DeKalb County Board of Education, Decatur, Georgia, annual financial report for the fiscal year ended 2015 June 30 (including independent auditor's reports)

DEKALB COUNTY BOARD OF EDUCATION
STONE MOUNTAIN, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2015
(Including Independent Auditor's Reports)

DEKALB COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

Page

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

i

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET POSITION

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

8

H NOTES TO THE BASIC FINANCIAL STATEMENTS

9

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

TEACHERS' RETIREMENT SYSTEM OF GEORGIA

39

2 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

40

3 SCHEDULE OF CONTRIBUTIONS TEACHERS' RETIREMENT SYSTEM OF GEORGIA

42

4 SCHEDULE OF CONTRIBUTIONS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 44

5 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION

46

6 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

47

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DEKALB COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION
7 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 8 SCHEDULE OF STATE REVENUE 9 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 10 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM

Page
48 50 52 55

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 FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY 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

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

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SECTION I FINANCIAL

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Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
November 7, 2016

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
Ladies and Gentlemen:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the DeKalb County Board of Education, as of and for the year ended June 30, 2015, and the related notes to the financial statements (Exhibits A through H), which collectively comprise the Board's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
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effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the DeKalb County Board of Education, as of June 30, 2015, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2015, the DeKalb County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions an amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date an amendment of GASB Statement No. 68. The School District restated beginning Net Position for the cumulative effect of these accounting changes. Our opinion is not modified with respect to this matter.
As discussed in Note 2 to the financial statements, in 2015, the DeKalb County Board of Education restated the prior period financial statements to record the Certificates of Participation related to the construction of a new school. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, the Schedules of Proportionate Share of the Net Pension Liability, the Schedules of Contributions to Retirement Systems, the Notes to the Required Supplementary Information and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual as presented on pages i through ix and pages 39 through 47 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the DeKalb County Board of Education's basic financial statements. The accompanying supplementary information, consisting of Schedules 7 through 10, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements.
The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November 7, 2016, 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering DeKalb County Board of Education's internal control over financial reporting and compliance.
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,

GSG: er 2015ARL-11

Greg S. Griffin State Auditor

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DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
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, 2015. 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 2015 fiscal year are as follows:
In total, net position decreased $593.4 million to $873.1 million, not reflecting the effects of the restatement of Net Position as describe in Note 2. This represents a 40.5 percent decrease from 2014 due primarily to the adoption of required new pension accounting standards. This total decrease was due to governmental activities since the Board has no business-type activities.
General revenues accounted for $539.2 million in revenue or 47.4 percent of all revenues. Program specific revenues in the form of charges for services and grants and contributions accounted for $597.5 million or 52.6 percent of total revenues of $1.137 billion.
The Board had $1,022.8 million in expenses related to governmental activities; $597.5 million of these expenses were offset by program specific charges for services, grants or contributions.
Among major funds, the general fund has $1,019.4 million in revenues and $971.9 million in expenditures. The general fund's "Net Change in Fund Balances" was $47.4 million, which is an increase from the prior year of $18.4 million. 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 Position 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 Position 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 2015?" The Statement of Net Position 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, 2015
These two statements report the Board's Net Position and changes in Net Position. This change in net position 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 digest base, facility conditions, required educational programs and other factors.
In the Statement of Net Position 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 Position 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 Position is of the Board as a whole. Table 1 provides a summary of the Board's net assets for fiscal year 2015 compared to fiscal year 2014.
- ii -

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Table 1 Net Position (In Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2015

Year 2014 (1)

Assets Current and Other Assets Capital Assets, Net

$

538,770 $

457,134

1,328,191

1,245,480

Total Assets

1,866,961

1,702,614

Deferred Outflows of Resources Related to Defined Benefit Pension Plan

99,096

0

Liabilities Current and Other Liabilities Long-Term Liabilities

751,797 133,205

141,119 94,967

Total Liabilities

885,002

236,086

Deferred Inflows of Resources Related to Defined Benefit Pension Plan

207,924

0

Net Position Net Investment in Capital Assets Restricted Unrestricted (Deficit)

1,207,520 290,866 -625,255

1,165,437 272,275 28,816

Total Net Position

$

873,131 $ 1,466,528

(1) Fiscal year 2014 balances do not reflect the effects of the restatement of Net Position. See Note 2 in the Notes to the Basic Financial Statements for more information.

Total net position decreased $593.4 million. This decrease is attributable to the pension plans' determination of the Board's net pension liability.
Table 2 shows the changes in net position for fiscal year 2015 compared to fiscal year 2014.

- iii -

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions
Total Program Revenues

Table 2 Change in Net Position
(In Thousands)

Governmental Activities

Fiscal Year

Fiscal Year

2015

2014 (1)

$

12,733 $

18,802

569,707

520,869

15,018

6,222

597,458

545,893

General Revenues: Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous Special Items

414,377 84
103,096 7,953 208
13,436

378,244
98,798 11,563
206 9,711 7,002

Total General Revenues and Special Items

539,154

505,524

Total Revenues

1,136,612

1,051,417

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

654,144
30,035 33,298 11,567 11,718 54,358
6,199 83,398 50,332 16,675
6,979
2,658 55,720
5,724
1,022,805

636,984
28,111 39,563 11,726 12,805 53,625
5,700 80,102 51,216 14,849
2,999
2,407 54,413
6,102
1,000,602

Increase in Net Position

$

113,807 $

50,815

(1) Fiscal year 2014 balances do not reflect the effects of the restatement of Net Position. See Note 2 in the Notes to the Basic Financial Statements for more information.

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DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Governmental Activities

Instruction, Pupil Services and Improvement of Instructional Services comprises 70.1 percent of governmental program expenses. The Operations of Non-instructional Services amounted to 5.7 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 2015 compared to fiscal year 2014. 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 2015

Net Cost of Services Fiscal
Year 2014 (1)

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

223,794 $
25,136 10,786
1,057 432
34,197 5,813
58,009 39,537 16,526
2,924
1,557 -143
5,724

280,727
22,549 3,018 -1,043 1,036
29,026 5,504
49,664 40,489 14,637
919
1,650 431
6,102

Total Expenses

$

425,349 $

454,709

(1) Fiscal year 2014 balances do not reflect the effects of the restatement of Net Position See Note2 in the Notes to the Basic Financial Statements for more information.

Although program revenues make up 52.6 percent of the revenues, the Board is still primarily dependent upon tax revenues for governmental activities. More than 34.2 percent of instruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 41.6 percent.

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DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
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 $1.139 billion and expenditures and other financing uses of $1.066 billion. There was an increase in fund balance of $25.2 million in the capital project funds due to increases in revenue over expenditures during the year. The general fund had an increase in fund balance of $47.4 million. This increase in fund balance was mainly the result of an increase in revenues from $940.5 million in 2014 to $1.019 billion in 2015. 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 2015, the Board amended its general fund budget as needed from time to time. The Board uses site-based budgeting based on FTE student allocations. The anticipated budgeted revenues and other sources for the original General Fund budget were $959.8 million and anticipated budgeted expenditures and other uses were $955.1 million. The budgeting systems are designed to monitor and control total sited budgets but provide flexibility for site management. For the General Fund, final budgeted revenues of $1.016 billion were over performed by the actual by $3.5 million. This difference was due mainly to receiving less than expected miscellaneous revenue that was offset by better than expected property taxes, sales taxes, state funds and charges for services. Actual expenditures and other uses of $971.9 million were 2.4 percent less than the final budgeted total of $995.4 million. General Fund revenues exceeded expenditures by $47.4 million resulting in an increase in "Fund Balance" for the year. Revenues for property taxes, sales taxes, state funds, federal funds, charges for services and miscellaneous revenues were the major factors in this increase.
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DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Capital Assets and Debt Administration

Capital Assets
At the end of fiscal year 2015 the Board had $1.328 billion invested in capital assets, all in governmental activities. Table 4 shows fiscal year 2015 balances compared with fiscal year 2014 balances.
Table 4 Capital Assets (Net of Depreciation, in Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2015

Year 2014 (1)

Land

$

Construction In Progress

Building and Improvements

Improvements Other Than Buildings

Equipment

44,486 $ 56,979 1,156,912 24,872 44,942

44,486 41,527 1,090,997 25,868 42,602

Total

$

1,328,191 $

1,245,480

(1) Fiscal year 2014 balances do not reflect the effects of the restatement to Net Position. See Note 2 in the Notes to the Basic Financial Statements for more information.
The primary increase occurred in Construction in Progress and Building and Improvements. Due to the ongoing population growth in the county, the Board has numerous construction projects including new buildings, additions, and renovations.

Debt
At June 30, 2015 the Board had $44.3 million in capital leases, $44.0 million in certificates of participation, $9.1 million in compensated absences, $33.3 million in general obligation bonds, and $2.4 million in premiums from the fiscal year 2012 bond issue. $16.7 million of the outstanding debt is due within one year.
Table 5 summarizes long-term debt outstanding and compares fiscal year 2015 balances to fiscal year 2014 balances.

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DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Table 5 Debt at June 30 (in Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2015

Year 2014 (1)

Certificates of Participation

$

Capital Leases

Compensated Absences

General Obligation Bonds

Unamortized Bond Premium

44,077 44,287 $
9,128 33,300
2,413

48,133 10,123 33,300
3,412

Total

$

133,205 $

94,968

(1) Fiscal year 2014 balances do not reflect the effect of the restatement of Net Position. See Note 2 in the Notes to the Basic Financial Statements for more information.
The Board maintains an underlying A+ and A1 credit rating from Standard & Poor's Ratings Services and Moody's Investors Service, respectively.

Current Issues

State funding was higher in 2015 than 2014 due to an increase in "Quality Basic Education" and payments from the Georgia State Financing and Investment Commission of $49.0 million. Also, federal grant revenue increased in 2015 by 1.6% from 2014. Combined state and federal revenues used in general fund operations in 2015 increased by $50.2 million from 2014.

