DOUGHERTY COUNTY BOARD OF EDUCATION ALBANY, GEORGIA REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS Russell W. Hinton State Auditor DOUGHERTY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS EXHIBITS BASIC FINANCIAL STATEMENTS DISTRICT-WIDE FINANCIAL STATEMENTS A STATEMENT OF NET ASSETS 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 ASSETS 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 ASSETS FIDUCIARY FUNDS 8 H NOTES TO THE BASIC FINANCIAL STATEMENTS 9 SCHEDULES REQUIRED SUPPLEMENTARY INFORMATION 1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND 29 DOUGHERTY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTION I FINANCIAL SCHEDULES SUPPLEMENTARY INFORMATION 2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 30 3 SCHEDULE OF STATE REVENUE 32 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 34 5 ALLOTMENTS AND EXPENDITURES GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM 37 SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS 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 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS DOUGHERTY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS - SECTIONV MANAGEMENT'S RESPONSES SCHEDULE OF MANAGEMENT'S RESPONSES SECTION I FINANCIAL Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 October 1, 2009 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Dougherty County Board of Education INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Ladies and Gentlemen: We have audited the accompanying financial statements of the governmental activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Dougherty County Board of Education, as of and for the year ended June 30, 2008, which collectively comprise the Board's basic financial statements as listed in the table ofcontents. These financial statements are the responsibility ofthe Dougherty County Board ofEducation's management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Dougherty County Board of Education's discretely presented component unit. Those financial statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for Dougherty County Stadium Authority is based on the report ofother auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Dougherty County Board of Education's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provides a reasonable basis for our opinions. 2008ARL-12X In our opinion, based on our audit and the report ofother auditors, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information ofthe Dougherty County Board ofEducation, as of June 30, 2008, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated October 1, 2009, on our consideration of the Dougherty County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose ofthat report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Management's Discussion and Analysis and the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through xiv and page 29 respectively, are not a required part ofthe basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We and the other auditors have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods ofmeasurement and presentation ofthe required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Dougherty County Board of Education's basic financial statements. The accompanying supplementary information which consist of Schedules 2 through 5, which includes the Schedule of Expenditures of Federal Awards as required by U. S. Office of Management and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied by us and the other auditors in the audit of the basic financial statements, and in our opinion, based on our audit and the report of other auditors, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. Respectfully submitted, ~~~.~~ State Auditor RWH:as 2008ARL-12X DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Management's discussion and analysis of the Dougherty County School District's financial performance provides an overall review of the School District's financial activities for the fiscal year ended June 30, 2008. The intent of this discussion and analysis is to present the School District's overall financial performance. Readers should also review the financial statements and notes to the financial statements to further enhance their understanding of the School District's financial performance. Financial Highlights Financial highlights for fiscal year 2008 are as follows: The School District's financial status continued to improve in fiscal year 2008. Total Net Assets increased more than $10.4 million in fiscal year 2008. The Unrestricted Net Assets deficit balance reported at the end of fiscal year 2007 for Governmental Activities was eliminated by the end of fiscal year 2008. The balance at June 30, 2008, was a positive $2.8 million. Fund balance for the Governmental Funds - General Fund increased $2.9 million in fiscal year 2008. Using the Basic Financial Statements The annual report consists primarily of a series of financial statements and notes to those statements. These statements are organized and presented in a manner intended to assist the reader in understanding the Dougherty County School District as a complete operating entity. System-wide Statements The Statement of Net Assets and Statement of Activities provide information about