DeKalb County Board of Education, Decatur, Georgia, annual financial report for the fiscal year ended 2019 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, 2019
(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

GOVERNMENT-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

10

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 PROPORTIONATE SHARE OF THE NET OPEB LIABILITY

SCHOOL OTHER POST EMPLOYEE BENEFITS FUND

41

4 SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA

42

5 SCHEDULE OF CONTRIBUTIONS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 43

6 SCHEDULE OF CONTRIBUTIONS SCHOOL OTHER POST EMPLOYMENT BENEFITS FUND 44

7 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION

45

8 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

46

DEKALB COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 9 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 10 SCHEDULE OF STATE REVENUE 11 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

Page
47 48 50

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 FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

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

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

SECTION V MANAGEMENT'S CORRECTIVE ACTION FOR CURRENT YEAR FINDINGS SCHEDULE OF MANAGEMENT'S CORRECTIVE ACTION

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400

INDEPENDENT AUDITOR'S REPORT

The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education
and Superintendent and Members of the Dekalb County Board of Education
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 (School District), as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the School District'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 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 financial statements referred to above present fairly, in all material respects, the respective financial position of the of the governmental activities, each major fund, and the aggregate remaining fund information of the School District as of June 30, 2019, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and required supplementary information listed in the table of contents 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 about 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.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District's basic financial statements. The accompanying supplementary information, as listed in the table of contents, 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 Title 2 U. S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also 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 taken as a whole.

Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 16, 2020 on our consideration of the School District'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 solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's 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 the School District'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,

October 16, 2020

Greg S. Griffin State Auditor

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
INTRODUCTION
The discussion and analysis of the DeKalb County Board of Education's (School District/Board) financial performance provides an overall review of the School District's financial activities for the fiscal year ended June 30, 2019. 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 the 2019 are as follows:
In total, net position increased $165.5 million to $196.6 million. This represents a 531.3 percent increase from 2018 due primarily to governmental activities since the Board has no business-type activities.
General revenues accounted for $706.0 million in revenue or 50.0 percent of all revenues. Program specific revenues in the form of charges for services and grants and contributions accounted for $705.9 million or 50.0 percent of total revenues of $1.4 billion.
The Board had $1.246 billion in expenses related to governmental activities; $705.9 million of these expenses were offset by program specific charges for services, grants, and contributions.
Among major funds, the general fund has $1.267 billion in revenues and $1.269 billion in expenditures. The general fund's "Net Change in Fund Balances" was ($1.8) million, which is a decrease from the prior year ($1.4) million. The fund balance reflects the accrual of all contracted salaries and benefits unpaid at June 30 in full compliance with GASB No. 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 2019?" The Statement of Net Position and the Statement of Activities
i

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
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.
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, capital projects fund, 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 government-wide financial statements because it cannot use these assets to finance its operations.
ii

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
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 position for fiscal year 2019 compared to fiscal year 2018.
Table 1 Net Position (In Thousands)

Assets Current and Other Assets Capital Assets, Net

Governmental Activities

Fiscal Year

Fiscal Year

2019

2018

$

661,897 $

656,065

1,650,384

1,480,278

Total Assets

2,312,281

2,136,343

Deferred Outflows of Resources Related to Defined Benefit Pension Plans Related to OPEB Plans

258,380 42,995

206,780 41,071

Total Deferred Outflows of Resources

301,375

247,851

Liabilities Current Liabilities Long-Term Liabilities

204,024 2,032,630

189,412 2,088,151

Total Liabilities

2,236,654

2,277,563

Deferred Inflows of Resources Related to Defined Benefit Pension Plans Related to OPEB Plans

28,252 152,117

9,970 65,516

Total Deferred Inflows of Resources

180,369

75,486

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

1,488,795 331,319
(1,623,481)

1,370,870 279,070
(1,618,795)

Total Net Position

$

196,633 $

31,145

Total Net position increased $165.5 million.

iii

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
Table 2 shows the Changes in Net Position for fiscal year ending 2019 compared to 2018.

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

Table 2 Change in Net Position
(In Thousands)

Governmental Activities

Fiscal Year

Fiscal Year

2019

2018

$

15,795 $

666,637

23,427

34,325 637,067
11,802

Total Program Revenues

705,859

683,194

General Revenues: Property Taxes - Maintenance and Operations Sales Tax - Special Purpose Local Option Tax for Capital Projects Other Sales Taxes Investment Earnings Miscellaneous
Special Item

548,239 114,339
12,673 6,567
24,207 -

501,955 108,525
13,829 4,106 8,799
(117,500)

Total General Revenues and Special Item

706,025

519,714

Total Revenues and Special Item

1,411,884

1,202,908

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 Debt

734,339
72,326 33,781 13,361 21,136 70,727
7,450 143,149
59,451 20,845
1,215
1,693 60,854
6,069

802,451
69,824 39,541 14,819 15,591 69,048
8,317 138,464
83,021 20,013
1,063
1,569 61,491
4,020

Total Expenses

1,246,396

1,329,232

Change in Net Position

165,488

(126,324)

Net Position, Restated

31,145

157,469

Ending Net Position

$

196,633 $

31,145

iv

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Governmental Activities

Instruction, pupil services and improvement of instructional services comprises 67.4% of governmental program expenses. The operations of non-instructional services amounted to 5.0% of the total governmental program expenses. These operations consist primarily of 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 2019 compared to fiscal year 2018. 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

Fiscal

Year 2019

Year 2018

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

168,059 $
55,716 24,799 10,057 16,274 54,521
3,359 102,010
40,204 15,637
935
1,331 44,389
3,246

339,520
39,296 22,987
8,435 8,822 39,331 3,023 82,398 52,744 10,971
582
860 33,049
4,020

Total Expenses

$

540,537 $

646,038

Although program revenues make up 50.0% of the revenues, the Board is still primarily dependent upon tax revenues for governmental activities. 40.8% of instruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 43.4%.
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 $1.415 billion and expenditures and other financing uses of $1.422 billion. There was a decrease in fund balance of $5.6 million in the capital projects fund due to other financing uses during the year. The general fund had a decrease in fund balance of $1.8 million. This increase in fund balance was mainly the result of an increase in revenues from $1.197 billion in 2018 to $1.267 billion in 2019.

v

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

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 2019, 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 $1.266 billion and anticipated budgeted expenditures and other uses were $1.294 billion. The budgeting systems are designed to monitor and control total site-based budgets and provide flexibility for site management.

For the general fund, final budgeted revenues, and other sources of $1.319 billion were under performed by the actual by $52.3 million. This difference was due mainly to receiving less than expected miscellaneous and state and federal revenues that was offset some by better than expected tax revenue and investment income.

Actual expenditures of $1.269 billion were 3.6% less than the final budgeted total of $1.316 billion.

General fund expenditures exceeded revenues and other financing sources by $1.8 million resulting in a decrease in "Fund Balance" for the year.

Capital Assets and Long-Term Liabilities

Capital Assets

At the end of fiscal year 2019, the Board had $1.650 billion invested in capital assets, all in governmental activities. Table 4 shows fiscal year 2019 balances compared with fiscal year 2018 balances.
Table 4 Capital Assets (Net of Depreciation, in Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2019

Year 2018

Land Construction in Progress Land Improvements Buildings and Improvement Equipment

$

70,909 $

181,285

27,910

1,304,685

65,595

70,909 48,750 23,197 1,286,928 50,494

Total

$

1,650,384 $

1,480,278

The primary increase occurred in construction in progress. Due to the ongoing population growth in the County, the Board has numerous projects including new buildings, additions, and renovations.

Long-Term Liabilities

At June 30, 2019, the Board had $6.3 million in compensated absences. There is $131.0 million in general obligation bonds and $7.3 million in unamortized bond premiums from the fiscal year 2017 issue and $117.5 million in claims and judgements from the settlement of the Gold class action lawsuit. $50.5 million of the long-term liabilities are due within one year.

vi

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019

Table 5 summarizes long-term liabilities outstanding and compares fiscal year 2019 balances to fiscal year 2018 balances.

Table 5 Long-Term Liabilities at June 30
(in Thousands)

Governmental Activities

Fiscal

Fiscal

Year 2019

Year 2018

General Obligations Bonds

$

Unamortized Bond Premium

Qualified School Construction Bonds

Compensated Absences

Claims and Judgements

131,025 $ 7,286
23,604 6,295
117,500

131,025 9,368
28,722 6,639
117,500

Total

$

285,710 $

293,254

The Board maintains an underlying AA and Aa3 credit rating from Standard & Poor's Ratings Services and Moody's Investors Service, respectively.

Current Issues

State funding was higher in 2019 than 2018 due to an increase in "Quality Basic Education" and state grants revenue. Federal grant revenue increased in 2019 by 7.7% from 2018. Combined state and federal revenues used in general fund operations in 2019 increased by $29.5 million from 2018.

Local revenue within DeKalb County School District is increasing. Property tax revenues had been impacted by the revaluation of property due to foreclosures and weak sales during the recession. Digest values are documented to be increasing during fiscal year 2019. Overall, total general fund revenues have been increasing for the last two years. Prior to the 2009 fiscal year, the tax digest in DeKalb County had never seen a decrease in value. However, for the last five 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 District to eliminate the deficit from fiscal year 2012. As of the end of fiscal year 2019, the Board has rebuilt the School District's financial reserves which are now in compliance with the School District's policy relating to fund balance targets. The Board remains committed to maintaining the School 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 government-wide financial statements as deferred inflows and outflows of resources and net pension liability. In addition, the financial statements reflect a similar long-term liability for the net OPEB liability related to post-retirement healthcare benefits.

vii

DEKALB COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 Factors Bearing on the School District's Future In December 2019, a strain of coronavirus (COVID-19) began to spread worldwide, resulting in a severe impact to the United States economy in March 2020. The spread of COVID-19 has had a negative impact on virtually all businesses and individuals which comprise the tax base of all levels of government. The extent of this impact is uncertain but is expected to have negative results on financial operations, however the impact cannot be reasonably estimated at this time. The return of the School District's fund balance to substantially fully funded relative to internal Board Policy gives to the School 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 School District's educational initiatives. The School District is also continually assessing and preparing for future events that may impact its financial position. Finally, the School District received its five (5) year accreditation certification from the SACs organization in March 2017 which granted full accreditation out to June 30, 2022. 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 Masana Mailliard, Interim Chief Financial Officer, at the DeKalb County Board of Education, 1701 Mountain Industrial Boulevard, Stone Mountain, Georgia, 30083.
viii

DEKALB COUNTY BOARD OF EDUCATION

DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2019
ASSETS
Cash and Cash Equivalents Investments Receivables, Net
Interest Taxes State Government Federal Government Other Inventory Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
DEFERRED OUTFLOWS OF RESOURCES
Related to Defined Benefit Pension Plans Related to OPEB Plans
Total Deferred Outflows of Resources
LIABILITIES
Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Interest Payable Claims Incurred but not Reported (IBNR) Contracts Payable Retainages Payable Other Current Liabilities Net Pension Liability Net OPEB Liability Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
DEFERRED INFLOWS OF RESOURCES
Related to Defined Benefit Pension Plans Related to OPEB Plans
Total Deferred Inflows of Resources
NET POSITION
Net Investment in Capital Assets Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted (Deficit)
Total Net Position
The accompanying notes to the basic financial statements are an integral part of this statement.

