DeKalb County Board of Education, Decatur, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2002

,'

I , .',..

"1 ,'

, -,

, '.. '
,''

:,1' t

'I~ ,,

, ..
'.

.. ,
:,' I,:

,> ,-'

1r-
1 t ._ ,..,_
'I
,'
' /<..

.\

. ,.....
., :-

: . .1'
l ,.,"}
' '

\'
'-/
C - ' ... I . .' '

. '' .

, ' I ' ~\ ,._

I,

. ,

, '

,.

., '

-.' ..

I:: 1,

''

:1, I \,,.I

.. ;.,.

. ',
'I
I' ,'

.. , ...... '

~ I ,

(

' ,,' ,f
., r

.. ',

\ '

' . .: , ,
.... - ' 'I .' , ,

'.'~ ~,. ,:

,~_; -':>\..

. -.-_-.,- ~-_ :.REP.ORT-'.ON AUDIT-:. _,,._ :'-.. -

.bf.iiiEiiNANCIAL' STATEMENTS. . :., -'

FbR

f:~E. .... ..,

~!.SC.4L:(~AR

' .

. ~ ,.... ~ ... ~

~NPEtiJuNt.ao;-ioo~,

',

;',;

.

. -,.
(
r' '
... ,
' ,

\... I

,/,_,._

. ,.
, ''

.. ,...
-,1' -~ , I
' f

,. ,

.~ :, '., ;"t' :

~ 1.-, , I.,,
.... ~

: ~ 1 \'. ',f

'~ i

.,.. ,

,I \

" ,
1 / '

.Russell'

'.
W.

Hin'toii

.';::

-:

.

~stat~Audit~i!, >" . -. ~:

'.,



!,-,

, 'r'

-', 'r,.

' ' J,

,..
"

.1 J.

I : ',
,I,.,,,
... ~ :: ,
.,. ',,',, 1. ',.

.......
,!
'\
.1. : I.....

. , t

,.,,.

'
,,

,, '

.'

DEKALB COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FTNANCIAL

INDEPENDENT AUDITOR'S COMBTNED REPORT ON BASIC FTNANCIAL STATEMENTS AND SUPPLEMENTARY TNFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENTS DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FTNANCIAL STATEMENTS

DISTRICT-WIDE FTNANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

3

B

STATEMENT OF ACTIVITIES

4

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

6

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

7

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

8

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES TN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

9

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

10

H

NOTES TO THE BASIC FTNANCIAL STATEMENTS

11

SCHEDULES

REQUIRED SUPPLEMENTARY TNFORMATION

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

TN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

30

DEKALB COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

31

3 SCHEDULE OF STATE REVENUE

33

4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

35

ALLOTMENTS AND EXPENDITURES

GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)

5

BY PROGRAM

36

6

BY SITE

37

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON COMPLIANCE AND ON lNTERNAL CONTROL OVER FlNANCIAL REPORTlNG BASED ON AN AUDIT OF FlNANCIAL STATEMENTS PERFORMED lN ACCORDANCE WITH GOVERNMENT AUDITlNG STANDARDS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON lNTERNAL CONTROL OVER COMPLIANCE lN ACCORDANCE WITH 0MB CIRCULAR A-133

SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FlNDlNGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FlNDlNGS AND QUESTIONED COSTS

SECTION IV FlNDlNGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S W Suite 214 Atlanta, Georgia 30334-8400
June 16, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the DeKalb 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 DeKalb County Board of Education, as of and for the year ended June 30, 2002, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility ofthe DeKalb 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 Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
As discussed in Note 2 to the financial statements, management has not recognized in the governmental activities and general fund a portion of salaries and the corresponding employer's cost of related benefits earned for contractual services completed prior to June 30, 2002. Also funds received, subsequent to June 30, 2002, from the Georgia Department of Education for the State's share of these unrecorded salaries and related benefits were not recorded as revenue in the year under review. Conversely, the similar salary costs and related revenues for contractual services completed
2002-34ARL-13X

prior to June 30, 2001, were improperly recorded in the year ended June 30, 2002. Accounting principles generally accepted in the United States ofAmerica require that revenues be recorded when available and measurable or earned, as appropriate, and that costs be recorded when liabilities are incurred, rather than when funds are received or disbursed. The aggregate effects on the financial statements of this variance or omission have not been determined, but are believed to be material.
In our opinion, except for the effects of not properly recognizing revenues and costs for certain salaries in the governmental activities and general fund as described in the proceeding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities and general fund of the DeKalb County Board of Education, as of June 30, 2002, 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 addition. in our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the district-wide capital projects fund, the debt service fund, and the aggregate remaining fund information ofthe DeKalb County Board ofEducation, as of June 30, 2002, 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.
As discussed in Note 2 to the basic financial statements, during fiscal year 2002, the Board completed a comprehensive inventory of its capital assets for inclusion in the basic financial statements, the Board consolidated its individual school activity accounts for inclusion in the basic financial statements, and the Board recorded inventories of purchased foods and Federal donated commodities housed at the various school sites in its basic financial statements. These changes are in accordance with generally accepted accounting principles.
As described in Note 2, the DeKalb County Board of Education has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2002.
In accordance with Government Auditing Standards, we have also issued our report dated June 16, 2003, on our consideration of the DeKalb County Board of Education's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations. contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through x and page 30 respectively, are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it.
2002-34ARL-l 3X

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the DeKalb County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 6, which includes the Schedule of Expenditures of Federal Awards as required by U.S. Office of Management and Budget Circular A-133, Audits o/States, Local Governments, and Non-Profit Organizations, 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, except for the effects of the matters referred to in the third paragraph, such information, is fairly stated, in all material respects, in relation to the basic .financial statements taken as a whole.

A copy ofthis report has been filed as a permanent record in the office ofthe State Auditor and made available to the press ofthe State, as provided for by Official Code of Georgia Annotated section 506-24.

Respectfully submitted,

--.

~-~

RWH:as 2002-34ARL-13X

State Auditor

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002
The discussion and analysis of the DeKalb County Board of Education's financial performance provides an overall review of the Board's financial activities for the fiscal year ended June 30, 2002. The intent of this discussion and analysis is to look at the Board's financial performance as a whole; readers should also review the notes to the basic financial statements and the financial statements to enhance their understanding of the Board's financial performance.
Financial Highlights
Key financial highlights for 2002 are as follows:
2002 is the initial year for the implementation of GASB 34. Due to being the implementation year, many comparisons are not available that will be available for 2003.
In total, net assets increased $36.3 million which represents a 5.6 percent increase from 2001. This total increase was due to governmental activities since the Board has no business-type activities.
General revenues accounted for $468.8 million in revenue or 52.1 percent of all revenues. Program specific revenues in the form of charges for services, operating and capital grants and contributions accounted for $430.3 million or 47.9 percent of total revenues of $899.2 million.
The Board had $862.9 million in expenses related to governmental activities; $430.3 million of these expenses were offset by program specific charges for services, grants or contributions.
Among major funds, the general fund has $789.2 million in revenues and $818.6 million in expenditures. The general fund's balance decreased to $26. l million from $50.4 million.
Using the Basic Financial Statements
This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the DeKalb County Board of Education as a financial whole, or as an entire operating entity.
The Statement ofNet Assets and Statement ofActivities provides 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. The fund financial statements also look at the Board's most significant funds. In the case of the DeKalb County Board of Education, the general fund is by far the most significant fund.

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002
Reporting the Board as a Whole
Statement ofNet Assets and the Statement ofActivities
While this document includes a number of funds used by the Board to provide programs and activities, a view of the Board as a whole requires a look at all financial transactions to ask the question, "How did we do financially during 2002?" The Statement of Net Assets and the Statement ofActivities answers this question. These statements include all assets and liabilities using the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the Board's net assets and changes in those assets. This change in net assets is important because it tells the reader that, for the Board as a whole, the financial position of the Board has improved or diminished. The causes of this change may be a result of many factors, some financial, some not. Non-financial factors include the Board's property tax base, facility conditions, required educational programs and other factors.
In the Statement of Net Assets and the Statement of Activities, the Board has one distinct type of activity:
Governmental Activities - All of the Board's programs and services are reported here including instruction, pupil services, improvement of instructional services, educational media services, general administration, school administration, business administration, maintenance and operation of plant, student transportation services, central support services, other support services, enterprise operations, food services and interest on debt.
Reporting the Board's Most Significant Funds
Fund Financial Statements
Fund financial reports provide detailed information about the Board's major funds. The Board uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the Board's most significant funds. The Board's major governmental funds are the general fund, district-wide capital projects funds and the debt service fund.
Governmental Funds Most of the Board's activities are reported in governmental funds, which focus on how money flows into and out 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 modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the 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)
ii

-. DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002 between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental/unds is reconciled in the financial statements. Fiduciary Funds The district is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the principals' accounts. The district 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 district excludes these activities from the district-wide financial statements because it cannot use these assets to finance its operations. The Board as a Whole The perspective of the Statement of Net Assets is of the Board as a whole. Table 1 provides a summary of the Board's net assets for fiscal year 2002. Since this is the first year the Board has prepared financial statements following GASB Statement 34, net asset comparisons to fiscal year 2001 are not available.
Ill

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002

Table 1 Net Assets (in Thousands)

Governmental Activities Fiscal Year 2002

Assets Current and Other Assets Capital Assets, Net

$186,665 607,064

Total Assets

$793,729

Liabilities Current and Other Liabilities Long-Term Liabilities

$ 39,671 72,193

Total Liabilities

$111,864

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

$524,025 144,933 12,907

Total Net Assets

$681,865

Total net assets increased $36.3 million.

Table 2 shows the changes in net assets for fiscal year 2002. Since this is the first year the Board has been required to prepare financial statements following GASB Statement 34, revenue and expense comparisons to fiscal year 2001 are not available.

