as revenue in the governmental funds for fiscal year 2010. The 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, 2010, for maintenance and operations amounted to $73,182,674 and for school bonds amounted to $1,160. The tax millage rate levied for the 2009 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 18.59 mills SALES TAXES Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $19,061,150 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. COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "H" INVENTORIES Food Inventories On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. 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. Disposalsare deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District. Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows: Capitalization Policy Estimated Useful Life Land Land Improvements Buildings and Improvements Equipment Intangible Assets All N/A $ 10,000 20 to 80 years $ 10,000 25 to 80 years $ 10,000 10 to 50 years $ 500,000 5 to 80 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized. Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method. COMPENSATED ABSENCES Members of the Teachers Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School District's financial statements. COWETA COUNN BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "H" At June 30, 2010, the School District's compensated absences liability is composed of an overtime compensation liability of $216,761 and a vacation leave liability of $878,240. The overtime compensation liability is calculated in accordance with the Fair Labor Standards Act and applies to all non-exempt employees of the School District as defined in the Fair Labor Standards Act. Applicable employees may accrue up to no more than 240 hours of compensatory leave. Twelve month employees earn vacation leave. Twelve month hourly employees earn 1 0 days of vacation leave for the first year of service, with an additional vacation day for each additional year of service completed through the 10th year. Twelve month hourly employees earn a maximum of 2 0 days of vacation leave at 1 0 years of service, and any unused vacation leave days must be used within a 2 4 month period to avoid forfeiture. Changes in the compensation absence liability during the last three fiscal years are as follows: Beginningof Year Liability l ncreases Decreases End of Year Liability GENERAL OBLIGATION BONDS The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets. NET ASSETS The School District's net assets in the District-wideStatements are classified as follows: Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties. COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "H" Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes. USE OF ESTIMATES The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. Note 3: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-&12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance. Acceptable security for deposits consists of any one of or any combination of the following: (1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, (2) Insurance on accounts provided by the Federal Deposit lnsurance Corporation, (3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia, (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, notes, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "H" CATEGORIZATION OF DEPOSITS Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2010, the bank balances were $31,592,837. The bank balances were entirely covered by Federal depository insurance or collateralized with securities held by the pledging financial institution in the School District's name. CATEGORIZATION OF INVESTMENTS At June 30, 2010, the carrying value of the School District's total investments was $70,331,610, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund 1,formerly referred to as LGIP, administered by the State of Georgia, Office of Treasury 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 of the State of Georgia, Office of Treasury and Fiscal Services for the Georgia Fund 1(Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at htt~://www.audits.~a.c~ov/SGD/cafr.htrnl. The Primary Liquidity Portfolio consists of Georgia Fund 1which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1may not exceed 6 0 days. The weighted average maturity for Georgia Fund 1on June 30,2010, was 4 6 days. Note 4: NON-MONETARYTRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 3 0 , 2 0 1 0 EXHIBIT "H" Note 5: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year: Governmental Activities Capital Assets, Not Being Depreciated: Land Construction in Progress Balances July 1, 2009 Increases Decreases Balances June 30, 2010 $ 9,138,880 $ 16,960,630 708,746 $ 877,554 $ 17,838,184 9,847,626 0 Total Capital Assets Not Being Depreciated $ 26,099,510 $ 1,586,300 $ 17,838,184 $ 9,847,626 Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements $ 225,894,248 $ 13,237,664 21,809,597 777,142 $ 17,633,745 4,181,429 $ 72.000 239,131,912 22,514,739 21,815,174 Less Accumulated Depreciation for: Buildings and lmprovments Equipment Land lmprovements Total Capital Assets, Being Depreciated, Net $ 216,410,266 $ 12,903,338 $ 10,720 $ 229,302,884 Governmental Activity Capital Assets - Net $ 242,509,776 $ 14,489,638 $ 17,848,904 $ 239,150,510 Current year depreciation expense by function is as follows: Instruction Support Services Pupil Services lmprovements of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Enterprises Operations Community Services Operations Food Services Operations COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "H" Note 6: INTERFUNDTRANSFERS Interfund transfers for the year ended June 30, 2010, consisted of the following: Transfer to Transfers From General Debt Service Fund Fund District-wideCapital Projects $ 973,660 $ 3,435 Transfers are used to move property tax revenues collected by the General Fund and SPLOST revenue collected by the Debt Service Fund to the District-wide Capital Projects Fund as supplemental funding source for capital construction projects. Note 7: RISK MANAGEMENT The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation. The School District has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions and acts of God. 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 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 liabilities 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 $350,000 loss per occurrence, up to the statutory limit. For purposes of estimating the claims incurred but not reported (IBNR) liability as of June 30, 2010, the School District computed the liability based on the estimated cost of each outstanding claim from claims experience of similar claims. Changes in the workers' compensation claims liability during the last two fiscal years are as follows: Beginningof Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability 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 liabilities being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "H" Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: Beginningof Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability The School District has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount Superintendent $ Assistant Superintendent for Financial Services $ Board Treasurer $ All Employees $ 20,000 10,000 10,000 250,000 Note 8: LONG-TERM DEBT CAPITAL LEASES The Coweta County Board of Education entered into a lease agreement for buses. This lease agreement qualifies as capital lease for accounting purposes, and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of 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 The General Obligation Bond currently outstanding is as follows: Purpose Interest Rates Amount General Government -Series 2 0 0 5 3.50% - 5.00% COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "H" The changes in Long-Term Debt during the fiscal year ended June 30,2010, were as follows: Capital Leases Governmental Funds General Compensated Obligation Absences Bonds Unamortized Bond Premium Total Balance July 1,2009 $ Additions Annual Leave Earned Deductions Annual Leave Utilized Debt Retired Bond Prem~ums Amortized Balance June 30,2010 $ 901,306$ 1,119,049$ 48,750,000$ 1.629.827 $ 52,400,182 901,306 0 $ 560,682 11,750,000 1,095,001$ 37,000,000$ 454,836 1,174,991$ 560,682 12,651,306 454,836 39,269,992 Portion of Long-Term Debt Due Within One Year $ 0 $ 1,095,001$ 11,925,000$ 454,836 $ 13,474,837 At June 30, 2010, payments due by fiscal year which includes principal and interest for these items are as follows: Fiscal Year EndedJune 30 General Obligation Debt Principal Interest Unamortized Bond Premium Total Principal and Interest $ 37,000,000 $ 3,865,237 $ 1,174,991 Note 9: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $390,772 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $298,716 Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $92,056 COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "H" Note 10: SIGNIFICANT CONTINGENT LIABILITIES ARBITRAGE REBATE TAX The Federal Tax Reform Act of 1986 requires issuers of tax-exempt debt to make payments to the United States Treasury of Investment Income received at yields that exceed the issuer's tax-exempt borrowing rates. The U.S. Treasury requires payment every five years. The estimated future liability of $267,588 at June 30, 2010, is based on tax-exempt debt subject to the Tax Reform Act. The estimated liability will be updated annually for any tax-exempt issuances or changes in yields through December 2010, at which time payment of the final calculated liability for the five-year period is required to be remitted. Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements. Note 11: POST-EMPLOYMENTBENEFITS GEORGIA SCHOOL PERSONNEL EMPLOYEES POST-EMPLOYMENT HEALTH BENEFIT FUND Plan Description. The Georgia School Personnel Post-Employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Insurance Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of the health insurance coverage. Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "H" The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2010: For certificatedteachers, librariansand regional educational service agencies: July 2009 August 2009 - October 2009 November 2009 -June 2010 18.534% of covered payroll for August Coverage 14.492% of covered payroll for September - November Coverage 18.534% of covered payroll for December - July Coverage For noncertificated school personnel: July 2009 -June 2010 $162.72 per member per month plus Department of Education contribution of $22,838,311 No additional contribution was required by the Board for fiscal year 2010 nor contributed to the State OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other post-employment benefits and are subject to appropriation. The School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows: Percentage Required Fiscal Year Contributed Contribution Note 12: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1,1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits. TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 1 0 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service. COWETA COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30,2010 EXHIBIT "H" Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 3 0 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available. Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 1 0 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2010, were 5.25% of annual salary. The member contribution rate will increase to 5.53% effective July 1,2010. Employer contributions required for fiscal year 2010 were 9.74% of annual salary as required by the June 30, 2007, actuarial valuation. The employer contribution rate will increase to 10.28% effective July 1,2010. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution (This page left intentionally blank) COWETA COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURESAND CHANGES IN FUND BAWNCES BUDGET TO ACTUAL YEAR ENDED JUNE 30.2010 REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnlngs Miscellaneous Total Revenues EXPENDITURES Current Instruction Support Services Pupil Servlces Improvement of lnstructlonal Servlces Educational Media Services General Administration School Admlnlstratlon Business Admln~stratlon Maintenance and Operation of Plant Student Transportation Services Central Support Servlces Other Support Serv~ces Enterprise Operations Communlty Services Food Services Operation Debt service Total EXDenditUreS Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES fUSESl Other Sources Other Uses Total Other Flnanc~ngSources (Uses) Net Change In Fund Balances Fund Balances - Beg~nnlng Adjustments Fund Balances - Endlng NONAPPROPRIATED BUDGETS ORIGINAL (1) FINAL Notes to the Schedule of Revenues. Exaendltures and Changes In Fund Balances Budvet and Actual (I) Original Budget amounts do not include budgeted revenues or expenditures of the various prlnclpal accounts or revenues or expenditures for health insurance and retirement contributions p a ~ don the School Dlstrlct's behalf. The accompanying schedule of revenues, expenditures and changes In fund balances budget and actual is presented on the modified accrual basis of accountingwhich IS the b a s s of accounting used In the presentation of the fund flnancial statements. See notes to the baslc flnancial statements. ACTUAL AMOUNTS COWETA COUNN BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDEDJUNE 30,2010 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Agriculture. U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Educat~on Food Services School Breakfast Program National School Lunch Program Total U. S. Department of Agriculture Education, U. S. Department of Education of Homeless Chlldren and Youth Cluster Pass-Through From Georgia Department of Educat~on Education for Homeless Children and Youth Education Technology State Grants Cluster Pass-Through From Georg~aDepartment of Educat~on Education Technology State Grants Special Educauon Cluster Pass-ThroughFrom Georgia Department of Education Special Education - ARRA Grants to States ARRA- Preschool Grants Grants to States Preschool Grants Total Special Education Cluster State Fiscal Stab~llzationFund Cluster Pass-ThroughFrom Georgia Department of Education ARRA - Education State Grants Title I, Part A Cluster Pass-ThroughFrom Georgia Department of Education ARRA - Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies Total Tltle I, Part A Cluster Other Programs Pass-ThroughFrom Georgia Department of Education Career and Techn~caEl ducation- Basic Grants to States English Language Acquisition Grants ImprovingTeacher QualityState Grants Mathemat~csand Sclence Partnerships Safe and DrugFree Schools and Communities - State Grants Total Other Programs Total U. S. Department of Educat~on Health and Human Services. U. S. Department of Child Care and Development Fund Cluster Pass-ThroughFrom Bright From the Start: Georgia Department of Early Care and Learning - ARRA Child Care and Development Block Grant CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD COWETA COUNN BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30,2010 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Defense. U. S. Department of Direct Department of the Air Force R.O.T.C. Program Department of the Marine Corps R.O.T.C. Program Total U. S. Department of Defense CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD Total Federal Financral Assistance N/A = Not Available Notes to the Schedule of Ex~endituresof Federal Awards (1) Includes the Federallyassigned value of donated commodltles for the Food Donation Program in the amount of $709.758. (2) Expenditures for the funds earned on the School Breakfast Program ($982,004) were not marntained separately and are included in the 2010 National School Lunch Program. Major Programs are identified by an asterisk (*)in front of the CFDA number. The School District drd not provlde 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 accountingwhich is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic f~nanciasl tatements. (This page left intentionally blank) COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30.2010 GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program Educatlon, Georgia Department of Quality Basic Educatlon Direct Instructional Cost Kindergarten Program - Kindergarten Program Early lntervention Program Primary Grades (1-3) Program Primary Grades - Early lntervention (1-3P)rogram Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early lntervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional lnstructlon Staff and Professional Development Indirect Cost Central Adrnlnistration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Nursing Services Vocational Supervisors Education Equalization Funding Grant Food Serv~ces Vocational Education Amended Formula Adjustment Other State Programs Dual Enrollment Georgia Special Needs Scholarship Fund - Re~rnbursement Health Insurance National Teacher Certification Preschool Handicapped Program Rule 1 0 Special Education State Grant Tuition for the Multi-Handicapped Virtual Schools Grant Georgia State Financingand Investment Commission Reimbursement on Construction Projects Office of Treasury and Fiscal Sewices Public School Employees Retirement GOVERNMENTAL FUND TYPES CAPITAL GENERAL PROJECTS FUND FUND SCHEDULE "3" TOTAL See notes to the basic financial statements. COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDEDJUNE 30.2010 ORIGINAL ESTIMATED COST (1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3) AMOUNT EXPENDED IN PRIOR YEARS (3) (4) PROJECT STATUS SPLOST ll $ 97,983,261 $ 104,630,408 I) The payment of all of the prlnclpaland Interest due on the School D~str~ct's Serles 1992 Bonds. Serles 1993 Bonds, and Serles 1998 Bonds wlth the result that no addltlonal ad valorem taxes wlll need to be collected In order to pay pr~nc~paanld Intereston such bonds. ii) The construnton and equipment of a new mlddle school and two new elementary schools; $ 39,630,408 Completed 31,046.572 Completed 111) Renovat~onof, mod~f~catloonf, mak~ngonf ew addlt~onsto and equlpplngof the follow~ngschools or facllitles. Arbor Spr~ngsElementarySchool. Arnall Middle School, Arnco Sargent ElementarySchool, Atk~nsonElementarySchool, Canongate Elementary School, Central Education Center. East Coweta Hlgh School. EastCoweta M~ddleSchool. EastsldeElementarySchool, Elm Street ElementarySchool. O.P. Evans Mlddle School, Wlnston Dowdell Academy. Jefferson Parkway ElementalySchool, Madras M~ddleSchool. Magg~eBrown Pre. K. MorelandElementarySchool, Newnan Crosslng ElementarySchool, Newnan Hlgh School, Northgate H~ghSchool. NorthgateElementarySchool, Poplar Road ElementarySchool. Ruth H~lEl lementaryScnool, Smokey Road M~ddleSchool. Thomas Crossroads ElementarySchool, western Elementaryschool, Westslde Burwell. Whlte Oak ElementarySchool and school on Wlllls Road: IV) the acqu~slt~oonf land for the foregoing purpose; v) the furnlshingand equipping of the F~neArts Center; VI) the acqulsltlon of addltlonal transportation faclllties and school buses; Ongolng Ongoing 2,199,635 Ongoing vli) the acqulsltlon, construnion and equlpplngof additions at facilities systemwlde; Ongolng VIM)the addition of new technology and modification to existingtechnology system-wide. 1,232.167 OngOlng Total SPLOST II $ 97.983.261 $ 104,630,408 $ 1,178.661 $ 101.810.229 SPLOST Ill 5 130,000,000 $ 130,000,000 I) The payment of principal and Interest on the School Dlstrlct's 2005 General ObllgatlonSales Tax Bonds In the aggregate prlnclpalamount Of $58,000,000. $ 14,119.682 $ 16,391,448 Ongoing 11)The acaulrlng, constructlngand equlpplngof three n~nthgrade academ~eso, ne m~ddleschool and an addltlon to Easts~deElementarySchool: 32,025,879 Ongolng 111)the retirement of any publlc purpose master lease executed for renovating, addlngto and lmprovlngany exlstlng school bu~ldlngsand facll~tles; IV) renovating, adding to and ~mprovingexlstlng school buildings and facllltles; 161,710 5,575,168 Ongolng V) provldlngaddltional technology; 70,767 Ongolng VI) provldlngaddltlonal buses: Ongolng VII) acqulsltlon, consvuctlon and equippingall facil~t~easnd addit~onsthereto system-w~de; 194.160 19,021,836 Ongolng vlii) and acquiring land for future school projects; 698.745 1.769.605 Ongoing IX) capltallzlnglnterest on bonds through July 1,2007- 1.986.994 Completed Total SPLOST Ill $ 130,000,000 $ 130,000,000 $ 15.174.297 $ 81,426,772 Total All Prolects COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30,2010 (1)The School D~str~cto'sr~ginacl ost estlrnateas specifled In the resolutioncall~ngfotrhe lmpositlon of the Local Opt~onSales Tax (2) The School D~strm'scurrent estlrnateof total cost for the projects. Includesall cost from project inceptionto completion (3) The voters of Coweta Countyapproved the lmposltlonof a 1%sales tax to fund the above projects and retire associated debt Amounts expendedfor these projects may include sales tax proceeds,state, local property taxes and/or other funds over the llfe of the projects. (4) Prlor to fiscal year 2010, the School D~str~ctp'sract~cerelatedto reportlngcompleted projectswas to omlt completed projectsfrom future SPLOST schedules. SPLOST II (I) was prevlously reported as completed. Therefore, in accordance with prlor School Dlstrlct practlceSPLOST ll(i) was omltted from the fiscal year 2009 SPLOST scheduie for fiscal year 