EXHIBIT "A"

Governmental Activities

$

397,120,374

136,637,036

119,082 22,610,379 82,879,812 19,677,282
153,587 2,699,553 252,193,681 1,398,190,344

2,312,281,130

258,379,797 42,995,155
301,374,952

12,790,750 154,687,602
2,312,720 1,581,220 12,006,440 14,291,373 6,371,277
582 955,246,221 791,655,645
50,459,173 235,250,650
2,236,653,653
28,252,196 152,117,324
180,369,520

1,488,795,038
1,050,195 37,694,280 292,574,636 (1,623,481,240)

$

196,632,909

- 1 -

DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2019

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

EXPENSES

CHARGES FOR SERVICES

$

734,339,221

$

13,760,547

72,326,020

-

33,781,328

-

13,361,441

-

21,136,174

-

70,726,814

-

7,449,488

-

143,148,576

-

59,450,855

-

20,844,471

-

1,215,091

-

1,693,232 60,854,158
6,068,728

2,034,746
-

$

1,246,395,597

$

15,795,293

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

Total general revenues

Change in Net Position

Net Position - Beginning of Year

Net Position - End of Year

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

$ 552,130,776 $
16,609,823 8,494,461 3,209,085 4,859,554
16,205,519 4,059,789
25,748,486 15,354,504
5,049,790 280,386
362,401 14,272,371
-
$ 666,636,945 $

388,785
487,761
95,171 2,344 -
30,513 15,390,262
3,892,784 157,624 -
158,219 2,823,208
23,426,671

$ (168,059,113)
(55,716,197) (24,799,106) (10,057,185) (16,274,276) (54,521,295)
(3,359,186) (102,009,828)
(40,203,567) (15,637,057)
(934,705)
(1,330,831) (44,388,822)
(3,245,520)
(540,536,688)

548,238,900
114,338,775 12,672,617 6,566,909 24,207,330
706,024,531 165,487,843
31,145,066
$ 196,632,909

- 3 -

ASSETS
Cash and Cash Equivalents Investments Receivables, Net
Interest Taxes State Government Federal Government Other Inventory

DEKALB COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2019

General Fund

Capital Projects
Fund

EXHIBIT "C"

Debt Service
Fund

Total Governmental
Funds

$ 190,375,594 $ -
13,039,252 82,879,812 19,677,282
153,587 2,699,553

206,697,158 $ 136,637,036
119,082 9,571,127
-

47,622 $ -
-

397,120,374 136,637,036
119,082 22,610,379 82,879,812 19,677,282
153,587 2,699,553

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

$ 308,825,080 $

353,024,403 $

$

12,561,896 $

154,686,664

2,309,579

-

-

582

169,558,721

228,854 $ 938
3,141 14,291,373
6,371,277 -
20,895,583

47,622 $

661,897,105

-$ -
-

12,790,750 154,687,602
2,312,720 14,291,373
6,371,277 582
190,454,304

9,683,182

-

-

9,683,182

2,699,553 -
3,968,598 122,915,026
129,583,177

332,128,820
-
332,128,820

47,622
-
47,622

2,699,553 332,176,442
3,968,598 122,915,026
461,759,619

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 308,825,080 $

353,024,403 $

47,622 $

661,897,105

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

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DEKALB COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET POSITION
JUNE 30, 2019

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 in the governmental funds.
Land Construction in progress Buildings and improvements Equipment Land improvements Accumulated depreciation
Some liabilities are not due and payable in the current period and therefore, are not reported in the governmental funds.
Net pension liability Net OPEB liability
Deferred outflows and inflows of resources related to pensions and OPEB are applicable to future periods and, therefore, are not reported in the governmental funds.
Related to pensions Related to OPEB
Taxes that are not available to pay for current period expenditures are deferred in the funds.
Long-term liabilities, and related items, are not due and payable in the current period and therefore are not reported in the governmental funds.
Bonds payable Accrued interest payable Compensated absences Qualified school construction bonds payable Unamortized bond premiums Claims and judgments payable

$

461,759,619

$

70,908,640

181,285,041

1,846,816,704

146,140,796

40,622,566

(635,389,722)

1,650,384,025

$

(955,246,221)

(791,655,645)

(1,746,901,866)

$

230,127,601

(109,122,169)

121,005,432 9,683,182

$

(131,025,000)

(1,581,220)

(6,294,529)

(23,604,000)

(7,286,294)

(129,506,440)

(299,297,483)

Net position of governmental activities (Exhibit "A")

$

196,632,909

The accompanying 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, 2019

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
Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Sale of Capital Assets Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances, Beginning of year

GENERAL FUND

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 548,238,900

$

-

$

12,672,617

114,338,775

537,337,697

18,901,147

128,696,496

-

15,760,217

-

3,495,027

3,071,882

20,632,270

6,367,841

1,266,833,224

142,679,645

-

$ 548,238,900

-

127,011,392

-

556,238,844

-

128,696,496

-

15,760,217

-

6,566,909

-

27,000,111

-

1,409,512,869

782,427,836
71,981,049 36,811,964 13,907,028 21,059,573 70,228,941
7,604,338 111,584,753
66,540,944 21,883,989
1,215,091 1,570,517 61,851,364
-
-
1,268,667,387
(1,834,163)
28,781 -
28,781
(1,805,382)
131,388,559

-
8,136 7,263,985 127,377,641
5,118,285 3,251,643
143,019,690
(340,045)
(5,241,000)
(5,241,000)
(5,581,045)
337,709,865

-
-
5,241,000
5,241,000
(5,241,000)

782,427,836
71,981,049 36,811,964 13,907,028 21,059,573 70,228,941
7,612,474 111,584,753
73,804,929 21,883,989
1,215,091 1,570,517 61,851,364 127,377,641
5,118,285 8,492,643
1,416,928,077
(7,415,208)

5,241,000
-
5,241,000
-
47,622

28,781 5,241,000 (5,241,000)
28,781
(7,386,427)
469,146,046

Fund Balances, End of year

$ 129,583,177

$ 332,128,820

$

47,622

$ 461,759,619

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

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DEKALB COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2019

EXHIBIT "F"

Net change in fund balances - total governmental funds (Exhibit "E")
Amounts reported for governmental activities in the Statement of Activities are different because:
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense:
Capital outlay 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 repayment of the principal of long-term debt is reported as an expenditure in the governmental funds. However, the repayment reduces long-term liabilities in the Statement of Net Position. In the current year, these amounts consists of:
Qualified school construction bond payment
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. This adjustment combines the net changes in the following balances:
Amortization of bond premium Pension expense OPEB expense Compensated Absences Claims and judgments

$ (7,386,427)

$ 214,850,146 (40,756,347)

174,093,799 (3,987,445)

5,118,285

$

2,081,798

12,583,142

(15,947,826)

344,116

(1,411,599)

(2,350,369)

Change in Net Position of governmental activities (Exhibit "B")

$ 165,487,843

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

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DEKALB COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS JUNE 30, 2019
ASSETS Cash and Cash Equivalents
LIABILITIES Accounts Payable and Accrued Liabilities Funds Held for Others
Total Liabilities

EXHIBIT "G"

Agency Funds

$

2,387,635

$

3,450

2,384,185

$

2,387,635

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

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

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 board elected by the voters and a Superintendent appointed by the Board. The School District 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.
CHARTER SCHOOLS
The Chamblee Charter High School, Chestnut Elementary School, Kingsley Charter Elementary School, Peachtree Charter Middle School, and Smoke Rise Elementary Charter Schools (collectively the "Charter Schools") are responsible for the public education of all students attending its schools. The Charter Schools were created through a contract between the School District and the Charter Schools whereby all State funding associated with the students attending the Charter Schools and certain specified local funds are turned over to the Charter Schools to cover the cost of its operations. The financial statements of the Charter Schools have been included with the School District's general fund.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of the School District have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as prescribed by the Governmental Accounting Standards Board ("GASB"). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below.
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements, and notes to the basic financial statements. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness.
GOVERNMENT-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 Net Position presents the School District's non-fiduciary assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference reported as net position. Net position is reported in three categories as follows:
1. Net investment in capital assets consists of the School District's total investment in capital assets, net of accumulated depreciation, and reduced by 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.
2. Restricted net position consists of resources for which the School District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties or 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, 2019

EXHIBIT "H"

3. Unrestricted net position consists of resources not meeting the definition of the two preceding categories. Unrestricted net position often has constraints on resources imposed by management which can be removed or modified.
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. Separate financial statements are presented for governmental and fiduciary funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
The 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.
The 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 for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets.
The 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 are used to report resources held by the School District in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The government- wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied.

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

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. 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 are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted resources 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.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2019, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 83, Certain Asset Retirement Obligations. This statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this statement. The adoption of this statement did not have an impact on the School District's financial statements.
In fiscal year 2019, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. The primary objective of this statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. The School District included additional information in the Long-Term Liabilities note disclosure.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool (Georgia Fund 1), 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 (O.C.G.A.) 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.

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

INVESTMENTS
The School District can invest its funds as permitted by O.C.G.A. 36-83-4. 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.
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. All other investments are reported at fair value.
For accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired.
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.
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 food inventories are reported at cost (calculated on the first-in, first-out basis). 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
On the government-wide financial statements, capital assets are recorded 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 the acquisition value on the date donated. 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. The School District does not capitalize book collections or works of art.
Capital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities column in the government-wide financial statements.
Depreciation is computed using the straight-line for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives.
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.

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

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

Land
Land Improvements Building and Additions Building Improvements Equipment
Outdoor Equipment Vehicles Kitchen Equipment Computers Miscellaneous Buses Intangible Assets

Capitalization Policy
ALL $ 100,000 $ 100,000 $ 100,000

$

5,000

$

5,000

$

5,000

$

5,000

$

5,000

$

5,000

$ 1,000,000

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

DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of financial position will 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.
In addition to liabilities, the statement of financial position will 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.
COMPENSATED ABSENCES
Compensated absences payable consists of vacation leave employees earned based on services already rendered.
Vacation leave of 10 to 20 days is awarded on a fiscal year basis to all full-time personnel employed on a 12 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 for the previous year. Upon terminating employment, the School District pays all unused and unforfeited vacation benefits to employees. Accordingly, vacation benefits are accrued as a liability in the government-wide financial statements. A liability for these amounts is reported in the governmental fund financial statements only if they have matured, for example, as a result of employee resignations and retirements by fiscal-year end.
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.

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

LONG-TERM LIABILITIES AND BOND DISCOUNTS/PREMIUMS
In the School District's government-wide financial statements, outstanding debt is reported as liabilities. Bond premiums and discounts and the difference between the reacquisition price and the net carrying value of refunded debt are deferred and amortized over the life of the bonds using the straight-line method. To conform to GAAP, bond premiums and discounts should be amortized using the effective interest method. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued.
In the governmental fund financial statements, the School District recognizes the proceeds of debt and premiums as other financing sources of the current period. Bond issuance costs are reported as debt service expenditures.
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 pension plan's fiduciary net position, and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by the plan. 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.
POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the Georgia School Employees Postemployment Benefit Fund (School OPEB Fund) and additions to/deductions from School OPEB Fund fiduciary net position have been determined on the same basis as they are reported by School OPEB Fund. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
FUND BALANCES
Fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent.
The School District's fund balances are classified as follows:
Nonspendable consists of resources 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 consists of resources that can be used only for specific purposes pursuant to constraints either (1) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.
Committed consists of resources that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board. The Board is the School District's highest level of decisionmaking 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 consists of resources 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 or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

Unassigned consists of resources within the general fund not meeting the definition of any aforementioned category. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance.
USE OF ESTIMATES

The preparation of the financial statements in conformity with U.S. GAAP 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.
PROPERTY TAXES

The DeKalb County Board of Commissioners adopted the property tax levy for the 2018 tax digest year (calendar year) on July 25, 2018 (levy date) based on property values as of January 1, 2018. Taxes were due on November 15, 2018 and could be paid in two installments on October 1, 2018 and November 15, 2018. Taxes collected within the current fiscal year or within 60 days after yearend on the 2018 tax digest are reported as revenue in the governmental funds for fiscal year 2019. 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, 2019, for maintenance and operations amounted to $517,385,747.

