DeKalb County Board of Education, Decatur, Georgia, annual financial report for the fiscal year ended June 30, 2011 (including independent auditor's reports)

DEKALB COUNTY BOARD OF EDUCATION
STONE MOUNTAIN, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2011
(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 FEDERAL AWARDS

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET ASSETS

B

STATEMENT OF 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

Page
i
1 2 4 5 6 7 8 9
31

DEKALB COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

SCHEDULES

SUPPLEMENTARY INFORMATION

COMPONENT UNIT FINANCIAL STATEMENTS

2

COMBINING STATEMENT OF NET ASSETS

CHARTER SCHOOL COMPONENT UNITS

3

COMBINING STATEMENT OF ACTIVITIES

CHARTER SCHOOL COMPONENT UNITS

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

Page
32 34 36 38 39 41

SECTION II
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

SECTION III 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 I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 7, 2012

Honorable Nathan Deal, 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, 2011, 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 Leadership Preparatory Academy, DeKalb Academy of Technology and the Environment, DeKalb PATH Academy, Destiny Academy of Excellence, International Community School and Museum School of Avondale Estates Charter Schools, which are discretely presented component units. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for those financial statements 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 PATH Academy, International Community School and Museum School of Avondale Estates 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 Board'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.

2011ARL-12

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, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the DeKalb County Board of Education, as of June 30, 2011, 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 Auditing Standards, we have also issued our report dated June 7, 2012, 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 Standards and 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 31 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. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We 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 financial statements as a whole. The accompanying supplementary information consists of Schedules 2 through 7, which includes the Schedule of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the financial statements. The 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 financial statements as a whole.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24.
Respectfully submitted,

RWH:as 2011ARL-12

Russell W. Hinton, CPA, CGFM State Auditor

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011
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, 2011. 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 2011 are as follows:
In total, net assets increased $78.5 million to $1.300 billion. This represents a 6 percent increase from 2010. This total increase was due to governmental activities since the Board has no business-type activities.
General revenues accounted for $560.4 million in revenue or 50.6 percent of all revenues. Program specific revenues in the form of charges for services and operating grants and contributions accounted for $547.7 million or 49.4 percent of total revenues of $1.108 billion.
The Board had $1.029 billion in expenses related to governmental activities; $547.7 million of these expenses were offset by program specific charges for services, grants or contributions.
Among major funds, the general fund has $1.009 billion in revenues and $979 million in expenditures. The general fund's "Net Change in Fund Balances" increased by $30 million resulting in a change in the "Total Fund Balances" increased from $23 million to $53 million for the fiscal year. The fund balance reflects the full accrual of all contracted salaries and benefits unpaid at June 30 in full compliance with GASB 34 regulations.
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 of Net Assets and Statement of Activities provide information about the activities of the whole Board, presenting both an aggregate view of the Board's finances and a longer-term view of those finances. Fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. 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 2011?" The Statement of Net Assets and the Statement of Activities answer 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.
- i -

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011
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.
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) 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 1 provides a summary of the Board's net assets for fiscal year 2011 compared to fiscal year 2010.
- ii -

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011

Table 1 Net Assets (In Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2011

Year 2010

Assets Current and Other Assets Capital Assets, Net

$

409,372 $

499,811

1,258,617

1,195,406

Total Assets

$

1,667,989 $

1,695,217

Liabilities Current and Other Liabilities Long-Term Liabilities

$

142,773 $

157,801

224,943

315,689

Total Liabilities

$

367,716 $

473,490

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

$

1,084,439 $

1,006,908

195,620

204,824

20,214

9,995

Total Net Assets

$

1,300,273 $

1,221,727

Total Liabilities and Net Assets

$

1,667,989 $

1,695,217

Total net assets increased $78.5 million. Table 2 shows the changes in net assets for fiscal year 2011 compared to fiscal year 2010.

- iii -

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011

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 Items Loss on Disposal of Capital Assets
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

Governmental Activities

Fiscal Year 2011

Fiscal Year 2010

$

19,037 $

19,855

528,648

499,921

14,767

$

547,685 $

534,543

$

448,123 $

464,374

95,122 10,604
2,334 4,220

93,218 10,273
2,767 4,153

-9,127

$

560,403 $

565,658

$

1,108,088 $

1,100,201

$

643,454 $

651,032

35,895 31,486 14,886 26,606 60,248
3,696 76,449 52,620 14,995
1,977

35,954 52,958 17,393 19,549 62,720
6,391 82,963 49,958 17,899
140

20 55,371 11,839

54,572 14,332

$

1,029,542 $

1,065,861

$

78,546 $

34,340

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DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011

Governmental Activities
Instruction, Pupil Services and Improvement of Instructional Services comprises 69.0 percent of governmental program expenses. The Operations of Non-instructional Services amounted to 5.4 percent of the total governmental program expenses. These operations consist primarily of the School Nutrition.

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 2011 compared to fiscal year 2010. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements.

Table 3 Governmental Activities
(in Thousands)

Net Cost of Services Fiscal Year 2011

Net Cost of Services Fiscal Year 2010

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

262,995 $
29,759 14,547
2,483 4,989 34,940 3,559 47,060 46,863 14,762
401
20 7,640 11,839

331,821
25,198 13,658
4,963 3,641 28,292 5,298 40,997 43,132 15,031
-225
5,180 14,332

Total Expenses

$

481,857 $

531,318

Although program revenues make up 49.4 percent of the revenues, the Board is still primarily dependent upon tax revenues for governmental activities. More than 40.9 percent of instruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 46.8 percent.

- v -

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011
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 $1.203 billion and expenditures and other financing uses of $1.281 billion. There was a decrease in fund balance of $109 million in the capital project funds due to the increase in construction projects during the year and the funding of bond payments to the debt service fund. The general fund had an increase in fund balance of $31 million. The change in the fund balance of the general fund for the year was due to increases in revenue over expenditures during the year. 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 $258 million over the past nine 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 2011, 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 $981.5 million were over performed by the actual by $27.9 million. This difference was due mainly to receiving better than expected property tax receipts, sales taxes, State funds, charges for services, and investment earnings, which were offset by receiving less than expected in Federal funds and miscellaneous receipts.
Actual expenditures of $978.83 million were 2.04 percent greater than the final budgeted total of $959.22 billion. More than projected instructional activities, food service operations and debt service lease payments contributed to the budget variance.
General Fund expenditures were exceeded by revenues resulting in an increase in "Net Change in Fund Balances" of over $30.5 million for the year. The additional property tax receipts, State funds and charges for services were the major factors in the increase.
Capital Assets and Debt Administration
Capital Assets
At the end of fiscal year 2011 the Board had $1.258 billion invested in capital assets, all in governmental activities. Table 4 shows fiscal year 2011 balances compared with fiscal year 2010 balances.
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DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011

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

Governmental Activities

Fiscal

Fiscal

Year 2011

Year 2010

Land

$

Construction In Progress

Building and Improvements

Improvements Other Than Buildings

Equipment

44,485 $ 76,538 1,057,253 27,712 52,629

41,255 111,282 964,745
28,608 49,516

Total

$

1,258,617 $

1,195,406

The primary increases occurred in buildings and building improvements as well as land and equipment. Due to the ongoing growth in the county, the Board has numerous construction projects including new buildings, additions, and renovations.
Debt
At June 30, 2011 the Board had $73.2 million in capital leases. There were $12.3 million in compensated absences. There is $135.0 million in general obligation bonds and $4.4 million in premiums from the fiscal year 2007 bond issue. $98.4 million of the outstanding debt is due within one year.
Table 5 summarizes long-term debt outstanding and compares fiscal year 2011 balances to fiscal year 2010 balances.
Table 5 Debt at June 30 (in Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2011

Year 2010

Capital Leases

$

Compensated Absences

General Obligation Bonds

Unamortized Bond Premium

73,168 $ 12,344 135,000
4,431

76,561 12,482 220,000
6,646

Total

$

224,943 $

315,689

The Board maintains an AA- and Aa3 bond rating from Standard and Poor's and Moody's, respectively.