the School District as a whole using accounting methods similar to those used by industry. The increases and decreases in the School District's net assets are an indicator of whether the School District's financial position is improving or deteriorating. There are many factors that can affect the overall financial condition of the School District such as the School District's property tax base, State and Federal funding, and the condition of buildings and equipment. All of the School District's programs and activities included in the System-wide Statements are reported as Governmental Activities. These include instruction, support services, staff development, operation and maintenance of facilities, pupil transportation, food service, after school programs, school administration, and various others functions. These statements report all assets and liabilities using the accrual basis of accounting. The basis of accounting determines when transactions are reported on the financial statements. The accrual basis of accounting records revenues when they are earned regardless of when payment (cash) is received. Expenditures are recorded at the time the liability is incurred regardless of when the actual payment is made. DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 The Statement of Activities reflects the governmental activities of the School by programs and services and distinguishes the revenue sources for these activities. The statement also helps identify how much local revenue is required to support the School's activities. Fund Financial Statements Fund financial reports provide detail information about the School's major funds. Funds are accounting devices the School District uses to keep track o( general operations, Federal and state grants, building programs, debt payments, worker's compensation claims, and student activity funds. The Dougherty County School District has two major funds - Governmental Funds and Fiduciary Funds. Governmental Funds Most of the School District's financial activities are reported in governmental funds. The fund statements provide more detailed information about the School District's funds, focusing on its most significant "major" funds - not the School District as a whole. These funds record how money flows in and out within the current period, and the reports the balances remaining at yearend available for spending in future periods. The governmental fund statements provide a shortterm view of the School District's general governmental operations and the basic services they provide. This governmental fund information can be used to identify financial resources available for financing educational programs. The differences between governmental activities (reported in the Statement ofNet Assets and the Statement ofActivities) and governmental funds are reconciled in the financial statements. The School District's governmental funds are the General Fund, Capital Projects Fund, and Debt Service Fund. General operations, the school food services, other Federal and State grant programs, the general operating portion of principal accounts, and workers compensation claims are consolidated in the General Fund. Fiduciary Funds The School District is the trustee, or fiduciary, for assets that belong to others. An example is funds belonging to school clubs and organizations whose records are maintained at the individual schools. These funds are generally referred to as "Activity Funds". The School District is responsible for ensuring that the assets recorded in these funds are used only for their intended purposes and only by those to whom the assets belong. The School District excludes these fund activities from the System-wide financial statements because these fund assets cannot be used to finance operations. 11 DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Presentation of Financial Data The next section of this discussion will provide more specific information as reported on the financial statements discussed above. For comparison purposes, this information will be presented for both fiscal year 2007 and fiscal year 2008. Statement of Net Assets (Analysis of the School District as a Whole) As previously stated above, the Statement ofNet Assets presents consolidated financial data for the School District as a whole. Table 1 provides a summary of the School District's net assets for fiscal year 2007 and fiscal year 2008. Assets Current and Other Assets Capital Assets, Net Total Assets Liabilities Current and Other Liabilities Long-Term Liabilities Total Liabilities Table 1 Net Assets (in Thousands) Governmental Activities Fiscal Fiscal Year 2007 Increase/ Year 2008 (Restated) Decrease $ 56,335 213,475 $ 269,810 $ 28,864 213,985 $ 242,849 $ 27,471 -510 $ 26,961 $ 37,362 2,029 $ 39,391 $ 19,519 3,331 $ 22,850 $ 17,843 -1,302 $ 16,541 Net Assets Invested in Capital Assets, Net ofRelated Debt Restricted Unrestricted Total Net Assets $ 212,559 15,040 2,820 $ 230.419 $ 212,440 7,664 -105 $ 219.999 $ 119 7,376 2,925 $ 10.420 The $26.9 million increase in Total Assets is the net result of an increase in Current and Other Assets and a Decrease in Capital Assets. A significant p01tion of the increase reported in Current and Other Assets is due to the cash receipt of $16.0 million from a Tax Anticipation