Local revenue within DeKalb County School System is increasing. Property tax revenues had been impacted by the revaluation of property due to foreclosures and weak sales. Digest values are documented to be increasing by at least 7% during fiscal year 2016. Overall, total General Fund revenues have been increasing for the last two years. Prior to the 2009 fiscal year, the tax digest in DeKalb had never seen a decrease in value. However, for the last three years, substantial digest increases have been documented.

During 2013, the Board reduced annual budgeted expenditures to address the challenges of prior reduced revenues. The reduced annual budget enabled the DeKalb County School System to eliminate the deficit from fiscal year 2012. As of the end of fiscal year 2015, the Board has rebuilt the District's financial reserves which are now in compliance with the District's policy relating to fund balance targets. The Board remains committed to maintaining the District's financial reserves.

Current financial statements reflect the School District's liability for the unfunded portion of the pension plan administered through the Teachers' Retirement System of Georgia (TRS) and Employees Retirement System of Georgia (ERS). This amount is currently being calculated based on actuarial estimates and is reflected on the District-wide financial statements as Deferred Inflows and Outflows of Resources and Net Pension Liability.

The School District has adopted GASB Statement 68 in the current fiscal year 2015, which resulted in a material restatement of beginning net position.

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DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 Factors Bearing on the District's Future Principal among the factors bearing upon the District's future are the January 2016 attainment of the status of full accreditation from the SACs organization. Additionally, the return of the District's Fund Balance to substantially fully funded relative to internal Board Policy gives to the District much more flexibility relative to salary and benefit increases, enhanced educational programs, and substantial technological improvements which, will greatly increase the efficacy, and thereby student performance, of the District's educational initiatives. 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 Dr. Michael J. Bell, 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

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DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2015
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest Taxes State Government Federal Government Other Inventories Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
DEFERRED OUTFLOWS OF RESOURCES
Related to Defined Benefit Pension Plan
LIABILITIES
Accounts Payable Salaries and Benefits Payable Claims Incurred but not Reported (IBNR) Payroll Withholdings Payable Interest Payable Contracts Payable Retainages Payable Deposits and Unearned Revenues Long-Term Liabilities
Due Within One Year Due in More Than One Year Net Pension Liability
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Related to Defined Benefit Pension Plan
NET POSITION
Net Investment in Capital Assets Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted (Deficit)
Total Net Position

EXHIBIT "A"

GOVERNMENTAL ACTIVITIES

$

103,302,651.31

326,870,842.38

2,131.60 24,408,762.97 63,474,863.12 17,892,759.82
141,347.09 2,676,670.81 101,464,930.39 1,226,725,777.17

1,866,960,736.66

99,095,760.12

11,911,305.21 118,118,347.57
7,971,579.31 1,897,939.18
468,702.52 11,521,271.10
3,026,499.55 34,312.25
16,653,491.56 116,551,034.31 596,846,728.00
885,001,210.56

207,923,893.00

1,207,520,444.16
4,719,821.68 444,000.00
285,702,524.93 -625,255,397.55

$

873,131,393.22

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, 2015

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
General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Investment Earnings Miscellaneous
Total General Revenues
Change in Net Position
Net Position - Beginning of Year, Restated
Net Position - End of Year

EXPENSES

CHARGES FOR SERVICES

PROGRAM REVENUES

$ 654,144,069.98 $
30,035,067.85 33,298,273.84 11,566,876.41 11,718,254.57 54,358,579.87
6,198,773.79 83,398,142.25 50,332,007.63 16,674,505.35
6,979,461.77
2,657,856.91 55,719,989.29
5,723,946.48
$ 1,022,805,805.99 $

5,654,125.85
1,101,215.96 5,978,319.51 12,733,661.32

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

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES
AND CHANGES IN NET POSITION

$ 413,265,283.83 $
4,898,777.84 22,005,783.05 10,425,861.61 11,286,504.10 20,161,094.79
242,420.80 25,173,293.73
8,362,482.39 148,650.40
4,055,435.91
49,681,235.53
$ 569,706,823.98 $

11,432,020.26 $
507,062.69 83,698.97
142,933.30 216,086.51 2,432,960.00
203,122.75
15,017,884.48

-223,792,640.04
-25,136,290.01 -10,785,428.10
-1,057,315.83 -431,750.47
-34,197,485.08 -5,813,419.69
-58,008,762.01 -39,536,565.24 -16,525,854.95
-2,924,025.86
-1,556,640.95 142,688.50
-5,723,946.48
-425,347,436.21

414,377,334.35 83,836.30

103,095,871.13 7,953,415.48 208,183.85
13,436,384.82
539,155,025.93
113,807,589.72
759,323,803.50

$

873,131,393.22

- 3 -

DEKALB COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2015

EXHIBIT "C"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Interest Taxes State Government Federal Government Other Inventories

GENERAL FUND

DISTRICT-WIDE CAPITAL PROJECTS FUND

DEBT SERVICE
FUND

TOTAL

$ 41,851,881.32 $ 61,386,676.36 $ 94,282,288.91 232,588,553.47

15,676,819.91 61,583,203.90 17,892,759.82
141,347.09 2,676,670.81

2,131.33 8,731,943.06 1,891,659.22

64,093.63 $ 103,302,651.31 326,870,842.38

0.27

2,131.60 24,408,762.97 63,474,863.12 17,892,759.82
141,347.09 2,676,670.81

Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Contracts Payable Retainages Payable Deposits and Unearned Revenue
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - Property Taxes
FUND BALANCES
Nonspendable Restricted Assigned Unassigned
Total Fund Balances

$ 234,104,971.76 $ 304,600,963.44 $ 64,093.90 $ 538,770,029.10

$ 8,381,151.77 $ 118,093,298.80 1,895,066.32
34,312.25

3,530,153.44 25,048.77 2,872.86
11,521,271.10 3,026,499.55

128,403,829.14

18,105,845.72

$ 11,911,305.21 118,118,347.57 1,897,939.18 11,521,271.10 3,026,499.55 34,312.25
146,509,674.86

8,059,535.89

8,059,535.89

2,676,670.81 3,850,717.83 1,570,736.07 89,543,482.02
97,641,606.73

286,495,117.72 $ 286,495,117.72

64,093.90

2,676,670.81 290,409,929.45
1,570,736.07 89,543,482.02

64,093.90 384,200,818.35

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 234,104,971.76 $ 304,600,963.44 $ 64,093.90 $ 538,770,029.10

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 POSITION JUNE 30, 2015

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Position are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported as assets in governmental funds. These assets consist of:
Land Construction in Progress Land Improvements Buildings Equipment Accumulated Depreciation
Total Capital Assets
Some liabilities, including net pension obligations, are not due and payable in the current period and, therefore, are not reported in the funds.
Net Pension Liability
Deferred Outflows and Inflows of Resources related to pensions are applicable to future periods and, therefore, are not reported in the governmental funds.
Taxes that are not available to pay for current period expenditures are deferred in the governmental funds.
Property Taxes
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. These consist of:
Bonds Payable Accrued Interest Payable Capital Leases Payable Certificates of Participation Payable Compensated Absences Payable Bond Premiums, Net of Amortization Claims and Judgments Payable
Total Long-Term Liabilities

$ 384,200,818.35

$

44,485,477.61

56,979,452.78

33,240,835.43

1,607,223,685.97

111,714,131.42

-525,452,875.65

1,328,190,707.56

-596,846,728.00 -108,828,132.88

8,059,535.89

$

-33,300,000.00

-468,702.52

-44,286,745.92

-44,077,140.05

-9,127,516.55

-2,413,123.35

-7,971,579.31

-141,644,807.70

Net Position of Governmental Activities (Exhibit "A")

$ 873,131,393.22

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, 2015

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 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, Restated
Fund Balances - Ending

GENERAL FUND

DISTRICT-WIDE CAPITAL PROJECTS FUND

DEBT SERVICE
FUND

TOTAL

$

414,349,565.09

8,037,251.78 $

441,070,372.23

132,346,004.49

12,733,661.32

167,033.64

10,646,284.47

1,019,350,173.02

103,095,871.13 12,584,924.48
41,145.80 $ 2,790,100.35
118,512,041.76

$ 4.41

414,349,565.09 111,133,122.91 453,655,296.71 132,346,004.49
12,733,661.32 208,183.85
13,436,384.82

4.41 1,137,862,219.19

605,434,494.20
30,734,687.21 32,630,533.43 11,623,546.18 11,914,116.06 55,643,943.48
5,996,412.45 84,104,376.79 49,696,505.87 17,080,837.50
6,949,050.52 2,663,423.04 55,778,942.62
1,394,813.39 260,486.47
971,906,169.21
47,444,003.81

69,997.77 5,035,200.00
1,646.51
74,220,138.10 7,568,285.34 5,122,122.22
92,017,389.94 26,494,651.82

1,332,000.00 1,332,000.00 -1,331,995.59

605,434,494.20
30,734,687.21 32,630,533.43 11,623,546.18 11,914,116.06 55,643,943.48
6,066,410.22 84,104,376.79 54,731,705.87 17,082,484.01
6,949,050.52 2,663,423.04 55,778,942.62 74,220,138.10
8,963,098.73 6,714,608.69
1,065,255,559.15
72,606,660.04

47,444,003.81 50,197,602.92

-1,332,000.00 -1,332,000.00 25,162,651.82 261,332,465.90

1,332,000.00
1,332,000.00 4.41
64,089.49

1,332,000.00 -1,332,000.00
0.00
72,606,660.04
311,594,158.31

$

97,641,606.73 $ 286,495,117.72 $

64,093.90 $ 384,200,818.35

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, 2015

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
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) is to decrease net position.
The net effect of recording the Capital Asset and related Liability for the new school that was completed at year-end associated with the 2011A/2011B Certificate of Participations.
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
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 Position. In the current year, these amounts consist of:
Capital Lease Payments Certificates of Participation Payments
Total Long-Term Debt Repayments
Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:
Net Increase in Accrued Interest Decrease in Compensated Absences Pension Expense Decrease in Claims and Judgments Amortization of Bond Premiums
Total Additional Expenditures
Change in Net Position of Governmental Activities (Exhibit "B")

$

72,606,660.04

$ 80,261,124.30 -34,007,436.91

46,253,687.39 -7,620,081.62 -25,720,866.61
27,769.26

$ 3,846,443.83 5,118,285.34

8,964,729.17

$

-7,871.59

995,306.67

17,013,290.12

296,433.09

998,533.80

19,295,692.09

$ 113,807,589.72

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

DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS JUNE 30, 2015
ASSETS Cash and Cash Equivalents Investments
Total Assets LIABILITIES Funds Held for Others

EXHIBIT "G"
AGENCY FUNDS
$ 2,355,199.52 1,248.62
$ 2,356,448.14
$ 2,356,448.14

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, 2015

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.
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 Position 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.