- vii -

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011
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 $62 million in state funding lost in the current year, state austerity reductions have amounted to nearly $258 million through fiscal year 2011. 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 $258 million since 2003. More than $165 million of the reductions have occurred in fiscal years 2009, 2010 and 2011. Year-over-year state revenues have decreased from the 2009 fiscal year to the 2010 fiscal year and from the 2010 fiscal year to the 2011 fiscal year, yet the student population is stable. The trend of declining state revenues will continue into the 2012 fiscal 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 fourth 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. Contacting the Board's Financial Management This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the Board's finances and to show the Board's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Mr. Michael Perrone, Chief Financial Officer, at the DeKalb County Board of Education, 1701 Mountain Industrial Blvd., Stone Mountain, Georgia, 30083.
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DEKALB COUNTY BOARD OF EDUCATION

DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2011

EXHIBIT "A"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Local Other Inventories Prepaid Items Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets

PRIMARY GOVERNMENT GOVERNMENTAL
ACTIVITIES

COMPONENT UNITS CHARTER SCHOOLS

$ 126,769,606.22 $ 182,359,778.14
16,137,125.99 54,531,713.24 25,087,243.81
140,636.12
2,787,977.16 1,558,651.14 121,023,067.62 1,137,594,030.70

1,961,307.00 102,365.00
89,795.00
270,103.00 34,712.00
1,578,105.00

$ 1,667,989,830.14 $

4,036,387.00

LIABILITIES
Accounts Payable Salaries and Benefits Payable Interest Payable Contracts Payable Retainages Payable Deposits and Deferred Revenues Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted
Total Net Assets
Total Liabilities and Net Assets

$ 26,543,917.68 $ 106,014,252.43 3,316,825.00 2,563,566.58 2,826,232.29 1,508,198.51
98,446,687.66 126,496,752.04
$ 367,716,432.19 $

554,182.00 98,289.00
119,132.00
70,708.00
842,311.00

$ 1,084,439,083.50 $
4,498,781.35 552,804.17
190,568,696.70 20,214,032.23
$ 1,300,273,397.95 $

1,507,397.00
1,686,679.00 3,194,076.00

$ 1,667,989,830.14 $

4,036,387.00

The notes to the basic financial statements are an integral part of this statement. - 1 -

DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2011

GOVERNMENTAL ACTIVITIES
Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Governmental Activities
COMPONENT UNITS
Charter Schools
General Revenues Taxes Property Taxes For Maintenance and Operations For Debt Services Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous
Total General Revenues
Change in Net Assets
Net Assets - Beginning of Year (Restated)
Net Assets - End of Year

EXPENSES

PROGRAM
CHARGES FOR SERVICES

$ 643,453,839.77 $
35,895,171.79 31,486,518.52 14,886,198.79 26,606,047.34 60,248,065.42
3,695,992.07 76,449,173.83 52,620,028.95 14,994,686.87
1,976,774.81
20,000.00 55,370,684.62 11,838,631.97
$ 1,029,541,814.75 $

13,848,408.21
709,293.81 4,479,178.66 19,036,880.68

$

15,645,687.00 $

630,817.00

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

EXHIBIT "B"

REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

NET (EXPENSES)

REVENUES AND CHANGES

IN NET ASSETS

PRIMARY

COMPONENT

GOVERNMENT

UNITS

GOVERNMENTAL

CHARTER

ACTIVITIES

SCHOOLS

$

366,610,318.79 $

-262,995,112.77

6,135,968.54 16,939,353.36 12,403,201.53 21,617,523.39 25,308,592.67
136,716.85 29,388,373.78
5,047,658.80 233,155.80
1,575,844.25

-29,759,203.25 -14,547,165.16
-2,482,997.26 -4,988,523.95 -34,939,472.75 -3,559,275.22 -47,060,800.05 -46,863,076.34 -14,761,531.07
-400,930.56

43,251,135.49

-20,000.00 -7,640,370.47 -11,838,631.97

$

528,647,843.25 $

-481,857,090.82

$

9,943,692.00

$ -5,071,178.00

$

448,123,261.45

10.12

95,121,979.73 10,603,932.83
2,334,352.97 $ 4,219,830.51

1,946.00 6,098,771.00

$

560,403,367.61 $ 6,100,717.00

$

78,546,276.79 $ 1,029,539.00

1,221,727,121.16

2,164,537.00

$ 1,300,273,397.95 $ 3,194,076.00

- 3 -

DEKALB COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2011

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Local Inventories Prepaid Items
Total Assets

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 80,158,764.10 $ 46,563,220.05 $ 47,622.07 $ 126,769,606.22

10,009,182.12 172,334,688.92

15,907.10 182,359,778.14

7,813,444.92 54,531,713.24 25,087,243.81
140,636.12 2,787,977.16 1,558,651.14

8,323,681.07

16,137,125.99 54,531,713.24 25,087,243.81
140,636.12 2,787,977.16 1,558,651.14

$ 182,087,612.61 $ 227,221,590.04 $ 63,529.17 $ 409,372,731.82

LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Retainages Payable Deposits and Deferred Revenue
Total Liabilities
FUND BALANCES
Nonspendable Restricted Assigned Unassigned
Total Fund Balances
Total Liabilities and Fund Balances

$ 13,993,265.30 $ 105,994,288.04
8,221,625.23

12,550,652.38 19,964.39
2,563,566.58 2,826,232.29

$ 128,209,178.57 $ 17,960,415.64

$ 26,543,917.68 106,014,252.43 2,563,566.58 2,826,232.29 8,221,625.23
$ 146,169,594.21

$ 4,346,628.30

$ 4,346,628.30

3,360,162.22 $ 209,261,174.40 $ 63,529.17 212,684,865.79

1,349,273.12

1,349,273.12

44,822,370.40

44,822,370.40

$ 53,878,434.04 $ 209,261,174.40 $ 63,529.17 $ 263,203,137.61

$ 182,087,612.61 $ 227,221,590.04 $ 63,529.17 $ 409,372,731.82

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

DEKALB COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS JUNE 30, 2011

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Assets are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
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 Liabilities at year-end consist of:
Bonds Payable Accrued Interest Capital Leases Payable Compensated Absences Payable Unamortized Bond Premiums
Total Long-Term Liabilities

$ 263,203,137.61

$

44,485,477.61

76,537,590.01

32,171,502.90

1,428,596,867.52

103,030,454.61

-426,204,794.33

1,258,617,098.32

6,713,426.72

$ -135,000,000.00 -3,316,825.00
-73,167,927.63 -12,344,731.13
-4,430,780.94

-228,260,264.70

Net Assets of Governmental Activities (Exhibit "A")

$ 1,300,273,397.95

The notes to the basic financial statements are an integral part of this statement. - 5 -

DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2011

EXHIBIT "E"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation
Capital Outlay Debt Services
Principal Dues and Fees Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 446,762,794.79

$

10,603,932.83 $ 95,121,979.73

376,116,922.05

152,530,921.20

19,036,880.68

196,028.63

2,137,985.64

4,156,787.66

63,042.85

$ 1,009,404,267.84 $ 97,323,008.22 $

10.12 $ 338.70

446,762,804.91 105,725,912.56 376,116,922.05 152,530,921.20
19,036,880.68 2,334,352.97 4,219,830.51