IV

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002

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

Governmental Activities Fiscal Year 2002
$ 13,294 393,292 23,748
$430,334
$333,345 3
62
1,818 82,835 10,083
2,418 4,992 14,981 7,342 10,960
$468,839
$899,173
$546,748
19,636 25,233 21,714 28,900 46,527 10,705 68,657 40,246
3,702 168
6,059 40,195
4,379
$862,869
$ 36,304

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002

Governmental Activities

Instruction comprises 63.4 percent of governmental program expenses. Interest expense was 0.5 percent. Interest expense was attributable to capital leases and the outstanding bond 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 net cost of services. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements. Since this is the first year the Board has prepared financial statements following GASB Statement 34, cost of service comparisons to fiscal year 200 I are not available.

Table 3 Governmental Activities
(in Thousands)

Net Cost of Services Fiscal Year 2002

Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt

$238,889
16,438 22,367 10,448 10,098 31,744 10,246 43,546 31,236
3,702 115
6,059 3,268 4,379

Total Expenses

$432,535

VI

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002
Although program revenues make up 47.9 percent of the revenues, the Board is still primarily dependent upon tax revenues for governmental activities. Over 43.7 percent of instruction activities are supported through truces and other general revenues; for all governmental activities general revenue support is 50.1 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 $902.9 million and expenditures and other financing uses of $897.5 million. There was an increase of $36.7 million in the capital projects fund due to the accumulation of sales tax proceeds during the year for future use. The general fund had a decrease of $24.2 million and debt service fund had a decrease of $7.1 million. The negative change in the fund balance of the general fund for the year was not totally unanticipated. The Board budgeted to use approximately $7 million from the 2001 ending balance to meet current costs in 2002.
General Fund Budgeting Highlights
The Board's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund.
The Board uses site-based budgeting based on FTE student allocations. The budgeting systems are designed to tightly control total sited budgets but provide flexibility for site management.
For the General Fund, actual revenues and other sources exceeded the final budget of $767.3 million by $27. l million. This difference was due to an increase in property and sales tax revenues of $14. l million over budget resulting from conservative budgeting and a higher collection rate than projected. This increase over budget was offset by reductions of $2.2 million under budget from lower investment earnings and $3.4 million in state revenues due to fewer Full Time Equivalent students than projected and a reduction in staff development earnings.
Actual expenditures and other financing uses of $818.6 million exceeded the final budgeted amount of $770. l million by $48.5 million. This difference was due to an increase in instruction and school administration salaries and benefits costs resulting from the hiring of a much more experienced staff than projected. These costs were offset somewhat by a reduction of Other Instructional costs of $5.2 million due to a delay in the purchase of budgeted instructional software and the contracting of fewer international teachers than projected. Actual noninstructional supplies and materials costs were also reduced due to conservative budgeting and cost control measures instituted during the year.
vii

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002

General Fund expenditures and other financing uses exceeded revenues and other financing sources by $24.2 million, $2.7 million of which was anticipated and budgeted for.

Capital Assets and Debt Administration

Capital Assets

At the end of fiscal year 2002 the Board had $607. I million invested in capital assets, all in governmental activities. Table 4 shows fiscal year 2002 balances. Since this is the first year the Board has prepared financial statements following GASB Statement 34, capital assets comparisons to fiscal 2001 are not available.

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

Governmental Activities Fiscal Year2002

Land Construction in Progress Land Improvements Buildings and Improvements Equipment Less: Accumulated Depreciation

$ 22,190 30,787 25,588
699,146 139,660 -310,307

Total

$607,064

The primary increases occurred in Buildings and Building Improvements and in Construction in Progress. Due to the ongoing growth in the county, the Board has numerous construction projects including new buildings, additions, and renovations.

Debt

At June 30, 2002 the Board had $68.1 million in bonds outstanding, $15.0 million in capital leases and $8.5 million in compensated absences, $19.3 million of which is due within one year. Table 5 summarizes general operations bonds, capital leases and compensated absences outstanding. Since this if the first year the Board has prepared financial statements following GASB Statement 34, debt comparisons to fiscal year 2001 are not available.

viii

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002

Table 5 Debt at June 30 (in Thousands)

Governmental Activities Fiscal Year 2002

General Obligation Bonds Capital Leases Compensated Absences

$ 68,085 14,955 8,465

Total

$ 91,505

The Board maintains an AA and Aa bond rating from Standard & Poor's and Moody's respectively.

Current Issues

The DeKalb County School System, DeKalb County, and the state of Georgia continue to struggle through serious economic hardships. Like the state of Georgia, DeKalb County sales tax and property tax revenue collections continue to run behind the previous year and current projections. As a result, state austerity reductions of over $18 million in state revenue for the school system for fiscal years 2003 and 2004 have already been instituted. In addition continued low interest rates have negatively affected investment earnings with no clear end in sight. Sales tax collections from the Special Purpose Local Option Sales Tax instituted in 2002 also continue to lag projections by nearly 7%.

On a positive note the property tax digest continues to grow at a 6% to 7% annual growth rate. Approximately 50% of the growth being due to new residential, commercial and industrial properties and 50% due to reassessment of existing properties. Enrollment also continues to grow at 1% to 2% annually.

Significant cost and budgetary control measures have been initiated by the school system in fiscal year 2003 and are budgeted to continue in fiscal year 2004. The Board of Education has taken budgetary action to see to it that the DeKalb County School System will overcome the current economic downturns while increasing the working reserve to higher levels in order to sustain the school system through any future poor economic conditions.

IX

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2002 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 ques.tions about this report or need additional financial information, contact Mr. Carl Beck, at the DeKalb County Board of Education, 3770 North Decatur Road, Decatur, Georgia 30032.
X

DEKALB COUNTY BOARD OF EDUCATION

DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2002
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Notes Receivable Inventories Capital Assets Land Construction in Progress Land Improvements Buildings Equipment Less Accumulated Deprec1at1on
Total Assets
LIABILITIES
Accounts Payable Salaries Payable Expired Grant Balances Payable Contracts Payable Retainages Payable Deferred Revenues Long-Term Llabiht1es
Due Within One Year Due in More Than One Year
Total Llabll1t1es
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Debt Service Capital Proiects Unrestricted
Total Net Assets
Total L1ab11ities and Net Assets
The notes to the basic financial statements are an integral part of this statement -3-

EXHIBIT"A"

GOVERNMENTAL ACTIVITIES

$

81,446,365 73

68,018,297 61

18,956,797 38 1,465,578 08
10,694,989 16 2,025,125 46 150,000 00 3,907,507 26

22,190,405 72 30,787,215 82 25,587,727 00 699,146,289 00 139,660,351.81 -310,307,029 60

$ 793,729,620 43

$

3,162,831 88

5,787,450 50

192,225 65

7,034,380 74

4,153,276 04

29,628 32

19,311,345 77 72,193,529 89

$ 111,864,668 79

$ 524,024,593 92
8,290,091 99 47,047 63
136,596,360 39 12,906,857 71
$ 681,864,951 64

$ 793,729,620 43

DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2002

EXPENSES

CHARGES FOR SERVICES

GOVERNMENTAL ACTIVITIES

Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Admin1strat1on School AdmIrnstratIon Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt

$ 546,747,999 54 $
19,636,062 07 25,233,541.57 21,713,900 93 28,899,790.46 46,527,531 54 10,704,768 95 68,656,606 63 40,246,458 11
3,701,710 75 167,593 83
6,059,318 71 40,195,200 70
4,378,783 84

1,231,763 25 589,177 66
11,472,782 47

Total Governmental ActIvItIes

$ 862,869,267 63 $ 13,293,723 38

General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Proiects For Debt Services Intangible Recording Tax Real Estate Alcoholic Beverages Grants and Contributions not Restricted to Spec1f1c Programs Investment Earnings Miscellaneous

Total General Revenues

Change in Net Assets

Net Assets - Beginning of Year

Net Assets - End of Year
The notes to the basic financial statements are an integral part of this statement -4 -

EXHIBIT"B"

PROGRAM REVENUES

OPERATING

CAPITAL

GRANTS AND

GRANTS AND

CONTRIBUTIONS CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

$ 301,351,309 56 $
3,178,206 56 561,547.58
10,609,386 75 8,442,252 17 14,783,274 62
24,207,981 86 5,153,124 59
52,503 88
24,952,309 46
$ 393,291,897 03 $

5,276,322 52 $ 20,000 00
2,305,437 24 656,485 29
10,359,327 36 458,900 44 313,164 81
3,856,980 37
501,866 94
23,748,484 97 $

-238,888,604 21
-16,437,855 51 -22,366,556 75 -10,448,028 89 -10,098,210 93 -31,744,256 92 -10,245,868 51 -43,546,282 30 -31,236,35315
-3,701,710 75 -115,089 95
-6,059,318 71 -3,268,241 83 -4,378,783 84
-432,535, 162 25

$ 333,344,913 44 2,934 88
62,070 94

82,835,395 54 1,818,049 38
10,082,987 67 2,417,706 96 4,991,603 23
14,980,679 27 7,342,163 54
10,960,055 97

$ 468,838,560 82

$

36,303,398 57

645,561,553 07

$

-5-

DEKALB COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30 2002

EXHIBIT"C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Notes Receivable lnventones
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salanes Payable Expired Grant Balances Payable Contracts Payable Retamages Payable Deferred Revenue
Total L1ab1ht1es
FUND BALANCES
Reserved for Continuation of Federal Programs Debt Service lnventones Capital Pro1ects
Unreserved Designated for Self-Insurance Undes1gnated Reported 1n General Fund
Total Fund Balances
Total L1ab1ht1es and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECT
FUNDS