- 9 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

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 Education Special Purpose Local Option Sales Tax (ESPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission 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 (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.
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 60 days after year-end, except for reimbursable grants. The School District considers all intergovernmental revenues to be available if they are collected within 120 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.

- 10 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net position 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.
RESTATEMENT OF PRIOR YEAR NET POSITION/FUND BALANCE
For fiscal year 2015, the School District made a variety of prior period adjustments due to the adoption of GASB Statement No. 68 and GASB Statement No. 71, as described in "New Accounting Pronouncements" below and to properly record the lease entered into on May 1, 2011 with the Georgia Municipal Association, Inc., which require the restatement of the June 30, 2014, Net Position in Governmental Activities and fund balance in the Capital Projects Fund. The result is a decrease in Net Position and Fund Balance at July 1, 2014 of $707,203,855.07 and $5,118,285.34, respectively. These changes are in accordance with generally accepted accounting principles.

Net position, July 1, 2014 as previously reported

$ 1,466,527,658.57

Prior Period adjustment - Implementation of GASB 68:

Net pension liability (measurement date)

Teachers Retirement System

$ -780,443,647.00

Employees' Retirement System

-1,446,768.00

Deferred Outflows - School District's contribution made

during fiscal year 2014

Teachers Retirement System

$ 59,043,762.00

Employees' Retirement System

158,502.00

Recording of the Certificate of Participations with the Georgia

Municipal Association, Inc. due to the new school being

completed at year-end

-781,890,415.00 59,202,264.00 15,484,295.93

Net position, July 1, 2014, as restated

$ 759,323,803.50

Fund Balance, July 1, 2014, as previously reported Recording of Certificate of Participations with the Georgia Municipal Association, Inc. due to the new school being completed at year-end

$ 316,712,443.65 -5,118,285.34

Fund Balance, July 1, 2014, as restated

$ 311,594,158.31

NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. The adoption of this statement has a significant impact on the School District's financial statements. As noted above the School District restated beginning Net Position for the cumulative effect of this accounting change.

- 11 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

In fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 69, Government Combinations and Disposals of Government Operations. This statement provides specific accounting and financial reporting guidance for combinations in the governmental environment. This statement also requires that disclosures be made by governments about combination arrangements in which they engage and for disposals of government operations. The School District did not have any activities of this type during the fiscal year and the adoption of this statement does not have a significant impact on the School District's financial statements.
In fiscal year 2015, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date an amendment of GASB No. 68. The objective of this statement is to improve accounting and financial reporting by addressing an issue in Statement No. 68, Accounting and Financial Reporting for Pensions, concerning transition provisions related to certain pension contributions made to defined benefit pension plans prior to implementation of statement. This statement amends paragraph 137 of Statement No. 68 which limited recognition of pension-related deferred inflows of resources at the transition to circumstances in which it is practical to determine the amounts of all deferred outflows of resources and deferred inflows of resources related to pensions. The adoption of this statement has a significant impact on the School District's financial statements. As noted above the School District restated beginning Net Position for the cumulative effect of this accounting change.
CASH AND CASH EQUIVALENTS
Composition of Deposits Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
Composition of Investments Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(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,

- 12 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

(6) The local government investment pool (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.

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

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 adopted the property tax levy for the 2014 tax digest year (calendar year) on July 7, 2014 (levy date) based on property values as of January 1, 2014. Taxes were due on November 15, 2014 (lien date) and could be paid in two installments on September 30, 2014 and November 15, 2014 (due dates). Taxes collected within the current fiscal year or within 60 days after year-end on the 2014 tax digest are reported as revenue in the governmental funds for fiscal year 2015. 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, 2015, for maintenance and operations amounted to $394,026,914.51.

The tax millage rate levied for the 2014 tax year (calendar year) for the DeKalb County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

23.98 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $20,322,650.58 during fiscal year ended June 30, 2015.
SALES TAXES
Education Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $103,095,871.13 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.

- 13 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

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.
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:

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

Capitalization Policy

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

- 14 -

Estimated Useful Life
N/A 20 to 40 years Up to 50 years
50 years
15 to 20 years 8 years
15 years 5 years
7 to 20 years 15 years 15 years

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

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.
DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. Under the full accrual method of accounting, the School District has reported deferred outflows of resources related to a defined benefit pension plan, as discussed in Note 16 Retirement Plans.
In addition to liabilities, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. Under the full accrual method of accounting, the School District has reported deferred inflows of resources related to a defined benefit pension plan, as discussed in Note 16 Retirement Plans. This item is reported only in the Districtwide Statement of Net Position. The School District has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and grants and these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available.
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 to 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 in addition to vacation earned during the current year of service, but no more than one-half of the earned but unused vacation of the previous year.
GENERAL OBLIGATION BONDS
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued.

- 15 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

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 Position.
PENSIONS
For purposes of measuring the Net Pension Liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers' Retirement System of Georgia (TRS), the Employees' Retirement System of Georgia (ERS) and the Public School Employees Retirement System (PSERS) and additions to deductions from TRS/ERS/PSERS's fiduciary net position have been determined on the same basis as they are reported by TRS/ERS/PSERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. See Note 16 Retirement Plans.
NET POSITION
The School District's Net Position in the District-wide Statements is classified as follows:
Net Investment in Capital Assets - 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 Net Investment in Capital Assets.
Restricted Net Position - This represents resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties.
Unrestricted Net Position - Unrestricted Net Position is the net amount of the assets, deferred outflows of resources, liabilities and deferred inflows of resources that are not included in the determination of Net Investment of Capital Assets and Restricted Net Position. Included in the net deficit reported is the School District's Net Pension Liability of $595,416,542.00 which is required for financial reporting.
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.

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

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 have not been assigned to other funds and that have not been restricted, committed, or assigned to specific purposes within the General Fund.

Fund Balances of the Governmental Funds at June 30, 2015, are as follows:

Nonspendable

Inventories

$

Restricted

Continuation of Federal Programs $ 3,850,717.83

Capital Projects

285,893,211.62

Debt Service

666,000.00

Assigned

School Activity Accounts

Unassigned

2,676,670.81
290,409,929.45 1,570,736.07
89,543,482.02

Fund Balance, June 30, 2015

$ 384,200,818.35

It is the goal of the School District to achieve and maintain a committed, assigned, and unassigned fund balance in the general fund at fiscal year-end of between 5% and 7% of budgeted expenditures while complying with Official Code of Georgia Annotated Section 20-2-167(a)5. When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.

USE OF ESTIMATES

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Note 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general, debt service, and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate function level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
The Superintendent is authorized by the Board to approve adjustments of no more than 10 percent of the amount budgeted for expenditures in any budget function for any fund. The Superintendent shall report any such adjustments to the Board. If expenditure of funds in any budget function for any fund is anticipated to be more than 10 percent of the budgeted amount, the Superintendent shall request Board approval for the budget amendment. Under no circumstance is the Superintendent or other staff person authorized to spend funds that exceed the total budget without approval by the Board.
See Schedule 6 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year under review.
Note 4: 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,

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

(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. The School District does not have a deposit policy for custodial credit risk. At June 30, 2015, School District had deposits with a carrying amount of $105,659,099.45, which includes $1,248.62 in Certificates of Deposit that are reported as Investments, and a bank balance of $114,316,931.32. The bank balances insured by Federal depository insurance were $2,528,088.16.

The amounts exposed to custodial credit risk are classified into three categories as follows:

Category 1 Category 2 -
Category 3 -

Uncollateralized, Cash collateralized with securities held by the pledging financial institution, or Cash collateralized with securities held by the pledging financial institution's Trust department or agent but not in the School District's name.

The School District's deposits by custodial credit risk category at June 30, 2015, are as follows:

Custodial Credit Risk Category

Bank Balance

1 2 3
Total

$

0.00

61,625,867.00

50,162,976.16

$ 111,788,843.16

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

CATEGORIZATION OF INVESTMENTS
At June 30, 2015, the carrying value of the School District's total investments was $326,872,091.00. This includes $1,248.62 invested in Certificates of Deposit, which are collateralized in the same manner as other cash deposits. The School District's investments as of June 30, 2015, are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Type

Fair Value

Investment Maturity Less Than 1 Year

Debt Securities U. S. Treasury Money Market Funds First American Treasury Obligation Fund Goldman Sachs Financial Square Trust Treasury
Investment Pools Office of the State Treasurer Georgia Fund 1

$

3,266,717.10 $

3,266,717.10

223,578,981.57

223,578,981.57

226,845,698.67 $ 226,845,698.67

100,025,143.71

$

326,870,842.38

The Georgia Fund 1 (local government investment pool) 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 and Extended Asset 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 AAAf 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, 2015, was 56 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.

- 20 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

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.

At June 30, 2015, $226,845,698.67 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 Ratings AAAm

Debt Securities U. S. Treasury Money Market Funds First American Treasury Obligation Fund Goldman Sachs Financial Square Trust Treasury

$ 3,266,717.10 $ 3,266,717.10 223,578,981.57 223,578,981.57

$ 226,845,698.67 $ 226,845,698.67

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 Goldman Sachs Financial Square Trust Treasury Fund. This investment is 68.40% of the School District's total investments.
Note 5: 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.