348.82 $ 1,106,727,624.88

$ 616,568,665.55

$ 616,568,665.55

35,895,171.79 27,406,158.29 14,553,588.76 26,606,047.34 60,248,065.42
5,361,956.34 $ 75,914,278.92 44,934,172.05 14,994,686.87
1,976,774.81
52,174,511.83

497,253.77 4,057,298.00
20,000.00 102,050,929.89

35,895,171.79 27,406,158.29 14,553,588.76 26,606,047.34 60,248,065.42
5,859,210.11 75,914,278.92 48,991,470.05 14,994,686.87
1,976,774.81 20,000.00
52,174,511.83 102,050,929.89

1,337,610.41 862,955.72

2,055,000.00 $ 7,732.50
2,238,401.25

85,000,000.00 10,840,900.00

88,392,610.41 7,732.50
13,942,256.97

$ 978,834,644.10 $ 110,926,615.41 $ 95,840,900.00 $ 1,185,602,159.51

$ 30,569,623.74 $ -13,603,607.19 $ -95,840,551.18 $ -78,874,534.63

$ 95,840,900.00 $ $ -95,840,900.00

95,840,900.00 -95,840,900.00

$ -95,840,900.00 $ 95,840,900.00 $

0.00

$ 30,569,623.74 $ -109,444,507.19 $

348.82 $ -78,874,534.63

23,308,810.30

318,705,681.59

63,180.35

342,077,672.24

$ 53,878,434.04 $ 209,261,174.40 $

63,529.17 $ 263,203,137.61

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 STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2011

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) is to decrease net assets.
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of:
Bond Principal Retirements Capital Lease Payments Amortization to Bond Premium
Total Long-Term Debt Repayments
Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:
Net Decrease in Accrued Interest on Issuance of Bonds Net Decrease in Compensated Absences
Total Additional Expenditures
Change in Net Assets of Governmental Activities (Exhibit "B")

$ -78,874,534.63

$ 96,251,381.81 -31,544,370.88

64,707,010.93

1,360,466.66

-1,495,755.01

$ 85,000,000.00 3,392,610.41 2,215,390.02

90,608,000.43

$ 2,103,625.00 137,463.41

2,241,088.41

$ 78,546,276.79

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

ASSETS Cash and Cash Equivalents
LIABILITIES Funds Held for Others

DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS JUNE 30, 2011

EXHIBIT "G"
AGENCY FUNDS $ 2,126,860.05
$ 2,126,860.05

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

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

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 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.

Discretely Presented Component Unit Included within the School District are six 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.

Because the major portion of the funding for the Charter Schools comes through the School System, the School System is considered financially accountable for the Charter Schools. The financial activities of the charter schools have been presented discretely because they provide services to third-parties outside the School System.

A listing of Charter Schools follows:

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

Destiny Academy of Excellence, Incorporated 3595 Linecrest Road Ellenwood, Georgia 30294

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

Leadership Preparatory Academy, Incorporated
6400 Woodrow Road Lithonia, Georgia 30038

Avondale Education Association, Incorporated d/b/a The Museum School of Avondale Estates
3191 Covington Highway Avondale Estates, Georgia 30002

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, the 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.

- 9 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

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 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.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.
District-wide Capital Projects Fund accounts for and reports financial resources including Special Purpose Local Option Sales Tax (SPLOST) and Bond Proceeds that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (property and sales) legally restricted for the payment of general long-term principal and interest.
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.
- 10 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt 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.
The State of Georgia reimburses the School System for teachers' salaries and operating costs through the Quality Basic Education Formula Earnings program (QBE). Generally teachers are contracted for the school year (July 1 June 30) and paid over a twelve month contract period, generally September 1 through August 31. In accordance with the respective rules and regulations of the QBE program, the State of Georgia reimburses the School System over the same twelve month period in which teachers are paid. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued. Since the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, the School System recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2011, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. The provisions of this Statement establish accounting and financial reporting standards for all governments that report governmental funds. It establishes criteria for classifying fund balances into specifically defined classifications and clarifies definitions for governmental funds.

- 11 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

RESTATEMENT OF PRIOR YEAR NET ASSETS

For fiscal year 2011, the School District included two additional Charter Schools as discretely presented component units. The result is an increase in Net Assets at July 1, 2010, of $107,910.00. This change is in accordance with generally accepted accounting principles.

Component Units: Net Assets, July 1, 2010, as previously reported Inclusion of Additional Charter Schools: Museum School of Avondale Estates Leadership Preparatory Academy

$

2,056,627.00

108,864.00 -954.00

Net assets, July 1, 2010, as restated
CASH AND CASH EQUIVALENTS

$

2,164,537.00

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 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states,
(2) Obligations issued by the United States government,
(3) Obligations fully insured or guaranteed by the United States government or a United States government agency,
(4) Obligations of any corporation of the United States government,
(5) Prime banker's acceptances,
(6) The Georgia Fund 1 administered by the State of Georgia, Office of the State Treasurer,
(7) Repurchase agreements, and
(8) Obligations of other political subdivisions of the State of Georgia.

- 12 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.

RECEIVABLES

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

PROPERTY TAXES

The DeKalb County Board of Commissioners fixed the property tax levy for the 2010 tax digest year (calendar year) on June 22, 2010 (levy date). Taxes were due on November 15, 2010 (lien date) and could be paid in two installments on August 30, 2010 and November 15, 2010 (due dates). Taxes collected within the current fiscal year or within 60 days after year-end on the 2010 tax digest are reported as revenue in the governmental funds for fiscal year 2011. The DeKalb County Tax Commissioner bills and collects the property taxes for the School District, withholds 1.25% 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, 2011, for maintenance and operations amounted to $446,762,794.79 and for school bonds amounted to $10.12.

The tax millage rate levied for the 2010 tax year (calendar year) for the DeKalb Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

22.98 mills

SALES TAXES

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $95,121,979.73 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

INVENTORIES

Consumable Supplies On the basic financial statements, consumable supplies are reported at cost (first-in, first-out). The School District uses the consumption method to account for the consumable supplies inventory whereby an asset is recorded when supplies are purchased and expenses are recorded at the time the supplies are consumed.

Food Inventories On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.

- 13 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

PREPAID ITEMS

Payments made to vendors for services that will benefit periods subsequent to June 30, 2011, are recorded as prepaid items.

CAPITAL ASSETS

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

Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide

statements are as follows:

Capitalization

Estimated

Policy

Useful Life

Land Land Improvements Buildings and Improvements Improvements Other than Buildings Equipment
Outdoor Equipment Vehicles Kitchen Equipment Computers Miscellaneous Buses Intangible Assets

All $ 100,000.00 $ 100,000.00 $ 100,000.00

$

5,000.00

$

5,000.00

$

5,000.00

$

5,000.00

$

5,000.00

$

5,000.00

$ 1,000,000.00

N/A 20 to 40 years
50 years 50 years
15 to 20 years 8 years
15 years 5 years
7 to 20 years 5 years
15 to 20 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.
Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, generally 15 to 20 years.

- 14 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

COMPENSATED ABSENCES

Members of the Teachers' Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School District's financial statements.

Vacation leave of 10 through 20 days is awarded on a fiscal year basis to all full time personnel employed on a twelve month basis. No other employees are eligible to earn vacation leave. Vacation leave not utilized during the fiscal year may be carried over to the next fiscal year, providing such vacation leave does not exceed 30 days.

Beginning of Year Liability

Increases

Decreases

End of Year Liability

2009 2010 2011

$ 12,271,951.47 $ $ 12,644,615.89 $ $ 12,482,194.54 $

7,737,145.82 $ 7,601,727.92 $ 7,091,294.97 $

7,364,481.40 $ 7,764,149.27 $ 7,228,758.38 $

12,644,615.89 12,482,194.54 12,344,731.13

GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the debt.
In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Assets.
NET ASSETS
The School District's net assets in the District-wide Statements are classified as follows:
Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.

