DeKalb County Board of Education, Decatur, Georgia, annual financial report for the fiscal year ended June 30, 2009 (including independent auditor's reports)

DEKALB COUNTY BOARD OF EDUCATION
DECATUR, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED
JUNE 30,2009
(Including Independent Auditor's Reports)

DEKALB COUNTY BOARD OF EDUCATION -TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION -SCHEDULE OF EXPENDITURES OF FEDERALAWARDS

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET ASSETS

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDS

H

NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL FUND

DEKALB COUNTY BOARD OF EDUCATION
- TABLE OF CONTENTS -
SECTION I
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION 2 COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS - CHARTER SCHOOLS 3 COMBINING STATEMENT OF REVENUES, EXPENDITURESAND
CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS - CHARTER SCHOOLS
4 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 5 SCHEDULE OF STATE REVENUE 6 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 7 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM
SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER M A l l E R S BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WlTH GOVERNMENTAUDrnNG STANDARDS REPORT ON COMPLIANCE WlTH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WlTH OMB CIRCULAR A-133
SECTION Ill
AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

DEKALB COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS
SECTION V MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404)6563174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 2,2010

Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education
and Interim Superintendent and Members of the DeKalb County Board of Education
INDEPENDENTAUDITOR'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, 2009, which collectively comprise the Board's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the DeKalb County Board of Education's management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of Academy of Lithonia, DeKalb Academy of Technology and the Environment, DeKalb PATH Academy, Destiny Academy of Excellence and the lnternational Community School Charter Schools, which represent 18.09% and 100% of the assets and revenues, respectively, of the aggregate remaining fund information. Those financial statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for Academy of Lithonia, DeKalb Academy of Technology and the Environment, DeKalb PATH Academy, Destiny Academy of Excellence and the lnternational Community School Charter Schools is based on the report of other auditors.
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. The financial statements of DeKalb Academy of Technology and the Environment, DeKalb PATH Academy and the lnternational Community School
Charter Schools were not audited in accordance with Government Auditing Standards. An audit
includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the DeKalb County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a

test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinions.
In our opinion, based on our audit and the report of other auditors, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the DeKalb County Board of Education, as of June 30, 2009, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditng Standards, we have also issued our report dated
September 2, 2010, on our consideration of the DeKalb County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standardsand should be considered in assessing the results of our audit.
Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through viii and page 33 respectively, are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We and the other auditors have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the DeKalb County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 7, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and
Budget Circular A-133, Audits o f States, Loci?/ Governments, and Nun-Profit Organliations, are presented for purposes of additional analysis and are not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures applied by us and the other auditors in the audit of the basic financial statements, and in our opinion, based on our audit and the report of other auditors, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2009
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, 2009. The intent of this discussion and analysis is to look at the Board's financial performance as a whole; readers should also review the notes to the basic financial statements and the financial statements to enhance their understandingof the Board'sfinancial performance.
Financial Highlights
Key financial highlights for 2009 are as follows:
o In total, net assets increased $24.8 million to $1.189 billion. This represents a 2 percent increase from 2008. This total increase was due to governmental activities since the Board has no business-typeactivities.
General revenues accounted for $605.9 million in revenues or 54.8 percent of all revenues. Program specific revenues in the form of charges for services, operating and capital grants and contributions accounted for $500.3 million or 45.2 percent of total revenues of $1.106 billion.
o The Board had $1.081 billion in expenses related to governmental activities; $500.3 million of these expenses were offset by program specific charges for services, grants or contributions.
u Among major funds, the general fund has $1.005 billion in revenues and $1.003 billion in expenditures. The general fund's "Net Change in Fund Balances" decreased by $10.9 million resulting in a change in the "Total Fund Balances" decreased from $17.0 million to $6.1 million for the fiscal year. The fund balance reflects the full accrual of all contracted salaries and benefits unpaid at June 3 0 in full compliance with GASB 34 regulations.
Usingthe Basic Financial Statements
This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand the DeKalb County Board of Education as a financial whole, or as an entire operating entity.
The Statement o f N e t Assets and Statement o f Activities 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. Fundfinancialstatementsprovide 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.
Reporting the Board as a Whole
Statement of Net Assets and the Statement of Activities
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 looking at all financial transactions to ask the question, "How did we do financially during 2009?" The Statement of Net Assets and the Statement
of Activities answers this question. These statements include all assets and liabilities using the accrual basis o f accountingsimilar 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.