Note issued on June 30, 2008. In prior years, these funds were not received until after the start of the next fiscal year. The receipt of these funds is offset by an equal liability for the Tax Anticipation Note. The decrease in Net Capital Assets is primarily due to the demolition of an old middle school building. The cost of renovating the old school building was determined to be iii DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 too costly and a new building was built in the adjacent lot. The value of the building at the time of the disposal was $2.9 million. These capital projects were funded by a 1 percent special purpose local option sales tax approved by the voters of Dougherty County. All capital projects were part of a long-range facilities plan to upgrade all of the School District's schools and facilities. See Table 5 for an analysis of the increase in Capital Assets. The Tax Anticipation Note issued on the last day of the fiscal year for $16.0 million is a liability to the School District. The Note has a maturity date of December 31, 2008, and is reported as a Current Liability. The Note will be paid from taxes and other available funds received between July, 2008 and December, 2008. Typically, in prior years, this debt was not incurred until after the start of the next fiscal year. The remaining Current Liabilities include, in part, balances due to Contractors and Architects for major capital projects. The decrease in Long-Term Liabilities was primarily due to the elimination of bond debt and payment of capital lease obligations. See Table 6 for complete analysis of the reduction on Long-Term Debt at June 30. Restricted or designated assets are assets that must be used for a specific purpose. No assets were restricted for payment of current bond debt as all bond debt was retired in March, 2008. Restricted assets increased $7.3 million and include funds restricted for bus replacement, $0.1 million; funds restricted for future debt service, $0.8 million; and funds restricted for capital projects, $14.2 million. Unrestricted Net Assets for Governmental Activities increased from a $0.1 million deficit balance at the end of fiscal year 2007 to a $2.8 million positive balance at the end of fiscal year 2008. This can be primarily attributed to the elimination of the long-term bond debt (shown in Table 1 above) and the increase in fund balances for both the General Fund and the District-wide Capital Project Funds. See The School District's Funds below. Statement of Activities Table 2 shows the changes in net assets for fiscal year 2007 and fiscal year 2008 as reported on the Statement of Activities. IV DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Table 2 Change in Net Assets (in Thousands) Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Fiscal Fiscal Year 2007 Increase/ Year 2008 (Restated) Decrease $ 1,662 105,284 282 $ 1,797 $ -135 102,567 2,717 5,433 -5,151 Total Program Revenues $107,228 $109,797 $ -2,569 General Revenues: Taxes Property Taxes For Maintenance and Operations Other Taxes Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous Special Items Loss on Disposal ofBuilding $ 40,108 39 18,657 435 10,557 725 3,084 -2,892 $ 34,880 $ 5,228 39 17,417 529 10,298 1,187 2,965 -813 1,240 -94 259 -462 119 -2,079 Total General Revenues $ 70,713 $ 66,463 $ 4,250 Total Revenues $177,941 $176,260 $ 1,681 Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General and School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central and Other Support Services Operations ofNon-Instructional Services Enterprise Operations Community Services Food Services Interest on Long-Term Debt Total Program Expenses $107,710 4,540 5,867 3,301 11,293 2,017 13,346 5,772 4,231 536 570 8,338 $167,521 $ 97,862 4,612 5,475 3,202 10,770 2,079 12,472 5,712 3,646 468 547 8,159 110 $155,114 $ 9,848 -72 392 99 523 -62 874 60 585 68 23 179 -110 $ 12,407 Increase in Net Assets $ 10.420 $ 21,146 $ -lQ,726 V DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Revenues received from Federal and State grants and allotments comprise the major portion of the increase in Operating Grants and Contributions. An additional $2.7 million in Federal and State grants were received in fiscal year 2008 and were used to fund various instructional programs and staff development costs. Bus replacement funds received from the State are reported as Capital Grants and Contributions. In fiscal year 2008, the School District entered into a four year lease-purchase agreement for the purchase of 12 new buses. These bus replacement funds are used to pay the annual lease-purchase payments. No other Capital Outlay grants were received from the State in fiscal year 2008 which accounts for the $5.1 million decrease in Capital Grants and Contributions and Total Program Revenues decreased $2.6 million. While Program Revenues decreased, General Revenues from taxes and other special items increased $4.2 million. The increase in general revenues such as property taxes and sales taxes totaled $6.4 million but these increases were offset by a decrease in investments earnings and the recording of the loss on disposal of the middle school building. A revaluation of property by the county in calendar year 2007 resulted in the $5.2 million increase in Property Taxes for