DAWSON COUNTY BOARD OF EDUCATION DAWSONVILLE, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS Russell W. Hinton State Auditor DAWSON 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 EXHIBITS BASIC FINANCIAL STATEMENTS DISTRICT-WIDE FINANCIAL STATEMENTS A STATEMENT OF NET ASSETS 1 B STATEMENT OF ACTIVITIES 2 FUND FINANCIAL STATEMENTS C BALANCE SHEET GOVERNMENTAL FUNDS 4 D RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS 5 E STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 6 F RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES 7 G STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS 8 H NOTES TO THE BASIC FINANCIAL STATEMENTS 9 SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION 1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND 25 SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 26 3 SCHEDULE OF STATE REVENUE 27 DAWSON COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 28 5 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM 29 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION I FINANCIAL Russell W. Hinton STATE AUDITOR (404) 656,2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 10, 2008 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Dawson County Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying financial statements ofthe governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) ofthe Dawson County Board of Education, as of and for the year ended June 30, 2007, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe Dawson County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Dawson County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. 2007ARL-11 In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information ofthe Dawson County Board of Education, as ofJune 30, 2007, 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. The Dawson County Board of Education has not presented Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not to be part of, the basic financial statements. In accordance with Government Auditing Standards, we have also issued our report dated March 10, 2008, on our consideration of the Dawson 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 ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on page 25 is not a required part of the basic financial statements but is supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Dawson County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. 2007ARL-l l 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, -::R ~-oo. L6.-4k ~ul:en W. Hinton, CPA, CGFM State Auditor RWH:as 2007ARL-11 DAWSON COUNTY BOARD OF EDUCATION DAWSON COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2007 ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Other Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less: Accumulated Depreciation Total Assets LIABILITIES Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Long-Term Liabilities Due Within One Year Due in More Than One Year Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Continuation of Federal Programs Debt Service Capital Projects Un restricted Total Net Assets Total Liabilities and Net Assets The notes to the basic financial statements are an integral part of this statement. - 1- EXHIBIT"A" GOVERNMENTAL ACTIVITIES $ 9,760,384.29 15,062,397.00 1,620,927.26 1,876,847.38 364,377.59 59,257.13 34,637.05 2,793,790.79 9,087,062.29 5,121,445.50 47,556,040.84 3,256,552.63 -8,501,695.48 $ =====8=8'=09=2=,0=2=4=.2=7 $ 46,040.06 3,680,998.06 863,882.00 708,584.00 5,231,505.10 23,738,105.09 $ 34,269,114.31 $ 44,199,987.48 318,445.46 4,724,967.50 1,309,087.70 3,270,421.82 $ 53,822,909.96 $ ==8=8,=0=92=,0=2=4=.2=7 DAWSON COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2007 GOVERNMENTAL ACTIVITIES Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debi Total Governmental Activities General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Intangible Recording Tax Real Estate Investment Earnings Miscellaneous Special Items Loss on Sale of Building Total General Revenues and Special Items Change in Net Assets Net Assets - Beginning of Year Net Assets - End of Year EXPENSES CHARGES FOR SERVICES $ 20,412,969.45 $ 17,150.08 1,202,543.28 1,028,976.66 617,433.16 355,927.77 1,886,295.51 295,066.51 2,304,230.58 942,046.13 246,089.01 4,215.83 356,632.54 93,142.91 1,503,728.05 1,557,884.79 113,626.01 188.39 921,155.60 $ 32,807,182.18 $ 1,052,120.08 The notes to the basic financial statements are an integral part of this statement. -2- EXHIBIT"B" PROGRAM REVENUES OPERATING CAPITAL GRANTS AND GRANTS AND CONTRIBUTIONS CONTRIBUTIONS NET (EXPENSES) REVENUES AND CHANGES IN NET ASSETS $ 11,199,058.56 $ 594,149.13 383,615.32 411,784.75 120,096.04 703,953.36 98,826.41 1,037,900.97 442,593.00 81,477.70 60.44 672,801.58 $ 15,746,317.26 $ 52,844.51 $ 318.06 224.29 1,796.33 6,343.13 164,083.32 1,194.93 