DEBT SERVICE
FUNDS

TOTAL

$ 15,999,185 85 $ 497,110 53

65,389,891 14 $ 67,521,187 OB

57,288 74 $

81,446,365 73 68,018,297 61

1,025,870 86 1,465,578 08 10,694,989 16 1,748,102 66
3,907,507 26

14,461,904 68
277,022 80 150,000 00

4 15

15,487,779 69 1,465,578 08
10,694,989 16 2,025,125 46 150,000 00 3,907,507 26

$ 35,338,344 40 $ 147,800,005 70 $ 57.292 89 $ 1831195,642 99

$ 3,146,843 35 $ 5,787,450 50 192,225 65
29,628 32

15,988 53
7,034,380 74 4,153,276 04

$ 9 156 147 82 $ 11203645 31

$

3,162,831 88

5,787,450 50

192,225 65

7,034,380 74

4,153,276 04

29,628 32

$ 20,359,793 13

$ 6,822,140 58

$ 6,822,140 58

$ 57,292 89

57,292 89

1,467,951 41

1,467,951 41

$ 136,596,360 39

136,596,360 39

1,556,731 42

1,556 731 42

16,335,373 17

16 335 373 17

$ 26,182,196 58 $ 136,596,360 39 $ 57,292 89 $ 162,835,849 86

$ 35,338,344 40 $ 147 800 005 70 $ 57,292 89 $ 183,195,642 99

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

DEKALB COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30. 2002

EXHIBIT"D"

Total Fund Balances - Governmental Funds (Exh1b1t "C")

$ 162,835,849 86

Amounts reported for Governmental Act1v1t1es m the Statement of Net Assets are different because

Capital Assets used m Governmental Act1v1t1es are not financial resources and therefore are not reported in the funds These assets consist of

Land Construction m Progress Land Improvements Buildings Equipment Accumulated Deprec1at1on
Total Capital Assets

$ 22,190,405 72 30,787,215 82 25,587,727.00
699,146,289 00 139,660,351 81 -310,307,029 60

607,064,959 75

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

3,469,017 69

Long-Term LIab1ht1es, including Bonds Payable, are not due and payable in the

current period and therefore are not reported as hab1hties m the funds

Long-Term L1ab1htIes at year-end consist of

Bonds and Notes Payable

$

Capital Leases

Compensated Absences

Total Long-Term LIabIhtles

-68,085,000 00 -14,955,365 83
-8,464,509 83

-91,504,875 66

Net Assets of Governmental Act1v1t1es (Exh1b1t "A")

$ 681,864,951 64

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

-- ------------------------

DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30. 2002

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 Adm1mstrabon School Adm1mstrahon Business Admin1stratIon Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation
Capital Outlay Debt Services
Pnncipal Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES {USES)
Sale of Equipment Capital Leases Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECT
FUNDS

DEBT SERVICE
FUNDS

TOTAL

$ 331,611,878 01 17,492,297 86 $
350,972,427 92 60,328,437 46 13,293,723 38 3,902,952 94 11,649,351 83

$ 82,835,395 54 20,720,195 89
3,437,461 83 15,943 21

13,180 12 $ 1,818,049 38
1,748 77

331,625,058 13 102,145,742 78 371,692,623 81
60,328,437 46 13,293,723 38
7,342,163 54 11,665,295 04

$ 789,251,069 40 $ 107,008,996 47 $ 1,832,978 27 $ 898,093,044 14

$ 537,085,478 93

$ 537,085,478 93

19,610,073 74 23,301,824 38 20,185,066 88
4,474,548 93 46,488,632 01
9,603,192 61 67,987,648 01 34,471,794.15
3,698,566 82 167,593 83
6,059,318 71 39,126,185 77
790,339 15 $

$ 69,932,557 22

20,999 18

19,610,073.74 23,301,824.38 20,185,066 88
4,474,548 93 46,488,632 01
9,624,191 79 67,987,648 01 34,471,794 15
3,698,566 82 167,593 83
6,059,318 71 39,126,185 77 70,722,896 37

4,957,453 42 623,172 58

5,175,000 00 3,755,611 26

10,132,453 42 4,378,783 84

$ 818,630.889 92 $ 69,932,557 22 $ 8,951,61044 $ 897,515,057 58

$ -29.379,820 52 $ 37,076,439 25 $ -7,118,63217 $

577,986 56

$

82,514 07

4,750,289.10

304,222 00

$

-304,222 00

$

82,514 07

4,750,289 10

304,222 00

-304,222 00

$ 5,137,025 17 $

-304,222 00

$ 4,832,803 17

$ -24,242,795 35 $ 36,772,217 25 $ -7,118,63217 $ 5,410,789 73

50,424,991 93

99,824,143.14

7,175,925 06

157,425,060 13

Fund Balances - Ending

$ 26,182,196 58 $ 136,596,360 39 $

57,292 89 $ 162,835,849 86

The notes to the basic financial statements are an integral part of this statement -8-

f 1-
DEKALB 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. 2002

EXHIBIT"F"

Total Net Change in Fund Balances - Governmental Funds (Exhrbrt "E")

$ 5,410,789 73

Amounts reported for Governmental Act1v1t1es in the Statement of Act1v1t1es are different because.

Capital Outlays are reported as expenditures in Governmental Funds However, in the Statement of Act1v1t1es, the cost of Capital Assets rs allocated over their estimated useful lives as depreciation expense In the current penod, these amounts are

Capital Outlay Deprec1at1on Expense
Excess of Capital Outlay over Deprec1at1on Expense

$ 46,323,184 90 -21,215,797 98

25,107,386 92

Because some property taxes wrll not be collected for several months after the School D1stnct's fiscal year ends, they are not considered "available" revenues

1,784,86113

In the Statement of Actrvrtres, only the gain on the sale of the (land/bu1lding/equ1pment) 1s 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 land/carrying value of the burlding/equrpment) sold

-787,753 14

Some of the Capital Assets acquired thrs year were financed with capital leases In-Governmental Funds, a capital lease arrangement rs considered a source of financing, but in the Statement of Net Assets, the lease obligation rs reported as a Long-Term L1ab1hty

-4,750,289 10

Repayment of long-term debt 1s reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term L1ab1ht1es rn the Statement of Net Assets In the current year, these amounts consist of

Bond Pnncrpal Retirements Capital Lease Payments
Total Long-Term Debt Repayments

$ 5,175,000 00 4,957,453 42 10,132,453 42

Some ,terns reported in the Statement of Actrvrtres do not require the use of current financial resources and therefore are not reported as expenditures rn Governmental Funds These acbvrtres consist of

Increase in Compensated Absences

-594,050 39

Change in Net Assets of Governmental Act1v1t1es (Exhrbrt "B")

$ 36,303,398 57

The notes to the basrc financial statements are an integral part of thrs statement -9 -

DEKALB COUNTY BOARD OF EDUCATION STATEMENT OE FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2002
ASSETS Cash and Cash Equivalents Accounts Receivable, Net
Other
Total Assets
LIABILITIES Funds Held for Others

EXHIBIT"G"
AGENCY FUNDS
$ 9,361,531.34 194.04
$ 9,361,725.38
$ 9,361,725 38

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

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

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

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

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 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 Bond Proceeds, grants from Georgia State Financing and Investment Commission and Special Purpose Local Option Sales Tax proceeds to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term principal, interest and paying agent's fees.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds, governments or individuals.
BASIS OF ACCOUNTING
The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless 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 Board uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and

- 12 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FfNANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, folJowed by cost-reimbursement grants, then general revenues.
A departure from the above definitions is the accounting treatment afforded the final two payments on General Fund teachers' and bus drivers' contracts, and the resources available from the Georgia Department of Education for the State's share of these contracts. During fiscal year 2002, a substantial number ofpersonnel ofthe School District were employed for a one hundred and ninety day period beginning in August 2001 and ending in early June 2002. Personnel contracts for this employment period specify that compensation be paid in twelve equal monthly payments beginning in September 2001 and ending in August 2002. State grants to fund the State's share of these contracts were disbursed from the Georgia Department of Education to the School District in the same twelve months. As of June 30, 2002, compensation under these employment contracts had been earned, but two of the twelve monthly payments, due for July and August 2002, had not been made. Payments for these two months were made and recorded as costs by the School District subsequent to June 30, 2002. Also, the State's portion ofthe compensation paid in July and August 2002 was received and recorded as revenue in the fiscal year subsequent to June 30, 2002. Conversely, the similar costs and related revenues for contractual services completed prior to June 30, 2001, were recorded in the year ended June 30, 2002. Generally accepted accounting principles require that revenues be recorded when earned or available and measurable as appropriate and that expenditures or expenses as appropriate be recorded when incurred, rather than when funds are received or disbursed.
RESTATEMENT OF PRIOR YEAR FUND BALANCE - GENERAL FUND
In prior years, the financial activities of the School District's School Food Services Fund, Lottery Programs, Federal Programs and Athletic Fund were reported as Special Revenue Funds and the activities ofthe Warehouse Service Fund were reported as Proprietary Fund Type - Internal Service Funds. These funds had a combined fund balance of$8,110,214.68 at July 1, 2001. For fiscal year 2002, these funds have been reported as part of the General Fund. In addition, governmental fund activity from the various school activity accounts, which were not reported in the prior year's financial statements, have been reported within the General Fund for fiscal year ended June 30, 2002. The governmental fund activity ofthe various school activity accounts had a fund balance of $1,077,005.44 at July 1, 2001. This change is in accordance with generally accepted accounting

- 13 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

principles. Also, inventories of consumable supplies, purchased food and Federal donated commodities housed at various school sites, which were not reported in the prior year's financial statements, have been reported within the General Fund for fiscal year ended June 30, 2001. The inventories had a balance of $5,616,304.26.

General Fund Balance July I, 2001

$35,621,467.55

Add Funds Consolidated with General Fund: School Food Services Fund Federal Programs Athletic Fund Warehouse Service Fund School Activity Account - Governmental Activity

7,504,868.99 1,188.74 9,358.37
594,798.58 1,077,005.44

Add: Inventory Balances Not Included in Prior Year Report: Consumable Supplies Food Donated Commodities Purchased Food

2,790,760.84
2,358,891.44 466,651.98

General Fund Balance July 1, 2001 (Restated)

$50,424,991.93

CHANGES IN ACCOUNTING PRINCIPLES

The DeKalb County Board of Education has implemented a new financial reporting model as required by provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, as of June 30, 2002.