The tax millage rate levied for the 2018 tax year (calendar year) for the School District was as follows (a mill equals $1 per thousand dollars of assessed value):

School Operations

23.28 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $30,853,153 during fiscal year ended June 30, 2019.
SALES TAXES
Education Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $114,338,775 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.
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 GAAP.
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 O.C.G.A. 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.

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DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

The Superintendent is authorized by the Board to approve adjustments of no more than 10% 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% 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 the General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual in the Supplementary Information Section for a detail of any over/under expenditures during the fiscal year under review.
NOTE 4: DEPOSITS, CASH EQUIVALENTS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
O.C.G.A. 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% 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. 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% of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
(1) Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
(2) Insurance on accounts provided by the Federal Deposit Insurance Corporation,
(3) Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia,
(4) Bonds, bills, notes, certificates of indebtedness, or other obligations of the counties or municipalities of the State of Georgia,
(5) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
(6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
(7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary
corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
The School District participates in the State's Secure Deposit Program (SDP), a multi-bank pledging pool. The SDP requires participating banks that accept public deposits in Georgia to operate under the policy and procedures of the program. The Georgia Office of State Treasurer (OST) sets the collateral requirements and pledging level for each covered depository. There are four tiers of collateralization levels specifying percentages of eligible securities to secure covered Deposits: 25%, 50%, 75% and 110%. The SDP also provides for collateral levels to be increased in amount of up to 125% if economic or financial conditions warrant. The program lists the types of eligible collateral. The OST approves authorized custodians.

- 17 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

In accordance with the SDP, if a covered depository defaults, losses to public depositors are first satisfied with any applicable insurance, followed by demands of payment under any letters of credit or sale of the covered depository's collateral. If necessary, any remaining losses are to be satisfied by assessments made against the other participating covered depositories. Therefore, for disclosure purposes, all deposits of the SDP are considered to be fully collateralized.
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, 2019, the School District had deposits with a carrying amount of $312,870,089 and a bank balance of $318,133,898. The bank balances insured by Federal depository insurance were $750,000, the bank balances collateralized with securities held by the pledging financial institution's trust department or agent in the School District's name were $163,052,636, the bank balances uninsured and uncollateralized were $55,812,808 and the bank balances included in the State's Secure Deposit Program (SDP) were $98,518,454.

Reconciliation of cash and cash equivalents balances to carrying value of deposits:

Cash and cash equivalents Statement of Net Position Statement of Fiduciary Net Position

$ 397,120,374 2,387,635

Total cash and cash equivalents

399,508,009

Less: Cash on hand Investment pools reported as cash and cash equivalents
Georgia Fund 1

97,575 86,540,345

Total carrying value of deposits - June 30, 2019

$ 312,870,089

CATEGORIZATION OF CASH EQUIVALENTS
The School District reported cash equivalents of $86,540,345 in Georgia Fund 1, a local government investment pool, which is included in the cash balances above. Georgia Fund 1 is not registered with the Securities Exchange Commission (SEC) as an investment company and does not 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, which approximates fair value. 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, 2019 was 39 days.
Georgia Fund 1, 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 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.

- 18 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

CATEGORIZATION OF INVESTMENTS At June 30, 2019, the School District had the following investments:

Investment Type
Debt Securities U. S. Treasurry Money Market Funds First American Government Obligation Fund $

Fair Value

Investment Maturity Less than 1 year

136,637,036 $

136,637,036

Interest Rate Risk

Interest rate risk is the risk that changes in interest rates of debt investment will adversely affect the fair value of an investment. The School District does not have a formal policy for managing interest rate risk.
Custodial Credit Risk

Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the School District will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The School District does not have a formal policy for managing custodial credit risk.
At June 30, 2019, $136,637,036 of the School District's applicable investments were held by the investment's counterparty, not in the School District's name.
Credit Quality Risk

Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State law limits investments to those prescribed O.C.G.A. 36-83-4. The School District does not have a formal policy that would further limit its investment choices or one that addresses credit risk.
The investments subject to credit quality risk are reflected below:

Rated Debt Investments

Fair Value

Credit Quality Ratings AAAm

Debt Securities U. S. Treasury Money Market Funds First American Government Obligation Fund $

136,637,036 $

136,637,036

Fair Value Measurements
The School District categorizes its fair value measurements within the fair value hierarchy established by U.S. GAAP. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.
The investment in the First American Government Obligation Fund classified as Level 2 of the fair value hierarchy is valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities' relationship to benchmark quoted prices.

- 19 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

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 First American Government Obligation Fund. This investment is 100% of the School District's total investments.
NOTE 5: CAPITAL ASSETS

The following is a summary of changes in the capital assets for governmental activities during the fiscal year:

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

Balances June 30, 2018

Increases

Decreases

Transfers

Balances June 30, 2019

$

70,908,640 $

- $

48,750,388

189,356,858

- $

- $

-

(56,822,205)

70,908,640 181,285,041

Total Capital Assets Not Being Depreciated

119,659,028

189,356,858

-

(56,822,205)

252,193,681

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

1,804,387,284 125,091,170 34,692,613
517,459,560 74,597,502 11,495,362

667,924 23,466,345
1,359,019
31,315,821 8,223,853 1,216,673

8,837,000 2,416,719
-
6,643,926 2,275,123
-

50,598,496 -
4,570,934
-

1,846,816,704 146,140,796 40,622,566
542,131,455 80,546,232 12,712,035

Total Capital Assets, Being Depreciated, Net

1,360,618,643

(15,263,059)

2,334,670

55,169,430

1,398,190,344

Governmental Activities Capital Assets - Net $ 1,480,277,671 $ 174,093,799 $

2,334,670 $ (1,652,775) $ 1,650,384,025

Current year depreciation expense by function is as follows:

Instruction

Support Services

Improvements of Instructional Services $ 1,030,723

Educational Media Services

201,113

General Administration

4,954

Business Administration

64,480

Maintenance and Operation of Plant

246,063

Student Transportation Services

4,628,836

Support Services - Central

333,087

Food Services

$ 33,912,746
6,509,256 334,345

$ 40,756,347

- 20 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

NOTE 6: INTERFUND TRANSFERS

Interfund transfers for the year ended June 30, 2019, consisted of the following:

Transfers to

Transfers From Capital Projects
Fund

Debt Service Fund

$

5,241,000

Transfers are used to move Special Purpose Local Option Sales Tax (SPLOST) revenues collected in the capital projects fund to the debt service fund to fund the bond interest payments.
NOTE 7: LONG-TERM LIABILITIES

The changes in long-term liabilities during the fiscal year for governmental activities were as follows:

Balance July 1, 2018

Additions

Governmental Activities

Balance

Deductions

June 30, 2019

Due Within One Year

General Obligation (G.O.) Bonds

$

Unamortized Bond Premiums

Qualified School Construction Bonds

Compensated Absences

Claim and Judgement

131,025,000 $ 9,368,092
28,722,285 6,638,645
117,500,000

- $ 7,045,298 -

- $ 2,081,798 5,118,285 7,389,414
-

131,025,000 $ 7,286,294
23,604,000 6,294,529
117,500,000

36,655,000 2,081,798 5,118,285 6,604,090 -

$ 293,254,022 $

7,045,298 $

14,589,497 $

285,709,823 $

50,459,173

In the event the entity is unable to make the principal and interest payments using proceeds of the Education Special Purpose Local Option Sales Tax (ESPLOST), the debt will be satisfied from the general fund or from a direct annual ad valorem tax levied upon all taxable property within the School District. Additional security is provided by the State of Georgia Intercept Program which allows for the state appropriations entitled to the School District to be transferred to the Debt Service Account Custodian for the payment of debt.
GENERAL OBLIGATION DEBT OUTSTANDING

The School District's bonded debt consists of general obligation bonds that are generally callable with interest payable semiannually. Bond proceeds primarily pay for acquiring or constructing capital facilities. The School District repays general obligation bonds from voter-approved Education Special Purpose Local Option Sales Tax (ESPLOST) proceeds. General obligation bonds are direct obligations and pledge the full faith and credit of the School District.

Voters have authorized $200,000,000 of general obligation debt. Of the total amount originally authorized, $68,975,000 remains unissued.

General obligation bonds currently outstanding are as follows:

Description

Interest Rate

Issue Date

Maturity Date

Amount Issued

Amount Outstanding

General Government - Series 2017

4.00%

3/2/2017

10/1/2022 $ 131,025,000 $

131,025,000

- 21 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

The following schedule details debt service requirements to maturity for the School District's total general obligation bonds payable:

Fiscal Year Ended June 30:

General Obligation Debt

Principal

Interest

Unamortized Bond Premium

2020 2021 2022 2023

$

36,655,000 $

37,145,000

37,755,000

19,470,000

4,507,900 $ 3,031,900 1,533,900
389,400

2,081,798 2,081,798 2,081,798 1,040,900

Total Principal and Interest

$

131,025,000 $

9,463,100 $

7,286,294

QUALIFIED SCHOOL CONSTRUCTION BONDS (QSCB)
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 in Qualified School Construction Taxable Certificates of Participation Bonds (QSCB) and $5,690,000 in Certificates of Participation Tax-Exempt Bonds to fund the construction of the new school. The lease agreement with Georgia Municipal Association, Inc. 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 QSCB.
Section 1521 of the American Recovery and Reinvestment Act (ARRA) of 2009 provides for a source of capital at no or at nominal interest rates for costs incurred by school districts in connection with the construction, rehabilitation or repair of a public school facility or for the acquisition of land where a school will be built. Investors receive Federal income tax credits at prescribed tax credit rates in lieu of interest, which essentially allows school districts to borrow without incurring interest costs.
When the stated interest rate on the QSCB results in interest payments that exceed the supplemental interest payments discussed in the preceding paragraph, the school district may apply for a direct cash subsidy payment from the U.S. Treasury which is intended to reduce the stated interest rate to a nominal percentage. To qualify for this subsidy the school district is required to periodically file appropriate documents with the Internal Revenue Service. These subsidy payments do not include the amount of any supplemental interest paid on a QSCB. The interest subsidy received by the school district in fiscal year 2019 was $2,823,208, which funded all but $428,435 of interest expense due on the QSCB.
Debt currently outstanding under Qualified School Construction Bonds is as follows:

Description

Amount Issued

Amount Outstanding

Georgia Municipal Association - COP Series 2011A Georgia Municipal Association - COP Series 2011B

$ 57,770,000 $ 17,914,000

5,690,000

5,690,000

$ 63,460,000 $ 23,604,000

- 22 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

The following is a schedule of total Qualified School Construction Bond payments:

Fiscal Year Ended June 30:

Principal

Interest

2020 2021 2022 2023

$

5,118,285 $

3,251,643

5,118,285

3,251,643

5,118,285

3,251,643

8,249,145

1,867,646

Total Principal and Interest $

23,604,000 $

11,622,575

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.
CLAIM AND JUDGEMENT

On June 9, 2020, the School District Board voted to approve the settlement of the Gold lawsuit, for a breach of contract for $117,500,000. The settlement, to be paid out by the School District to the Settlement Administrator over a five-year period is recorded as a long-term liability on the Statement of Net Position.

The following schedule reports the annual settlement payments:

Fiscal Year Ended June 30:

Settlement Payments

2021 2022 2023 2024 2025

$

27,500,000

22,500,000

22,500,000

22,500,000

22,500,000

Total

$

117,500,000

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.