5,354.23 232,158.80 $ -9, 143,916.30 -608,394.15 -645,361.34 -205,330.35 -235,607.44 -1,180,545.82 -196,240.10 -1,259,986.48 -335,369.81 -164,611.31 -4,155.39 -243,006.53 -91,759.59 95,583.36 -1,557,884.79 -15,776,586.04 $ 16,196,879.63 506,118.49 6,342,843.26 759,591.44 266,970.87 1,337,520.77 438,530.17 -41 574.45 $ 25,806,880.18 $ 10,030,294.14 43,792,615.82 $ 53,822,909.96 -3- DAWSON COUNTY BOARD OF EDUCATION BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2007 EXHIBIT "C" ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Other Inventories Total Assets GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 4,376,098.11 $ 4,462,544.01 $ 15,062,397.00 377,604.76 1,876,847.38 364,377.59 59,257.13 34,637.05 1,049,643.00 921,742.17 $ 11,287.12 9,760,384.29 15,062,397.00 1,438,534.88 1,876,847.38 364,377.59 59,257.13 34 637.05 $ 7,088,822.02 $ 20,574,584.01 $ 933,029.29 $ 28,596,435.32 LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Total Liabilities FUND BALANCES Reserved for: Continuation of Federal Programs Debt Service Inventories Capital Projects Unreserved Designated for Student Activities Undesignated Reported in: General Fund Total Fund Balances $ 1,349.06 $ 3,680,998.06 44,691.00 863,882.00 708,584.00 $ 3,682,347.12 $ 1,617,157.00 $ 46,040.06 3,680,998.06 863,882.00 708,584.00 $ 5,299,504.12 $ 283,808.41 $ 3,791,938.21 $ 34,637.05 15, 165,488.80 207,226.70 2,880,802.74 $ 3,406,474.90 $ 18,957,427.01 $ $ 933,029.29 283,808.41 4,724,967.50 34,637.05 15,165,488.80 207,226.70 2,880,802.74 933,029.29 $ 23,296,931.20 Total Liabilities and Fund Balances $ 7,088,822.02 $ 20,574,584.01 $ 933,029.29 $ 28,596,435.32 The notes to the basic financial statements are an integral part of this statement. -4- DAWSON COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30, 2007 EXHIBIT"D" Total Fund Balances - Governmental Funds (Exhibit "C") Amounts reported for Governmental Activities in the Statement of Net Assets are different because: Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of: Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation Total Capital Assets Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures. Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: Bonds Payable Capital Leases Unamortized Bond Premiums Total Long-Term Liabilities Net Assets of Governmental Activities (Exhibit "A") $ 23,296,931.20 $ 2,793,790.79 9,087,062.29 5,121,445.50 47,556,040.84 3,256,552.63 -8,501,695.48 59,313,196.57 182,392.38 $ -26,210,000.00 -1,893,093.42 -866.516.77 -28.969.610.19 $ 53,822,909.96 The notes to the basic financial statements are an integral part of this statement. -5- DAWSON COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2007 EXHIBIT"E" REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation Capital Outlay Debt Services Principal Interest Total Expenditures Excess of Revenues over {under) Expenditures OTHER FINANCING SOURCES {USES) Capital Leases Transfers In Transfers Out Total Other Financing Sources {Uses) Net Change in Fund Balances Fund Balances - Beginning GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 16,019,851.86 1,003,384.22 $ 14,056,646.26 1,736,593.00 1,052,120.08 151,354.61 438,530.17 $ 6,342,843.26 185,236.80 1,128,792.51 $ 34,458,480.20 $ 7,656,872.57 $ 500,753.88 $ 23,177.11 57,373.65 16,520,605.74 7,369,404.59 14,241,883.06 1,736,593.00 1,052,120.08 1,337,520.77 438,530.17 581,304.64 $ 42,696,657.41 $ 21,075,623.33 $ 21,075,623.33 1,202,543.28 1,110,675.66 664,165.32 359,223.97 1,913,792.26 300,866.51 2,188,493.76 1,443,642.38 250,022.01 4,215.83 470,258.55 110,701.59 1,589,728.60 185,009.53 $ $ 9,861,611.05 1,950.00 1,202,543.28 1,110,675.66 664,165.32 359,223.97 1,913,792.26 302,816.51 2,188,493.76 1,443,642.38 250,022.01 4,215.83 470,258.55 110,701.59 1,589,728.60 10,046,620.58 147,992.16 18 877.24 150,225.42 99 774.58 3,700,000.00 1,456,160.00 3,998,217.58 1,574,811.82 $ 33,035,831.98 $ 1o, 111,611.05 $ 5,158,110.00 $ 48,305,553.03 $ 1,422,648.22 $ -2,454, 738.48 $ -4,576,805.36 $ -5,608,895.62 $ 124,596.00 $ 124,596.00 61,363.51 $ 4,265,325.00 4,326,688.51 $ -4,326,688.51 -4,326,688.51 $ 185,959.51 $ -4,326,688.51 $ 4,265,325.00 $ 124,596.00 $ 1,608,607.73 $ -6,781,426.99 $ -311,480.36 $ -5,484,299.62 1,797,867.17 25,738,854.00 1,244,509.65 28,781,230.82 Fund Balances - Ending $ 3,406,474.90 $ 18,957,427.01 $ 933,029.29 $ 23,296,931.20 The notes to the basic financial statements are an integral part of this statement. -6 - DAWSON COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2007 EXHIBIT "F" Total Net Change in Fund Balances - Governmental Funds (Exhibit "E") Amounts reported for Governmental Activities in the Statement of Activities are different because: Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are: Capital Outlay Depreciation Expense Excess of Capital Outlay over Depreciation Expense Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues. In the Statement of Activities, only the loss on the sale of the building/equipment is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the building/equipment sold. Some of the Capital Assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets, the lease obligation is reported as a Long-Term Liability. Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of: Bond Principal Retirements Capital Lease Payments 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: Amortization of Bond Premium $ -5,484,299.62 $ 12,510,338.81 -1,257,760.79 11,252,578.02 182,392.38 -41,574.45 -124,596.00 $ 3,700,000.00 298,217.58 3,998,217.58 247,576.23 Change in Net Assets of Governmental Activities (Exhibit "B") $ 10,030,294.14 The notes to the basic financial statements are an integral part of this statement. -7- DAWSON COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2007 ASSETS Cash and Cash Equivalents LIABILITIES Funds Held for Others EXHIBIT "G" AGENCY FUNDS $ 127,087.53 $ 127,087.53 The notes to the basic financial statements are an integral part of this statement. -8- DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "H" Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY REPORTING ENTITY The Dawson County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Dawson County Board of Education. District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. The Statement ofActivities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. The School District reports the following major governmental funds: -9- DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT"H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund. District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation ofmajor capital facilities. Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees. The School District reports the following fiduciary fund type: Agency funds account for assets held by the School District as an agent for various funds, governments or individuals. BASIS OF ACCOUNTING The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless ofwhen the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds ofgeneral long-term liabilities are reported as other financing sources. - 10 - DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorize the School District to deposit its funds in one or more solvent banks or insured Federal savings and loan associations. INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and - 11 - DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT"H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (8) Obligations of other political subdivisions of the State of Georgia. The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit risks, interest rate risks or foreign currency risks. RECEIVABLES Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. PROPERTY TAXES The Dawson County Board of Commissioners fixed the property tax levy for the 2006 tax digest year (calendar year) on July 28, 2006 (levy date). Taxes were due on December 20, 2006 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2006 tax digest are reported as revenue in the governmental funds for fiscal year 2007. The Dawson County Tax Commissioner bills and collects the property taxes for the School District, withholds 1.75% oftaxes collected as a fee for tax collection and remits the balance of taxes collected to the School District. Property tax revenues, at the fund reporting level, during the fiscal year ended June 30, 2007, for maintenance and operations amounted to $16,019,851.86 and for school bonds amounted to $500,753.88. Tax millage rates levied for the 2006 tax year (calendar year) for the Dawson County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value): School Operations School Bonds 13.646 mills 0.400 mills 14.046 mills SALES TAXES Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $6,342,843.26 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. - 12 - DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING .POLICIES INVENTORIES FOOD INVENTORIES On the basic financial statements, inventories ofdonated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. CAPITAL ASSETS Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works ofart. 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 All $ 100,000.00 $ 100,000.00 $ 100,000.00 NIA 20 years 20 to 80 years 8 to 15 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. - 13 - DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT"H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GENERAL OBLIGATION BONDS The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets. NET ASSETS The School District's net assets in the District-wide Statements are classified as follows: Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties. Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes. Note 3: DEPOSITS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee ofinsurance, or by collateral. The aggregate ofthe face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. Acceptable security for deposits consists of any one of or any combination of the following: - 14 - DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "H" Note 3: DEPOSITS (1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia, (2) Insurance on accounts provided by the Federal Deposit Insurance Corporation, (3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia, (4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities ofthe 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 ofdevelopment authorities created by the laws ofthe State of Georgia, and (7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS At June 30, 2007, the bank balances were $25,884,161.51. The amounts ofthe total uninsured bank balances are classified into three categories of custodial credit risk: Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or by its trust department or agent in the School District's name, Category 3 - Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name. The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2007, as follows: Custodial Credit Risk Category Bank Balance 1 $ 0.00 2 25,070,721.53 3 413,439.98 Total $25,484,161.51 - 15 - DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT"H" Note 4: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories Note 5: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year: Governmental Activities Capital Assets, Not Being Depreciated: Land Construction in Progress Total Capital Assets Not Being Depreciated Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements Total Capital Assets, Being Depreciated, Net Governmental Activity Capital Assets - Net Balances July I, 2006 Increases Decreases Balances June 30, 2007 $ 2, I07,942.00 $ 685,848.79 $ 2,793,790.79 825,541.00 8,786,188.29 $ 524,667.00 9,087,062.29 $ 2,933,483.00 $ 9,472,037.08 $ 524,667.00 $ 11,880,853.08 $48,097,617.00 $ 335,052.95 $ 876,629.11 $47,556,040.84 3,257,990.00 263,192.38 264,629.75 3,256,552.63 1,292,858.00 2,964,723.40 -863,864.10 5,121,445.50 4,541,564.00 2,235,126.00 703,065.00 807,509.47 280,220.74 170,030.58 9,148.11 226,672.20 5,339,925.36 2,288,674.54 873,095.58 $45,168,710.00 $ 2,305,207.94 $ 41,574.45 $47,432,343.49 $ 48,102,123,QQ $ ll,111,245,Q2 $ 566,241,45 $ 52,313, I96.51 Capital assets being acquired under capital leases as of June 30, 2007, are as follows: Governmental Funds Buildings and Improvements Equipment Less: Accumulated Depreciation $ 1,895,095.38 658,143.00 329,841.72 $ 2,223,396.66 Current year depreciation expense by function is as follows: - 16 - DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "H" Note 5: CAPITAL ASSETS Instruction Support Services Educational Media Services General Administration School Administration Maintenance and Operation of Plant Student Transportation Services Community Services Food Services $ 769,536.11 $ 32,961.14 3,183.77 25,497.42 90,034.99 243,589.01 16,959.88 412,226.21 75,998.47 $ 1,257,760.79 Note 6: RESTRICTED ASSETS Special Purpose Local Option Sales Tax (SPLOST), general obligation bond proceeds and property tax levied specifically for retirement of outstanding bond principal, interest and paying agent's fees (Debt Service Funds) are restricted assets in the Statement ofNet Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2007, were as follows: District-wide Capital Projects Bond SPLOST Proceeds Debt Service Funds Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions Restricted Investments: Capital Acquisitions $ 3,791,938.21 $ 921,742.17 $ 553,590.37 $ 117,015.43 $ 15,062,397.00 Note 7: INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2007, consisted of the following: Transfer to Transfers From District-wide Capital Projects General Fund Debt Service Fund $ 61,363.51 4,265,325.00 Total $ 4,326,688.51 - 17 - DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "H" Note 7: INTERFUND TRANSFERS Transfers are used (1) to move excess local funds from the Regular Capital Projects to the General Fund and (2) to move SPLOST revenues collected by the District-wide Capital Projects Fund to the Debt Service Fund to pay current year bond principal and interest as required in the bond resolution. Note 8: RISK MANAGEMENT The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation. The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the system for its general insurance coverage. The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the General Fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. Changes in the unemployment compensation claims liability during the last two fiscal years are as follows: Beginning of Year Liability Claims and Changes in Estimates Claims Paid End of Year Liability 2006 2007 $ 0.00 $ 6 094.00 $ 6,094.