The provisions of GASB Statement No. 34 require the inclusion of a Statement ofNet Assets. The elements comprising Net Assets - Beginning include the following:

- 14 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FfNANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General Fund (Restated) July l, 2001 Capital Projects Fund Debt Service Fund

$ 50,424,991.93 99,824,143.14 7,175,925.06

Governmental Funds (Restated) July 1, 2001 Capital Assets Accumulated Depreciation Property Tax Revenue Timing Differences Bonds and Notes Payable Capital Leases Payable Compensated Absences

$ 157,425,060.13 876,083,363.08 -293,338,037.11 1,684,156.56 -73,260,000.00 -15, 162,530.15 -7,870,459.44

Net Assets Beginning (See Exhibit "B")

$ 645.561.553.07

CASH AND CASH EQUIVALENTS

COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorize the Board to deposit its funds in one or more solvent banks or insured Federal savings and loan associations.

INVESTMENTS

COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:

(1) Obligations issued by the State of Georgia or by other states,

(2) Obligations issued by the United States government,

(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,

- 15 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(4) Obligations of any corporation of the United States government,

(5) Prime banker's acceptances,

(6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services,

(7) Repurchase agreements, and

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

RECEIVABLES

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

PROPERTY TAXES

The DeKalb County Board ofCommissioners fixed the property tax levy for the 2001 tax digest year (calendar year) on June 12, 2001 (levy date). Taxes were due on November 15, 2001 (lien date) and could be paid in two installments on August 15, 2001 and November 15, 2001 (due dates). Taxes collected within the current fiscal year or within 60 days after year-end on the 2001 tax digest are reported as revenue in the governmental funds for fiscal year 2002. The DeKalb 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, 2002, for maintenance and operations amounted to $331,549,807.07 and for school bonds amounted to $13,180.12.

The tax millage rate levied for the 2001 tax year (calendar year) for the DeKalb County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

21.98 mills

SALES TAXES

Special Purpose Local Option Sales Tax revenue during the year amounted to $84,653,444.92 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.

- 16 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC-FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVENTORIES

FOOD INVENTORIES 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 are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses are recorded as the inventory items are used.

For fiscal year 2002, the School District began recording inventories ofpurchased foods and donated food commodities. The recording ofthe purchased foods and donated food commodities inventories is a change in accounting principles.

CAPITAL ASSETS

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

Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows:

Capitalization Policy

Estimated Useful Life

Land Land Improvements Buildings Building Improvements Equipment
Vehicles Kitchen Equipment Computers Outdoor Equipment Miscellaneous Equipment Buses

ALL $ I00,000.00 $ 100,000.00 $ 100,000.00

NIA 20 years 80 years
NIA

$ 1,000.00

20 years

$ 1,000.00

15 years

$ 1,000.00

10 years

$ 1,000.00

15 years

$ 1,000.00 10 to 30 years

$ 1,000.00

20 years

- 17 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. In addition, general obligation bonds have been issued to refund existing general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee 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 of the public funds being secured after the deduction ofthe amount ofdeposit insurance. If a depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool of public funds shall be not less than 110 percent ofthe daily pool balance. OCGA Section 45-8-11 (b) provides an officer holding public funds may, in his discretion, waive the requirement for security in the case ofoperating funds placed in demand deposit checking accounts.
Acceptable security for deposits consists of any one of or any combination of the following:
( 1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,

- 18 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS

(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,

(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and

(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

CATEGORIZATION OF DEPOSITS At June 30, 2002, the bank balances were $108,531,737.50. The amounts ofthe total bank balances are classified into three categories of credit risk:

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

The School District's deposits are classified by risk category at June 30, 2002, as follows:

Risk Category

Bank Balance

I

$ 886,848.69

2

107,644,888.81

3

0.00

Total

$108.531.737.50

CATEGORIZATION OF INVESTMENTS Investments are classified as to risk by the three categories described below:

- 19 -

- ---- ------- - - - - - - - - - - - - - - - - -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30. 2002

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS

Category 1 - Insured or registered, or securities held by the School District or the School District's agent in the School District's name.
Category 2 - Uninsured or unregistered. with securities held by the counterparty's trust department or agent in the School District's name.
Category 3 - Uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent but not in the School District's name.

Funds invested in an investment pool managed by another government are not required to be categorized unless the investing entity owns specific, identifiable investment securities in the pool.

At June 30, 2002, the carrying value of the School District's total investments was $68,018,297.61 which is materially the same as fair value. The investments are classified as to risk categories as follows:

Type of Investment
Repurchase Agreements Local Government
Investment Pools
Total Investments

Risk Categories

2

3

Carrying Amount

Fair Value

$,==~0~0,..,0 $47,608 000 00 $,==~O~,O,..,O $47,608,000 00 $47,608,000.00

20,410,297.61 20,410.297 .61 $ 68 0)8.297 6) $ 68.018 297,61

The carrying amounts shown above includes amounts maintained in an investment pool by the State of Georgia, Office of Treasury and Fiscal Services in which the School District owns no identifiable securities. The investment policy of the State of Georgia, Office of Treasury and Fiscal Services for the Local Government Investment Pool (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. A description ofthe Primary Liquidity Portfolio is as follows:

The Primary Liquidity Portfolio consists of Georgia Fund 1, which is a combination local and state government investment pool, and Fund 6. Georgia Fund 1 is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the Securities and Exchange Commission as an investment company but does operate Georgia Fund 1 in a manner consistent with Rule 2a-7 ofthe Investment Company Act of 1940 and is considered to be a 2a-7 like pool. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participant's shares sold and redeemed based on$ l .00 per share. Pooled cash and cash equivalents and investments are reported at cost, which approximates fair value. The pool does not issue any legally binding guarantees to support the value of the shares. Participation in the pool is voluntary and deposits consist of funds from local governments; operating and trust funds ofGeorgia's state agencies, colleges and universities; and current operating funds of the State of Georgia's General Fund.

- 20-

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS

Investments in Georgia Fund 1 and Fund 6 are directed toward short-term instruments such as U.S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances and repurchase agreements. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2002, was 0.12 years. The average investment duration for Fund 6 on June 30, 2002, was 0.75 years.

Note 4: NON-MONETARY TRANSACTIONS

The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 1 - Inventories

Note 5: CAPITAL ASSETS

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

Balances July 1,2001

Increases

Decreases

Balances June 30, 2002

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

$ 18,991,930.72 $ 3,198,475.00

$ 22,190,405.72

93,990,788.82 26,062,057.00 $-89,265,630.00 30,787,215.82

Total Capital Assets Not Being Depreciated $112,982,719.54 $ 29,260,532.00 $-89,265,630.00 $ 52,977,621.54

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements

$635,468,386.00 $ 63,677,903.00

$699,146,289.00

127,632,257.54 17,062,652.90$ -5,034,558.63 139,660,351.81

25,587,727.00

25,587,727.00

Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

248,342,429.07 44,995,608.04

8,739,328.57

257,081,757.64

11,197,083.06 -4,246,805.49 51,945,885.61

1,279,386.35

1,279,386.35

Total Capital Assets, Being Depreciated,

Net

$469,762,606.43 $ 85,112,484.92$ -787,753.14 $554,087,338.21

Governmental Activity Capital Assets Net

$582.745.325.97 $114.373.0 !6.92 $-90.053.383.14 $607.064.959.75

Capital assets being acquired under capital leases as of June 30, 2002, are as follows:

- 2I -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"H"

Note 5: CAPITAL ASSETS

Equipment Less: Accumulated Depreciation

Governmental Funds
$25,973,382.40 -3,892,051.74

$22.081.330.66

Current year depreciation expense by function is as follows:

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

$ 5,288,360.81

$ 834, 126.48 672,187.63
10,607,109.98 469,876.78 320,655.33
2,509,609.98

15,413,566.18 513,870.99

$21,215,797.98

Note 6: RESTRICTED ASSETS

Special Purpose Local Option Sales Tax (SPLOST) and property tax levied specifically for retirement of outstanding bond principal, interest and paying agent's fees (Debt Service Funds) are reported as restricted assets in the Statement ofNet Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2002, were as follows:

Capital Projects SPLOST Proceeds

Debt Service Funds

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

$ 4,252,627.34 $66,933,5 I 5.88

$ 57,288.74

- 22 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 7: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2002, consisted of the following:

Transfer to

Transfers From District-Wide Capital Projects

General Fund

$ 304,222.00

Transfers are used to move excess funds from the Capital Projects Fund to the General Fund upon completion of capital construction projects.

Note 8: RISK MANAGEMENT

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

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

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

The School District has established a limited risk management program for workers' compensation claims. The School District accounts for claims within the same fund that the employees salaries and benefits were paid with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. An excess coverage insurance policy covers individual claims in excess of$350,000.00 loss per occurrence, up to the statutory limit.

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End ofYear Liability

2001 2002

$

0.00 $ 2,208,082.03 $ 2,208,082.03 $

0.00

$

0.00 $ 2,239,026.06 $ 2,239,026.06 $

0.00

- 23 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"H"

Note 8: RISK MANAGEMENT

The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the same fund that the employees salary and benefits were paid 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:

2001 2002

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

$

0.00 $ 72,366.40 $ 72,366.40 $

0.00

$

0.00 $ 134,121.36 $ 134,121.36 $

0.00

The School District is self-insured with regard to dental claims. The School District accounts for claims within the General Fund with expenditures and liability being reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated.