- 15 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes.

FUND BALANCES

The School District's fund balances are classified as follows:

Nonspendable Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.

Restricted Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.

Committed Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.

Unassigned The residual classification for the General Fund. This classification represents fund balances that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund.

Fund Balances of the Governmental Funds at June 30, 2011, are as follows:

Nonspendable Inventories Prepaid Assets
Restricted Continuation of Federal Programs Capital Projects Debt Service
Assigned School Activity Accounts
Unassigned

$ 2,787,977.16 1,558,651.14 $

4,346,628.30

$ 3,360,162.22 206,007,878.57 3,316,825.00

212,684,865.79

1,349,273.12 44,822,370.40

Fund Balance, June 30, 2011

$ 263,203,137.61

- 16 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Note 3: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. At June 30, 2011, the bank balances were $146,246,263.94. All bank balances were either insured or collateralized with securities held by the pledging financial institution's trust department in the School District's name.

- 17 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

CATEGORIZATION OF INVESTMENTS

The School District's investments as of June 30, 2011, are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Maturity

Less Than 1

Investment Type

Fair Value

Year

1 - 5 Years

Debt Securities U.S. Treasury U.S. Treasury Money Market Mutual Fund Goldman Sachs Financial Square Trust Treasury Obligation Fund

$ 37,956,392.25

$ 37,956,392.25

119,360,885.31 $ 119,360,885.31

15,030,907.56

15,030,907.56

$ 172,348,185.12 $ 134,391,792.87 $ 37,956,392.25

Other Investments SunTrust FPA
Investment Pools Office of Treasury and Fiscal Services Georgia Fund 1

1.00 2,393.94

Total Investments

$ 172,350,580.06

The Georgia Fund 1, formerly referred to as LGIP, administered by the State of Georgia, Office of the State Treasurer is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at www.audits.ga.gov/SGD/CAFR.html.
The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2011, was 59 days.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value of an investment. The School District does not have a formal policy for managing interest rate risk.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk.

- 18 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

At June 30, 2011, $172,348,185.12 of the School District's applicable investments were uninsured and unregistered, with securities held by the counterparty's trust department or agent in the name of the School District.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The School District does not have a formal policy for managing credit quality risk.

The investments subject to credit quality risk are reflected below:

Rated Debt Investments

Fair Value

Quality Rating AAAm

Debt Securities

U.S. Treasury Money Market Mutual Fund $ 119,360,885.31

Goldman Sachs Financial Square

Treasury Obligation Fund

15,030,907.56

$ 119,360,885.31 15,030,907.56

Totals by Quality Ratings

$ 134,391,792.87 $ 134,391,792.87

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The School District does not have a formal policy for managing concentration of credit risk. More than 5% of the School District's investments are in U.S. Treasury Money Market Mutual Funds, U.S. Treasury Debt Securities and Goldman Sachs Financial Square Treasury Obligation Fund. These investments are 69%, 22% and 9%, respectively, of the School District's total investments.

Note 4: NON-MONETARY TRANSACTIONS

The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories

- 19 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Note 5: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year:

Governmental Activities Capital Assets, Not Being Depreciated:
Land Construction Work In Progress

Balances July 1, 2010

Increases

Decreases

Balances June 30, 2011

$ 41,254,995.61 $ 3,230,482.00

$

111,282,364.72 81,566,202.35 $ 116,310,977.06

44,485,477.61 76,537,590.01

Total Capital Assets, Not Being Depreciated $ 152,537,360.33 $ 84,796,684.35 $ 116,310,977.06 $ 121,023,067.62

Capital Assets, Being Depreciated: Buildings and Improvements Equipment Land Improvements

$ 1,315,242,569.27 $ 113,403,471.61 $

94,948,885.86 14,320,678.91

32,129,978.90

41,524.00

49,173.36 $ 1,428,596,867.52

6,239,110.16

103,030,454.61

32,171,502.90

Less: Accumulated Depreciation: Buildings and Improvements Equipment Land Improvements

350,497,653.39 45,433,369.30 3,521,929.27

20,850,709.90 9,756,566.21 937,094.77

4,441.93 4,788,086.58

371,343,921.36 50,401,848.93 4,459,024.04

Total Capital Assets, Being Depreciated, Net $ 1,042,868,482.07 $ 96,221,303.64 $ 1,495,755.01 $ 1,137,594,030.70

Governmental Activity Capital Assets - Net $ 1,195,405,842.40 $ 181,017,987.99 $ 117,806,732.07 $ 1,258,617,098.32

Capital assets being acquired under capital leases as of June 30, 2011, are as follows:

Buildings and Improvements Equipment Less: Accumulated Depreciation

Governmental Funds
$ 55,360,000.00 146,860.66
3,163,740.27

$ 52,343,120.39

Current year depreciation expense by function is as follows:

Instruction

Support Services

Improvements of Instructional Services

$ 3,446,676.19

Educational Media Services

280,955.36

Business Administration

160,184.82

Maintenance and Operation of Plant

451,825.19

Student Transportation Services

3,065,040.06

Food Services

$ 21,439,885.30
7,404,681.62 2,699,803.96 $ 31,544,370.88

- 20 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Note 6: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2011, consisted of the following:

Transfers

From

District-wide

Capital

Transfers to

Projects

Debt Service Fund

$ 95,840,900.00

Transfers are used to move SPLOST revenue collected in Capital Projects to Debt Service to fund the bond principal and interest.

Note 7: RISK MANAGEMENT

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

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

The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage.

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 employee's salaries and benefits are paid. An excess coverage insurance policy covers individual claims in excess of $500,000.00 loss per occurrence, up to $10,000,000.00.

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 of Year Liability

2010 $ 2011 $

0.00 $ 3,180,925.43 $ 3,180,925.43 $ 0.00 $ 3,904,192.76 $ 3,904,192.76 $

0.00 0.00

- 21 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

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

Changes in the unemployment compensation claims liability during the last two fiscal years are as

follows:

Beginning

Claims and

of Year

Changes in

Claims

End of Year

Liability

Estimates

Paid

Liability

2010

$

2011

$

0.00 $ 0.00 $

559,682.00 $ 1,379,848.09 $

559,682.00 $ 1,379,848.09 $

0.00 0.00

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

Position Covered All Employees
Note 8: LONG-TERM DEBT

Amount $ 1,000,000.00

CAPITAL LEASES
The DeKalb County Board of Education entered into an agreement dated September 1, 2005, with the Georgia School Board Association for the construction and subsequent lease of purchase of land, buildings, and all furnishings and subsequent lease of two new elementary school facilities. Under the terms of the agreement, the School District will make annual payments through December 1, 2026.
The DeKalb County Board of Education entered into an agreement dated March 1, 2007, with the Georgia School Board Association for the construction and subsequent lease of purchase of land, buildings, and all furnishings and subsequent lease of one new elementary school facility. Under the terms of the agreement, the School District will make annual payments through December 1, 2027.
The DeKalb County Board of Education entered into an agreement dated April 30, 2009, with Motorola, Inc. for the purchase of public safety radios. Under the terms of the agreement, the School District will make annual payments through May 1, 2012.
The DeKalb County Board of Education entered into an agreement dated December 1, 2009, with the Bank of America for the purchase of textbooks over the next five years and subsequent lease of textbooks. Under the terms of the agreement, the School District will make annual payments through July 12, 2017.
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

- 22 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences.