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 The School District participates in the Georgia School Boards Association Workers' Compensation Fund, a public entity risk pool organized on July 1, 1992, to develop, implement, and administer a program ofworkers' compensation self-insurance for its member organizations. The School District pays an annual premium to the Fund for its general insurance coverage. Additional insurance coverage is provided through an agreement by the Fund with the Safety National Casualty Corporation to provide coverage for potential losses sustained by the Fund in excess of$400,000.00 loss per occurrence, up to $1,000,000.00. - 18 - DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "H" Note 8: RISK MANAGEMENT The School District has purchased surety bonds to provide additional insurance coverage as follows: Position Covered Amount All Employees Superintendent Principals $ 100,000.00 $ 150,000.00 $ 10,000.00 Note 9: OPERATING LEASES Dawson County Board ofEducation has entered into various leases as lessee for copiers and system telecommunications. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2007, for governmental funds amounted to $192,908.20. Future minimum lease payments for these leases are as follows: Year Ending Governmental Funds 2008 2009 2010 2011 2012 $ 184,379.09 75,400.85 62,267.27 30,070.86 2,720.00 Total $ 354,838.07 Note 10: SHORT-TERM DEBT The School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution ofthe State ofGeorgia limits the aggregate amount of short-term debt to 75 percent ofthe total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred. Short-term debt activity for the fiscal year is as follows: Beginning Balance Issued Redeemed Ending Balance Tax Anticipation Notes $======o=".o==o $3,000,000.00 $3,000,000.00 $======0-.0==0 - 19 - DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "H" Note 11: LONG-TERM DEBT CAPITAL LEASES The Dawson County Board of Education entered into an agreement January 9, 2004, with the Georgia School Board Association for the construction and subsequent lease of an addition to the Dawson County High School. Under the terms of the agreement, the School District will make annual payments through January 1, 2014. The Dawson County Board of Education also entered into various lease agreements for buses. These lease agreements qualify as capital leases for accounting purposes, and, therefore, have been recorded at the present value ofthe future minimum lease payments as of the date of their inception. GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows: Purpose Interest Rates Amount General Government - Series 2005A 4.00% - 5.25% General Government - Series 2005B 5.50% General Government - Refunding - Series 1997A 3.95% - 5.00% $ 9,970,000.00 10,000,000.00 6,240,000.00 $ 26.210.000.00 The changes in Long-Term Debt during the fiscal year ended June 30, 2007, were as follows: Balance July 1, 2006 Additions Capital Leases Deductions Debt Retired Bond Premiums Amortized Balance June 30, 2007 Portion of Long-Term Debt Due within One Year Capital Leases Governmental Funds General Unamortized Obligation Bond Bonds Premium Total $ 2,066,715.00 $29,910,000.00 $ 1,114,093.00 $33,090,808.00 124,596.00 124,596.00 298,217.58 3,700,000.00 3,998,217.58 247,576.23 247,576.23 $ 1,893,093.42 $ 26.210.000.00 $ 866.5)6.77 $ 28 969.6)0.19 $ 333,928.88 $ 4,650,000.00 $ 247,576.22 $ 5,231,505.10 At June 30, 2007, payments due by fiscal year which includes principal and interest for these items are as follows: - 20 - DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "H" Note 11: LONG-TERM DEBT Fiscal Year Ended June 30 Cagital Leases Princigal Interest 2008 2009 2010 2011 2012 2013 - 2014 $ 333,928.88 $ 81,435.29 340,549.05 74,815.12 282,072.67 67,880.81 187,146.02 62,853.98 187,146.02 62,853.98 562,250.78 125,707.96 Total Principal and Interest $ 1,893.093 .42 $ 475,547.14 Fiscal Year Ended June 30 General Obligation Debt Principal Interest Unamortized Bond Premium 2008 2009 2010 2011 2012 2013 - 2015 $ 4,650,000.00 $ 1,253,753.75 $ 5,330,000.00 997,366.25 6,095,000.00 705,652.50 6,590,000.00 372,952.50 795,000.00 176,455.00 2,750,000.00 281,250.00 247,576.22 247,576.22 247,576.22 123,788.11 Total Principal and Interest $ 26,210,000.00 $ 3,787,430.00 $ 866,516.77 Note 12: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $656,807.14 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 $612,549.08 Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $39,827.06 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 $4,431.00 - 21 - DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "H" Note 13: SIGNIFICANT COMMITMENTS The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2007, together with funding available: Project Unearned Executed Contracts Funding Available From State Robinson