- 23 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

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 loss per occurrence, up to $25,000,000.

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

2018 $ 9,006,189

$ 5,533,852

$

7,275,793

$

7,264,248

2019 $ 7,264,248

$ 8,745,546

$

7,949,044

$

8,060,750

UNEMPLOYMENT COMPENSATION
The School District is self-insured with regard to unemployment compensation claims. The School District accounts for claims within the general fund with expenses/expenditures and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated.
Changes in the unemployment compensation claims liability during the last two fiscal years are as follows:

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2018 $

-

$

98,793

$

98,793

$

-

2019 $

-

$

169,467

$

169,467

$

-

SURETY BOND

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

Position Covered

Amount

Superintendent

$

1,000,000

NOTE 9: FUND BALANCE CLASSIFICATION DETAILS

The School District's financial statements include the following amounts presented in the aggregate at June 30, 2019:

Nonspendable Inventories
Restricted Capital Projects Debt Service
Assigned School Activity Accounts
Unassigned

$

2,699,553

$ 292,900,942 39,275,500

332,176,442

3,968,598 122,915,026

Fund Balance, June 30, 2019

$ 461,759,619

- 24 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

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.
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 not less than 5% and 7% of budgeted expenditures.
NOTE 10: SIGNIFICANT COMMITMENTS
COMMITMENTS UNDER CONSTRUCTION CONTRACTS
The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2019:

Project

Unearned Executed Contracts (1)

New Cross Keys Middle School Chamblee High School Clarkston High School New Cross Keys High School Dunwoody High School Lakeside High School John Lewis Elementary School New Doraville United Elementary School Indian Creek Elementary School Technology: Safety and Security Southwest DeKalb High School Addition Warren Tech Hvac Austin Elementary School Replacement Early Learning Center McNair Middle School Replacement Pleasantdale Elementary School Replacement Smoke Rise Elementary School Replacement Comprehensive Arts School at former Avondale Middle School

$

497,173

1,026,422

692,300

2,857,486

796,580

982,475

2,916,515

12,696,184

16,576,593

3,300,000

1,045,948

308,270

1,802,049

445,545

5,212,328

12,196,701

23,981,140

276,003

$

87,609,712

(1) The amounts described are not reflected in the basic financial statements.
NOTE 11: SIGNIFICANT CONTINGENT LIABILITIES FEDERAL GRANTS
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. Any disallowances resulting from the grantor audit may become a liability of the School District. However, the School District believes that such disallowances, if any, will be immaterial to its overall financial position.

- 25 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

LITIGATION
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 12: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description: Certified teachers and non-certified public school employees of the School District as defined in 20-2-875 of the Official Code of Georgia Annotated (O.C.G.A.) are provided OPEB through the School OPEB Fund - a cost-sharing multiple-employer defined benefit postemployment healthcare plan, reported as an employee trust fund and administered by a Board of Community Health (Board). Title 20 of the O.C.G.A. assigns the authority to establish and amend the benefit terms of the group health plan to the Board.
Benefits Provided: The School OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for public school teachers, including librarians, other certified employees of public schools, regional educational service agencies and non-certified public school employees. Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from Employees' Retirement System (ERS), Georgia Judicial Retirement System (JRS), Legislative Retirement System (LRS), Teachers Retirement System (TRS) or Public School Employees Retirement System (PSERS). If elected, dependent coverage starts on the same day as retiree coverage. Medicare-eligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The School OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the School OPEB Fund is permitted.
Contributions: As established by the Board, the School OPEB Fund is substantially funded on a payas-you-go basis; that is, annual cost of provided benefits will be financed in the same year as claims occur. Contributions to the school OPEB Fund from the District were $33,802,837 for the year ended June 30, 2019. Active employees are not required to contribute to the School OPEB Fund.
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
At June 30, 2019, the School District reported a liability of $791,655,645 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2018. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2017. An expected total OPEB liability as of June 30, 2018 was determined using standard roll-forward techniques. The School District's proportion of the net OPEB liability was actuarially determined based on employer contributions during the fiscal year ended June 30, 2018. At June 30, 2018, the School District's proportion was 6.228755%, which was an increase of 0.105002% from its proportion measured as of June 30, 2017.

- 26 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

For the year ended June 30, 2019, the School District recognized OPEB expense of $37,429,698. At June 30, 2019, the School District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows of Resources

OPEB

Deferred Inflows of Resources

Differences between expected and actual

experience

$

- $

18,007,049

Changes of assumptions

-

134,110,275

Net difference between projected and actual

earnings on OPEB plan investments

1,071,107

-

Changes in proportion and differences

between School District contributions and

proportionate share of contributions

20,442,176

-

School District contributions subsequent to

the measurement date

21,481,872

-

Total

$

42,995,155 $

152,117,324

School District contributions subsequent to the measurement date are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year Ended June 30:

OPEB

2020 2021 2022 2023 2024 2025

$ (25,360,322) (25,360,322) (25,360,323) (25,424,313) (21,045,999) (8,052,762)

- 27 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

Actuarial assumptions: The total OPEB liability for the June 30, 2018 was determined by an actuarial valuation as of June 30, 2017 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2018:

OPEB:

Inflation

2.75%

Salary increases

3.25% 9.00%, including inflation

Long-term expected rate of return Healthcare cost trend rate
Pre-Medicare Eligible

7.30%, compounded annually, net of investment expense, and including inflation
7.50%

Medicare Eligible

5.50%

Ultimate trend rate Pre-Medicare Eligible

4.75%

Medicare Eligible

4.75%

Year of Ultimate trend rate

Pre-Medicare Eligible

2028

Medicare Eligible

2022

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows:

For TRS members: The RP-2000 White Collar Mortality Table projected to 2025 with projection scale BB (set forward 1 year for males) is used for death after service retirement and beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward two years for males and four years for females) is used for death after disability retirement.
For PSERS members: The RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females) is used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward 5 years for both males and females) is used for the period after disability retirement.

The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the pension systems, which covered the five-year period ending June 30, 2014.
The remaining actuarial assumptions (e.g., initial per capita costs, health care cost trends, rate of plan participation, rates of plan election, etc.) used in the June 30, 2017 valuation were based on a review of recent plan experience done concurrently with the June 30, 2017 valuation.
Projection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation.

- 28 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

The long-term expected rate of return on OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of investment expense and the assumed rate of 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. During fiscal year 2018, the State OPEB fund updated their investment strategy to a more long-term approach. The target allocation and best estimates of arithmetic real rates of return for the major asset class is summarized in the following table:

Asset class

Target allocation

Long-Term Expected Real Rate of Return*

Fixed income Domestic Large CAP stocks Domestic Mid CAP stocks Domestic Small CAP stocks International Developed Market International Emerging Market Alternatives

30.00% 37.20%
3.40% 1.40% 17.80% 5.20% 5.00%

(0.50% 9.00% 12.00% 13.50% 8.00% 12.00% 10.50%

100.00%

*Net of Inflation.

Discount Rate: The discount rate has changed since the prior measurement date from 3.58% to 3.87%. In order to measure the total OPEB liability for the State OPEB Fund, a single equivalent interest rate of 3.87% was used as the discount rate. This is comprised mainly of the yield or index rate for 20 year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.87% per the Bond Buyers Index). The projection of cash flows used to determine the discount rate assumed that contributions from members and from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2118. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2018. Therefore, the calculated discount rate of 3.87% was applied to all periods of projected benefit payments to determine the total OPEB liability.
Sensitivity of the School District's proportionate share of the net OPEB liability to changes in the discount rate: The following presents the School District's proportionate share of the net OPEB liability calculated using the discount rate of 3.87%, as well as what the School District's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.87%) or 1 percentage-point higher (4.87%) than the current discount rate:

1% Decrease (2.87%)

Current Discount Rate (3.87%)

1% Increase (4.87%)

net OPEB liability

$

924,405,572 $

791,655,645 $ 684,606,720

- 29 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

Sensitivity of the School District's proportionate share of the net OPEB liability to changes in the healthcare cost trend rates: The following presents the School District's proportionate share of the
net OPEB liability, as well as what the School District's proportionate share of the net OPEB liability
would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower
or 1-percentage-point higher than the current healthcare cost trend rates:

1% Decrease

Current Healthcare Cost Trend Rate

1% Increase

net OPEB liability

$ 665,551,274 $

791,655,645 $

952,812,384

School OPEB Funds fiduciary net position: Detailed information about the School OPEB Fund's fiduciary net position is available in the Comprehensive Annual Financial Report (CAFR) which is publicly available at https://sao.georgia.gov/comprehensive-annual-financial-reports.
NOTE 13: RETIREMENT PLANS
The School District 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 O.C.G.A 47-3-60 and certain other support personnel as defined by 47-3-63 are provided a pension through the 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 TRS issues a publicly available separate financial audit report that can be obtained at www.trsga.com/publications.
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 2019. The School District's contractually required contribution rate for the year ended June 30, 2019 was 20.90%, of annual School District payroll. For the current fiscal year, employer contributions to the pension plan were $133,220,772 from the School District.
EMPLOYEES' RETIREMENT SYSTEM
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.
- 30 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

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.
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, plus 6% of annual compensation in excess of $4,200. 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, 2019 was 24.78% of annual covered payroll for Old and New Plan members and 21.78% for GSEPS members. The rates include the annual actuarially determined employer contribution rate of 24.66% of annual covered payroll of new and old plan members and 21.66% for GSEPS members plus 0.12% adjustment for the HB 751 one-time benefit adjustment of 3% to retired state employees. 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 to the pension plan were $215,126 for the current fiscal year.
PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS)
Plan Description: Public Schools Employees Retirement System (PSERS) is a cost-sharing multipleemployer 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 TRS. 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.

- 31 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

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. The current fiscal year contribution was $1,724,234.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
At June 30, 2019, the School District reported a liability of $955,246,221 for its proportionate share of the net pension liability for TRS ($953,735,293) and ERS ($1,510,928).
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

$ 953,735,293

State of Georgia's proportionate share of the net pension liability associated with the School District

1,246,448

Total

$ 954,981,741

The net pension liability for TRS and ERS was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2017. An expected total pension liability as of June 30, 2018 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, 2018.
At June 30, 2018, the School District's TRS proportion was 5.138067%, which was an increase of 0.119328% from its proportion measured as of June 30, 2017. At June 30, 2018, the School District's ERS proportion was 0.036753%, which was a decrease of 0.006695% from its proportion measured as of June 30, 2017.
At June 30, 2019, 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 $9,955,524.
The PSERS net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2017. An expected total pension liability as of June 30, 2018 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, 2018.

- 32 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

For the year ended June 30, 2019, the School District recognized pension expense of $119,704,581 for TRS, $226,782 for ERS and $2,305,067 for PSERS and revenue of $753,741 for TRS and $2,305,067 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.

At June 30, 2019, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

TRS

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

ERS Deferred Outflows of Resources

Deferred Inflows of Resources

Differences between expected and actual experience

$

63,138,623 $

1,965,670 $

46,993 $

-

Changes of assumptions

14,391,520

-

71,184

-

Net difference between projected and actual earnings on pension plan investments

-

26,076,975

-

34,819

Changes in proportion and differences between School District contributions and proportionate share of contributions

47,225,066

9,201

70,513

165,531

School District contributions subsequent to the measurement date

133,220,772

-

215,126

-

Total

$

257,975,981 $

28,051,846 $

403,816 $

200,350

The School District contributions subsequent to the measurement date 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, 2020. 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

2020 2021 2022 2023 2024

$

66,762,005 $

39,122,223

(14,775,816)

4,279,995

1,314,956

80,638 (18,860) (57,881) (15,557)
-

- 33 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

Actuarial assumptions: The total pension liability as of June 30, 2018 was determined by an actuarial valuation as of June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement.
Teachers Retirement System:

Inflation Salary increases Investment rate of return

2.75%
3.25% 9.00%, average, including inflation
7.50%, net of pension plan investment expense, including inflation

Post-retirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service retirements and dependent beneficiaries. The RP-2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used for death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.