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Note 6: CAPITAL ASSETS

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

Balances July 1, 2014 (Restated)

Increases

Decreases

Balances June 30, 2015

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

$ 44,485,477.61

$

85,604,556.70 $ 85,896,600.90 $ 114,521,704.82

44,485,477.61 56,979,452.78

Total Capital Assets Not Being Depreciated

130,090,034.31

85,896,600.90 114,521,704.82

101,464,930.39

Capital Assets Being Depreciated Buildings and Improvements Equipment Land Improvements
Less Accumulated Depreciation for: Buildings and Improvements Equipment Land Improvements

1,528,106,620.82 103,837,715.13 33,240,835.43

99,269,530.14 9,616,698.08

20,152,464.99 1,740,281.79

1,607,223,685.97 111,714,131.42 33,240,835.43

437,109,469.86 61,236,126.80 7,372,507.24

25,854,004.23 7,157,045.07 996,387.61

12,651,380.64 1,621,284.52

450,312,093.45 66,771,887.35 8,368,894.85

Total Capital Assets, Being Depreciated, Net

1,159,467,067.48

74,878,791.31

7,620,081.62

1,226,725,777.17

Governmental Activity Capital Assets - Net $ 1,289,557,101.79 $ 160,775,392.21 $ 122,141,786.44 $ 1,328,190,707.56

Capital assets being acquired under capital leases as of June 30, 2015, are as follows:
Governmental Funds

Buildings and Improvements Less: Accumulated Depreciation

$ 55,360,000.00 7,529,600.00

$ 47,830,400.00

Current year depreciation expense by function is as follows:

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

1,290,504.34 202,556.89 345,907.77 522,943.24
3,487,731.36

$ 27,666,223.21
5,849,643.60 491,570.10

$ 34,007,436.91

- 22 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Note 7: INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2015, consisted of the following:

Transfers to

Transfers From District-wide Capital Projects

Debt Service Fund

$ 1,332,000.00

Transfers are used to move SPLOST revenues collected in the Capital Projects Fund to Debt Service Fund to fund the bond interest payments.
Note 8: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.
The School District has obtained commercial insurance for risk of loss associated with torts, assets, errors or omissions and acts of God. The School District has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the School District's insurance coverage in any of the past three years. 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), errors and omissions liability, and crime 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 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. An excess coverage insurance policy covers individual claims in excess of $1,000,000.00 loss per occurrence, up to $25,000,000.00.
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

2014

$

0.00 $ 15,257,340.19 $ 6,989,327.79 $ 8,268,012.40

2015

$ 8,268,012.40 $ 6,335,301.56 $ 6,631,734.65 $ 7,971,579.31

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.

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2014

$

0.00 $

456,323.60 $

456,323.60 $

0.00

2015

$

0.00 $

174,997.51 $

174,997.51 $

0.00

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

Position Covered

Amount

Superintendent

$

1,000,000.00

Note 9: SHORT-TERM DEBT
The School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred.
Short-term debt activity for the fiscal year is as follows:

Beginning Balance July 1, 2014

Additions

Reductions

Ending Balance June 30, 2015

Tax Anticipation Notes

$

0.00 $ 36,000,000.00 $ 36,000,000.00 $

0.00

Note 10: LONG-TERM LIABILITIES

CAPITAL LEASES

The DeKalb County Board of Education entered into an agreement dated September 1, 2005, with the Georgia School Boards 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 30, 2026.

The DeKalb County Board of Education entered into an agreement dated March 1, 2007, with the Georgia School Boards Association for the construction and subsequent lease of purchase of land, buildings, and all furnishings and subsequent lease of one new elementary school facilities. Under the terms of the agreement, the School District will make annual payments through December 1, 2027.

- 24 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

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.

Certificates of Participation

On May 1, 2011 the School District entered into a lease agreement with the Georgia Municipal Association, Inc. for the purchase of a replacement high school. The Georgia Municipal Association, Inc. sold $57,770,000.00 in Qualified School Construction Taxable Certificates of Participation Bonds (QSCBS) and $5,690,000.00 in Certificates of Participation Tax-Exempt Bonds to fund the construction of the new school. The lease agreement with Georgia Municipal Association provides that the School District owns the high school and is responsible for the payment of principal and interest on the Certificate of Participation and QSCBS.

Under Federal Law, the QSCBS are eligible to receive an interest subsidy from the U.S. Government which will materially offset the School District's liability to make full interest debt service amortization payments as scheduled. To qualify for this subsidy, the School District is required to periodically file appropriate documents with the Internal Revenue Service. The School District started making interest payments on the lease in December of 2011. The total amount of interest due on QSCBS is reflected in the below amortization schedule. The interest subsidy received by the School District from the U.S. Government in fiscal year 2015 funded all interest due on the QSCBS except for $219,716.65.

The principal payments began in fiscal year 2014 on the QSCBS. These payments were made to U.S. Bank and are being held in a Certificate Payment Fund account.

COMPENSATED ABSENCES

Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences.

GENERAL OBLIGATION DEBT OUTSTANDING

General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rate

Amount

General Government - Series 2012

4.00%

$ 33,300,000.00

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

The changes in Long-Term Liabilities during the fiscal year ended June 30, 2015, were as follows:

Balance July 1, 2014 (Restated)

Governmental Activities

Additions

Deductions

Balance June 30, 2015

Due Within One Year

G.O. Bonds

$

Capital Leases

Certificates of Participation

Compensated Absences (1)

Bond Premiums Amortized

33,300,000.00 48,133,189.75 49,195,425.39 10,122,823.22 $
3,411,657.15

$ 5,564,994.12

$ 3,846,443.83 5,118,285.34 6,560,300.79
998,533.80

33,300,000.00 44,286,745.92 $ 44,077,140.05
9,127,516.55 2,413,123.35

3,999,615.94 5,118,285.34 6,537,056.48
998,533.80

$ 144,163,095.51 $ 5,564,994.12 $ 16,523,563.76 $ 133,204,525.87 $ 16,653,491.56

(1) The portion of Compensated Absences due within one year has been determined to be immaterial to the basic financial statements.

At June 30, 2015, payments due by fiscal year which includes principal and interest for these items are as follows:

Fiscal Year Ended June 30:

Capital Leases

Principal

Interest

2016 2017 2018 2019 2020 2021 - 2025 2026 - 2030

$

3,999,615.94 $

3,945,511.75

3,456,618.23

2,910,000.00

3,035,000.00

17,325,000.00

9,615,000.00

1,874,028.27 1,715,470.98 1,565,221.21 1,441,435.00 1,318,326.00 4,408,965.26
567,414.00

Total Principal and Interest

$

44,286,745.92 $

12,890,860.72

Fiscal Year Ended June 30:
2016 2017 2018 2019 2020 2021 - 2025
Total Principal and Interest

Certificates of Participation

Principal

Interest

$

5,118,285.34 $

5,118,285.34

5,118,285.34

5,118,285.34

5,118,285.34

18,485,713.35

3,251,643.00 3,251,643.00 3,251,643.00 3,251,643.00 3,251,643.00 8,370,932.50

$

44,077,140.05 $

24,629,147.50

- 26 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Fiscal Year Ended June 30:

General Obligation Debt

Principal

Interest

Unamortized Bond Premium

2016 2017 2018

$ 1,332,000.00 $

998,533.80

1,332,000.00

998,533.80

$

33,300,000.00

666,000.00

416,055.75

Total Principal and Interest

$

33,300,000.00 $ 3,330,000.00 $ 2,413,123.35

Note 11: ON-BEHALF PAYMENTS

The School District has recognized revenues and costs in the amount of $2,248,948.74 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 Teachers' Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $522,321.74

Office of State Treasurer Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $1,726,627.00

Funds paid on behalf of the School District are reported in governmental funds. See Note 16 Retirement Plans for the State support related to the Net Pension Liability.

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Note 12: SIGNIFICANT COMMITMENTS
The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2015:

Project

Unearned Executed Contracts

Admin and Instructional Sidewalk Improvements $

62,164.34

Chapel Hill Elementary School

573,080.05

DCS-02 Generators

126,174.08

Engineering Services for Emergency Generators

47,733.27

Fernbank Elementary School

6,738,918.99

Gresham Park Elementary School

16,508,622.24

Hambrick Elementary School

210,975.41

Indian Creek Elementary School

541,452.88

Kingsley Elementary School

5,880.00

Peachcrest Elementary School

1,582,826.99

Redan High School

10,830,080.00

Sam Moss Service Center

591,926.78

Stone Mill Elementary School

194,278,75

Stone Mountain Elementary School

231,684.51

Towers HS Roof Replacement

155,286.40

Warren Tech School

1,413,150.00

$ 39,814,234.69

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

Note 13: 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 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 14: SUBSEQUENT EVENTS

On December 17, 2012 the Southern Association of Colleges and Schools (SACS), notified the School District that it was placing the School District on Accredited Probation. As a result of this probation, Governor Nathan Deal removed and replaced six Board Members on March 13, 2013 in accordance with O.C.G.A Section 20-2-73. The Governor's decision was upheld by the Georgia Supreme Court on November 25, 2013. The School District was upgraded from Accredited-Warned to AccreditedAdvised on February 13, 2015. The School District met three last required actions and submitted an institution progress report in December 2015, which was reviewed by an evaluation team. The School

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

District was upgraded from Accredited-Advised to Accredited on January 28, 2016. Advanced based its decision on a comprehensive review of the School District in December 2015. The School District was commended for putting programs, policies and procedures in place to stabilize the School District to restore confidence and trust among stakeholder groups. SACS recognized the progress the School District had made in a manner that allows the School District to refocus its efforts on academic achievement. Advanced determined that the School District made progress in creating a framework for addressing fourteen required actions by developing comprehensive and systematic processes to guide its operations. The School District has continued to work on improving school board governance and leadership, while supporting the efforts of the superintendent to identify and implement school improvement strategies and student achievement initiatives.
Note 15: 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 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. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012 pay approximately 25% of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.
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 "payas-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.