2001 2002

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

$ 532,459.67 $ 2,961,648.88 $ 3,250,165.02 $ 243,943.53

$ 243,943.53 $ 3,274,830.83 $ 3,518,774.36 $

0.00

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

Position Covered

Amount

Superintendent All Employees

$ I00,000.00 $ 500,000.00

Note 9: OPERATING LEASES

The DeKalb County Board of Education has entered into various leases as lessee for copiers. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2002, for governmental funds amounted to $1,506,554.68. Future minimum lease payments for these leases are as follows:

Year Ending

Governmental Funds

2003

$ 149,449.97

- 24 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT"H"

Note 10: LONG-TERM DEBT

CAPITAL LEASES The DeKalb County Board of Education has entered into various lease agreements as lessee for vehicles, buses, copiers and a solid waste system. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception.

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

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

Purpose

Interest Rates

Amount

General Government - Series 1993A

2.80% - 6.25% $ 38,430,000.00

General Government - Refunding - Series 1993 2.80%- 5.60%

29,655,000.00

$ 68,085,000.00

The changes in Long-Term Debt during the fiscal year ended June 30, 2002, were as follows:

Balance July I, 2001
Additions Capital Leases Annual Leave Earned
Deductions Annual Leave Utilized Debt Retired
Balance June 30. 2002
Portion of Long-Term Debt Due within One Year

Capital Leases

Compensated Absences

General Obligation
Bonds

Total

$15,162,530.15 $ 7,870,459.44 $73,260,000.00 $96,292,989.59

4,750,289.10 5,326,729.00

4,750,289 I0 5.326,729.00

4,732,678.61

4,732,678.61

4,957,453.42

5,175,00000 I0, 132,453.42

$ H 25 5 165...81 $ 8 464,502 83 $68 085 000 00 $21 504825 66

$ 5,301,835 94 $ 8,464,509.83 $ 5,545,000.00 $19,311,345 77

At June 30, 2002, payments due by fiscal year which includes principal and interest for these items are as follows:

- 25 -

---- ------------------

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 10: LONG-TERM DEBT

Fiscal Year Ended June 30
2003 2004 2005 2006 2007 - 201 I 2012
Total Principal and Interest

Ca12ital Leases

Prmc112al

Interest

General Obligation

Debt

Princi12al

Interest

$ 5,301,835.94 $
4,712,645.77 3,288,953.41
942.437.95 709,492.76

638,508.40 $ 5,545,000.00 $ 3,505,016.26

394,845.32 5,870,000.00 3,232,687.51

190.483.01 6,265,000.00 2,937.546 26

61,075.55 6,715,000.00 2,615.405.0 I

79,307.46 40,835,000.00 6,993,488.13

2,855,000.00

89,218 75

$14 255 365..83 $ I 364,212 :Z~ $68 085 QQQ QQ $12 373 361 22

Note 11: ON-BEHALF PAYMENTS

The Board has recognized revenues and costs in the amount of$9,888,826.00 for health insurance and retirement contributions paid on the Board's behalf by the following State Agencies.

Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $8,022,117.12

Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of$1,044,063.88

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 $822,645.00

Note 12: SIGNIFICANT COMMITMENTS

The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2002, together with funding available:

- 26 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FfNANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 12: SIGNIFICANT COMMITMENTS

Project

Unearned Executed Contracts

Funding Available From State

285 - Softball Field Conversions

$ 83,757.50

630 - Toney Elementary School

450,177.33 $ 167,825.00

631 - Sky Haven Elementary School

450,177.33

167,825.00

632 - Stone Mountain Elementary School

372,633.60

167,825.00

634 - Redan Middle School

5,026,329.63

985,096.29

636 - Livsey Elementary School

377,549.10

640 - Hightower Elementary School

438,343.00

174,825.00

642 - Kelly Lake Elementary School

445,383.00

644 - Rowland Elementary School

462,975.00

179,820.00

645 - Montgomery Elementary School

438,343.00

179,820.00

648 - Coralwood Elementary School

445,843.00

654 - Panola Way Elementary School

441,883.00

179,820.00

655 - Pine Ridge Elementary School

462,975.00

179,820.00

656 - Murphey Candler Elementary School

441,883.00

179,820.00

657 - Vanderlyn Elementary School

438,343.00

179,820.00

658 - Rockbridge Elementary School

462,975.00

179,820.00

659 - Sagamore Hills Elementary School

438,343.00

179,820.00

660 - Snapfinger Elementary School

441,883.00

179,820.00

661 - Shadow Rock Elementary School

462,975.00

179,820.00

662 - Fairrington Elementary School

441,883.00

179,820.00

663 - Glen Haven Elementary School

441,883.00

664 - Brown's Mill Elementary School

441,883.00

179,820.00

665 - Clifton Elementary School

449,383.00

179,820.00

666 - Midvale Elementary School

438,343.00

179,820.00

667 - Laurel Ridge Elementary School

438,343.00

179,820.00

668 - Hawthorne Elementary School

445,843.00

179,820.00

669 - Avondale Elementary School

462,975.00

179,820.00

679 - Fembank Elementary School

462,975.00

174,825.00

685 - Stone Mill Elementary School

470,475.00

179,820.00

688 - E. L. Miller (Mainstreet) Elementary School

468,475.00

179,820.00

715 - New Clarkston Middle School

43,686.70

719,180.10

716 - Towers Middle School

53,511.00

695,178.00

723 - Columbia Elementary School

1,485,545.86

734 - Chamblee High School

6,945.00

756 - New Lithonia High School

1,446,570.91

845,982.60

757 - Martin Luther King Jr. High School

340,699.99

551,259.90

759 - Nancy Creek Elementary School

353,830.60

167,825.00

760 - Medlock Elementary School

274,760.60

167,825.00

- 27 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 12: SIGNIFICANT COMMITMENTS

761 - Mclendon Elementary School 762 - Smoke Rise Elementary School 763 - Redan Elementary School 764 - Oak.grove Elementary School 765 - Kingley Elementary School 766 - Gresham Park Elementary School 767 - Flat Shoals Elementary School 768 - Briar Lake Elementary School 769 - Henderson Mill Elementary School 770 - Atherton Elementary School 778 - Tilson Elementary School 779 - Terry Mill Elementary School 780 - Woodridge Elementary School 781 - High Tower Elementary School

$ 401,885.60 $ 167,825.00

401,885.60

167,825.00

450,177.33

167,825.00

401,885.60

167,825.00

402,885.60

167,825.00

450,177.33

167,825.00

450,177.33

167,825.00

401,885.60

167,825.00

401,885.60

167,825.00

450,177.33

167,825.00

450,177.33

167,825.00

450,177.33

167,825.00

450,177.33

167,825.00

2,206,690.00

$29.321,028.06 $10,583,776.89

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

Note 13: CONTINGENT LIABILITIES

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

The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements.

Note 14: SUBSEQUENT EVENTS

In the subsequent fiscal year, DeKalb County School District Variable Rate Tax Anticipation Notes, Series 2003 - 2007 were issued with a par value of $80,470,000.00. The Notes were issued for the purpose of advance funding a portion of the capital improvement program of the DeKalb County School District and paying the costs of issuing the Notes.

Note 15: ACCUMULATED EMPLOYEES' LEAVE

Full-time twelve month employees earn annual leave ranging from ten to twenty days per year depending on the employee's length of continuous service with a maximum accumulation of sixty days. Employees are paid up to the maximum accumulation for unused accumulated annual leave at their current rate of pay upon retirement or termination of employment.

- 28 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2002

EXHIBIT "H"

Note 15: ACCUMULATED EMPLOYEES' LEAVE

Full-time employees earn one and one-quarter days of sick leave each month with a maximum accumulation ofone hundred ninety days,. Employees are paid between $3.00 and $9.00 per day for unused sick leave which may range from twenty-six days to one hundred ninety days upon retirement or termination of employment.

Note 16: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

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

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

Fiscal Year

Percentage Contributed

Required Contribution

2002 2001 2000

100% 100% 100%

$45,372,318.10 $49,416,364.05 $47,159,731.74

- 29-

-------- --~-~------------

DEKALB COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30. 2002

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 Adm1mstrat1on School Adm1mstrat1on Business Adm1mstration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations 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
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL

FINAL

ACTUAL AMOUNTS

$ 328,712,101 00 $ 328,712,101 00 $ 331,611,878 01

6,300,000 00

6,300,000.00

17,492,297 86

354,365,421.00

354,365,421 00

350,972,427 92

50,702,726 00

50,702,726 00

60,328,437 46

11,830,000 00

11,830,000 00

13,293,723 38

6,140,000 00

6,140,000 00

3,902,952 94

5,802,923 00

5,802,923 00

11,649,351 83

$ 763,853,171 00 $ 763,853,171 00 $ 789,251,069 40

$ 504,278,091 00 $ 504,278,091 00 $ 537,085,478 93

18,609,719 00 22,258,134 00 16,714,198 00
3,907,915 00 40,064,901 00
9,661,976 00 67,094,723 00 30,853,860 00 10,562,113 00
180,850.00 2,666,857 00 39,226,896 00

18,609,719 00 22,258,134 00 16,714,198 00
3,907,915 00 40,064,901 00
9,661,976 00 67,094,723 00 30,853,860 00 10,562,113 00
180,850 00 2,666,857 00 39,226,896 00

19,610,073 74 23,301,824 38 20,185,066 88 4,474,548.93 46,488,632 01
9,603,192 61 67,987,648 01 34,471,794 15
3,698,566 82 167,593 83
6,059,318 71 39,126,185 77
790,33915 5,580,626 00

$ 766,080,233 00 $ 766,080,233 00 $ 818,630,889 92

$ -2,227,062 00 $ -2,227,062 00 $ -29,379,820 52

$ 3,494,625 00 $ 3,494,625 00 $

-4,010,992 00

-4,010,992 00

5,137,025 17

$

-516,367.00 $

-516,367 00 $ 5,137,025 17

$ -2,743,429 00 $ -2,743,429 00 $ -24,242,795 35

42,069,744 00

42,069,744 00

50,424,991 93

$ 39,326,315 00 $ 39,326,315 00 $ 26,182,196 58

See notes to the basic financial statements.