The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

Employees' Retirement System:

Inflation

2.75%

Salary increases

3.25% 7.00%, including inflation

Investment rate of return

7.30%, net of pension plan investment expense, including inflation

Postretirement mortality rates were based on the RP-2000 Combined Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB and set forward two years for both males and females for service retirements and dependent beneficiaries. The RP-2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB and set back seven years for males and set forward three years for females was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-12% less than the actual number of deaths that occurred during the study period for service retirements and beneficiaries and for disability retirements. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.

The actuarial assumptions used in the June 30, 2017 valuation was based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014
Public School Employees Retirement System:

Inflation

2.75%

Salary increases

N/A

Investment rate of return

7.50%, net of pension plan investment expense, including inflation

- 34 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

Postretirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward three years for males and two years for females) for the period after service retirement and for dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward five years for both males and females) was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-11% less than the actual number of deaths that occurred during the study period for healthy retirees and 9-11% less than expected under the selected table for disabled retirees. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.

The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

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

TRS Target Allocation

ERS/PSERS Target allocation

Long-term expected real rate of return*

Fixed Income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks Alternative

30.00% 39.80%
3.70% 1.50% 19.40% 5.60%
-

30.00% 46.20%
1.30% 12.40% 5.10% 5.00%

(0.50)% 9.00%
12.00% 13.50%
8.00% 12.00% 10.50%

Total

100.00%

100.00%

*Rates shown are net of the 2.75% assumed rate of inflation
Discount Rate: The discount rate used to measure the total TRS pension liability was 7.50%. The discount rate used to measure the total ERS and PSERS pension liability was 7.30%. 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.

- 35 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

Sensitivity of the School District'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% and 7.30%, 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% and 6.30%) or 1-percentage-point higher (8.50% and 8.30%) than
the current rate:

Teachers 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

$ 1,592,057,292 $

953,735,293 $

427,725,478

Employees' Retirement System:
School District's proportionate share of the net pension liability

1% Decrease (6.30%)

Current Discount Rate (7.30%)

1% Increase (8.30%)

$

2,149,073 $

1,510,928 $

967,212

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 publicly available at www.trsga.com/publications and http://www.ers.ga.gov/formspubs/formspubs.html.
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 PSERS. Recognizing that PSERS was a limited defined contribution and defined benefit plan which did not provide for 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 8% 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 become available to the employee upon retirement or when the employee reaches age 59.

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

Fiscal Year

Percentage Contributed

Required Contribution

2019 2018 2017

100% 100% 100%

$

4,115,503

$

4,527,384

$

4,627,343

NOTE 14: TAX ABATEMENTS

DeKalb County Development Authority enters into property tax abatement agreements with local businesses for the purpose of attracting or retaining businesses within their jurisdictions. The abatements may be granted to any business located within or promising to relocate to DeKalb County.

For the fiscal year ended June 30, 2019, DeKalb County abated property taxes due to the School District on the 2018 tax levy totaling $3,920,187. Included in that amount abated, the following are individual abatement agreements that exceeded 10 percent of the total amount abated:

A 33.5 percent property tax abatement to a residential rental property. The abatement amounted to $524,650.

A 15 percent property tax abatement to a residential and retail rental property. The abatement amounted to $579,268.

- 36 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2019

EXHIBIT "H"

NOTE 15: SUBSEQUENT EVENTS
On September 17, 2020, the $117,500,000 settlement of the Gold lawsuit received final approval from the Superior Court of Dekalb County Georgia. The Gold litigation was a class action lawsuit filed on behalf of certain individuals actively employed by the DeKalb County School District before July 27, 2009 on an annual contract basis. The lawsuit was filed against the School District and the Board in March 2011 over the then Board's 2009 decision to suspend certain employer contributions to a taxsheltered annuity plan. The settlement is reported as a long-term liability on the Statement of Net Position. The principal terms of the settlement are $117,500,000 to be paid out by the School District to the Settlement Administrator over a five-year period as disclosed in the long-term liability note.
In December 2019, a strain of coronavirus (COVID-19) began to spread worldwide, resulting in a severe impact to the United States economy in March 2020. The spread of COVID-19 has had a negative impact on virtually all businesses and individuals which comprise the tax base of all levels of government. The extent of this impact is uncertain but is expected to have negative results on financial operations, however the impact cannot be reasonably estimated at this time.

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DEKALB COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA
FISCAL YEARS ENDED JUNE 30

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 payroll School District's proportionate share of the net pension liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability

2019

2018

2017

2016

2015

5.138067%

5.018739%

4.854299%

4.712696%

4.712930%

$ 953,735,293 $ 932,748,101 $ 1,001,496,009 $ 717,461,169 $ 595,416,542

1,246,448

5,136,236

7,883,562

5,869,616

4,485,967

$ 954,981,741 $ 613,539,685

$ 937,884,337 $ 579,389,485

$ 1,009,379,571 $ 536,892,957

$ 723,330,785 $ 501,452,947

$ 599,902,509 $ 483,104,965

155.45% 80.27%

160.99% 79.33%

186.54% 76.06%

143.08% 81.44%

123.25% 84.03%

This schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available.

- 39 -

DEKALB COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
FISCAL YEARS ENDED JUNE 30

SCHEDULE "2"

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 payroll School District's proportionate share of the net pension liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability

2019

2018

2017

2016

2015

0.036753%

0.043448%

0.036208%

0.037839%

0.038132%

$ 1,510,928 $ 1,764,569 $ 1,712,790 $ 1,533,008 $ 1,430,186

-

-

-

-

-

$ 1,510,928 $ 1,065,707

$ 1,764,569 $ 1,035,482

$ 1,712,790

$

841,877

$ 1,533,008

$

917,547

$ 1,430,186

$

900,182

141.78% 76.68%

170.41% 76.33%

203.45% 72.34%

167.08% 76.20%

158.88% 77.99%

This schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available.

- 40 -

DEKALB COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY
SCHOOL OPEB FUND FISCAL YEAR ENDED JUNE 30

SCHEDULE "3"

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

2019 6.228755% $ 791,655,645

2018 6.123753% $ 860,384,832

$ 791,655,645 $ 552,356,240

$ 860,384,832 $ 531,360,186

143.32% 2.93%

161.92% 1.61%

This schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available.

- 41 -

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

DEKALB COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA
FISCAL YEARS ENDED JUNE 30

SCHEDULE "4"

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

$ 133,220,772 $ 103,010,906 $ 82,226,356 $ 76,015,170 $ 65,941,063 $ 59,325,216 $ 56,336,367 $ 56,477,235 $ 57,198,715 $ 57,802,494

133,220,772

103,010,906

82,226,356

76,015,170

65,941,063

59,325,216

56,336,367

56,477,235

57,198,715

57,802,494

$

-$

-$

-$

-$

-$

-$

-$

-$

-$

-

$ 637,487,717 $ 613,539,685 $ 579,389,485 $ 536,892,957 $ 501,452,947 $ 483,104,365 $ 493,745,552 $ 549,402,309 $ 556,407,731 $ 593,458,300

20.90%

16.79%

14.19%

14.16%

13.15%

12.28%

11.41%

10.28%

10.28%

9.74%

- 42 -

DEKALB COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
FISCAL YEARS ENDED JUNE 30

SCHEDULE "5"

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

Contractually required contributions

$ 215,126 $ 264,402 $ 256,903 $ 208,112 $ 201,493 $ 166,174 $ 104,823 $ 76,992 $

57,962 $

61,212

Contributions in relation to the contractually required contributions

215,126

264,402

256,903

208,112

201,493

166,174

104,823

76,992

57,962

61,212

Contribution deficiency (excess)

$

-$

-$

-$

-$

-$

-$

-$

-$

-$

-

School District's covered payroll

$ 868,144 $ 1,065,707 $ 1,035,482 $ 841,877 $ 917,547 $ 900,182 $ 723,163 $ 689,713 $ 587,676 $

619,629

Contributions as a percentage of covered payroll

24.78%

24.81%

24.81%

24.72%

21.96%

18.46%

14.50%

11.16%

9.86%

9.88%

- 43 -

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

DEKALB COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS SCHOOL OPEB FUND
FISCAL YEARS ENDED JUNE 30

SCHEDULE "6"

2019

2018

2017

$ 33,802,837 $ 32,283,037 $ 31,929,735

33,802,837

32,283,037

31,929,735

$

-$

-$

-

$ 587,544,464 $ 552,356,240 $ 531,360,186

5.75%

5.84%

6.01%

This schedule is intended to show information for the last 10 fiscal years. Additional years will be displayed as they become available.

- 44 -

DEKALB COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
FISCAL YEAR ENDED JUNE 30, 2019

SCHEDULE "7"

Teachers Retirement System
Changes of assumptions: On November 18, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases. The expectation of retired life mortality was changed to RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males).
In 2010 and later, the expectation of retired life mortality was changed to the RP-2000 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.
Employees' Retirement System
Changes of benefit terms: A new benefit tier was added for members joining the System on and after July 1, 2009. A one-time 3% payment was granted to certain retirees and beneficiaries effective July 2016. A one-time 3% payment was granted to certain retirees and beneficiaries effective July 2017.
Changes of assumptions: On March 15, 2018, the Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date.
On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal and salary increases.
Public School Employees Retirement System
Changes of assumptions: On March 15, 2018, the Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for June 30, 2017 actuarial valuation. In addition, based on the Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date.
On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement and withdrawal. The expectation of retired life mortality was changed to the RP2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward 3 years for males and 2 years for females).
In 2010 and later, the expectation of retired life mortality was changed to the RP-2000 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.
School OPEB Fund
Changes of benefit terms: There have been no changes in benefit terms.
Changes of assumptions : June 30, 2017 valuation: the June 30, 2017 actuarial valuation was revised, for various factors, including the methodology used to determine how employees and retirees were assigned to each of the OPEB Funds and anticipated participation percentages. Current and former employees of State organizations (including technical colleges, community service boards and public health departments) are now assigned to the State OPEB fund based on their last employer payroll location: irrespective of retirement affiliation.
The discount rate was updated from 3.58% as of June 30, 2017 to 3.87% as of June 30, 2018.