- 29 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2015:

For certificated teachers, librarians and regional educational service agencies and certain other eligible participants:

July 1, 2014 June 30, 2015 $945.00 per member per month

For non-certificated school personnel:

July 1, 2014 June 30, 2015 $596.20 per member per month

No additional contribution was required by the Board for fiscal year 2015 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:

Percentage

Required

Fiscal Year

Contributed

Contribution

2015 2014 2013
Note 16: RETIREMENT PLANS

100% 100% 100%

$ 95,446,409.56 $ 92,864,270.07 $ 87,675,055.16

DeKalb County Board of Education participates in various retirement plans administered by the State of Georgia, as further explained below.

TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)

Plan Description: All teachers of the School District as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple- employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial audit report that can be obtained at www.trsga.com/publications.

- 30 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Benefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee 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. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.

Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. [Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2015. The School District's contractually required contribution rate for the year ended June 30, 2015 was 13.15% of annual School District payroll.

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

Fiscal Year

Percentage Contributed

Required Contribution

2015 2014 2013
EMPLOYEES' RETIREMENT SYSTEM

100% 100% 100%

$ 65,941,062.53 $ 59,325,216.04 $ 56,336,367.47

Plan description: The Employees' Retirement System of Georgia (ERS) is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. ERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.

Benefits provided: The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the old plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are new plan members subject to modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS. Under the old plan, the new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.

- 31 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Retirement benefits paid to members are based upon the monthly average of the member's highest 24 consecutive calendar months, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor. Annually, postretirement cost-of-living adjustments may also be made to members' benefits, provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

Contributions: Member contributions under the old plan are 4% of annual compensation, up to $4,200.00, plus 6% of annual compensation in excess of $4,200.00. Under the old plan, the state pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these state contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The School District's contractually required contribution rate, actuarially determined annually, for the year ended June 30, 2015 was 21.96% of annual covered payroll for old and new plan members and 18.87% for GSEPS members. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.

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

Fiscal Year

Percentage Contributed

Required Contribution

2015 2014 2013

100%

$

100%

$

100%

$

PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS)

201,493.33 166,173.55 104,823.34

Plan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers' Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.

Benefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service.

Upon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits.

- 32 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Contributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.

Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees.

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

2015 2014 2013

100% 100% 100%

$ 3,927,701.28 $ 3,858,443.98 $ 3,972,798.87

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2015, the School District reported a liability of $596,846,728.00 for its proportionate share of the Net Pension Liability for TRS ($595,416,542.00) and ERS ($1,430,186.00).

- 33 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

The TRS Net Pension Liability reflected a reduction for support provided to the School District by the State of Georgia for certain public school support personnel. The amount recognized by the School District as its proportionate share of the Net Pension Liability, the related State of Georgia support, and the total portion of the Net Pension Liability that was associated with the School District were as follows:

School District's proportionate share of the Net Pension Liability

$ 595,416,542.00

State of Georgia's proportionate share of the Net Pension Liability associated with the School District

4,485,967.00

Total

$ 599,902,509.00

The Net Pension Liability was measured as of June 30, 2014. The total pension liability used to calculate the Net Pension Liability was based on an actuarial valuation as of June 30, 2013. An expected total pension liability as of June 30, 2014 was determined using standard roll-forward techniques. The School District's proportion of the Net Pension Liability was based on contributions to TRS and ERS during the fiscal year ended June 30, 2014.

At June 30, 2014, the School District's TRS proportion was 4.712930%, which was an increase of 0.234026% from its proportion measured as of June 30, 2013. At June 30, 2014, the School District's ERS proportion was 0.038132%, which was an increase of 0.008318% from its proportion measured as of June 30, 2013.

At June 30, 2015, the School District did not have a PSERS liability for a proportionate share of the Net Pension Liability because of a Special Funding Situation with the State of Georgia, which is responsible for the Net Pension Liability of the plan. The amount of the State's proportionate share of the Net Pension Liability associated with the School District is $6,365,074.00.
The PSERS Net Pension Liability was measured as of June 30, 2014. The total pension liability used to calculate the Net Pension Liability was based on an actuarial valuation as of June 30, 2013. An expected total pension liability as of June 30, 2014 was determined using standard roll-forward techniques. The State's proportion of the Net Pension Liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2014.
For the year ended June 30, 2015, the School District recognized pension expense of $48,783,945.00 for TRS, $242,589.00 for ERS and $552,766.00 for PSERS and revenue of $419,590.00 for TRS and $552,766.00 for PSERS. The revenue is support provided by the State of Georgia. For TRS, the State of Georgia support is provided only for certain support personnel.

- 34 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

At June 30, 2015, the School District reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:

Net differences between projected and actual earnings on pension plan investments

TRS

Deferred Outflows Deferred Inflows of

of Resources

Resources

$ 207,574,828.00

ERS

Deferred Outflows Deferred Inflows

of Resources

of Resources

$ 349,065.00

Changes in proportion and differences between

School District contributions and proportionate

share of contributions

$ 33,227,130.00

$

School District contributions subsequent to the measurement date

65,418,740.79

Total

$ 98,645,870.79 $ 207,574,828.00 $

248,396.00
201,493.33 449,889.33 $

349,065.00

DeKalb County Board of Education contributions subsequent to the measurement date of June 30, 2014 for TRS and ERS are reported as deferred outflows of resources and will be recognized as a reduction of the Net Pension Liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30:

TRS

ERS

2016 2017 2018 2019 2020

$ -44,342,075.00 $ $ -44,342,075.00 $ $ -44,342,075.00 $ $ -44,342,122.00 $ $ 3,020,649.00

67,981.00 5,883.00
-87,266.00 -87,267.00

Actuarial assumptions: The total pension liability as of June 30, 2014 was determined by an actuarial valuation as of June 30, 2013, using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers' Retirement System:

Inflation Salary increases Investment rate of return

3.00%
3.75 7.00%, average, including inflation 7.50%, net of pension plan investment expense, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females set back two years for males and set back three years for females.

The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

- 35 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Employees' Retirement System:

Inflation Salary increases Investment rate of return

3.00%
5.45 9.25%, average, including inflation 7.50%, net of pension plan investment expense, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for the periods after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back eleven years for males for the period after disability retirement.

Public School Employees Retirement System:

Inflation Salary increases Investment rate of return

3.00%
N/A 7.50%, net of pension plan investment expense, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table set forward one year for males for the period after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back two years for males and set forward one year for females for the period after disability retirement.
The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.
The long-term expected rate of return on TRS, ERS and PSERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class
Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks
Total
* Rates shown are net of the 3.00% assumed rate of inflation

Target allocation
30.00% 39.70%
3.70% 1.60% 18.90% 6.10%
100.00%

Long-term expected real rate of return*
3.00% 6.50% 10.00% 13.00% 6.50% 11.00%

- 36 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015

EXHIBIT "H"

Discount rate: The discount rate used to measure the total TRS, ERS and PSERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS, ERS, and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Sensitivity of the DeKalb County Board of Education's proportionate share of the Net Pension Liability to changes in the discount rate: The following presents the School District's proportionate share of the Net Pension Liability calculated using the discount rate of 7.50%, as well as what the School District's proportionate share of the Net Pension Liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate:

Teachers' Retirement System:
School District's proportionate share of the Net Pension Liability

1% Decrease (6.50%)

Current discount rate (7.50%)

1% Increase (8.50%)

$ 1,097,272,799.00 $

595,416,542.00 $ 182,148,335.00

Employees' Retirement System:

1% Decrease (6.50%)

Current discount rate (7.50%)

1% Increase (8.50%)

School District's proportionate share of the Net Pension Liability

$ 2,085,494.00 $

1,430,186.00 $

872,365.00

Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS, ERS and PSERS financial report which is publically available at www.trsga.com/publications and www.ers.ga.gov/formspubs/formspubs.

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DEKALB COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS' RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30, 2015

SCHEDULE "1"

School District's proportion of the net pension liability School District's proportionate share of the net pension liability State of Georgia's proportionate share of the net pension liability
associated with the School District Total
School District's covered-employee payroll School District's proportionate share of the net pension liability
as a percentage of its covered employee payroll Plan fiduciary net position as a percentage of the total pension liability

2015 4.712930% $ 595,416,542.00
4,485,967.00 $ 599,902,509.00 $ 483,104,365.11
123.25% 84.03%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by DeKalb County Board of Education.
- 39 -

DEKALB COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30, 2015
School District's proportion of the net pension liability School District's proportionate share of the net pension liability School District's covered-employee payroll School District's proportionate share of the net pension liability
as a percentage of its covered employee payroll Plan fiduciary net position as a percentage of the total pension liability

SCHEDULE "2"
2015 0.038132% $ 1,430,186.00 $ 900,181.75
158.88% 77.99%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by DeKalb County Board of Education.
- 40 -

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DEKALB COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS TEACHERS' RETIREMENT SYSTEM FOR THE YEAR ENDED JUNE 30

Contractually required contribution Contributions in relation to the contractually required contribution Contribution deficiency (excess) School District's covered-employee payroll Contributions as a percentage of covered-employee payroll

2015

2014

2013

$ 65,941,062.53 $ 59,325,216.04 $ 56,336,367.47

$ 65,941,062.53 $ 59,325,216.04 $ 56,336,367.47

$

0.00 $

0.00 $

0.00

$ 501,452,947.02 $ 483,104,365.11 $ 493,745,551.89

13.15%

12.28%

11.41%

This schedule is intended to show information for 10 years. Due to the retention policy of the DeKalb County Board of Education, the School District is only able to display 6 years of information. Schedule includes all significant plans and funds administered by DeKalb County Board of Education.
- 42 -

SCHEDULE "3"

2012

2011

2010

$ 56,477,234.74 $ 57,198,714.76 $ 57,802,494.08

$ 56,477,234.74 $ 57,198,714.76 $ 57,802,494.08

$

0.00 $

0.00 $

0.00

$ 549,402,308.66 $ 556,407,731.18 $ 593,458,300.06

10.28%

10.28%

9.74%

- 43 -

DEKALB COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS EMPLOYEES' RETIREMENT SYSTEM
FOR THE YEAR ENDED JUNE 30

Contractually required contribution Contributions in relation to the contractually required contribution Contribution deficiency (excess) School District's covered-employee payroll Contributions as a percentage of covered-employee payroll

2015

2014

2013

$ 201,493.33 $ 166,173.55 $ 104,823.34

$ 201,493.33 $ 166,173.55 $ 104,823.34

$

0.00 $

0.00 $

0.00

$ 917,547.04 $ 900,181.75 $ 723,163.41

21.96%

18.46%

14.50%

This schedule is intended to show information for 10 years. Due to the retention policy of the DeKalb County Board of Education, the School District is only able to display 6 years of information. Schedule includes all significant plans and funds administered by DeKalb County Board of Education.
- 44 -

SCHEDULE "4"

2012

2011

$ 76,992.22 $ 57,961.96 $

$ 76,992.22 $ 57,961.96 $

$

0.00 $

0.00 $

$ 689,712.79 $ 587,675.52 $

11.16%

9.86%

2010 61,212.21 61,212.21
0.00 619,629.00
9.88%

- 45 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2015

SCHEDULE "5"

Teachers' Retirement System

Changes of assumptions : In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience.