2010 The School Dlstrict changed ~ t s practlceto ~ncludecompleted projectson future SPLOST Schedules until the total SPLOST project is complete. The amount expended in prlor years has been adjusted as follows: Amount expended in prlor years as previously reported 5 143.606.593 Add back amount prevl0uSly reportedfor SPLOST II (i) Amount expended ~nprlor years, restated $ 183.237.001 See notes to the bas~cf~nanciasl tatements. (This page left intentionally blank) COWETA COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30,2010 SCHEDULE "5" DESCRIPTION D~recltnstructlonal Programs K~ndergartenProgram K~ndergartenProgram-Early lntewentlon Program Prlmary Grades (1-3) Program Pr~maryGrades-Early lnterventlon (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intewentlon (4-5) Program Mlddle School (6-8) Program Hlgh School General Educat~on(9-12) Program Vocational Laboratory (9-12) Program Students wlth Dlsabllltles Categoty I Category Il Categoly III Category 1V Category V Glfted Student - Category VI Remedlal Education Program Alternative Educat~onProgram Engl~shSpeakers of Other Languages (ESOL) TOTAL DIRECT INSTRUCTIONAL PROGRAMS Medla Center Program Staff and Professional Development ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION(1) (2) ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL TOTAL QBE FORMULA FUNDS (1) Comprised of State Funds plus Local Flve Mill Share. (2) Allotments do not ~ncludethe Impact of the State amended formula adjustment. See notes to the baslc flnanclal Statements. SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENOTF AUDITSAND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 30,2011 Honorable Nathan Deal, 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 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAnERS 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, 2010, which collectively comprise Coweta County Board of Education's basic financial statements and have issued our report thereon dated March 30, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered Coweta County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Coweta County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Coweta County Board of Education's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed t o identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether Coweta County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management, members of the Coweta County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, . Russell W. Hinton, CPA, CGFM State Auditor Russell W. Hinton STATE AUDITOR (404)656-2174 DEPARTMENOTF AUDITSAND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 3 0 , 2 0 1 1 Honorable Nathan Deal, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Coweta County Board of Education INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WlTH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MNOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133 Ladies and Gentlemen: We have audited Coweta County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2010. 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 OMB Circular A-133, Audits of States, 1ma1 Governments, and Non-Profit Organizations. Those etandards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the 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. In our opinion, the Coweta County Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30,2010. Internal Control Over Com~liance Management of Coweta County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable t o Federal programs. In planning and performing our audit, we considered Coweta County Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Coweta County Board of Education's internal control over compliance. A deficienncy in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of management, members of the Coweta County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, - Russell W. Hinton, CPA, CGFM State Auditor 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 30,2010 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FA-6381-06-01 Previously Reported Corrective Action Implemented SECTION IV FINDINGS AND QUESTIONED COSTS COWETA COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30,2010 I SUMMARY OF AUDITOR'S RESULTS Financial Statements Type of auditor's report issue: Governmental Activities; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information Internal control over financial reporting: Material weakness identified? Significant deficiency identified? Noncompliance material to financial statements noted: Federal Awards Internal Control over major programs: = Material weakness identified? = Significant deficiency identified? Type of auditor's report issued on compliance for major programs: All major programs Any audit findings disclosed that are required to be reported in accordance with OMB Circular A-133, Section 510(a)? Identification of major programs: CFDA Number(s) Name of Federal Program or Cluster Child Nutrition Cluster Title I, Part A Cluster Special Education Cluster State Fiscal Stabilization Fund Cluster Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as low-risk auditee? II FINANCIALSTATEMENT FINDINGS AND QUESTIONEDCOSTS No matters were reported. Ill FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. Unqualified N 0 None Reported N 0 None Reported Unqualified