- 45 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (GAAP BASIS)
GENERAL FUND FISCAL YEAR ENDED JUNE 30, 2019

SCHEDULE "8"

REVENUES Property taxes Other taxes State funds Federal funds Charges for services Investment income 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 (deficiency) of revenues over expenditures
OTHER FINANCING SOURCES (USES) Operating transfers from other funds Sale or compensation for loss of fixed assets Operating transfers to other funds
Total other financing sources (uses)
Net change in fund balances
FUND BALANCES, beginning of year

Budget Original

Final

$ 547,583,375 10,100,000
537,947,487 114,882,664
4,749,880 2,015,000 44,341,917

$ 547,583,375 10,100,000
547,217,988 158,162,106
4,749,880 2,015,000 44,818,867

1,261,620,323

1,314,647,216

Actual
$ 548,238,900 12,672,617
537,337,697 128,696,496
15,760,217 3,495,027
20,632,270
1,266,833,224

Variance With Final Budget

$

655,525

2,572,617

(9,880,291)

(29,465,610)

11,010,337

1,480,027

(24,186,597)

(47,813,992)

757,618,869
81,252,305 50,290,770 13,864,326 21,223,867 69,987,455
9,202,626 110,883,580
66,555,187 23,660,761
1,079,897 1,054,249 63,855,745
10,000
1,270,539,637
(8,919,314)

787,997,674
85,323,254 54,106,946 13,879,582 22,747,493 70,187,256
9,663,322 113,768,696
67,933,890 23,849,093
1,692,167 1,054,249 63,793,245
10,000
1,316,006,867
(1,359,651)

782,427,836
71,981,049 36,811,964 13,907,028 21,059,573 70,228,941
7,604,338 111,584,753
66,540,944 21,883,989
1,215,091 1,570,517 61,851,364
-
1,268,667,387
(1,834,163)

4,506,856 -
(23,386,856)
(18,880,000)
(27,799,314)
122,796,262

4,496,856 -
(24,395,809)
(19,898,953)
(21,258,604)
115,191,754

28,781
-
28,781
(1,805,382)
131,388,559

5,569,838
13,342,205 17,294,982
(27,446) 1,687,920
(41,685) 2,058,984 2,183,943 1,392,946 1,965,104
477,076 (516,268) 1,941,881
10,000
47,339,480
(474,512)
(4,496,856) 28,781
24,395,809
19,927,734
19,453,222
16,196,805

FUND BALANCES, end of year

$ 94,996,948 $ 93,933,150 $ 129,583,177 $ 35,650,027

Notes to the Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual
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

- 46 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FISCAL YEAR ENDED JUNE 30, 2019

SCHEDULE "9"

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 U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Grants to States Preschool Grants Preschool Grants
Total Special Education Cluster
Other Programs Direct STEM is LIT(eracies) Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States Career and Technical Education - Basic Grants to States Charter Schools Education for Homeless Children and Youth Education for Homeless Children and Youth English Language Acquisition State Grants English Language Acquisition State Grants Migrant Education - State Grant Program Student Support and Academic Enrichment Program Supporting Effective Instruction State Grants Supporting Effective Instruction State Grants Title I Grants to Local Educational Agencies Title I Grants to Local Educational Agencies
Total Other Programs
Total U. S. Department of Education
Justice, U. S. Department of Direct Edward Byrne Memorial Justice Assistance Grant Program
Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program Department of the Army R.O.T.C. Program Department of the Navy R.O.T.C. Program
Total U. S. Department of Defense

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

10.553 10.555

195GA324N1099 $ 195GA324N1099

11,115,165 49,125,456
60,240,621

84.027 84.027 84.173 84.173

H027A170073 H027A180073 H173A170081 H173A180081

24.215G
84.048 84.048 84.282 84.196 84.196 84.365 84.365 84.011 84.424A 84.367 84.367 84.010 84.010

S215G180150
V048A170010 V048A180010 U282A170016 S196A170011 S196A180011 S365A170010 S365A180010 S011A180011 S424A170011 S367A170001 S367A180001 S010A170010 S010A180010

16.738

176,260 15,252,905
137,449 276,954
15,843,568
18,631
61,057 1,063,642
61,539 31,237 43,520 588,434 1,165,050 20,068 764,413 1,392,403 2,513,301 13,142,717 20,867,510
41,733,522
57,577,090
34,492
895,614
199,752
1,199,096
2,294,462

Total Expenditures of Federal Awards

$

120,146,665

Notes to the Schedule of Expenditures of Federal Awards
Note 1. Basis of Presentation
The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of the DeKalb County Board of Education (the "Board") under programs of the federal government for the year ended June 30, 2019. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position or changes in net position of the Board.
Note 2. Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.
Note 3. Indirect Cost Rate

The Board has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance.

See notes to the basic financial statements

- 47 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE
FISCAL YEAR ENDED JUNE 30, 2019

SCHEDULE "10"

AGENCY / FUNDING
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, QBE Kindergarten Early Intervention Program Primary Grades Program (1-3) Primary Grades Early Intervention Program (1-3) Upper Elementary Grades Program (4-5) Upper Elementary Grades Early Intervention Program (4-5) Middle School Program (6-8) High School General Education Program (9-12) Career Technical and Agricultural Education (9-12) Program (CTAE) Students with Disabilities Gifted Student - Category VI Remedial Education Program Alternative Education Program English For Speakers Of Other Languages (Esol) Media Centers Twenty Days Additional Instruction, QBE Staff and Professional Development Principal Staff and Professional Development Indirect Cost Central Administration Cost-School Administration Cost-Facilities Maintenance and Operations State Health Benefit Plan Employer Holiday QBE Contra Account Categorical Grants Pupil Transportation Nurses Vocational Supervisors Food Services Career, Technical and Agricultural Education (CTAE) Other State Programs Preschool Disability Services Other Programs Charter Schools - Facilities Connections For Classrooms GNETS State Grant Governor's Office of Student Achievement Pupil Transportation - State Bonds Math and Science Supplement Rule 10 Special Education State Grant Tuition For Multi-Handicapped Children
Georgia State Financing and Investment Commission Reimbursement on Construction Projects
Office of Treasury and Fiscal Services Public School Employees Retirement
Georgia Department of Public Health Shape School Physical Activity and Nutrition Grant

GOVERNMENTAL FUND TYPES

GENERAL

PROJECTS

FUND

FUND

TOTAL

$ 11,535,542 $

-

$

11,535,542

24,159,512 22,938,493 68,769,020 46,143,015 32,690,628 28,304,031 71,277,726 64,442,050 15,451,162 86,744,775 36,429,655
4,731,767 5,033,739 35,734,404 13,599,295 3,917,944 2,405,188
40,501
10,965,963 26,238,898 29,751,413 (6,117,930) (116,710,663)
4,721,716 2,126,422
57,190 1,343,864
780,078
1,916,407
222,420 1,556,309 2,758,321
22,591 620,540 767,459 139,430
98,588
-
1,724,234
6,000

-
-
-
-
-
18,901,147
-
-

24,159,512 22,938,493 68,769,020 46,143,015 32,690,628 28,304,031 71,277,726 64,442,050 15,451,162 86,744,775 36,429,655
4,731,767 5,033,739 35,734,404 13,599,295 3,917,944 2,405,188
40,501
10,965,963 26,238,898 29,751,413 (6,117,930) (116,710,663)
4,721,716 2,126,422
57,190 1,343,864
780,078
1,916,407
222,420 1,556,309 2,758,321
22,591 620,540 767,459 139,430
98,588
18,901,147
1,724,234
6,000

$ 537,337,697

$ 18,901,147

$

556,238,844

See notes to the basic financial statements

- 48 -

(This page left intentionally blank)

PROJECT
2012 Sales Tax - Authorized Projects
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 HS4 and Stone Mountain HS 9. Replacement of Austin ES, Fernbank ES, Gresham Park ES, Pleasantdale ES, Peachcrest 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 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)

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF
SPECIAL PURPOSE LOCAL OPTION SALES TAX PROCEEDS FISCAL YEAR ENDED JUNE 30, 2019

SCHEDULE "11"

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

TOTAL COMPLETION
COST

ESTIMATED COMPLETION
DATE

$

2,342,500.00

$

10,529,895.73

$

8,190,241.09

9,557,400.00

10,532,998.65

-

84,892,200.00

113,743,432.17

6,696,036.27

2,342,500.00

2,781,397.48

533,094.47

9,932,200.00

8,004,210.00

225,135.00

2,717,300.00

2,682,284.00

1,088,060.56

4,029,100.00

11,127,167.00

-

11,056,600.00

35,525,148.58

1,039,211.70

2,339,654.64 10,532,998.65 82,240,402.84
1,889,451.21 10,000.00 55,332.19
310,896.41
30,855,953.68

$ 10,529,895.73 10,532,998.65 -
-

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 36,261,900.00 9,463,700.00 1,592,900.00

167,426,565.29 19,245,872.25 22,065,648.16 54,992,632.00 42,592,213.00 2,902,294.25 4,221,328.66 2,292,719.24 32,821,546.89 12,800,247.61 2,252,530.33

22,240,713.03 32,525.91 29,225.00
4,132,544.51 26,367,108.81
153,447.70
-

96,330,259.73 19,213,346.34 22,036,423.16 29,288,625.46
7,871,655.19 2,902,294.25 4,067,880.96 2,292,719.24 32,821,546.89 12,800,247.61 2,252,530.33

19,245,872.25 22,065,648.16
2,902,294.25 4,221,328.66 2,292,719.24 32,821,546.89 12,800,247.61 2,252,530.33

29,925,000.00 $ 475,000,000.00

86,256,823.99 $ 644,796,955.28

786,510.92 $ 71,513,854.97

75,902,465.08 $ 436,014,683.86

$ 119,665,081.77

Completed Completed
Jul 2020 Sep 2019 Oct 2020 Jul 2019 Dec 2020
Dec 2020
Dec 2020 Completed Completed
Dec 2021 Sep 2019 Completed Completed Completed Completed Completed Completed
Jun 2022

- 50 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF
SPECIAL PURPOSE LOCAL OPTION SALES TAX PROCEEDS FISCAL YEAR ENDED JUNE 30, 2019

SCHEDULE "11" (CONTINUED)

PROJECT
2017 Sales Tax - Authorized Projects
(1) Making of site, facility and technology improvements deemed necessary to improve safety and security, such as enhancing surveillance systems, fire alarm systems, fire sprinkler installation, perimeter fencing, etc. at some or all of the DeKalb County School District (DCSD) schools and facilities;
(2) Adding to, modifying, replacing, reconfiguring schools and/or creating new schools and/or facilities to accommodate current and future student enrollment, address major facility conditions, develop early childhood centers, enhance regional support of schools, and accommodate expanded new programmatic needs, and acquiring land for constructing and equipping new and/or replacement schools/facilities, or equivalent facility capacity, including, but not limited to, site preparation and the demolition of all or portions of existing structures and/or acquiring leasehold purchasing of facilities/properties as needed based on DCSD's determination of need priorities;
(3) Adding to, renovating, modifying, reconfiguring, equipping, upgrading, supplementing, acquiring, replacing, and installing capital improvements for various existing and new schools, buildings and facilities (including schools, buildings and facilities to be constructed pursuant to this resolution, once completed and including any site preparation and demolition of existing structures if necessary) e.g., roofing, plumbing, wiring, painting, water piping, HVAC, making athletic field and physical education facility upgrades and improvements, ADA renovations, infrastructure improvements, repaving, restroom facilities, systems for environmental and air quality control, physical education facilities, kitchens, improvements to comply with health, safety and applicable building codes, traffic control and optimization, parking and parking capacity, stormwater management facilities, and program-driven modifications, as needed based on the DCSD's determination of need priorities at some or all of the DCSD schools and facilities;
(4) Making technology improvements, by acquiring, replacing, purchasing, installing, upgrading or supplementing technology including, but not limited to technology that supports and/or enhances instruction, digital communication technology, enhanced school security solutions, wireless technology, enterprise content management solutions, replacement and/or enhancement of technology/systems in support of an Enterprise Resource Planning (ERP) upgrade, data storage systems, telecommunication systems, digital records retention, technology hardware, software, and related infrastructure at some or all of the DCSD schools and facilities, as needed;
(5) Replacing, purchasing, upgrading, refurbishing or supplementing school buses and support vehicles and other capital equipment as needed including, but not limited to items such as desks, chairs, tables, instructional equipment, band equipment, kitchen equipment, waste compactors, portable classroom/modular buildings, custodial equipment, grounds equipment, etc. at some or all DCSD schools and facilities;
(6) and the expenses incidental to accomplishing the Dekalb projects including, but not limited to, implementation expenses, management expenses, and legal expenses.