- 30 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30 2002

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Agnculture, U S Department of Child Nutnbon Cluster Pass-Through From Georgia Department of Education Food and NutntIon Program Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food and Nutnt1on Program Food D1stnbut1on Program (1)
Total U S Department of Agriculture
Corporation for National and Community Service Pass-Through From Georgia Department of Education Learn and Serve America School and Community Based Programs
Education, U S Department of Special Education Cluster Pass-Through From Georgia Department of Education lndIvIduals with D1sab1l1t1es Education Act Part B - Special Education Flow Through Capacity BuIldIng Improvement Georgia Learning Resources System Preschool Severely Emotionally Disturbed
Total Special Education Cluster
Other Programs Direct Drug and Violence Prevention Coordinators Community Technology Centers Elementary School Counseling Program Youth Cnme Watch of Amenca Teaching American History Grants Twenty-First Century Community Learning Centers Pass-Through from Board of Regents, University System of Georgia Titlell Teacher Quality Enhancement Grant Pass-Through From Georgia Department of Education Comprehensive School Reform Demonstration ProJect Elementary and Secondary Education Act Titlel Accountability Grants Grants to Local Educational Agencies Delinquent ProJect Titlell Eisenhower Professional Development Titlelll Technology Literacy Challenge Fund Grants TitleVI Innovative Education Program Strategies Class Size Reduction TIUeVII Immigrant Education TIUeX Charter Schools Goals2000 State and Local Education Systemic Improvement Grants

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

10 553 10 555

NIA

$ 4,315,422 86

(2)

NIA

17 235 192 74 $ 37 738 421 50 (3)

$ 21,550,615 60 $ 37,738,421 50

10 550

NIA

1,018,769 86

1,018,769 86

$ 22,569,385 46 $ 38,757,191 36

94 004

N/A $

21 759 13 $

21 759 13

84 027 84 173 84 027 84173 84027

NIA

$ 8,341,327 24 $

8,341,327 24

N/A

343,076 58

343,076 58

NIA

193,209 11

193,209 11

NIA

473,160 27

473,160 27

NIA

405 253 61

405 253 61

$ 9,756,026 81 $

9,756,026 81

84 184 84 341 84 215 84 215 82 215 84 287

297,393 59 280,984 54 307,979 90 616,243 89
84,779 51 4,802,072 25

297,393 59 280,984 54 307,979 90 616,243 89
84,779 51 4,802,072 25 (4)

84 336 84 332
84 348 84 010 84 010 84 281 84 318 84 298 84340 84 162 84 282 84 276

NIA

11,60361

11,603 61

NIA

107,228 49

107,228 49

NIA

815,157 93

815,157 93

NIA

12,061,905 37

12,061,905 37

NIA

16,413 00

16,413 00

NIA

552,166 86

552,166 86

N/A

40,910 54

40,910 54

NIA

537,007 77

537,007 77

N/A

2,295,035 97

2,295,035 97

NIA

657,553 29

657,553 29

N/A

506,375 46

506,375 46

N/A

90,623 45

90,623 45

- 31 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30 2002

SCHEDULE "2"

FUNDING AGENCY PROGRAM/GRANT
Educatron. U S Department of Other Programs Pass-Through From Georgra Department of Educatron Safe and Drug-Free Schools and Communrtres Stewart B McKinney Homeless Assistance Act Educabon for Homeless Chrldren and Youth Vocatronal Educatron - Basrc Grants to States Hrgh School Program Basrc Grant
Total U S Department of Educatron
Health and Human Servrces. U S Department of Pass-Through From Georgra Department of Educabon Refugee School Impact Grant Pass-Through From Georgra Department of Human Resources Block Grants for Prevention and Treatment of Substance Abuse
Total U S Department of Health and Human Services
Justrce, U S Department of Pass-Through From Office of Communrty Onented Polrcmg Servrces Public Safety Partnershrp and Communrty Polrcmg Grant
Natrona! Aeronautrcs and Space Admrnrstra!Jon Pass-Through from Cuyahoga Communrty College The Scrence, Engrneenng, Mathemabcs and Aerospace Academy
Defense, U S Department of Drrect Department of the Arr Force R O T C Program Department of the Army R O T C Program Department of the Navy R O T C Program
Total U S Department of Defense

CFDA NUMBER
84 186 84 196 84048
93 576 93 959
16 710 43

PASSTHROUGH
ENTITY ID
NUMBER

FEDERAL REVENUE IN PERIOD

EXPENDITURES IN PERIOD

NIA $ 833,911 16 $

N/A

50,806 33

833,911 16 50,806 33

NIA

987 454 51

987 454 51

$ 35,709,634 23 $ 35,709,634 23

N/A $ 378,204 31 $

N/A

131,229 00

$ 509 433 31 $

378,204 31 131 229 00 509 433 31

N/A $ 48939441 $

489 394 41

N/A $ 17084179 $

170 841 79

$ 248,639 55 $ 187,689 41 42166017
$ 857,989 13 $

248,639 55 187,689 41 42166017 857 989 13

Total Federal Frnancial Assistance

$ 60,328,437 46 $

N/A = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) The amounts shown for the Food DIstnbutron Program represents the Federally assigned value of nonmonetary assistance for donated commodrbes recerved and/or consumed by the School D1stnct dunng the current frscal year
(2) Expendrtures for the School Breakfast Program were not marntarned separately and are rncluded rn the 2002 Natrona! School Lunch Program
(3) Expendrtures for this program rnclude State, and/or Other Funds Expenditures are not maintained by fund source
(4) Includes Federal Assrstance of $1,450,335 00 provided to subrecip1ents

Ma1or Programs are 1dentrfied by an astensk () in front of the CFDA number

The accompanying schedule of expenditures of Federal awards includes the Federal grant actrvrty of the DeKalb County Board of Educabon and rs presented on the mod1f1ed accrual basrs of accountrng which Is the basis of accountrng used in the presentation of the basrc frnancial statements

76,516,243 36

See notes to the baSlc financral statements

32-

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 36 2002

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Community Affairs, Georgia Department of Governor's Emergency Funds Local Assistance Grants
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 Grades (6-6) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with D1sab1ht1es Category I Category II Category Ill Category IV Category V Gifted Student - Category VI Special Education Itinerant Speaal Education Supplemental Speech Remedial Education Program Alternative Education Program Enghsh Speakers of Other Languages (ESOL) Media Center Program 20 Days Add1t1onal Instruction Staff and Professional Development Indirect Cost Central AdminIstratIon School AdmInistratIon Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Pnnapal Supplements Vocational Supervisors Education EquahzatIon Funding Grant Food Services Children's Intervention School Service Program Other State Programs Apprent1cesh1p Program Charter Schools Comprehensive School Reform Demo Pro1ect Consortia Georgia Learning Resources System Health Insurance Indirect Costs/Governor's Emergency Funds Mentor Teachers National Teacher Cert1ficat1on Next Generation Schools Outdoor Classrooms Pay for Performance Preschool Handicapped Program Residential and Reintegration Speaal Education Low Incidence Grant Speaal Education Support Cost
- 33 -

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

43,756 63

164,063 06

$

43,756 63

164,063 06

20,595,596 00 1,627,079 00
46,920,030 00 6,605,424 00
25,764,365 00 4,154,74900 4,051,026 00
39,975,736 00 41,243,040 00
5,799,333 00
3,705,266 00 5,605,016 00 19,031,336 00 5,132,200 00
315,367 00 7,429,774 00
3,630 00 61,603 00 366,979 00 3,362,949 00 5,150,509 00 7,607,656 00 2,336,641 00 1,490,796 00
6,320,507 00 14,369,316 00 23,066,949 00
5,016,710 00 1,405,995 00 1,770,026 00
390,561 00 266,760 00 3,970,923 00 2,362,924 00
6,946 40
90,000 00 2,975 33
57,636 67 97,314 00 6,022,117 12
2,000 00 63,646 00 22,543 00 72,952 53
6,250 00 1,047,977 74 1,255,350 00
23,504 00 3,546,957 00
111,000 00

20,595,596 00 1,627,079 00
46,920,030 00 6,605,424 00
25,764,365 00 4,154,749 00 4,051,026 00
39,975,736 00 41,243,040 00
5,799,333 00
3,705,266 00 5,605,016 00 19,031,336 00 5,132,200 00
315,367 00 7,429,774 00
3,630 00 61,603 00 366,979 00 3,362,949 00 5,150,509 00 7,607,656 00 2,336,641 00 1,490,796 00
6,320,507 00 14,369,316 00 23,066,949 00
5,016,710 00 1,405,995 00 1,770,026 00
390,561 00 266,760 00 3,970,923 00 2,362,924 00
6,946 40
90,000 00 2,975 33
57,636 67 97,314 00 6,022,117 12
2,000 00 63,646 00 22,543 00 72,952 53
6,250 00 1,047,977 74 1,255,350 00
23,504 00 3,546,957 00
111,00000

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30 2002

SCHEDULE "3"

AGENCY/FUNDING
GRANTS Education. Georgia Department of Other State Programs Statewide After School (4-8) Program Statewide Reading (K-3) Program Teachers' Retirement Student Achievement - Travel Vocational Education Industry Certification Lottery Programs Ass1st1ve Technology Computers in the Classroom Exceptional Growth-Capital Outlay Post Secondary Options Vocational Technology
Georgia State F1nanc1ng and Investment CommIss1on Reimbursement on Construction ProJects
Office of School Readiness Pre-Kindergarten Program
Office of Treasury and Fiscal Services Pubhc School Employees Retirement
CONTRACTS Education. Georgia Department of After School Programs Foreign Language Model Program
Juvenile Justice. Georgia Department of DeKalb Alternative School
Office of the Governor Georgia Challenge Program Pass Through From Metropolitan Regional Educational Service Agency