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2009
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. Nonfinancial factors include the Board's property tax base, facility conditions, required educational programs and other factors.
In the Statement of Net Assets and the Statement of Activities, the Board has one distinct type of activity:
Governmental Activities -All 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, enterprise operations, food services and interest on debt.
Reportingthe 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) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is reconciled in the financial statements.
Fiduciary Funds: The Board is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the principals' accounts. The Board is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The Board excludes these activities from the District-wide financial statements because it cannot use these assets to finance its operations.
The Board as a Whole
The perspective of the statement of net assets is of the Board as a whole. Table 1provides a summary of the Board's net assets for fiscal year 2009 compared to fiscal year 2008.

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2009

Table 1 Net Assets (in Thousands)

Assets Current and Other Assets Capital Assets, Net

Total Assets

Liabilities Current and Other Liabilities Long-Term Liabilities

Total Liabilities

$

Net Assets

Invested in Capital Assets, Net of Related Debt

$

Restricted

Unrestricted (Deficit)

Total Net Assets

$

Total Liabilities and Net Assets

Governmental Activities

Fiscal

Fiscal

Year 2009

Year 2008

514,976$
1,027,654$ 168,390 -6,786
1,189,258$

521,594
1,004,421 160,870 -908
1,164,383

Total net assets increased $24.8 million. Table 2 shows the changes in net assets for fiscal year 2 0 0 9 compared to fiscal year 2008.

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2009

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 Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous
Special ltem Loss on Disposal of Capital Assets
Total General Revenues and Special ltem
Total Revenues
Program Expenses Instruction Support Services Pupil Services Improvementof 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-InstructionalServices Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt
Total Expenses

Governmental Activities

Fiscal

Fiscal

Year 2009

Year 2008

Increase in Net Assets

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2009

Governmental Activities

Instruction, Pupil Services and lmprovement of lnstructional Services comprises 68.1 percent of governmental program expenses. The Operations of Non-instructional Services amounted to 4.9 percent of the total governmental program expenses. These operations consist primarily of the School Nutrition and Athletics programs.
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 for fiscal year 2009 compared to fiscal year 2008. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements.
Table 3 Governmental Activities
(in Thousands)

Total Cost of Services

Fiscal

Fiscal

Year 2 0 0 9

Year 2008

Net Cost of Services

Fiscal

Fiscal

Year 2009 Year 2 0 0 8

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

Total Expenses

Although program revenues make up 45.2 percent of the revenues, the Board is still primarily dependent upon tax revenues for governmental activities. More than 49.5 percent of instruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 53.7 percent.

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2009
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 $1.134 billion and expenditures and other financing uses of $1.161 billion. There was a decrease in fund balance of $16.9 million in the capital project funds due to the increase in construction projects during the year. The general fund had a decrease in fund balance of $10.9 million. The change in the fund balance of the general fund for the year was due to decreases in budgeted revenue during the year. These decreases in revenue were the result of less state funding and interest earned. The effort by the Board to begin to rebuild the general fund balance, which has been severely depleted in prior years by state funding reductions which began in fiscal year 2003, was subordinated to provide additional resources for instruction and student achievement. This has resulted in a reduction in state earnings of nearly $120 million over the past seven fiscal years.
General Fund Budgeting Highlights
The Board's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund.
During the course of fiscal year 2009, the Board amended its general fund budget as needed. 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, final budgeted revenues and other sources of $1.076 billion were under performed by the actual revenues by $ 7 1 million. This difference was due mainly to less State Funds received due to State budget cuts and removal of budgeted alternative benefit funds from actual revenue amounts. Worse than expected investment earnings were also a factor in the reduced revenue.
Actual expenditures of $1.003 billion were 3.0 percent less than the final budgeted total of $1.034 billion. Less than projected instructional salaries contributed to the budget variance.
General Fund expenditures and other financing uses exceeded revenues and other financing sources resulting in a decrease in "Net Change in Fund Balances" of over $10.9 million for the year. The additional operating cost was a major factor in the decrease in fund balance.
Capital Assets and Debt Administration
Capital Assets
At the end of fiscal year 2009, the Board had $1.108 billion invested in capital assets, all in governmental activities. Table 4 shows fiscal year 2009 balances compared with fiscal year 2008 balances.

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30,2009

Table 4 Capital Assets at June 3 0 (Net of Depreciation, in Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2009

Year 2008

Land Construction In Progress Buildings and Building Improvements lmprovements Other than Buildings Equipment

$

41,255 $

54,864

935,033

41,718 94,330 844,622

Total

The primary increases occurred in buildings and building improvements. Due to the ongoing growth in the county, the Board has numerous construction projects including new buildings, additions, and renovations.