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT
YEAR (3)

AMOUNT EXPENDED
IN PRIOR YEARS (3)

TOTAL COMPLETION
COST

$

12,872,000.00

$

12,872,000.00

$

-

$

-

$

-

298,180,000.00

311,601,132.00

19,528,844.73

23,791,734.95

-

96,948,000.00

96,948,000.00

2,518,330.81

1,045,287.66

-

65,000,000.00

65,000,000.00

18,851,837.25

29,329,251.93

-

40,000,000.00

40,075,000.00

9,751,288.87

14,355,053.95

-

48,000,000.00

174,503,868.00

9,434,605.79

7,780,299.66

-

561,000,000.00

701,000,000.00

60,084,907.45

76,301,628.15

-

ESTIMATED COMPLETION
DATE Sep 2024
May 2023
May 2024
Jan 2023 Aug 2022 Sep 2024

$ 1,036,000,000.00

$ 1,345,796,955.28

$ 131,598,762.42

(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.

$ 512,316,312.01

$ 119,665,081.77

See notes to the basic financial statements.

- 51 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education
and Superintendent and Members of the Dekalb County Board of Education
Report on Compliance for Each Major Federal Program
We have audited the Dekalb County Board of Education (School District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2019. The School District'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 federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the School District'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 the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the School District's compliance.

Basis for Qualified Opinion on Child Nutrition Cluster
As described in the accompanying Schedule of Findings and Questioned Costs, the School District did not comply with requirements regarding Child Nutrition Cluster as described in item FA 2019-001 for Equipment and Real Property. Compliance with such requirements is necessary, in our opinion, for the School District to comply with requirements applicable to that program.
Qualified Opinion on Child Nutrition Cluster
In our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the School District complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on Child Nutrition Cluster for the year ended June 30, 2019.
Unmodified Opinion on the Other Major Federal Program
In our opinion, the School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its other major federal program identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs for the year ended June 30, 2019.
Other Matters
The School District's response to the noncompliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
Report on Internal Control over Compliance
Management of the School District 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 the School District'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 the Uniform Guidance, 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 School District's internal control over compliance.
Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph 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. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be a material weakness.
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. We consider the deficiency in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as item FA 2019-001, to be a material weakness.
The School District's response to the internal control over compliance findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,

October 16, 2020

Greg S. Griffin State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400

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

The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Education
and Superintendent and Members of the Dekalb County Board of Education
We have audited, in accordance with the 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 the Dekalb County Board of Education (School District), as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements, and have issued our report thereon dated October 16, 2020.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the School District'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 School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph 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 have not been identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control that we consider to be a material weakness and a significant deficiency.
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. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs as item FS 2019-001 to be a material weakness.

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. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs as item FS 2019-002 to be a significant deficiency.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School District'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.
School District's Response to Findings
The School District's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District'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 School District'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 School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,

October 16, 2020

Greg S. Griffin State Auditor

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

DEKALB COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2019

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 6441-13-02 Control Category: Internal Control Impact: Compliance Impact:

Capital Asset Maintenance Capital Assets Material Weakness None

Finding Status:

Unresolved See Corrective Action/Responses

Management concurs with this finding. The IT and Finance Division has partially implemented a new Financial Management Information System (FMIS), MUNIS, which when completed will ensure that capital assets will be tracked and reported properly.

Estimated Completion Date: June 30, 2021

Contact Person: Mrs. Masana Mailliard, Interim CFO Telephone: (678) 676-0446 E-mail: Masana_Mailliard@dekalbschools.ga.org

FS 2014-002 Control Category: Internal Control Impact: Compliance Impact:

Capital Asset Maintenance Capital Assets Significant Deficiency None

Finding Status:

Unresolved See Corrective Action/Responses

Management concurs with this finding. The IT and Finance Division has partially implemented a new Financial Management Information System (FMIS), MUNIS, which when completed will ensure that capital assets will be tracked and reported properly.

Estimated Completion Date: June 30, 2021

Contact Person: Mrs. Masana Mailliard, Interim CFO Telephone: (678) 676-0446 E-mail: Masana_Mailliard@dekalbschools.ga.org

FS 2015-001 Control Category: Internal Control Impact: Compliance Impact:

Inadequate Controls over Capital Assets Capital Assets Significant Deficiency None

Finding Status:

Unresolved See Corrective Action/Responses

Management concurs with this finding. The IT and Finance Division has partially implemented a new Financial Management Information System (FMIS), MUNIS, which when completed will ensure that capital assets will be tracked and reported properly.

Estimated Completion Date: June 30, 2021

Contact Person: Mrs. Masana Mailliard, Interim CFO Telephone: (678) 676-0446 E-mail: Masana_Mailliard@dekalbschools.ga.org

- 1 -

DEKALB COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2019

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2016-001 Control Category: Internal Control Impact: Compliance Impact:

Controls over Capital Asset Capital Assets Significant Deficiency None

Finding Status:

Unresolved See Corrective Action/Responses

1) The Finance Division conducted a survey of potential intangible assets in order to address the capitalization policy and will amend the School District's capitalization policy to include a threshold to record intangible assets.
2) The School District is currently addressing the controls over capital assets and will implement additional monitoring, analysis and reporting of capital projects through additional personnel as well as the application of the new Financial Management Information System (FMIS), MUNIS. The new FMIS includes a project ledger to assist with capital assets that will enable improved tracking to ensure reporting accuracy and appropriate adjustments are made, as necessary.

Estimated Completion Date: June 30, 2021

Contact Person: Mrs. Masana Mailliard, Interim CFO Telephone: (678) 676-0446 E-mail: Masana_Mailliard@dekalbschools.ga.org

FS 2017-001 Control Category: Internal Control Impact Compliance Impact

Controls over Financial Reporting Financial Reporting Material Weakness None

Finding Status:

Partially Resolved See Corrective Action/Responses

Management agrees with this finding. Dekalb County School District has partially implemented a new financial system, MUNIS, and a number of new processes related to financial reporting, that will help resolve the financial reporting finding. Finance has hired a Capital Asset Manager to help resolve some of the challenges related to the Capital Asset area. Dekalb County School District also contracted with a new Financial Statement preparer to assist with the completion of the fiscal year 2018 and fiscal year 2019 Financial Statements.

Estimated Completion Date: June 30, 2021

Contact Person: Mrs. Masana Mailliard, Interim CFO Telephone: (678) 676-0446 E-mail: Masana_Mailliard@dekalbschoolsga.org

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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, 2019

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2017-002 Control Category Internal Control Impact: Compliance Impact:

Controls over Capital Assets Capital Assets Significant Deficiency None

Finding Status:

Partially Resolved See Corrective Action/Responses

Finance has hired a Capital Asset Manager to help resolve some of the challenges related to the Capital Asset area. Finance is also in the process of going live in a new capital asset module within the MUNIS ERP system, which will help resolve this.

Estimated Completion Date: June 30, 2021

Contact Person: Mrs. Masana Mailliard, Interim CFO Telephone: (678) 676-0446 E-mail: Masana_Mailliard@dekalbschoolsga.org

FS 2018-001 Control Category: Internal Control Impact Compliance Impact

Controls over Financial Reporting Financial Reporting Material Weakness None

Finding Status:

Unresolved See Corrective Action/Responses

Management agrees with this finding. Dekalb County School District has partially implemented a new financial system, MUNIS, and a number of new processes related to financial reporting, that will help resolve the financial reporting finding. Finance has hired a Capital Asset Manager to help resolve some of the challenges related to the Capital Asset area. Dekalb County School District also contracted with a new Financial Statement preparer to assist with the completion of the fiscal year 2020 Financial Statements.

Estimated Completion Date: June 30, 2021

Contact Person: Mrs. Masana Mailliard, Interim CFO Telephone: (678) 676-0446 E-mail: Masana_Mailliard@dekalbschoolsga.org

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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, 2019

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2018-002 Control Category Internal Control Impact: Compliance Impact:

Controls over Capital Assets Capital Assets Significant Deficiency None

Finding Status:

Unresolved See Corrective Action/Responses

Finance has hired a Capital Asset Manager to help resolve some of the challenges related to the Capital Asset area. Finance is also in the process of going live in a new capital asset module within the MUNIS ERP system, which will help resolve this.

Estimated Completion Date: June 30, 2021

Contact Person: Mrs. Masana Mailliard, Interim CFO Telephone: (678) 676-0446 E-mail: Masana_Mailliard@dekalbschoolsga.org

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA-2016-001 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Costs:

Controls over Equipment Equipment and Real Property Management Significant Deficiency Nonmaterial Noncompliance U.S. Department of Agriculture Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) 16165GA324N1099 None Identified

Finding Status:

Unresolved See Corrective Action/Responses

Management concurs with this finding. The School Nutrition Department (SNS) is in the process of implementing new procedures to strengthen the equipment records and ensure complete and accurate tracking and reporting in accordance with all applicable federal, state, and local requirements. Additionally, the SNS department will create a new position dedicated to management and oversight of equipment and real property to ensure effective internal control processes, including performance of an annual inventory.

Estimated Completion Date: June 30, 2021

Contact Person: Mrs. Masana Mailliard, Interim CFO Telephone: (678) 676-0446 E-mail: Masana_Mailliard@dekalbschoolsga.org

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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, 2019

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA 2017-001 Compliance Requirement: Internal Control Impact : Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Costs:

Controls over Equipment Equipment and Real Property Management Significant Deficiency Nonmaterial Noncompliance U.S. Department of Agriculture Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) 17175GA324N1099, 17175GA324N1100 None Identified

Finding Status:

Unresolved See Corrective Action Responses

The School Nutrition Program has taken the following steps in resolving this finding: 1) Annual Equipment Inventory counts will be conducted by the School Nutrition Manager each April; 2) A new position, Kitchen Equipment Specialist, has been created to monitor District-wide kitchen inventory equipment. This position was filled in May 2020; and 3) Increased collaboration with the Finance department to determine accurate inventory listings.

Estimated Completion Date: June 30, 2021

Contact Person: Mrs. Masana Mailliard, Interim CFO Telephone: (678) 676-0446 E-mail: Masana_Mailliard@dekalbschoolga.org

FA 2017-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs:

Controls over Procurement and Suspension and Debarment Procurement and Suspension and Debarment Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education Special Education Cluster (CFDA 84.027 and 84.173) H027A150073, H027A160073, H173A150081, H173A160081 None Identified

Finding Status:

Partially Resolved See Corrective Action/Responses

Procedures were updated to check suspension and debarment each semester.

Estimated Completion Date: June 30, 2021

Contact Person: Mrs. Masana Mailliard, Interim CFO Telephone: (678) 676-0446 E-mail: Masana_Mailliad@dekalbschoolsga.org

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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, 2019

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA 2018-001 Compliance Requirement: Internal Control Impact : Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Costs:

Controls over Equipment Equipment and Real Property Management Significant Deficiency Nonmaterial Noncompliance U.S. Department of Agriculture Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) 18185GA324N1099, 18185GA324N1100 None Identified

Finding Status:

Unresolved See Corrective Action Responses

The School Nutrition Program has taken the following steps in resolving this finding: 1) Annual Equipment Inventory counts will be conducted by the School Nutrition Manager each April; 2) A new position, Kitchen Equipment Specialist, has been created to monitor District-wide kitchen inventory equipment. This position was filled in May 2020; and 3) Increased collaboration with the Finance department to determine accurate inventory listings.

Estimated Completion Date: June 30, 2021

Contact Person: Mrs. Masana Mailliard, Interim CFO Telephone: (678) 676-0446 E-mail: Masana_Mailliard@dekalbschoolga.org

FA 2018-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Numbers: Questioned Costs:

Controls over Procurement and Suspension and Debarment Procurement and Suspension and Debarment Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education Special Education Cluster (CFDA 84.027 and 84.173) H027A160073, H027A170073, H173A170081 None Identified

Finding Status:

Unresolved See Corrective Action/Responses

Procedures were updated to check suspension and debarment each semester.