Elementary School HVAC Renovation $ 22,618.12 $ 475,047.00 Dawson County Middle School 3,528,131.71 $ 3!550)49.83 $ 475!047.00 The amounts described in this note are not reflected in the basic financial statements. Note 14: SIGNIFICANT CONTINGENT LIABILITIES Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. Note 15: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: - 22 - DAWSON COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2007 EXHIBIT "H" Note 15: RETIREMENT PLANS Fiscal Year 2007 2006 2005 Percentage Contributed 100% 100% 100% Required Contribution $ 1,766,153.16 $ 1,613,373.00 $ 1,471,310.00 - 23 - (This page left intentionally blank) DAWSON COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2007 SCHEDULE "1" REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services. Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation Capital Outlay Debt Service Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Other Sources Other Uses Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning NONAPPROPRIATED BUDGETS ORIGINAL(1) FINAL (1) ACTUAL AMOUNTS $ 16,493,618.00 $ 16,493,618.00 $ 16,019,851.86 156,000.00 156,000.00 1,003,384.22 12,139,688.00 13,128,867.12 14,056,646.26 1,625, 116.00 1,717,710.00 1,736,593.00 894,484.00 894,484.00 1,052, 120.08 35,700.00 35,700.00 151,354.61 35,000.00 35,000.00 438,530.17 $ 31,379,606.00 $ 32,461,379.12 $ 34,458,480.20 $ 20,608,421.00 $ 20,767,544.12 $ 21,075,623.33 1,165,962.00 1,010,602.00 664,244.00 349,631.00 1,921,358.00 316,410.00 2,234,793.00 1,387,740.00 246,633.00 20,847.00 1,578,498.00 225,000.00 1, 173,606.00 1, 168,975.00 664,244.00 350,017.00 1,948, 158.00 320,171.00 2,274,813.00 1,508,975.00 253,481.00 7,597.00 124,747.00 1,578,498.00 225,000.00 1,202,543.28 1,110,675.66 664,165.32 359,223.97 1,913,792.26 300,866.51 2,188,493.76 1,443,642.38 250,022.01 4,215.83 470,258.55 110,701.59 1,589,728.60 185,009.53 166,869.40 $ 31,730,139.00 $ 32,365,826.12 $ 33,035,831.98 $ -350,533.00 $ 95,553.00 $ 1,422,648.22 $ 507,195.00 $ $ -350,000.00 -463,303.00 185,959.51 $ -350,000.00 $ 43,892.00 $ 185,959.51 $ -700,533.00 $ 139,445.00 $ 1,608,607.73 2,333,884.94 2,333,884.94 1,797,867.17 Fund Balances - Ending $ 1,633,351.94 $ 2,473,329.94 $ 3,406,474.90 Notes to the Schedule of Revenues, Ex11enditures and Changes in Fund Balances Budget and Actual (1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts. The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 25- DAWSON COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2007 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program Total Child Nutrition Cluster Other Programs Pass-Through From Georgia Department of Education Food Donation (1) Total U. S. Department of Agriculture Education, U.S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants Total Special Education Cluster Other Programs Pass-Through From Georgia Department of Education English Language Acquisition Grants Enhancing Education Through Technology Program Hurricane Education Recovery Act Improving Teacher Quality State Grants State Grants for Innovative Programs Title I Grants to Local Educational Agencies Vocational Education - Basic Grants to States Total U. S. Department of Education CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD 10.553 10.555 N/A (2) N/A $ _~1,~43-2-,3_4=2~.o~o $ 1,432,342.00 10.550 NIA 54 373.71 84.027 84.173 NIA $ N/A $ 489,304.00 11183.77 500,487.77 84.365 84.318 84.938 84.367 84.298 84.010 84.048 N/A 161.33 N/A 86.78 N/A (3) NIA 109,645.83 N/A 4,350.00 N/A 475,282.88 N/A 28,945.36 $ 1,118,959.95 Total Federal Financial Assistance $ 2,605,675.66 N/A = Not Available Notes to the Schedule of Expenditures of Federal Awards (1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year. (2) Expenditures for the funds earned on the School Breakfast Program ($111,676.14) were not maintained separately and are included in the 2007 National School Lunch Program. (3) Funds earned and expended in the prior period on the Hurricane Education Recovery Act, in the amount of $7,846.00, do not require reporting of expenditures. Major Programs are identified by an asterisk (*) in front of the CFDA number. The School District did not provide Federal Assistance to any Subrecipient. The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Dawson County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 26- DAWSON COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2007 SCHEDULE "3" AGENCY/FUNDING GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement State Bonds Sparsity Nursing Services Principal Supplements Vocational Supervisors Food Services Vocational Education Amended Formula Adjustment Other State Programs Graduation Coaches Health Insurance K-3 Statewide Reading Program National Teacher Certification Preschool Handicapped Program Teachers' Retirement Virtual Schools State Grant