Method and assumptions used in calculations of actuarially determined contributions : The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2015 reported in that schedule:

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation rate Salary increases Investment rate of return

June 30, 2012 Entry age Level percentage of payroll, open 30 years Seven-year smoothed market 3.00% 3.75 7.00%, including inflation 7.50%, net of pension plan investment
expense, including inflation

Employees' Retirement System

Changes of assumptions : There were no changes in assumptions or benefits that affect the measurement of the total pension liability since the prior measurement date.

Method and assumptions used in calculations of actuarially determined contributions : The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2015 reported in that schedule:

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation rate Salary increases
Investment rate of return

June 30, 2012 Entry age Level dollar, open 30 years Seven-year smoothed market 3.00% 2.725% 4.625% for FY 2012-2013, 5.45% - 9.25% for FY2014+ 7.50%, net of pension plan investment
expense, including inflation

- 46 -

DEKALB COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2015

SCHEDULE "6"

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 USES
Other Uses
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$

391,054,373.00 $

399,928,719.00 $

414,349,565.09 $

5,800,000.00

5,800,000.00

8,037,251.78

413,176,542.00

417,609,632.00

441,070,372.23

112,300,828.00

148,289,568.78

132,346,004.49

4,650,000.00

4,654,658.00

12,733,661.32

165,000.00

165,000.00

167,033.64

32,674,575.00

39,359,435.00

10,646,284.47

959,821,318.00

1,015,807,012.78

1,019,350,173.02

14,420,846.09 2,237,251.78
23,460,740.23 -15,943,564.29
8,079,003.32 2,033.64
-28,713,150.53
3,543,160.24

588,402,867.00
29,397,386.00 33,832,471.00 12,016,214.00 14,174,482.00 55,470,594.00
5,701,790.00 79,460,529.00 50,194,949.00 15,681,230.00
3,131,581.00 1,278,390.00 48,636,552.00 1,710,725.00
939,089,760.00
20,731,558.00

626,844,215.55
30,131,298.00 34,114,259.44 11,796,277.02 15,710,269.27 55,604,116.00
6,097,139.00 82,038,131.00 56,690,225.00 16,137,509.19
7,607,568.09 1,278,390.00 49,594,995.00 1,710,725.00
995,355,117.56
20,451,895.22

605,434,494.20
30,734,687.21 32,630,533.43 11,623,546.18 11,914,116.06 55,643,943.48
5,996,412.45 84,104,376.79 49,696,505.87 17,080,837.50
6,949,050.52 2,663,423.04 55,778,942.62 1,655,299.86
971,906,169.21
47,444,003.81

21,409,721.35
-603,389.21 1,483,726.01
172,730.84 3,796,153.21
-39,827.48 100,726.55 -2,066,245.79 6,993,719.13 -943,328.31 658,517.57 -1,385,033.04 -6,183,947.62
55,425.14
23,448,948.35
26,992,108.59

-16,000,000.00

-16,000,000.00

4,731,558.00 46,955,603.46

4,451,895.22 46,955,603.46

$

51,687,161.46 $

51,407,498.68 $

47,444,003.81 $ 50,197,602.92 97,641,606.73 $

16,000,000.00 42,992,108.59
3,241,999.46 46,234,108.05

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
(1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts. The principal accounts had actual revenues of $12,307,370.66 and actual expenditures of $12,295,400.82.
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.

- 47 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2015

SCHEDULE "7"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Georgia Department of Education Food Services State Administrative Expenses Child Nutrition Discretionary Grants Limited Availability
Total Other Programs
Total U. S. Department of Agriculture
Education, U.S. Department of School Improvement Grants Cluster Pass-Through From Georgia Department of Education ARRA - School Improvement Grants
Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Direct Fund for the Improvement of Education Transition to Teaching Program Grant 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 for Homeless Children and Youth English Language Acquisition Grants Improving Teacher Quality State Grants Special Education State Personnel Development Title I Grants to Local Educational Agencies Twenty-First Century Community Learning Centers Pass-Through From Georgia State University Teacher Quality Partnership Grants
Total Other Programs
Total U. S. Department of Education
Health and Human Services, U. S. Department of Pass-Through From Georgia Department of Human Services Refugee and Entrance Assistance-State Administered Programs

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

* 10.553 * 10.555

N/A

(2)

N/A

$

55,252,489.08 (1)

55,252,489.08

10.560

N/A

10.579

N/A

9,330.37 48,400.00
57,730.37
55,310,219.45

84.388

N/A

520,513.59

* 84.027

N/A

* 84.173

N/A

84.215 84.350

84.395

N/A

84.048

N/A

84.282

N/A

84.196

N/A

84.365

N/A

* 84.367

N/A

84.323

N/A

84.010

N/A

84.287

N/A

84.336

N/A

21,983,166.12 318,188.74
22,301,354.86
15,166.85 51,801.93
8,105,819.17 928,897.68
1,532,183.10 31,707.98
2,744,551.00 3,569,266.38
17,313.90 42,693,623.81
100,761.34
77,137.84
59,868,230.98
82,690,099.43

93.566

N/A

50,742.67

Justice, U. S. Department of Edward Byrne Memorial Justice Assistance Grant Program

- 48 -

16.738

N/A

37,873.38

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2015

SCHEDULE "7"

FUNDING AGENCY PROGRAM/GRANT
Transportation, U. S. Department of Highway Safety Cluster Pass-Through From Department of Public Safety State and Community Highway Safety
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

20.600

N/A

9,574.50
496,638.55 157,011.20 746,513.49 1,400,163.24

Total Expenditures of Federal Awards

$ 139,498,672.67

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 $7,067,278.38.

(2) Expenditures for the funds earned on the School Breakfast Program ($9,170,675.28) were not maintained separately and are included in the 2015 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.

- 49 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2015

SCHEDULE "8"

AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities 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) Special Education Itinerant Special Education Supplemental Speech Media Center Program 20 Days Additional Instruction Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Other State Programs Career, Technical, and Agriculture-Ag Extended Day Career, Technical, and Agriculture-Ag Extended Year Career, Technical, and Agriculture-CTE Apprenticeship Career, Technical, and Agriculture-CTE Extended Day Career, Technical, and Agriculture-CTE Extended Year Career, Technical, and Agriculture-Industry Certification Career, Technical, and Agriculture-Supervision Charter Schools - Facilities Food Services GNETS State Grant Math and Science Supplements Preschool Handicapped Program Pupil Transportation - State Bonds Residential Treatment Centers Grant Rule 10 Special Education State Grant Teachers' Retirement Vocational Construction Related Equipment - State Bonds

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$

7,786,831.60

$

7,786,831.60

29,681,579.00 7,448,845.00
72,276,361.00 12,243,342.00 31,432,024.00
5,715,935.00 52,564,178.00 52,383,907.00
9,127,990.00
9,264,023.00 7,598,025.00 28,141,078.00 6,086,097.00 3,371,008.00 24,791,445.00 2,462,566.00 3,827,086.00 23,317,393.00
22,572.00 185,139.00 10,403,015.00 3,032,929.00 1,841,810.00
36,409.00
7,698,403.00 19,933,414.00 24,803,473.00 -39,097,376.00
4,531,512.00 1,885,756.00
4,223.00 1,923.00 37,890.00 893,255.08 27,650.00 32,321.15 52,272.00 417,000.00 1,318,837.00 3,243,465.59 875,530.25 1,815,779.24 2,432,960.00 235,729.00 145,160.66 522,321.74 981,942.76

29,681,579.00 7,448,845.00
72,276,361.00 12,243,342.00 31,432,024.00
5,715,935.00 52,564,178.00 52,383,907.00
9,127,990.00
9,264,023.00 7,598,025.00 28,141,078.00 6,086,097.00 3,371,008.00 24,791,445.00 2,462,566.00 3,827,086.00 23,317,393.00
22,572.00 185,139.00 10,403,015.00 3,032,929.00 1,841,810.00
36,409.00
7,698,403.00 19,933,414.00 24,803,473.00 -39,097,376.00
4,531,512.00 1,885,756.00
4,223.00 1,923.00 37,890.00 893,255.08 27,650.00 32,321.15 52,272.00 417,000.00 1,318,837.00 3,243,465.59 875,530.25 1,815,779.24 2,432,960.00 235,729.00 145,160.66 522,321.74 981,942.76

- 50 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2015

SCHEDULE "8"

AGENCY/FUNDING
Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Governor's Office of Student Achievement Innovation Teach Grant Connections For Classrooms
Office of the State Treasurer Public School Employees Retirement

GOVERNMENTAL FUND TYPES

CAPITAL

GENERAL

PROJECTS

FUND

FUND

TOTAL

$ 12,584,924.48 $

12,584,924.48

$

5,000.00

1,503,715.16

5,000.00 1,503,715.16

1,726,627.00

1,726,627.00

$ 441,070,372.23 $ 12,584,924.48 $ 453,655,296.71

See notes to the basic financial statements.