Debt

At June 30, 2009 the Board had $37.1 million in capital leases. There were $12.6 million in compensated absences. There is $300.0 million in general obligation bonds and $8.9 million in premiums from the fiscal year 2007 bond issue. $91.9 million of the outstanding debt is due within one year. The Board defeased all of its outstanding General Obligation Bonds in prior years. This defeasance was the culmination of the 1997 Special Purpose Local Option Sales Tax Program with sales tax proceeds being used to enable the Board to become essentially debt free.

Table 5 summarizes capital leases and compensated absences outstanding and compares fiscal year 2009 balances to fiscal year 2008 balances.

Table 5 Debt at June 3 0 (in Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2009

Year 2008

Capital Leases Compensated Absences General Obligation Bonds Unamortized Bond Premiums
Total

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENTS DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2009
The Board maintains an AA- and Aa3 bond rating from Standard and Poor's and Moody's, respectively.
Current Issues
The DeKalb County School System continues to face serious reductions in the state's "Quality Basic Education"funding formula earnings. In addition to the over $75.0 million in state funding lost in the current year, state austerity reductions have amounted to nearly $191.0 million through fiscal year 2010. Sales tax collections from the 2007 approved Special Purpose Local Option Sales Tax continue to exceed projections.
Continued challenges with state funding are a concern for the DeKalb County School System. DeKalb County School System has been underfunded according to the state's funding formula by more than $191.0 million since 2003. More than $103.0 million of the reductions have occurred in fiscal years 2009 and 2010. Year-over-year state revenues have decreased from the 2008 fiscal year to the 2009 fiscal year and from the 2009 fiscal year to the 2010 fiscal year, yet the student population is stable. The trend of declining state revenues will continue into the 2 0 1 1fiscal year.
Local revenue in DeKalb County School System is decreasing, also. Property tax revenues are impacted by the revaluation of property due to foreclosures and weak sales. Overall, total General Fund revenues are decreasing for the second consecutive year. Prior to the 2009 fiscal year, the tax digest in DeKalb has never seen a decrease in value.
The Board will be challenged to continue to overcome any current or future financial challenges given the state of the local, state, and national economy. DeKalb County School System does continue to strive to increase the working reserve to higher levels in order to sustain the School System and will do so as soon as it is feasible.
Contactingthe Board's Financial Management
This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the Board's finances and to show the Board's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Mr. Marcus T. Turk, Chief Financial Officer, at the DeKalb County Board of Education, 1 7 0 1Mountain Industrial Blvd., Stone Mountain, Georgia, 30083. You may also e-mail your questions to marcus-turk@fc.dekalb.kl2.ga.u~.

DEKALB COUNTY BOARD OF EDUCATION

DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30,2009
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Prepaid Items Other Current Assets Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Interest Payable Contracts Payable Retainages Payable Deferred Revenues Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted (Deficit)
Total Net Assets
Total Liabilities and Net Assets
The notes t o the basic financial statements are an integral part of this statement. - 1-

EXHIBIT " A
GOVERNMENTAL ACTlVlTl ES

DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30,2009

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operationsof Non-InstructionalServices Enterprise Operations Community Services Food Services Interest on Short-Term and Long-TermDebt
Total Governmental Activities
General Revenues Taxes Propem/ Taxes For Maintenance and Operations For Debt Services Sales Taxes Spec~aPl urpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous
Special ltems Loss on Disposal of CapitalAssets (Note 12)
Total General Revenues and Special ltems
Changes in Net Assets
Net Assets - Beginningof Year
Net Assets - End of Year

EXPENSES

CHARGES FOR SERVICES

The notes to the basic financial statements are an integral part of this statement.
- 2 -

EXHIBIT " 6

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET ASSETS

DEKALB COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30,2009

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Other Inventories Prepaid Items Other Current Assets
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Deferred Revenue
Total Liabilities
FUND BALANCES
Reserved for: Continuation of Federal Programs Debt Service Capital Projects
Unreserved Undesignated Reported in: General Fund Nonmajor Governmental Funds
Total Fund Balances
Total Liabilities and Fund Balances

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

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

EXHIBIT " C

DEBT SERVICE
FUND

NONMAJOR GOVERNMENTAL
FUND

TOTAL

(This page left intentionally blank)