GENERAL OBLIGATION DEBT OUTSTANDING

General Obligation Bonds currently outstanding are as follows:

Interest

Purpose

Rates

Amount

General Government - Series 2007

4.0% - 5.0%

$ 135,000,000.00

The changes in Long-Term Debt during the fiscal year ended June 30, 2011, were as follows:

Governmental Funds

Balance

Balance

Due Within One

July 1, 2010

Additions

Deductions

June 30, 2011

Year

G.O. Bonds Capital Leases Compensated Absences Bond Premiums Amortized

$ 220,000,000.00

$ 85,000,000.00 $ 135,000,000.00 $ 85,000,000.00

76,560,538.04

3,392,610.41

73,167,927.63

4,231,297.19

12,482,194.54 $ 7,091,294.97

7,228,758.38

12,344,731.13

7,000,000.00

6,646,170.96

2,215,390.02

4,430,780.94

2,215,390.47

$ 315,688,903.54 $ 7,091,294.97 $ 97,836,758.81 $ 224,943,439.70 $ 98,446,687.66

At June 30, 2011, payments due by fiscal year which includes principal and interest for these items are as follows:

Capital Leases

Principal

Interest

Fiscal Year Ended June 30:

2012 2013 2014 2015 2016 2017 - 2021 2022 - 2026 2027 - 2028

$

4,231,297.19 $

5,900,000.00

6,150,000.00

6,395,000.00

6,650,000.00

20,065,000.00

18,120,000.00

5,656,630.44

2,947,314.49 2,743,431.82 2,516,072.44 2,288,152.19 2,049,030.01 7,330,675.13 3,563,437.00
206,138.00

Total Principal and Interest

$ 73,167,927.63 $ 23,644,251.08

Fiscal Year Ended June 30:

General Obligation Debt

Principal

Interest

Unamortized Bond Premium

2012 2013

$ 85,000,000.00 $ 50,000,000.00

6,633,650.00 $ 2,439,750.00

2,215,390.47 2,215,390.47

Total Principal and Interest

$ 135,000,000.00 $

9,073,400.00 $

4,430,780.94

- 23 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Note 9: PRIOR YEAR DEFEASEMENT OF DEBT
In fiscal year 2003, the School District defeased certain general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the School District's basic financial statements. At June 30, 2011, $2,855,000.00 of bonds are outstanding and are considered defeased.
Note 10: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $2,613,210.53 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certificated Personnel In the amount of $1,546,264.76
Paid to the Teachers' Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $632,924.77
Office of the State Treasurer Paid to the Public School Employees' Retirement System For Public School Employees' Retirement (PSERS) Employer's Cost In the amount of $434,021.00
Note 11: SIGNIFICANT COMMITMENTS
The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2011, together with funding available:

- 24 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Project ADA Group A2b Modifications - Multiple Locations Allgood Elementary School Cedar Grove High School HVAC and Renovations Chamblee Charter High School New Replacement Chamblee High School ADA Modifications Chamblee High School New Replacement Chestnut Charter Elementary School ADA Modifications Clarkston High School Renovation Cross Keys High School Renovation DeKalb School of the Arts Relocation to Avondale High School - Renovations Dunwoody High School Renovations and Additions Emergency Generator Installation at Dresden Elementary School - Labor Only Emergency Generator Installation at Idlewood Elementary School - Labor Only Engineering Services for Emergency Generators - Task Release 1 Engineering Services for Emergency Generators - Task Release 2 - at 12 schools Evansdale Elementary School Roofing Flat Shoals Elementary School Glen Haven Elementary School Widen Drive Group B1 ADA Modifications Multiple Locations Hambrick Elementary School Hambrick Elementary School Roofing Hawthorne Elementary School Henderson Middle School Henderson Middle School Architectural Improvements Indian Creek Elementary School Architectural and Mechanical Design Services Knollwood Elementary School Lakeside High School Lithonia Middle School Locker Room HVAC Replacement Miller Grove High School Addition MLK High School Addition Montgomery Elementary School Mountain Industrial Center Oak Grove Elementary School Lighting Plumbing Fixtures at Huntley Hills and Montgomery Elementary Plumbing Fixtures at Cary Reynolds Elementary School and Smoke Rise Elementary School Plumbing Fixtures at Medlock Elementary School and Laurel Ridge Elementary School Redan High School Architectural Improvements Rockbridge Elementary School Architectural and Mechanical Design Services Sam Moss Center - HVAC and Roof Sequoyah Middle School Sequoyah Middle School Architectural Improvements Sequoyah Middle School HVAC - See 633419 Sequoyah Middle School HVAC, Lighting, etc. Sequoyah Middle School Renovation HVAC Shamrock Middle School Shamrock Middle School Architectural Improvements Sky Haven Elementary School Window Replacement Snapfinger Elementary School Stone Mill Elementary School Stone Mountain Elementary School Stone Mt High School Engineering Technology Lab Renovation Southwest DeKalb High School Addition & Renovation Warren Tech - HVAC William Bradley Center William Bradley Center Renovation and Modifications William Bradley Center Roof Replacement Woodridge Elementary School Roof Replacement

Unearned

Executed

Contracts

$

242,172.00

3,238.80

28,421.00

845,000.00

393,698.53

2,470,000.00

6,874.00

898,608.46

673,799.66

105,692.29

310,043.55

41,299.00

14,379.00

8,750.00

7,820.00

107,410.27

394,567.92

114,132.00

90,800.00

65,250.00

418,022.70

555,127.00

777,891.00

30,051.50

40,622.00

92,000.00

12,998,384.22

93,243.65

121,797.00

371,250.00

69,000.00

33,005.00

81,895.00

18,175.79

1,227.37

707.23

164,500.00

75,229.00

58,890.41

985,346.00

3,690.00

12,499.96

7,846.35

54,286.96

643,042.00

6,340.00

366,989.00

159,268.80

48,562.50

61,281.25

39,452.00

568,800.00

37,490.40

5,126.80

23,105.00

12,817.00

57,964.00

Funding Available From State
$ 202,564.00
256,230.00

$ 25,916,883.37 $ 458,794.00

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

- 25 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Note 12: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District (DCSD) is a defendant and counterclaim plaintiff in a lawsuit filed by Heery International, Inc., E. R. Mitchell & Co., and Heery/Mitchell, A Joint Venture in DeKalb County Superior Court on February 20, 2007. Heery/Mitchell alleges that DCSD breached its contract with Heery/Mitchell for construction program management services when DCSD terminated the Agreement and failed to remit payment to Heery/Mitchell for three outstanding pay applications. Heery/Mitchell claims that it has incurred over $1 million in lost profits and other consequential damages as a result of DCSD's alleged breach. Heery/Mitchell also seeks to recover litigation expense, including attorney's fees, from DCSD, pursuant to O.C.G.A. 13-6-11. DCSD is contesting the case vigorously.
On March 23, 3007, DCSD filed an Answer and Counterclaims in response to Heery/Mitchell's Complaint. In addition to answering Heery/Mitchell's allegations, DCSD filed counterclaims against Heery/Mitchell for (1) fraud, (2) breach of fiduciary duty, and (3) breach of contract. In addition, DCSD alleges that Heery/Mitchell failed to satisfy a number of their contractual obligations relating to, among other things, record maintenance and retention, project supervision and coordination, and reporting to DCSD.
Although both the results and cost of litigation are uncertain, DCSD strongly believes that Heery/Mitchell's claims are totally without merit and will ultimately be unsuccessful. On the other hand, DCSD believes, based on the available evidence, that its counterclaims against Heery/Mitchell are strong and that the DCSD will achieve a substantial recovery against Heery/Mitchell.
The School District believes the likelihood of a material adverse outcome is unknown at this time. Accordingly, adjustments, if any that might result from the resolution of this matter have not been reflected in the basic financial statements.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 13: SUBSEQUENT EVENTS
On May 1, 2011, the School District entered into a lease agreement with the Georgia Municipal Association, Inc. (Association) for the purchase of a replacement high school in the amount of $63,460,000.00. The lease will commence upon the acquisition, construction and equipping of the replacement high school, which is expected to be in fiscal year 2013.
Note 14: POST-EMPLOYMENT BENEFITS
Georgia School Personnel Post-employment Health Benefit Fund
Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service

- 26 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including

benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of the health insurance coverage.

Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "pay-as-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.

The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2011:

For certificated teachers, librarians and regional educational service agencies:

July 2010 - April 2011 May 2011 - June 2011

21.955% of covered payroll for August - May Coverage 1.429% of covered payroll for June - July Coverage

For non-certificated school personnel:

July 2010 - December 2010 January 2011 - May 2011 June 2011

$162.72 per member per month $218.20 per member per month $246.20 per member per month

The Department of Education was appropriated an additional $25,081,633 for non-certificated personnel health insurance payments. The amount attributable to the School District is reflected in the On-behalf note disclosure.

No additional contribution was required by the Board for fiscal year 2011 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation.

The School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows:

- 27 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Fiscal Year

Percentage Contributed

Required Contribution

2011 2010 2009

100%

$

87,542,127.58

100%

$

77,443,370.21

100%

$

59,734,995.39

Note 15: RETIREMENT PLANS

TEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description. The TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. The Teachers' Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.

On October 25, 1996, the Board created the Supplemental Retirement Benefits Plan of the Georgia Teachers' Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.

TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.
Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2011, were 5.53% of annual salary. The member contribution rate will increase to 6.00% effective July 1, 2012. Employer contributions required for fiscal year 2011 were 10.28% of annual salary as required by the June 30, 2008, actuarial valuation. The employer contribution rate will increase to 11.41% effective July 1, 2012.

- 28 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2011

EXHIBIT "H"

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2011 2010 2009

100%

$

100%

$

100%

$

PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM (PSERS)

57,198,714.74 57,802,484.08 58,116,685.22

Bus drivers, lunchroom personnel, and maintenance and custodial personnel are members of the Public School Employees' Retirement System of Georgia. The System is funded by contributions by the employees and by the State of Georgia. The School District makes no contribution to this plan.

DEFINED CONTRIBUTION PLAN

On July 11, 1983, DeKalb County Board of Education began an employer paid 403(b) annuity plan for the group of employees covered under the Public School Employees' Retirement System (PSERS). Recognizing that PSERS was a limited defined contribution and defined benefit plan which did not provide for an adequate retirement for this group of employees, it was the Board's desire to supplement the retirement of this group.

The Board selected Fidelity Investments as the provider of this plan. For each employee covered under PSERS, the Board began contributing to the plan an amount equal to eight percent of the employee's base pay.

The employee becomes vested in the plan when the first contribution is made.

Funds accumulated in the employer paid accounts are only available to the employee upon termination of employment.

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2011 2010 2009

100%

$

4,201,789.00

100%

$

6,582,819.00

100%

$

29,520,396.00

- 29 -

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DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL GENERAL FUND
YEAR ENDED JUNE 30, 2011

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Food Services Operation
Debt Service
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Sale of Equipment Other Sources Other Uses
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL(1)

ACTUAL AMOUNTS

$

421,526,974.00 $

430,820,860.00 $

446,762,794.79

9,500,000.00

9,500,000.00

10,603,932.83

311,085,205.00

312,244,396.00

376,116,922.05

111,589,372.00

183,250,943.00

152,530,921.20

6,900,000.00

6,940,300.00

19,036,880.68

22,350.00

22,350.00

196,028.63

33,705,197.00

35,391,128.00

4,156,787.66

$

894,329,098.00 $

978,169,977.00 $ 1,009,404,267.84

$

547,693,442.00 $

600,929,437.91 $

616,568,665.55

34,857,856.00 46,312,099.00 14,858,093.00 12,332,737.00 59,577,518.00
4,761,345.00 71,818,815.00 34,376,665.00 15,472,556.00
97,000.00 2,875,500.00 44,902,987.00

35,764,901.96 31,477,332.38 15,418,516.00 24,460,012.32 61,004,372.36
5,072,328.00 73,332,321.00 44,568,673.32 15,207,067.44
3,015,810.00 2,875,500.00 46,094,616.00

35,895,171.79 27,406,158.29 14,553,588.76 26,606,047.34 60,248,065.42
5,361,956.34 75,914,278.92 44,934,172.05 14,994,686.87
1,976,774.81
52,174,511.83 2,200,566.13

$

889,936,613.00 $

959,220,888.69 $

978,834,644.10

$

4,392,485.00 $

18,949,088.31 $

30,569,623.74

$

2,005.00 $

2,005.00

3,322,250.00

3,322,250.00

-22,667,562.00

-22,667,562.00

$

-19,343,307.00 $

-19,343,307.00

$

-14,950,822.00 $

-394,218.69 $

32,031,856.00

23,849,090.88

30,569,623.74 23,308,810.30

$

17,081,034.00 $

23,454,872.19 $

53,878,434.04

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual
(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts.
The accompanying schedule of revenues, expenditures and changes in fund balances budget and actual is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 31 -

DEKALB COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF NET ASSETS CHARTER SCHOOL COMPONENT UNITS
JUNE 30, 2011

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
State Government Other Prepaid Items Capital Assets, Depreciable (Net of Accumulated Depreciation)

International Community
School

Destiny Academy of Excellence

$

261,365.00 $

114,171.00

12,850.00 1,908.00
223,949.00

3,947.00 29,995.00

Total Assets

$

500,072.00 $

148,113.00

LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts Payable Long-Term Liabilities
Due Within One Year
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Unrestricted
Total Net Assets

$

68,296.00 $

69,531.00

$

137,827.00 $

$

154,418.00 $

207,827.00

$

362,245.00 $

17,916.00 39,786.00
57,702.00
29,995.00 60,416.00 90,411.00

Total Liabilities and Net Assets

$

500,072.00 $

148,113.00

The notes to the basic financial statements are an integral part of this statement. - 32 -

SCHEDULE "2"

Leadership Preparatory
Academy

DeKalb Academy of Technology and the
Environment

DeKalb PATH Academy

Museum School of Avondale Estates

Total

$

114,121.00 $

549,285.00 $

668,347.00 $

254,018.00 $

1,961,307.00

102,365.00

102,365.00

720.00 123,963.00

146,502.00 2,324.00
490,021.00

61,324.00 72,182.00
9,583.00 218,342.00

28,471.00 38,569.00 16,230.00 491,835.00

89,795.00 270,103.00
34,712.00 1,578,105.00

$

238,804.00 $

1,188,132.00 $

1,132,143.00 $

829,123.00 $

4,036,387.00

$

10,005.00 $

323,765.00 $

91,992.00 $

42,208.00 $

554,182.00

58,503.00

98,289.00

119,132.00

119,132.00

1,177.00

70,708.00

$

10,005.00 $

324,942.00 $

91,992.00 $

219,843.00 $

842,311.00

$

123,963.00 $

488,844.00 $

218,342.00 $

491,835.00 $

1,507,397.00

104,836.00

374,346.00

821,809.00

117,445.00

1,686,679.00

$

228,799.00 $

863,190.00 $

1,040,151.00 $

609,280.00 $

3,194,076.00

$

238,804.00 $

1,188,132.00 $

1,132,143.00 $

829,123.00 $

4,036,387.00

- 33 -

EXPENSES Education
REVENUES Program Revenues: Charges for Services Operating Grants and Contributions Total Program Revenues
Net (Expenses) Revenue General Revenues
Investment Earnings Miscellaneous
Total General Revenues Change in Net Assets Net Assets - Beginning of Year (Restated)
Net Assets - End of Year