Georgia State Financing and Investment Commission Reimbursement on Construction Projects Human Resources, Georgia Department of Family Connection Office of Treasury and Fiscal Services Public School Employees Retirement See notes to the basic financial statements. -27- GOVERNMENTAL FUND TYPES CAPITAL GENERAL PROJECTS FUND FUND TOTAL $ 78,826.74 $ 78,826.74 802,876.00 219,227.00 1,903,726.00 237,357.00 960,057.00 101,173.00 1,629,003.00 1,334,459.00 440,477.00 2,167,129.00 263,264.00 117,164.00 126,520.00 64,010.00 282,222.00 86,299.00 55,838.00 403,696.00 571,301.00 722,235.00 409,033.00 46,922.00 100,000.00 20,000.00 114,220.00 11,704.00 9,429.00 81,324.00 94,134.00 -321,946.00 40,075.00 612,549.08 43,982.38 24,724.00 80,323.00 39,827.06 150.00 802,876.00 219,227.00 1,903,726.00 237,357.00 960,057.00 101,173.00 1,629,003.00 1,334,459.00 440,477.00 2,167,129.00 263,264.00 117,164.00 126,520.00 64,010.00 282,222.00 86,299.00 55,838.00 403,696.00 571,301.00 722,235.00 409,033.00 46,922.00 100,000.00 20,000.00 114,220.00 11,704.00 9,429.00 81,324.00 94,134.00 -321,946.00 40,075.00 612,549.08 43,982.38 24,724.00 80,323.00 39,827.06 150.00 $ 185,236.80 78,905.00 4431.00 185,236.80 78,905.00 4431.00 $ 14,056,646.26 $ 185,236.80 $ 14,241,883.06 DAWSON COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2007 SCHEDULE "4" PROJECT The acquisition, construction and equipping of two elementary schools, one new middle school and necessary furnishings and equipment, including the acquisition of all necessary property. The acquiring, constructing and equipping one new middle school; acquiring, constructing and equipping one new elementary school; adding to, renovating, repairing, improving and equipping existing school buildings; acquiring miscellaneous new equipment, school buses and other vehicles; acquiring land for new or existing schools; adding to, renovating, repairing, acquiring, improving and equipping school system buildings and facilities. ORIGINAL ESTIMATED COST(1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR (3)(4) AMOUNT EXPENDED IN PRIOR YEARS (3) (4) PROJECT STATUS $ 20,535,000.00 $ 20,535,000.00 $ 827,710.12 $ 17,752,852.00 Ongoing 29,019,000.00 29,019,000.00 9,283,900.93 763,556.00 Ongoing $ 49,554,000.00$ 49,554,000.00$ 10,111,611.05$ 18,516,408.00 (1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax. (2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion. (3) The voters of Dawson County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects. (4) In addition to the expenditures shown above, the School District has incurred interest to provide advanced funding for the above projects as follows: Prior Years $ 1,845,180.42 Current Year 1,128,725.00 Total $ 2,973,905.42 See notes to the basic financial statements. -28- DAWSON COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES BY PROGRAM YEAR ENDED JUNE 30, 2007 SCHEDULE "5" DESCRIPTION Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) TOTAL DIRECT INSTRUCTIONAL PROGRAMS Media Center Program Staff and Professional Development ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL $ 1,098,376.00 $ 1,612,997.74 $ 47,366.76 $ 1,660,364.50 311,493.00 676.74 676.74 2,637,687.00 3,656,911.51 88,161.12 3,745,072.63 324,288.00 122,998.42 122,998.42 1,326,620.00 1,879,676.49 47,160.50 1,926,836.99 138,609.00 2,282,004.00 1,854,457.00 603,077.00 2,999,550.00 354,199.00 157,261.00 176,077.00 85 315.00 125,653.74 2,539,371.19 2,958,391.98 649,581.10 162,003.52 2,143,141.44 333,391.68 330,201.45 296,967.14 48,624.60 246,802.85 41 300.16 129,160.75 119,342.46 132,024.48 22,967.14 747.45 2,535.41 1,569.68 601.90 6,140.90 97.10 125,653.74 2,668,531.94 3,077,734.44 781,605.58 162,003.52 2,166,108.58 334,139.13 332,736.86 298,536.82 49,226.50 252,943.75 41,397.26 $ 14,349,013.00 $ 17,148,691.75 $ 597,875.65 $ 17,746,567.40 391,758.00 78494.00 529,543.11 119,844.46 649,387.57 TOTAL QBE FORMULA FUNDS $ 14,819,265.00 $ 17,678,234.86 $ 717,720.11 $ 18,395,954.97 (1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment. See notes to the basic financial statements. -29- SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 10, 2008 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Dawson County Board of Education REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Dawson County Board of Education as of and for the year ended June 30, 2007, which collectively comprise Dawson County Board of Education's basic financial statements and have issued our report thereon dated March 10, 2008. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered Dawson County Board ofEducation's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose ofexpressing an opinion on the effectiveness of the Dawson County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Dawson County Board of Education's internal control over financial reporting. A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Dawson County Board ofEducation's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted 2007YB-10 accounting principles such that there is more than a remote likelihood that a misstatement of the Dawson County Board ofEducation's financial statements that is more than inconsequential will not be prevented or detected by the Dawson County Board of Education's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Dawson County Board of Education's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether Dawson County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we have reported to management of Dawson County Board of Education in a separate letter dated March 10, 2008. This report is intended solely for the information and use of the management, members of the Dawson County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~::i,~~~to~~~ State Auditor RWH:as 2007YB-10 Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 March 10, 2008 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Dawson County Board of Education REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULARA-133 Ladies and Gentlemen: Compliance We have audited the compliance of Dawson County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2007. Dawson 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 Dawson County Board of Education's management. Our responsibility is to express an opinion on Dawson County Board of Education's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Dawson County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the 2007SA-10 circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Dawson County Board of Education's compliance with those requirements. In our opinion, the Dawson County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each ofits major Federal programs for the year ended June 30, 2007. Internal Control Over Compliance The management of Dawson County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Dawson County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, but not for the purpose ofexpressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness ofthe Dawson County Board ofEducation's internal control over compliance. A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement ofa Federal program will not be prevented or detected by the entity's internal control. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. 2007SA-10 This report is intended solely for the information and use of the management, members of the Dawson County Board ofEducation, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, RWH:as 2007SA-10 ~Lu.~ Russell W. Hinton, CPA, CGFM State Auditor SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS DAWSON COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AUDITEE'S RESPONSE/STATUS SEE AUDITOR'S COMMENTS FS-6421-06-01 Previously Reported Corrective Action Implemented FS-6421-06-02 Further Action Not Warranted (1) AUDITOR'S COMMENTS (1) Findings/internal control deficiencies of this nature, that are not deemed significant deficiencies or material weaknesses and do not require reporting in the audit report in accordance with Statements on Auditing Standards (SAS) 112 or Governmental Auditing Standards (Yellow Book), will be communicated in a management letter in subsequent periods. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. SECTION IV FINDINGS AND QUESTIONED COSTS DAWSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Dawson County Board of Education's financial statements was unqualified. 2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Dawson County Board ofEducation did not disclose any significant deficiencies related to the financial statements. 3. Noncompliance Material to the Financial Statements The audit of the Dawson County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements. 4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Dawson County Board ofEducation did not disclose any significant deficiencies in internal control over major programs. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Dawson County Board of Education's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Required to be Reported by Section .5 I0(a) of 0MB Circular A-133 The Dawson County Board of Education's audit did not disclose audit findings required to be reported by section .5 I0(a) of 0MB Circular A-133. 7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food Services - School Breakfast Program 10.555 Food Services - National School Lunch Program 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $300,000.00. 9. Low Risk Auditee The Dawson County Board of Education qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133. - 1- DAWSON COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2007 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. -2-