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

406,758 61

1,318,471 15

1,044,063 88

1,556,041 78

85,080 45

$

406,758 61

1,318,471 15

1,044,063 88

1,556,041 78

85,080 45

97,018 14 2,373,275 00
$ 16.192,335 81 27,915 00 199,760 35

97,018 14 2,373,275 00 16,192,335 81
27,915 00 199,760 35

4,527,860 08

4,527,860 08

6,589,485 37

6,589,485 37

822,645 00

822,645 00

37,500 00 118,957 83
10,000 00

37,500 00 118,957 83
10,000 00

998 46

99846

$ 350,972,427 92 $ 20,720,195 89 $ 371,692,623 81

See notes to the basic financial statements

-34-

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30 2002

SCHEDULE "4"

PROJECT

ORIGINAL ESTIMATED
COST{1}

CURRENT ESTIMATED COSTS {2l

AMOUNT EXPENDED IN CURRENT
YEAR{3l

AMOUNT EXPENDED
IN PRIOR YEAR {3)

PROJECT STATUS

Capital outlay projects for educational purpose $ 381,733,800 00 $ 357,310,047 00 $ 59,461,918 72 $ 273,452,935 28 Ongoing

Retirement of previously incurred general obhgation debt

114,435,000 00 111,685,178 00

8,930,611 26

30,910,761 07 Ongoing

Acqu1s1t1on of real estate on which to build and equip new schools and centers, the renovations and modIfIcat1ons of existing fac111t1es the purchase and installation of technology equipment. and the purchase of school buses

524,404,330 00 524,404,330 00

Ongoing

$ 1,020,573,130 00 $ 993,399,555 00 $ 68,392,529 98 $ 304,363,696 35

(1 J The School D1stnct's onginal 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's 1nceptIon to completion
(3) The voters of DeKalb County approved the ImposItIon of a 1% sales tax to fund the above projects Amounts expended for these proJects may include sales tax proceeds, state, local property taxes and/or other funds over the hfe of the proiect

See notes to the basic financial statements

-35-

DEKALB COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM {QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30. 2002

SCHEDULE "5"

DESCRIPTION

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

Direct Instructional Programs

Kindergarten Program

$

Kindergarten Program-Early Intervention Program

Pnmary 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 Grades (6-8) Program

Middle School (6-8) Program

High School General Education (9-12) Program

Vocational Laboratory (9-12) Program

Students with D1sab1h1Jes

Category I

Category II

Category Ill

Category IV

CategoryV

Gifted Student - Category VI

Remedial Education Program

Alternative Education Program

English Speakers of Other Languages (ESOL)

25,674,664 00 $ 2,028,333 00
60,984,166 00 8,234,376 00
32,006,958 00

25,580,709 91 $
61,301,570 02 2,200,050 19
30,736,545 93

991,530 79 $ 7,015,530 74
861,31504

26,572,240 70
68,317,100 76 2,200,050 19
31,597,860 97

5,315,446 00 5,050,043 00 49,834,123 00 51.413,957 00 7,229,502 00 42,228,427.00
9,262,026 00 484,905 00
4,217,215 00 6,420,671 00

31,427,226 55 44,662,823 32 55,234,882.78
8,351,734 56
25,006,628 88 4,085,916 21 16,787,980 78 5,353,882 76 609,569 30 7,342,17324 7,419,745 93 2,861,989 38 6,408,532 17

4,088,713 42 5,225,865 96 9,086,252 53 1,012,647 18
864,672 99 124,199 44 196,047 15 133,860 95
10,784 74 57,617 60 13,387 25 143,546 34

35,515,939 97 49,888,689 28 64,321,135 31
9,364,381 74
25,871,301 87 4,210,115 65 16,984,027 93 5,487,743 71 620,354 04 7,399,790 84 7,433,133 18 3,005,535 72 6,408,532 17

TOTAL DIRECT INSTRUCTIONAL PROGRAMS

$ 310,384,812 00 $ 335,371,961 91 $ 29,825,972 12 $ 365,197,934.03

Media Center Program Staff and Professional Development

9,733,347 00 1,858,439 00

14,120,240 10 1,767,375 89

2,906,927 30 964,914 30

17,027,167 40 2,752,290 19

TOTAL QBE FORMULA FUNDS

$ 321,976,598 00 $ 351,279,577 90 $ 33,697,813 72 $ 384,977,391 62

(1) Comprised of State Funds plus Local Five Mill Share

See notes to the basic financial statements

- 36-

DEKALB COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30. 2002

SCHEDULE "6"

SITE
Narv1e Hams Elementary School Avondale Middle School Wynbrooke Elementary School Martin Luther King, Jr High School Cedar Grove High School Vanderlyn Elementary School Austin Elementary School Redan High School Margaret Hams High School Eldridge L Miller Elementary School Panola Way Elementary School Peachtree Middle School Pine Ridge Elementary School Browns Mill Elementary School Chapel Hill Middle School Marbut Elementary School DeKalb Alternative Night School Cedar Grove Middle School Freedom Middle School Rockbridge Elementary School Cedar Grove Elementary School Stone Mountain High School Kittredge Magnet School Sequoyah Middle School Salem Middle School Shadow Rock Elementary School Edward L Bouie, Sr Elementary School Chamblee Middle School Stone Mountain Charter School Inc Columbia Middle School DeKalb Trans1t1on School Famngton Elementary School Stephenson Middle School Robert Shaw Theme School DeKalb School of the Arts Mary Mcleod Bethune Middle School Academy of Lithonia Charter School Bob Mathis Elementary School Stephenson High School DeKalb Alternative School DeKalb Truancy School Stone Mill Elementary School Miller Grove Middle School Woodridge Elementary School Stone Mountain Middle School Open Campus High School Henderson Middle School Shamrock Middle School Hooper Alexander Elementary School Avondale High School Brockett Elementary School Chapel Hill Elementary School

- 37 -

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

$

2,904,313 00 $

3,350,766 73

3,239,397 00

3,167,240 43

2,149,605 00

2,470,945 46

1,918,079 00

3,758,050 74

4,040,081 00

3,903,225 08

2,217,244.00

2,399,219 26

1,716,279 00

2,115,181.04

4,973,171 00

5,079,088 59

1,131,363 00

1,364,613 99

2,484,809 00

2,655,77075

3,033,789 00

3,357,878 48

3,552,468 00

3,769,964 66

2,603,152 00

2,827,010 20

2,744,686 00

3,114,30266

3,005,785 00

3,197,572 51

3,121,938 00

3,614,649 72

54,472 00

279,425 85

4,172,34900

3,867,259 25

4,050,694 00

3,930,505 08

2,303,681 00

2,700,197 97

3,190,600 00

3,672,494 31

3,870,438 00

4,134,036 53

1,519,182 00

2,027,512 18

3,718,196 00

3,730,047 96

6,327,875 00

6,054,132 93

2,377,845 00

2,755,040.92

2,816,322 00

3,134,890 08

2,151,464 00

2,133,168 23

344,356 00

756,330 52

4,442, 179 00

4,604,13111

229,569 00

234,521 52

2,636,611 00

3,250,252 35

4,996,007 00

5,225,743 53

1,750,557 00

2,064,121 16

660,635 00

1,341,558.15

3,242,718 00

3,447,633 21

497,006 00

1,146,393 23

1,254,386 00

1,500,795 54

5,057,440 00

5,022,122.81

1,288,310 00

2,580,287 55

108,531 00

300,665 13

2,112,792 00

2,444,704 32

4,319,831 00

4,452,617 70

2,067,028 00

2,240,183 25

2,935,770 00

3,013,310 27

2,795,079 00

3,656,436 00

4,844,905 00

4,900,924 73

4,504,900 00

4,765,060 28

1,339,421 00

1,879,105.36

2,867,144 00

3,080,759 83

1,638,886 00

1,863,125 06

2,339,736 00

2,661,744.60

DEKALB COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30. 2002

SCHEDULE "6"

SITE
Columbia Elementary School Dresden Elementary School Evansdale Elementary School McNa1r Middle School ldlewood Elementary School Livsey Elementary School Medlock Elementary School Nancy Creek Elementary School Peachcrest Elementary School Sky Haven Elementary School Leslie J Steele Elementary School Tucker High School Woodward Elementary School Allgood Elementary School Columbia High School Druid Hills High School Fernbank Elementary School Gresham Park Elementary School Henderson Mill Elementary School Indian Creek Elementary School Knollwood Elementary School Mclendon Elementary School Midvale Elementary School Cary Reynolds Elementary School Stone Mountain Elementary School Tilson Elementary School Wadsworth Elementary School Ashford Park Elementary School Briarlake Elementary School Canby Lane Elementary School Chesnut Elementary School Dunaire Elementary School Flat Shoals Elementary School Hambrick Elementary School Heritage Educational Center Jolly Elementary School Lakeside High School Meadowview Elementary School Midway Elementary School Oak Grove Elementary School Pleasantdale Elementary School Rock Chapel Elementary School Smoke Rise Elementary School Toney Elementary School McNaIr High School Atherton Elementary School Bnar Vista Elementary School Murphy Candler Elementary School Clarkston High School Cross Keys High School Forrest Hills Elementary School Hightower Elementary School