- 51 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2015

SCHEDULE "9"

PROJECT

ORIGINAL ESTIMATED
COST (1)

2007 Sales Tax- Authorized Projects

1 Lease-hold improvements for Rock Chapel ES.

Princeton ES, and Dunwoody ES (COPS 05/07)

$ 66,000,000.00 $

2 Renovations/expansion at SWD HS, Towers HS, Columbia HS, McNair HS, and emergency HVAC

25,000,000.00

3 Cross keys HS Renovation and Career Tech

16,927,348.00

4 Tucker HS Replacement

66,330,016.00

5 Roofing Portfolio #1

9,677,168.00

6 HVAC Portfolio #1

17,168,224.00

7 ADA Code Requirements Portfolio #1

4,730,336.00

8 Local School Priority Requests (LSPR)

5,156,419.00

9 Site Improvements

13,417,986.00

10 Druid Hills HS Improvements

9,739,800.00

11 Renovation and expansion of relocated DeKalb School of the Arts

10,000,000.00

12 Renovation and expansion of Mountain Industrial Center

29,836,296.00

13 Purchase of Land

3,000,000.00

14 Additions to Chamblee HS, Clarkston HS, Druid Hills HS, Dunwoody HS, Lakeside HS, and Redan HS

63,292,805.00

15 Technology-Refresh cycle

19,418,581.00

16 Lithonia HS addition and Improvements

11,447,624.00

17 MLK Jr HS addition and improvements

10,178,779.00

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED IN PRIOR YEARS (3)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

ESTIMATED COMPLETION
DATE

73,189,758.29 $ 4,322,629.37 $ 27,653,583.15 $

0.00 $

22,888,015.35 17,909,849.64 60,359,593.17 12,238,001.23 11,547,220.89
3,360,424.32 7,399,602.89 6,707,679.14 17,980,312.63

0.00 9,530.00
0.00 0.00 296,482.97 855,879.82 34,497.57 631,354.89 64,914.08

22,888,015.35 17,900,319.64 60,359,593.17 12,238,001.23 11,250,737.92
2,504,544.50 7,365,105.32 6,076,324.25 17,915,398.55

22,888,015.35 17,909,849.64 60,359,593.17 12,238,001.23 11,547,220.89
3,360,424.32 7,399,602.89 6,707,679.14 17,980,312.63

5,404,226.51

0.00

5,404,226.51

5,404,226.51

31,520,886.02 18,676.47

103,838.19 7,326.47

31,417,047.83 11,350.00

31,520,886.02 18,676.47

51,022,504.43 25,741,611.57
25,488.00 13,734,575.78

1,729,432.58 1,422,178.15
0.00 372,957.04

49,293,071.85 24,319,433.42
25,488.00 13,361,618.74

51,022,504.43 25,741,611.57
25,488.00 13,734,575.78

Dec-27
Completed Completed Completed Completed Completed Completed Completed Completed Completed
Completed
Completed Completed
Completed Completed Completed Completed

18 Miller Grove HS addition and improvements

5,874,487.00

5,142,911.18

73,171.75

5,069,739.43

5,142,911.18

Completed

19 Dunwoody HS addition and improvements 20 Clarkston HS Improvements 21 HVAC Portfolio #2 22 Roofing Portfolio #2 23 ADA Code Requirements Portfolio #2 24 School buses 25 Technology-Media Center upgrades 26 HVAC Portfolio #3 27 Roofing Portfolio #3 28 Other improvements and supporting services 29 Bond Interest Payments

4,819,395.00 4,000,000.00 10,716,737.00 10,681,471.00 2,052,729.00 12,000,000.00 10,000,000.00 17,408,662.00 7,125,137.00
0.00 0.00 466,000,000.00

19,727,480.64 11,759,987.13
7,768,981.33 4,124,513.16 2,518,457.76 12,026,695.05 9,858,450.26 6,905,432.52 3,264,672.84 68,911,566.02 56,021,915.62 569,079,489.84

4,512.00 0.00
-176,924.92 0.00
1,661,598.52 26,933.93
206,241.05 5,427,155.79
338,506.75

19,722,968.64 11,759,987.13
7,945,906.25 4,124,513.16
856,859.24 11,999,761.12
9,652,209.21 1,478,276.73 2,926,166.09

487,498.45 0.00
17,899,714.45

47,277,877.80 56,021,915.62 488,820,039.85

19,727,480.64 11,759,987.13
7,768,981.33 4,124,513.16 2,518,457.76 12,026,695.05 9,858,450.26 6,905,432.52 3,264,672.84
0.00 56,021,915.62 426,978,165.53

Completed Completed Completed Completed Completed Completed Completed Completed Completed
Dec-23 Completed

- 52 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2015

PROJECT 2012 Sales Tax- Authorized Projects

ORIGINAL ESTIMATED
COST (1)

1 Americans with Disabilities Act (ADA) Improvements 2 Stadiums 3 Capital Renewal Program 4 Code Requirements 5 Coralwood Diagnostic Center Addition 6 Early Learning Center 7 Arts School at former Avondale MS 8 Renovation of Southwest DeKalb HS and Stone
Mountain HS 9 Replacement of Austin ES, Fernbank ES, Gresham
Park ES, Pleasantdale ES, Peachtree ES, Rockbridge ES, Smoke Rise ES 10 Henderson MS Renovation/Addition 11 Redan HS Renovation/Addition 12 Chamblee HS Replacement 13 McNair MS Replacement 14 Local School Priority Requests 15 Demolition 16 Safety/Security Systems Upgrade

2,342,500.00 9,557,400.00 84,892,200.00 2,342,500.00 9,932,200.00 2,717,300.00 4,029,100.00
11,056,600.00
135,021,700.00 14,992,000.00 20,988,800.00 55,001,900.00 35,043,800.00 5,153,500.00 2,342,500.00 2,342,500.00

17 Technology Equipment and Infrastructure Refresh
18 School Buses
19 Service Vehicles
20 Other capital improvements and supporting services (Includes Bond Series 2012 Bond Issuance Costs, Principal Payments and 2011 COPs Interest Payments)

36,261,900.00 9,463,700.00 1,592,900.00
29,925,000.00 475,000,000.00

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3)

AMOUNT EXPENDED IN PRIOR
YEARS

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED

ESTIMATED COMPLETION
DATE

2,067,991.00 9,434,240.00 86,504,503.08 1,920,248.00 9,804,210.00 2,682,284.00 3,977,167.00

40,951.45 0.00
6,721,586.53 54,419.85 0.00 0.00 0.00

0.00 0.00 1,891,087.05 0.00 0.00 0.00 27,500.00

33,224,366.00

4,286,917.75

16,804,073.80

141,213,955.31 17,280,446.91 21,018,330.00 54,992,632.00 34,592,213.00 3,202,479.00 2,312,313.00 2,312,313.00 34,244,407.00 12,800,319.00 1,555,311.00

31,912,693.18 498,285.93
6,207,473.87 5,577,677.84
0.00 3,105.00 1,465,508.19
0.00 6,105,202.03 5,243,470.00
76,761.00

2,541,406.99 631,612.55 713,123.75
5,617,860.27 0.00
31,338.75 360,091.80
0.00 21,391,175.39
2,713,992.61 1,478,549.33

0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Jan-17 Sep-17 Feb-18 Feb-17 Dec-18 Oct-17 Sep-17
Apr-17
Nov-18 Jan-17 Oct-16 Jun-19 Mar-18 Aug-17 Aug-17 Jun-16 Dec-17 Jul-16 Jun-16

94,960,271.70 570,100,000.00

5,040,305.30 73,234,357.92

7,437,678.87 61,639,491.16

0.00 0.00

Oct-17

$ 941,000,000.00 $ 1,139,179,489.84 $ 91,134,072.37 $ 550,459,531.01 $ 426,978,165.53 $

(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 PROGRAMS (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2015

SCHEDULE "10"

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

$

36,918,993.00 $

34,225,444.66 $

103,310.10 $ 34,328,754.76

8,118,919.00

1,182,029.90

1,182,029.90

88,445,837.00

74,533,233.12

1,646,892.12

76,180,125.24

13,816,731.00

2,316,718.86

2,316,718.86

38,581,921.00

44,928,755.38

44,928,755.38

6,616,153.00 64,423,044.00 64,150,392.00 10,938,295.00 66,289,710.00
29,573,579.00 2,738,685.00 4,680,376.00
27,306,193.00

2,257,522.16 3,805,988.71 58,087,722.41 72,703,528.52 10,553,443.00
48,465,768.13 7,039,177.71
34,657,063.99 2,491,706.19 174,896.91 5,088,040.96 39,915.45 1,047,246.67
14,938,592.03

69,945.53 600,750.51 1,583,145.01 1,200,173.11
1,650,416.01 3,024.59
56,294.56
1,843.95
20,195.22

2,257,522.16 3,875,934.24 58,688,472.92 74,286,673.53 11,753,616.11
50,116,184.14 7,042,202.30
34,713,358.55 2,491,706.19 176,740.86 5,088,040.96 39,915.45 1,067,441.89
14,938,592.03

462,598,828.00

418,536,794.76

6,935,990.71

425,472,785.47

12,651,574.00 2,247,151.00

10,012,802.22 907,716.54

1,393,244.13 345,397.16

11,406,046.35 1,253,113.70

TOTAL QBE FORMULA FUNDS

$

477,497,553.00 $ 429,457,313.52 $ 8,674,632.00 $ 438,131,945.52

(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.