DEKALB COUNTY BOARD OF EDUCATION COMBINING STATEMENT OF ACTIVITIES CHARTER SCHOOL COMPONENT UNITS FOR THE YEAR ENDED JUNE 30, 2011

International Community
School

Destiny Academy of Excellence

$

4,567,741.00 $

1,419,650.00

$

198,056.00

2,367,866.00 $

$

2,565,922.00 $

$

-2,001,819.00 $

681,278.00 681,278.00 -738,372.00

$

1,753,538.00

$

1,753,538.00 $

$

-248,281.00 $

610,526.00

683,785.00 683,785.00 -54,587.00 144,998.00

$

362,245.00 $

90,411.00

The notes to the basic financial statements are an integral part of this statement. - 34 -

SCHEDULE "3"

Leadership Preparatory
Academy

DeKalb Academy of Technology and the
Environment

DeKalb PATH Academy

Museum School of Avondale Estates

Total

$

1,492,972.00 $

3,766,400.00 $

3,010,874.00 $

1,388,050.00 $

15,645,687.00

$

65,770.00 $

102,668.00 $

233,043.00 $

31,280.00 $

630,817.00

1,068,892.00

2,378,584.00

1,805,935.00

1,641,137.00

9,943,692.00

$

1,134,662.00 $

2,481,252.00 $

2,038,978.00 $

1,672,417.00 $

10,574,509.00

$

-358,310.00 $ -1,285,148.00 $

-971,896.00 $

284,367.00 $

-5,071,178.00

$

713.00 $

1,207.00 $

26.00 $

1,946.00

$

588,063.00

1,724,573.00

1,132,789.00

216,023.00

6,098,771.00

$

588,063.00 $

1,725,286.00 $

1,133,996.00 $

216,049.00 $

6,100,717.00

$

229,753.00 $

440,138.00 $

162,100.00 $

500,416.00 $

1,029,539.00

-954.00

423,052.00

878,051.00

108,864.00

2,164,537.00

$

228,799.00 $

863,190.00 $

1,040,151.00 $

609,280.00 $

3,194,076.00

- 35 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2011

SCHEDULE "4"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning Child and Adult Care Food Program
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 Education of Homeless Children and Youth Cluster Pass-Through From Georgia Department of Education ARRA - Education for Homeless Children and Youth Education for Homeless Children and Youth
Total Education of Homeless Children and Youth Cluster
Educational Technology State Grants Cluster Pass-Through From Georgia Department of Education ARRA - Education Technology State Grants Education Technology State Grants
Total Education Technology State Grants Cluster
School Improvement Grants Cluster Pass-Through From Georgia Department of Education ARRA - School Improvement Grants School Improvement Grants
Total School Improvement Grants Cluster
Special Education Cluster Pass-Through From Georgia Department of Education Special Education ARRA - Grants to States ARRA - Preschool Grants Grants to States Preschool Grants
Total Special Education Cluster
Title I, Part A Cluster Pass-Through From Georgia Department of Education ARRA - Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies
Total Title I, Part A Cluster
Other Programs Direct Fund for Improvement of Education Transition to Teaching Pass-Through From Georgia Department of Education ARRA - Race-to-the-Top Incentive Grants Career and Technical Education - Basic Grants to States Charter Schools Education Jobs Fund English Language Acquisition Grants Improving Teacher Quality State Grants Mathematics and Science Partnerships

- 36 -

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

N/A

(2)

N/A

$ 50,482,996.59 (1)

$ 50,482,996.59

10.558

N/A

260,462.46

$ 50,743,459.05

94.004

N/A

$

31,909.10

84.387 84.196
84.386 84.318
84.388 84.377

N/A

$

N/A

$

40,558.56 32,947.62
73,506.18

N/A

$

1,666,724.23

N/A

919,025.60

$

2,585,749.83

N/A

$

1,312,511.83

N/A

2,649.41

$

1,315,161.24

* 84.391 * 84.392 * 84.027 * 84.173
* 84.389 * 84.010
84.215 84.350 84.395 84.048 84.282 * 84.410 84.365 84.367 84.366

N/A

$ 12,293,295.07

N/A

422,802.44

N/A

12,943,553.73

N/A

345,767.59

$ 26,005,418.83

N/A

$ 13,785,248.18

N/A

35,566,446.59

$ 49,351,694.77

$

1,694,074.19

550,748.30

N/A

235,242.00

N/A

1,356,068.12

N/A

404,863.88

N/A

18,759,992.00

N/A

2,554,604.85

N/A

3,174,279.62

N/A

31,472.74

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2011

SCHEDULE "4"

FUNDING AGENCY PROGRAM/GRANT
Education, U. S. Department of Other Programs Pass-Through From Georgia Department of Education Reading First State Grants Safe and Drug-Free Schools and Communities - State Grants Special Education State Personnel Development Twenty-First Century Community Learning Centers Pass-Through From Georgia Institute of Technology College Access Challenge Grant Program Pass-Through From Georgia State University Teacher Quality Partnership Grants Transition to Teaching
Total Other Programs
Total U. S. Department of Education
Health and Human Services, U. S. Department of Child Care and Development Fund Cluster Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning ARRA - Child Care and Development Block Grant Other Programs Pass-Through From Georgia Department of Human Resources Refugee and Entrant Assistance - Discretionary Grant
Total U. S. Department of Health and Human Services
Justice, U. S. Department of Direct Edward Byrne Memorial Justice Assistance Grant Program
Energy, U. S. Department of Direct National Aeronautics and Space Administration Aerospace Education Services Program
Defense, U. S. Department of Direct Department of the Air 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

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

84.357 84.186
84.323 84.287
84.378
84.336 84.350

N/A

$

N/A

113,259.78 62,786.95

N/A

42,869.96

N/A

417,155.37

N/A

30,121.00

N/A

10,799.00

N/A

2,907.06

$ 29,441,244.82

$ 108,772,775.67

93.713 93.576
16.738

N/A

$

N/A $

3,600.00
231,173.08 234,773.08

N/A

$

121,154.85

43.001

$

89,125.87

$

514,221.32

143,517.34

786,871.37

$

1,444,610.03

Total Expenditures of Federal Awards

$ 161,437,807.65

N/A = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $6,135,464.38.
(2) Expenditures for the funds earned on the School Breakfast Program ($7,830,074.42) were not maintained separately and are included in the 2011 National School Lunch Program.

Major Programs are identified by an asterisk (*) in front of the CFDA number.

The School District did not provide Federal Assistance to any Subrecipient.

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the DeKalb County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements.

See notes to the basic financial statements.

- 37 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2011
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category III Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Nursing Services Vocational Supervisor Food Services Vocational Education Amended Formula Adjustment Other State Programs Charter Schools - Facilities Dual Enrollment Funding GNETS State Grant Health Insurance Math and Science Supplements Move On When Ready Preschool Handicapped Program Residential Treatment Centers Grant Rule 10 Special Education State Grant Severely Emotionally Disturbed Teachers' Retirement Virtual Schools Grant Vocational Construction Related Equipment - State Bonds
Governor's Office of Highway Safety Students Against Drunk Driving
Office of the State Treasurer Public School Employees Retirement

See notes to the basic financial statements.