DEKALB COUNTY BOARD OF EDUCATION RECONCILIATIONOF THE GOVERNMENTALFUNDS BALANCESHEET
TO THE STATEMENT OF NET ASSETS JUNE 30,2009
Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Taxes that are not available to pay for current period expenditures are deferred in the funds.
Long-Term Liabilities, including Bonds Payable,are not due and payable in the current period and therefore are not reported as liabilities In the funds. Long-Term Liabil~tiesat year-endconsist of:
Bonds Payable Accrued Interest Capital Leases Payable Compensated Absences Unamortized Bond Premiums
Total Long-Term Liabilities
Net Assets of Governmental Activities (Exhibit "A")

EXHIBIT " D

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 30,2009

REVENUES
Property Taxes sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current l nstruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Capital Outlay Debt Services
Principal Dues and Fees Interest
Total Expenditures
Excessof Revenuesover (under) Expenditures
OTHER FINANCING SOURCES (USES)
Capital Leases Sale of Equipment Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending
The notes to the basic financial statements are an integral part of this statement.
- 8-

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

EXHIBIT "Em

DEBT SERVICE
FUND

NONMAJOR GOVERNMENTAL
FUND

TOTAL

DEKALB COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30.2009
Total Net Change in Fund Balances- Governmental Funds (Exhibit"E") Amounts reportedfor GovernmentalActivities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in GovernmentalFunds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are: Capital Outlay Depreciation Expense Excess of Capital Outlay over DepreciationExpense
Taxes reported in the Statement of Activities that do not provide current financial resources are not reoorted as revenues in the funds.
In the Statement of Activities, only the gain on the sale of the capital assets is reported. whereas in the Governmental Funds, the entire proceedsfrom the sale increasefinancial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the capital assets sold.
Some of the Capital Assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets, the lease obligation is reported as a Long-Term Liability.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, butthe repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of: Capital Lease Payments Amortizations to Bond Premiums Total Long-Term Debt Repayments
Some items reported in the Statement of Activities do not require the use of current financial resourcesand therefore are not reported as expenditures in Governmental Funds. These activities consist of: Net Increase in Accrued Interest Net lncrease in Compensated Absences Decrease in Arbitrage Liability Total Additional EXpenditures
Change in Net Assets of GovernmentalActivit~es(Exhibit"6")
The notes to the basic financial statements are an integral part of this statement.
- 10-

DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30,2009
ASSETS Accounts Receivable, Net
Local
LIABILITIES Cash Overdraft Accounts Payable Contracts Payable Retainage Payable Funds Held for Others
Total Liabilities

EXHIBIT "G"
AGENCY FUNDS

The notes to the basic financial statements are a n integral part of this statement.
- 11-

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2009

EXHIBIT "H"

REPORTING ENTITY
The DeKalb County Board of Education was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.

BLENDED COMPONENT UNITS

Included within the School District are five Charter Schools. Each Charter School is responsible for the public education of all students attending its school. The Charter Schools were created through a contract between the School District and each Charter School whereby all State funding associated with the students attending the Charter Schools and certain specified local funds are remitted to the Charter Schools to cover their operations. The financial statements of the Charter Schools have been blended with the School District's nonmajor governmental funds.

A listing of Charter Schools follows:

Academy of Lithonia, Incorporated 3235 Evans Mill Road Lithonia, Georgia 30058

Destiny Academy of Excellence, Incorporated 3595 Linecrest Road Ellenwood, Georgia 3 0 2 9 4

DeKalb Academy of Technology and The Environment, Incorporated
1833 Stone Mountain Lithonia Road Lithonia, Georgia 30058

International Community School, Incorporated 3260 Covington Highway Decatur, Georgia 30032

DeKalb PATH Academy, lncorporated 3007 Hermance Drive Clarkston, Georgia 30021

The Gateway to College Academy (Charter School) is responsible for the public education of all students attending its school. The Charter School was created through a contract between the School District, Charter School, and Georgia Perimeter College whereby all State funding associated with the students attending the Charter School and certain specified local funds are turned over to the Charter School to cover the cost of its operations. Gateway to College Academy was included in the financial statements of Georgia Perimeter College.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNlTNG POLICIES

BASIS OF PRESENTAllON
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.

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2009

EXHIBIT "H"

District-wide Statements:
The Statement of Net Assets and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements:
The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as nonmajor funds.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.
District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) and Bond Proceeds to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (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 of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, and grants. On an accrual basis, revenue from property taxes is

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30,2009

EXHIBIT "H"

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 is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancingset of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Propertytaxes, 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 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 of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
CASH AND CASH EQUIVALENTS
Composition of Deposits
Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
Composition of Investments Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interestearning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year and equity investments are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
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,