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SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

(This page left intentionally blank)

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
November 7, 2016

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, 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, 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, 2015, and the related notes to the financial statements, which collectively comprise DeKalb County Board of Education's basic financial statements, and have issued our report thereon dated November 7, 2016.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered DeKalb County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances 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. Accordingly, we do not express an opinion on the effectiveness of the DeKalb County Board of Education's internal control.
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. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

2015YB-30

(This page left intentionally blank)

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. We did identify a certain deficiency in internal control, described in the accompanying Schedule of Findings and Questioned Costs as item FS 2015-001, that we consider to be a significant deficiency.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether DeKalb County Board of Education's financial statements are free from 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 November 7, 2016.
DeKalb County Board of Education's Response to Findings
DeKalb County Board of Education's response to the finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. DeKalb County Board of Education's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,

GSG:er 2015YB-30

Greg S. Griffin State Auditor

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Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
November 7, 2016

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 FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
Ladies and Gentlemen:
Report on Compliance for Each Major Federal Program
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, 2015. 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.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of DeKalb County Board of Education's major federal programs based on our audit of the types of compliance requirements referred to above. 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.

2015SA-30

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We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of DeKalb County Board of Education's compliance.
Opinion on Each Major Federal Program
In our opinion, the DeKalb County Board of Education complied, in all material respects, with the types of 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, 2015.
Report on Internal Control over Compliance
Management of DeKalb County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered DeKalb County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program 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. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
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 material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, we identified a certain deficiency in internal control over compliance, as described in the accompanying Schedule of Findings and Questioned Costs as item FA 2015-001, that we consider to be a significant deficiency.
DeKalb County Board of Education's response to the internal control over compliance finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. DeKalb County Board of Education's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
2015SA-30

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The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,

GSG:er 2015SA-30

Greg S. Griffin State Auditor

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

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DEKALB COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6441-13-01 FS-6441-13-02 FS-2014-001 FS-2014-002

Partially Resolved See Corrective Action Reponses Unresolved See Corrective Action Reponses Partially Resolved See Corrective Action/Responses Unresolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

FINANCIAL REPORTING Financial Statement Preparation Material Weakness Finding Control Number: FS-6441-13-.01

The School District completed the fiscal year 2015 financial statements by allocating additional resources and personnel to the financial statement preparation process to help ensure the accuracy and completeness of the financial statements. Additionally, the Finance division will implement a Chart of Accounts conversion project when a new FMIS/HRIS system is implemented. Hardware upgrades have taken place relative to most of the staff involved in the financial statement preparation process. The IT and Finance divisions reviewed software options relative to replacing the Accounting and other software reporting packages. In July 2016, the Board approved a vendor for the new FMIS/HRIS conversion project. Project implementation is expected to take 1 to 2 years.

FINANCIAL REPORTING Financial Statement Preparation Material Weakness Finding Control Number: FS 2014-001

The School District completed the fiscal year 2015 financial statements by allocating additional resources and personnel to the financial statement preparation process to help ensure the accuracy and completeness of the financial statements. Additionally, the Finance division will implement a Chart of Accounts conversion project when a new FMIS/HRIS system is implemented. Hardware upgrades have taken place relative to most of the staff involved in the financial statement preparation process. The IT and Finance divisions reviewed software options relative to replacing the Accounting and other software reporting packages. In July 2016, the Board approved a vendor for the new FMIS/HRIS conversion project. Project implementation is expected to take 1 to 2 years.

CAPITAL ASSETS Capital Asset Maintenance Material Weakness Finding Control Number: FS 6441-13-02

The Finance division will implement a new FMIS conversion project which will ensure that capital assets will be appropriately tracked and reported. In July 2016, the Board approved a vendor for the new FMIS conversion project. Project implementation is expected to take one year.

DEKALB COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015
CORRECTIVE ACTION/RESPONSES
CAPITAL ASSETS Capital Asset Maintenance Significant Deficiency Finding Control Number: FS 2014-002
The Finance division will implement a new FMIS conversion project which will ensure that capital assets will be appropriately tracked and reported. In July 2016, the Board approved a vendor for the new FMIS conversion project. Project implementation is expected to take one year.
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.

SECTION IV FINDINGS AND QUESTIONED COSTS

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DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2015

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

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

Unmodified

Internal control over financial reporting:

Material weakness identified?

No

Significant deficiency identified?

Yes

Noncompliance material to financial statements noted:

No

Federal Awards

Internal Control over major programs:

Material weakness identified?

No

Significant deficiency identified?

Yes

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

Unmodified

Any audit findings disclosed that are required to be reported in

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

Yes

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555 84.027, 84.173 84.367

Child Nutrition Cluster Special Education Cluster Improving Teacher Quality State Grants

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

$3,000,000.00

Auditee qualified as low-risk auditee?

No

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DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2015

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-2015-001 Inadequate Controls over Capital Assets

Control Category:

Capital Assets

Internal Control Impact:

Significant Deficiency

Compliance Impact:

None

Repeat of Prior Year Finding: FS 2014-002 and FS-6441-13-01

Description: Adequate policies and procedures are not in place to ensure capital assets inventory records are properly maintained.

Criteria: The School District's management is responsible for designing and maintaining internal controls that provide reasonable assurance that capital asset inventory records are properly maintained. Chapter 37 Implementing a Capital Assets Management System of the Financial Management for Georgia Local Units of Administration provides that School Districts must establish capital asset policies, define system requirements, implement a capital asset system, and maintain capital asset inventory records.

Condition: Our review of capital assets revealed the following items:

Buses listed on the entity's capital asset listing were not depreciated according to the entity's estimated useful life within its capitalization policies resulting in an overstatement of depreciation expense of $196,611.97 and an understatement of assets by $1,474,589.76.
Procedures were not in place to periodically reconcile capital outlay expenditures to capital asset additions. This procedures would ensure that all assets meeting the capitalization threshold are recorded, the correct expense function is used when removing the expense to record the capital asset additions, and capital asset is being added in the same year as the expense actually occurred.
Physical inventory reviews performed by the School District at year end were incomplete and applicable forms were not attached or approved for the disposals of assets identified in physical inventory testing.
The School District has not formally adopted an amended capitalization policy to include the procedures for recording intangible assets in accordance with Governmental Accounting Standards Board Statement No. 51, Accounting and Reporting for Intangible Assets.
The School District used a sole source vendor for HVAC renovations for several of the schools. Although the vendor is a valid sole source and District policies were followed, the School District failed to provide an executed contract for these projects.
During our review of capital assets, including construction in progress, Auditor noted immaterial misstatements, immaterial misclassifications and one material misclassification. Based on management's decision, not all of the immaterial errors were corrected on the financial statements.

Cause: Per discussion with management, the School District could not adequately implement internal controls to maintain capital assets activity due to legacy accounting system inadequacies. The impact of these inadequacies resulted in staff and time constraints.

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DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2015 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Effect or Potential Effect: The failure of the School District to maintain a complete and accurate capital asset listing can lead to inaccurate internal and external reporting, as well as noncompliance with generally accepted accounting principles. Recommendation: The School District should design and implement controls over capital assets to ensure (1) an ongoing analysis of capital projects is maintained and (2) capital assets inventory records are reviewed for accuracy and appropriate adjustments are made as necessary. Views of Responsible Officials and Corrective Action Plans: Management concurs with this finding. The IT and Finance Division will implement a new FMIS conversion project which will ensure that capital assets will be tracked and reported properly. A software system has been selected and we are at the beginning stages of replacing our legacy accounting and capital assets software with an estimated 15 to 18 month implementation timeline. Contact Person: Dr. Michael J. Bell, CFO Telephone: (678) 676-0133 Email: michael_bell@dekalbschools.ga.org Contact Person: Mr. Gary Brantley, CIO Telephone: (678) 676-1194 E-mail: gary_brantley@dekalbschools.ga.org
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DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2015

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA-2015-001 Inadequate Controls over Employee Compensation

Compliance Requirement: Allowable Cost/Cost Principles

Internal Control Impact:

Significant Deficiency

Compliance Impact:

Nonmaterial Noncompliance

Federal Awarding Agency: U. S. Department of Agriculture

Pass-Through Entity:

Georgia Department of Education

CFDA Number and Title:

Child Nutrition Cluster (CFDA 10.553 and 10.555)

Questioned Costs:

$17,348.43

Description: A review of employee compensation charged to the Child Nutrition Program revealed that internal control procedures were not in place to ensure employee compensation expenditures are properly documented and calculated. Leave balances were not properly calculated.

Criteria: Provisions of the OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, require that costs charged to a Federal program be necessary and reasonable for proper and efficient performance and administration of the Federal award, as well as be adequately documented.

Condition: The School District did not properly calculate the allowable leave for one of the Child Nutrition Cluster employees; this employee, a Lunchroom Manager, was on unpaid leave for almost the entirety of the fiscal year, but was continuing to be paid normally due to the school bookkeeper not reporting the employee as being absent for months at a time.

Cause: In discussing this issue with CNC management and payroll personnel, they stated it was a direct result of CrossPointe, their payroll system, not having electronic documentation capabilities, as well as their system automatically recording employees as being present until it is manually changed.

Effect or Potential Effect: Failure to monitor employee compensation expenditures for compliance resulted in noncompliance with the requirements of the Federal Grant.

Recommendation: The School District should establish and implement appropriate procedures to strengthen internal controls over processing employee compensation. In addition, the School District should ensure that appropriate time and attendance records are prepared and maintained for all personnel working on Federal programs.

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DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2015 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Views of Responsible Officials and Corrective Action Plans: Management concurs with this finding. The IT and Finance Divisions are at the beginning stage of a new FMIS conversion project with proper time management software which will ensure that individuals are properly compensated. Contact Person: Dr. Michael J. Bell, CFO Telephone: (678) 676-0133 E-mail: michael_bell@dekalbschools.ga.org Contact Person: Joyce Wimberly Telephone: (678) 676-0156 E-mail: joyce_r_wimberly@dekalbschools.ga.org Contact: Dresden Elementary School Principal and Bookkeeper
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