Estimated Completion Date: June 30, 2021

Contact Person: Mrs. Masana Mailliard, Interim CFO Telephone: (678) 676-0446 E-mail: Masana_Mailliad@dekalbschoolsga.org

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SECTION IV FINDINGS AND QUESTIONED COSTS

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2019

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

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

Unmodified

Internal control over financial reporting:

Material weakness identified?

Yes

Significant deficiency identified?

Yes

Noncompliance material to financial statements noted:

No

Federal Awards

Internal Control over major programs:

Material weakness identified?

Yes

Significant deficiency identified?

No

Type of auditor's report issued on compliance for major programs: Child Nutrition Cluster Supporting Effective Instruction State Grants

Qualified Unmodified

Any audit findings disclosed that are required to be reported in

accordance with 2 CFR 200.516(a)?

Yes

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555 84.367

Child Nutrition Cluster Supporting Effective Instruction 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

- 1 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2019

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2019-001 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding:

Controls over Financial Reporting Financial Reporting Material Weakness None FS 2018-001, 2017-001

Description: The School District did not have adequate controls in place over the financial statement reporting process to ensure all required activity was correctly included in the financial statement information presented for audit. The original financial statements, as presented for audit, contained material and significant errors and omissions.

Criteria: Management is responsible for having adequate controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). The School District's internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills, and experience to prepare GAAP based financial statements and include all disclosures as required by the Governmental Accounting Standards Board (GASB).
GASB Statement No. 34, Basic Financial Statements Management's Discussion and Analysis for State and Local Governments (Statement), requires governments to present government-wide and fund financial statements as well as summary reconciliation of the (a) total governmental funds balances to the net position of governmental activities in the Statement of Net Position, and (b) total changes in governmental fund balances to the change in the net position of governmental activities in the Statement of Activities. In addition, the statement requires information about the government's major and nonmajor funds in the aggregate, to be provided in the fund financial statements.
Chapter II 2 Annual Financial Reporting of the Financial Management for Georgia Local Units of Administration provides that School Districts must prepare their financial statements in accordance with generally accepted accounting principles.

Condition: The following errors and omissions were noted in the School District's financial statements and note disclosures as presented for audit:

School activity agency account balances for cash and funds held for others were understated by $56,866 due to the financial statements not being properly adjusted for the current year activity. An adjustment was proposed by the auditor and accepted by the School District to correct this error.
The government-wide financial statements account balances for cash, expenses and charges for services revenue were understated by $613,958, $13,077,738, and $13,691,696, respectively, due to the financial statements not being properly adjusted for the school activity governmental fund. The general fund account balances for cash, expenditures, and charges for services revenue were understated by $613,958 and $13,077,738, and $13,691,696, respectively. Adjustments was proposed by the auditor and accepted by the School District to correct these errors.
The principal payment on the QSCB bond was recorded as an interest payment. In the government-wide financial statements, interest on debt was overstated and expense was understated by $5,118,285. For the capital projects fund debt service interest was overstated and debt service principal was understated by $5,118,285. Adjustments were proposed by the auditor and accepted by the School District to correct these errors.
- 2 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2019
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
The IRS QSCB bond interest subsidy receipts were recorded as reductions of interest payments rather than as revenue. In the government-wide financial statements the interest on debt and capital grants revenue were each understated by $2,823,208. For the capital projects fund interest payments and miscellaneous revenue were each understated by $2,823,208. Adjustments were proposed by the auditor and accepted by the School District to correct these errors.
The GO bond interest payments were reported as principal payments. In the government-wide financial statements Interest on debt was understated and expense was overstated by $5,241,000. For the debt service fund debt service interest was understated and debt service principal was overstated by $5,241,000. Adjustments were proposed by the auditor and accepted by the School District to correct these errors.
Material misclassifications were noted in the government-wide financial statements for the various net position accounts. Unrestricted net position, net position restricted for continuation of federal programs, and net position restricted for capital projects were overstated by $99,531,348, $9,397,212, and $46,544,405, respectively. Net position restricted for debt service and net investment in capital assets were understated by $37,646,658 and $117,826,307, respectively. Adjustments were proposed by the auditor and accepted by the School District to correct these errors.
Material misclassifications were noted due to the local government investment pool and five money market accounts being incorrectly reported as investments instead of Cash. In the government-wide financial statements investments were overstated and cash was understated by $305,601,660. For the general fund investments was overstated and cash was understated by $80,536,956. For the capital projects fund investments was overstated and cash was understated by $225,064,704.
In the government-wide financial statements non-depreciable capital assets were overstated by $57,047,186. Depreciable capital assets and expense were understated by $25,092,946 and $31,954,240, respectively, due to errors in construction in progress.
Material errors were noted for the SPLOST schedule due to errors during completion of the schedule by entity personnel. Current estimated costs were understated by $8,087,935.62, amount expended in current year was overstated by $12,269,725.58, amount expended in prior years was understated by $4,388,302.01, and total completion costs were overstated by $532,131,417.23. Adjustments were proposed by the auditor and accepted by the School District to correct these errors.
Material errors were noted for construction in progress (CIP) in the capital asset note due to project detail errors. CIP increases were overstated by $81,326,315 and CIP transfers were overstated by $24,279,129. Adjustments were proposed by the auditor and accepted by the School District to correct these errors.
The current year Teachers Retirement System contributions in the retirement plans note and on the schedule of contributions were understated by $30,347,314. Adjustments were proposed by the auditor and accepted by the School District to correct these errors.
The current year Employees' Retirement System contributions in the retirement plans note and on the schedule of contributions were overstated by $23,948,032. Adjustments were proposed by the auditor and accepted by the School District to correct these errors.
Material errors were noted in categorization of deposits for the deposits, cash equivalents and investments note. The carrying amount was understated by $4,725,022, the bank balance was understated by $5,949,894, collateral held or pledged in the entity's name was overstated by $98,209,571, collateral not in the School District's name was overstated by $48,433,673, uncollateralized deposits were understated by $55,812,808, and Georgia Pledging Pool (State Deposit Program) was understated by $98,518,454. Adjustments were proposed by the auditor and accepted by the School District to correct these errors.
- 3 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2019
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
A complete listing of all financial statement preparation journal entries was not provided to the auditors. In addition, support for some amounts used on the various trial balances was not provided.
Numerous other correction and reclassification entries were proposed by the auditor and accepted by the School District to properly present the School District's financial statements, note disclosures, and supplementary information.
Cause: In discussing this deficiency with the School District, they stated that the cause was a direct result of the lack of review of the financial statements and note disclosures as prepared by their consultant.
Effect or Potential Effect: Material and significant misstatements and misclassifications were included in the financial statements presented for audit. Numerous adjustments were necessary in order for the School District's financial statements to be in conformity with GAAP. The lack of controls and monitoring could impact the reporting of the School District's financial position and results of operations.
Recommendation: The School District should strengthen their internal controls and preparation and review procedures over financial reporting to ensure that the financial statements, including disclosures, presented for audit are complete and accurate. These procedures should be performed by a properly trained individual(s) possessing a thorough understanding of the applicable GAAP, GASB pronouncements and knowledge of the School District's activities and operations. The School District should also consider implementing the use of a review checklist to assist in the review process over the financial statements.
Views of Responsible Officials: We concur with this finding.

FS 2019-002 Control Category: Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding:

Controls over Capital Assets Capital Assets Significant Deficiency None FS 2018-002, FS 2017-002, FS-2016-001, FS-2015-001, FS-2014-002, and FS-6441-13-02

Description: Adequate policies and procedures were not in place to ensure capital assets inventory records were 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:

- 4 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2019
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Significant and other misstatements related to construction projects, including amounts for contracts payable, retainage payable, and unearned executed contracts, and construction in progress additions and transfers, were noted.
Other misstatements related to capital asset additions were noted. This deficiency includes three current year asset additions that were found to be prior period expenses, as well as additions that were transferred from construction in progress to buildings and improvements prior to the last pay application and certificate of completion.
Buses listed on the capital asset listing were not depreciated according to the School District's estimated useful life within its capitalization policies resulting in an overstatement of accumulated depreciation and an understatement of capital assets by $1,011,147.
The School District has not formally adopted a capitalization policy to include a useful life in recording intangible assets in accordance with Governmental Accounting Standards Board Statement No. 51, Accounting and Reporting for Intangible Assets.
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.
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 execute its plans to replace legacy systems and design and implement controls over capital assets to ensure (1) an ongoing analysis of capital projects is maintained and (2) capital asset inventory records are reviewed for accuracy and appropriate adjustments are made as necessary.
Views of Responsible Officials: We concur with this finding.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA 2019-001 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Costs: Repeat of Prior Year Finding:

Controls over Equipment Equipment and Real Property Management Material Weakness Material Noncompliance U.S. Department of Agriculture Georgia Department of Education Child Nutrition Cluster (CFDA 10.553 and 10.555) 195GA324N1099 None Identified FA 2018-001, FA 2017-001, and FA 2016-001

Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Child Nutrition Cluster.

- 5 -

DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2019

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Criteria: 2 CFR 200.313 (d)(1) states, "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date, and cost of the property, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property". In addition, 2 CFR 200.313 (d)(2) states, "A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years".
Condition: The School District did not maintain an equipment listing for the Child Nutrition Cluster.
Cause: Child Nutrition Cluster management was unable to generate an equipment listing. In discussing the deficiency with management, they state that communication difficulties exist between the responsible parties of purchasing equipment, labeling equipment, performance of the annual inventory, and recording equipment items on the listings. Additionally, personnel responsible for equipment record keeping found that equipment purchases were often difficult to accurately distinguish from other purchase types due to insufficient descriptions in the source data.
Effect or Potential Effect: Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or federal funds. Additionally, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance.
Recommendation: The School District should develop and maintain an equipment listing that reflects all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of Federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. In addition, management should implement controls to ensure that a complete physical inventory of equipment is performed, and the results are reconciled back to the equipment listing at least once every two years.
Views of Responsible Officials: We concur with this finding.

FA 2019-002 Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number:
Questioned Costs: Repeat of Prior Year Finding:

Inadequate Controls over Procurement, Suspension and Debarment Procurement, Suspension and Debarment Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education 84.027, 84,173 Special Education Cluster H027A170073 Special Education Grants to States H027A180073 Special Education Grants to States H173A170081 Special Education Preschool Grants H173A180081 Special Education Preschool Grants None Identified FA 2018-002 and FA 2017-002

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DEKALB COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2019
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over procurement as it relates to Special Education Cluster.
Criteria: 2 CFR 200.303(a) states that the non-federal entity must "establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." Provisions included in 2CFR200.320(b) provide that if small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.
Condition: A sample of ten procurement transactions were randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted:
The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for five small purchase expenditures reviewed.
The School District could not provide fiscal year 2019 contracts for vendors used for three small purchase expenditures reviewed.
The School District could not provide evidence that rate or price quotations were obtained from the vendor used for one small purchase reviewed.
Cause: In discussing the deficiencies with management, they stated that internal control procedures related to procurement were not being followed appropriately. In addition, management did not adequately monitor the procurement internal control procedures.
Effect or Potential Effect: Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of Federal funds. In addition, this deficiency could lead to the return of grant funds associated with these unallowable expenditures. Furthermore, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance.
Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately.
Views of Responsible Officials: We concur with this finding.
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SECTION V MANAGEMENT'S CORRECTIVE ACTION