- 38 -

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

$

1,600,573 00 $

1,889,858 95

2,634,678 00

2,805,943 88

1,869,785 00

2,351,970 26

3,563,502.00

3,673,427 08

2,643,596 00

2,781,40062

1,141,355 00

1,413,419 92

1,338,378 00

1,614,745 01

1,303,932 00

1,562,776 65

1,171,481 00

1,605,275 72

2,008,368 00

2,453,192 02

1,283,393 00

1,811,40114

4,284,977 00

4,568,342 27

2,501,534 00

2,833,567 62

2,028,555 00

2,191,237 57

3,583,615 00

3,863,072 02

3,309,013 00

3,758,921 54

1,708,906 00

1,956,259 92

1,648,756 00

1,982,939 44

2,031,057 00

2,382,447 61

2,628, 115 00

2,856,749 83

1,519,999 00

1,955,850 13

2,112,965 00

2,319,773.03

1,497,939 00

1,808,706 90

3,013,332 00

3,250,760 77

2,408,451 00

2,612,029 24

1,641,936 00

1,922,544.06

1,373,765 00

1,834,942 02

1,294,445 00

1,494,763 69

1,352,524 00

1,899,198 87

1,877,019 00

2,227,121 70

1,567,871 00

1,901,911 69

2,124,281 00

2,299,623 20

1,554,938 00

1,852,596 09

2,298,305 00

2,610,851 96

1,006,201.00

1,237,692 90

2,055,939 00

2,397,506.64

4,265,675 00

4,460,218 04

1,733,789 00

2,262,796 69

1,500,455 00

1,861,499 92

1,541,763 00

1,881,832 61

1,969,644 00

2,273,114 71

2,608,014 00

3,174,533.80

1,979,527 00

2,397,547 34

1,568,921 00

1,863,864 31

3,653,439 00

4,022,247 65

1,973,795 00

2,561,195 34

1,219,695 00

2,084,740 74

2,360,074.00

2,869,480 47

3,887,958 00

4,282,644 00

3,751,209 00

4,013,934 02

1,052,005 00

1,342,084.87

1,665,381 00

2,006,272 76

DEKALB COUNTY BOARD OF EDUCATION GENERAL FUND- QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY SITE YEAR ENDED JUNE 30. 2002

SCHEDULE "6"

SITE
Kelley Lake Elementary School Laurel Ridge Elementary School Montclair Elementary School Oakcliff Elementary School Rainbow Elementary School Rowland Elementary School Snapfinger Elementary School Stoneview Elementary School Towers High School Coralwood Education Center Avondale Elementary School Chamblee High School Clifton Elementary School Dunwoody High School Glen Haven Elementary School Hawthorne Elementary School Huntley Hills Elementary School Kingsley Elementary School Lithonia High School Montgomery Elementary School Redan Elementary School Sagamore Hills Elementary School East DeKalb Campus Southwest DeKalb High School Terry Mill Elementary School Fernbank Science Center DeKalb International Student Center DeKalb High School of Technology, North Campus DeKalb High School of Technology, South Campus Warren Technical School Central Office (Alternative Education Program) Other Auxiliary Facility
TOTAL
(1) Comprised of State Funds plus Local Five Mill Share

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1)

ELIGIBLE QBE PROGRAM COSTS

$

1,461,790 00 $

1,835,436 04

1,499,266 00

2,102,475 24

1,849,556 00

2,013,018 04

2,068,156 00

2,455,011 61

1,935,509 00

2,375,135 32

1,670,015 00

2,073,115 58

2,284,037 00

2,989,590 60

2,779,573 00

2,853,491 72

3,096,112 00

3,476,214 17

501,692 00

891,876 52

2,135,91000

2,641,444 35

3,615,284 00

4,155,251 51

1,596,192 00

2,108,234 63

3,576,533 00

3,987,666 28

1,847,509 00

2,297,947 23

1,172,983 00

1,657,828 25

1,365,906 00

1,973,564 03

1,306,345 00

1,568,708 74

4,752,960 00

5,104,628 51

1,444,041 00

1,973,943 57

2,955,110 00

3,257,302 37

1,276,074 00

1,574,391 53

4,465,646 00

6,351,267 85

4,497,011 00

5,502,322 82

1,636,490 00

1,933,371 57

1,697,941 30

250,673 62

702,869 09

935,381 88

1,593,021 60

4,217,215 00

4,842,429 52

3,684,830 91

$ 310,384,812 00 $ 365,197,934 03

See notes to the basic financial statements

- 39 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street. S. W Sullc 214 Atlanta, Georgia 30334-8400
June 16, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the DeKalb County Board of Education
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of DeKalb County Board of Education as of and for the year ended June 30, 2002, and have issued our report thereon dated June 16, 2003. This report was qualified for a departure from generally accepted accounting principles, as identified in the auditor's report on the basic financial statements. 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.
Compliance
As part of obtaining reasonable assurance about whether DeKalb 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 grants, 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 ofnoncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered DeKalb County Board of Education's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal
20028-30

control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in ourjudgment, could adversely affect DeKalb County Board of Education's ability to record, process, summarize and report financial data consistent with assertions of management in the financial statements. The reportable conditions are described in the accompanying Schedule of Findings and Questioned Costs as items FS-6441-02-01 and FS-6441-02-02.
A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe none of the reportable conditions described above are material weaknesses.
This report is intended solely for the information and use of the management, members of the DeKalb County Board of Education, 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,
?1~.. OQ__ LJ.~ ~ell W. Hinton State Auditor
RWH:as 2002YB-30

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S W. Suite 214 Atlanta. Georgia 30334-8400
June 16, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Superintendent and Members of the DeKalb County Board of Education
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited the compliance of DeKalb County Board of Education with the types ofcompliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2002. DeKalb 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 DeKalb County Board of Education's management. Our responsibility is to express an opinion on DeKalb County Board of Education's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular Al 33, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A- I 33 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the DeKalb 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 DeKalb County Board of Education's compliance with those requirements.
2002SA-10

In our opinion, the DeKalb County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2002.
Internal Control Over Compliance
The management of DeKalb 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 DeKalb County Board ofEducation's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with 0MB Circular A-133.
Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more ofthe internal control components does not reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major Federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the management, members of the DeKalb County Board of Education, 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 2002SA-10

State Auditor

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

DEKALB COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6441-99-02 FS-6441-00-01 FS-6441-01-01 FS-644 I-01-02

Previously Reported Corrective Action Implemented Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented

CORRECTIVE ACTION/RESPONSES

CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number: FS-6441-01-01

Procedures have been put in place to ensure that reconciling items and unidentified variances are resolved on a more timely basis. A new financial software system, along with the addition of a Treasury Coordinator will better facilitate these procedures.

SECTION IV FINDINGS AND QUESTIONED COSTS

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002

I SUMMARY OF AUDITOR'S RES ULTS

1. Type of Report Issued on the Financial Statements The auditor's opinion on the DeKalb County Board of Education's financial statements was qualified for a departure from generally accepted accounting principles.

2. Reportable Conditions in Internal Control Disclosed by the Audit of the Financial Statements The audit report for the DeKalb County Board of Education disclosed financial statement reportable conditions related to the following control categories.

Cash and Cash Equivalents

Capital Assets

None ofthe reportable conditions described above are considered to be material weaknesses.

3. Noncompliance Material to the Financial Statements The audit of the DeKalb County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements.

4. Reportable Conditions in Internal Control Over Major Programs The audit report for the DeKalb County Board of Education did not disclose any reportable conditions in internal control over major programs.

5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the DeKalb County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified.

6. Audit Findings Required to be Reported by Section .510(a) ofOMB Circular A-133 The DeKalb County Board ofEducation's audit did not disclose audit findings required to be reported by section .510(a) ofOMB Circular A-133.

7. Major Programs Federal awards audited as major programs are as follows: 10.553 Food and Nutrition Program - Food Services - School Breakfast Program 10.555 Food and Nutrition Program - Food Services- National School Lunch Program 10.550 Food and Nutrition Program - Food Distribution Program 84.340 Elementary and Secondary Education Act - Title VI - Class Size Reduction

8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $2,223,999.58.

9. Low Risk Auditee The DeKalb County Board ofEducation qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133.

- 1-

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Reportable Condition Repeated From Prior Year Finding Control Number: FS-6441-02-01
A review of the School District's internal control policies and procedures noted the following deficiency in providing adequate internal control over Cash and Cash Equivalents as noted below:
Bank reconciliations contained numerous reconciling items. Adjustments for these items were not made by the School District in a timely manner. Many of the reconciling items listed on the June 30, 2002 bank reconciliation remained unadjusted as of February, 2003.
This deficiency occurred because of management's failure to follow established procedures to analyze and reconcile cash balances on the general ledger with supporting documentation.
The School District should strengthen internal controls to ensure that cash is recorded, balanced and reviewed on a monthly basis and that detailed records supporting the general ledger are complete, accurate and reliable.
Management's Response:
We concur with this finding for the year under review and have replaced certain accounting personnel with appropriate expertise to maintain the bank reconciliations in accordance with GAAP.
CAPITAL ASSETS Inadequate Accounting Procedures Reportable Condition Finding Control Number: FS-6441-02-02
A review of the School District's internal control policies and procedures noted deficiencies in providing adequate internal control over Capital Assets as noted below:
(I) The School District failed to record the following items on the initial capital asset records as presented for audit:
(a) Purchase of land at cost of$1,093,000.00; (b) Land improvements for site work at a cost of $25,587,727.00; (c) Six (6) buses acquired through a capital lease with total cost of $443,670.18.
(2) Trash compactors acquired through a capital lease were recorded at incorrect acquisition costs resulting in an understatement of asset acquisition cost of $279,000.00.
-2-

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CAPITAL ASSETS Inadequate Accounting Procedures Reportable Condition Finding Control Number: FS-6441-02-02
(3) The date that a capital asset is placed in use is not always the start date for depreciation to begin.
Audit adjustments were made to the capital assets records to correct items (1) and (2) noted above. These deficiencies occurred because the School District did not establish adequate accounting procedures to monitor and maintain capital assets records. The School District should strengthen internal controls to ensure that capital assets records are complete and maintained according to the School District's capital assets policy. Management's Response: We concur with the finding and subsequent to the Audit we have established procedures to insure that all applicable assets are accounted for properly. We have established a compliance officer position that will have the responsibility of maintaining records in accordance with all Federal, State and Local regulations. III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
-3-