- 38 -

SCHEDULE "5"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

8,934,160.01

30,943,806.79 1,883,213.78
70,497,893.66 4,716,816.79
34,256,715.43 3,919,654.36 1,938,385.76
51,577,600.24 55,042,040.10
7,812,008.52
6,749,344.30 5,758,330.40 23,785,203.58 6,316,171.92 5,053,130.88 18,350,237.83 1,143,628.70 4,365,895.21 12,799,033.75 9,673,018.00 2,938,425.00 1,782,864.00
7,969,229.00 19,300,440.00 22,592,480.00
4,688,894.00 1,355,929.00
58,539.00 1,407,904.58
999,251.84 -61,457,248.00
211,000.00 85,983.00
475,930.71 1,546,264.76
768,298.39 1,934.00
1,721,624.32 124,077.66 145,814.30
2,751,781.38 632,924.77 1,225.00 35,334.50
27,709.83
434,021.00
$ 376,116,922.05

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2011

SCHEDULE "6"

PROJECT

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

PROJECT STATUS

Property acquisition, construction and

equipping a minimum of eight (8) new

schools and two (2) new centers;

renovations, modifications, additions and

equipment for existing schools;

acquisition and installation of

information systems hardware and

infrastructure at all schools and selected

other facilities; purchase of both new

school buses and school buses currently

under lease.

$

524,404,330.00 $

524,080,408.01 $

2,412,908.39 $ 504,366,150.91 Ongoing

Property acquisition, renovations and

expansion, construction and equipping,

roofing, site improvements of new and

existing schools; acquisition of buses,

technology - media center upgrades,

HVAC systems, roofing, school

improvement projects throughout the

District,

technology

additions,

renovations and upgrades, transportation

improvements and site acquisitions;

paying capitalized interest on General

Obligation Bonds.

609,460,500.00

584,461,307.67

117,948,252.59

264,969,284.33 Ongoing

$ 1,133,864,830.00 $ 1,108,541,715.68 $ 120,361,160.98 $ 769,335,435.24

(1) The School District's original cost estimate as specified in the resolution calling for the imposition of the Local Option Sales Tax.
(2) The School District's current estimate of total cost for the projects. Includes all cost from project inception to completion.
(3) The voters of DeKalb County approved the imposition of a 1% sales tax to fund the above projects and retire associated debt. Amounts expended for these projects may include sales tax proceeds, state, local property taxes and/or other funds over the life of the projects.

See notes to the basic financial statements.

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DEKALB COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2011

SCHEDULE "7"

DESCRIPTION
Direct Instructional Programs Kindergarten Program Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category III Category IV Category V Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL)
TOTAL DIRECT INSTRUCTIONAL PROGRAMS
Media Center Program Staff and Professional Development

ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2)

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

38,733,821.00 $ 32,510,074.16 $ 136,447.17 $ 32,646,521.33

2,261,153.00

1,595,270.74

1,595,270.74

88,402,707.00

70,709,704.24

1,726,423.49

72,436,127.73

5,904,177.00

3,368,138.24

3,368,138.24

42,826,788.00

43,000,862.63

43,000,862.63

4,905,068.00 2,414,592.00 64,369,782.00 68,927,667.00 9,953,116.00 59,630,643.00
22,507,580.00 1,437,607.00 5,458,144.00
15,641,762.00

1,701,945.67 11,089,992.45 57,035,580.64 72,442,875.00 10,135,589.20
45,204,900.97 6,394,932.63
20,243,484.87 2,139,120.03 238,837.50 4,660,266.47 117,408.12 1,074,327.44
11,261,522.28

107,973.01 626,151.11 2,410,566.53 1,050,259.99
1,826,883.07 11,140.16 60,486.33 13,433.63 4,587.36 9,883.43
26,399.04

1,701,945.67 11,197,965.46 57,661,731.75 74,853,441.53 11,185,849.19
47,031,784.04 6,406,072.79
20,303,971.20 2,152,553.66 243,424.86 4,670,149.90 117,408.12 1,100,726.48
11,261,522.28

$

433,374,607.00 $ 394,924,833.28 $ 8,010,634.32 $ 402,935,467.60

12,351,638.00 2,288,451.00

12,524,742.04 1,487,642.02

1,855,264.61

14,380,006.65 1,487,642.02

TOTAL QBE FORMULA FUNDS

$

448,014,696.00 $ 408,937,217.34 $ 9,865,898.93 $ 418,803,116.27

(1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment.

See notes to the basic financial statements.

- 41 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 7, 2012

Honorable Nathan Deal, 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 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of DeKalb County Board of Education as of and for the year ended June 30, 2011, which collectively comprise DeKalb County Board of Education's basic financial statements and have issued our report thereon dated June 7, 2012. Our report includes a reference to 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. Other auditors audited the financial statements of the School District's discretely presented component units (Charter Schools), which include: Leadership Preparatory Academy, DeKalb Academy of Technology and the Environment, DeKalb PATH Academy, Destiny Academy of Excellence, International Community School and the Museum School of Avondale Estates, as described in our report on DeKalb County Board of Education's financial statements. This report does not include the results of other auditors' testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. The financial statements of the DeKalb PATH Academy, International Community School and the Museum School of Avondale Estates (Charter Schools) were not audited in accordance with Government Auditing Standards.
Internal Control Over Financial Reporting
Management of DeKalb County Board of Education is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered DeKalb County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the DeKalb County Board of Education's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the DeKalb County Board of Education's internal control over financial reporting.

2011YB-11

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether 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 grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We noted certain matters that we have reported to management of DeKalb County Board of Education in a separate letter dated June 7, 2012.
This report is intended solely for the information and use of the audit committee, management, members of the DeKalb County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:as 2011YB-11

Russell W. Hinton, CPA, CGFM State Auditor

Russell W. Hinton
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
June 7, 2012

Honorable Nathan Deal, 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 REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Ladies and Gentlemen:
Compliance
We have audited DeKalb County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2011. 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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the 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.
In our opinion, the DeKalb County Board of Education complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2011.

2011SA-10

Internal Control Over Compliance
Management of DeKalb County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to Federal programs. In planning and performing our audit, we considered DeKalb County Board of Education's internal control over compliance with the requirements that could have a direct and material effect on a major Federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the DeKalb County Board of Education's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
This report is intended solely for the information and use of management, members of the DeKalb County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:as 2011SA-10

Russell W. Hinton, CPA, CGFM 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, 2011

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6441-09-01

Partially Resolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

ACCOUNTING CONTROLS (OVERALL) Inadequate Internal Controls over Construction Projects Finding Control Number: FS-6441-09-01

The DeKalb County School District has taken significant measures to provide an organizational structure that supports effective internal controls over financial reporting. The Director of Internal Audits has been hired and has a reporting structure to the Board of Education and the Superintendent. The Purchasing policy has been revised and augmented to include specific guidelines for capital projects procurement and specific guidelines for purchasing ethics. Further, the DeKalb County School District has revised board policies concerning Employee Code of Ethics, Board member Code of Ethics, and Staff Conflict of Interest. The DeKalb County School District has also adopted a Whistleblower policy and is in the process of reviewing every Board of Education policy.

The DeKalb County School District will continue to monitor and implement new internal controls as the need arises. The measures already implemented will service to mitigate or completely eliminate the factors that caused this finding.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2011

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

Type of auditor's report issue: Governmental Activities; Aggregate Discretely Presented Component Units; General Fund; Capital Projects Fund; Debt Service Fund; Aggregate Remaining Fund Information

Unqualified

Internal control over financial reporting: Material weakness identified? Significant deficiency identified?

No None Reported

Noncompliance material to financial statements noted:

No

Federal Awards

Internal Control over major programs: Material weakness identified? Significant deficiency identified?

No None Reported

Type of auditor's report issued on compliance for major programs: All major programs

Unqualified

Any audit findings disclosed that are required to be reported in

accordance with OMB Circular A-133, Section 510(a)?

No

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

84.010, 84.389 84.027, 84.173, 84.391, 84.392 84.410

Title I, Part A Cluster Special Education Cluster Education Jobs Fund

Dollar threshold used to distinguish between Type A and Type B programs:

$3,000,000.00

Auditee qualified as low-risk auditee?

No

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.