fiscal year 2008. Although program revenues make up a majority of the revenues, the School District is still dependent upon tax revenues for the funding of governmental activities. Total Program Expenses increased $12.4 million for fiscal year 2008 compared to the previous fiscal year. The greatest increases occurred in the categories of Instruction, Improvement of Instructional Services, General and School Administration, Maintenance and Operation and Central and Other Support Services. A 3 percent state mandated certified salary raise, the high cost of gasoline and utilities, the additional costs of equipping, staffing and supplying a new elementary school and the purchase of new textbooks are the primary factors contributing to the expenditure increase in these categories. Descriptions of Expense Categories Instruction includes activities relating to the teaching of pupils and the interaction between teacher and pupil. Pupil Services are activities designed to assess and improve the well being of students and to supplement the teaching process. Improvement of Instructional Services are activities which are designed primarily for assisting instructional staff in planning, developing, and evaluating the process of providing challenging learning experiences for students. Educational Media Services are activities that direct, manage and operate educational media centers. General Administration establishes and administers policy for operating the local School District. Vl DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 School Administration includes the activities of principals, assistant principals, and clerical staff in administering school operations. Business Administration includes the financial and warehouse operations of the School District. Maintenance and Operation ofPlant Activities involve keeping the schools grounds, buildings, and equipment in an effective working condition. Student Transportation includes activities associated with the transporting of students to and from school, as well as to and from school activities, as provided by state law. Central and Other Support Services include all other support services including personnel services, management information services, and public relations services. Enterprise Operations are activities that are operated in a manner similar to business enterprises where the intent is to recover costs through user charges. This would include athletic events and child nutrition catering activities. Community Services are activities concerned with providing community services to staff or students such as after school programs and student activity accounts. Food Services are activities associated with the preparation and serving of meals for students. The school food service program is funded by Federal and State grants and revenues from the sale of meals to students and teachers. The cost of meals for students and teachers is determined by the School District. Governmental Activities Table 3 shows, for governmental activities, the total cost of services and the net cost of services for both fiscal year 2007 and fiscal year 2008. This information is presented on the Statement of Activities. The Net Cost of Services reflects the balance of costs that were funded by taxes and other General Revenues. Vll DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Table 3 Governmental Activities (in Thousands) Total Cost of Services Fiscal Fiscal Year 2008 Year2007 Net Cost of Services Fiscal Fiscal Year 2007 Year2008 Restated 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 ofNon-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt $ 107,710 $ 97,862 $ 33,482 $ 21,256 4,540 5,867 3,301 1,880 9,413 2,017 13,346 5,772 3,123 1,108 4,612 5,475 3,202 1,719 9,051 2,079 12,472 5,712 2,957 689 2,784 2,371 1,115 -823 4,810 1,960 7,983 3,217 3,093 527 2,840 2,116 961 -947 4,554 1,879 6,969 2,969 2,892 521 536 570 8,338 468 547 8,159 110 536 569 -1,332 441 547 -1, 791 110 Total Expenses $ 167,521 $ 155,114 $ 60,292 $ 45,311 Total Expenses increased $12.4 million and the portion of expenses funded from local taxes increased $15.0 million. Food Service expenses were totally funded by sources other than local taxes. The School District's Funds Table 4 shows the change in fund balance for Governmental Funds as reported on the Statement of Revenues, Expenditures and Changes in Fund Balances. Capital Projects and Debt Service Funds are combined for presentation purposes. vm DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Table 4 Governmental Funds Net Change in Fund Balance (in Thousands) Revenues General Fund Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous $ 40,399 435 92,402 23,722 1,662 360 3,084 Total Revenues $ 162,064 Expenditures Current Instruction Support Services Enterprise Operations Community Services Food Service Operations Capital Outlay Debt Services Principal Interest $ 100,800 49,594 504 570 8,180 373 4 Total Expenditures $ 160,025 Excess of Revenues over (under) Expenditures $ 2,039 Other Financing Sources (Uses) Capital Leases Transfers In/Out $ 981 -139 Total Other Financing Sources (Uses) $ 842 Net Change in Fund Balance $ 2,881 Fund Balances - Beginning (Restated) 1,473 Fund Balances - Ending $ 4,354 Capital Projects and Debt Service Totals $ 40,399 $ 18,657 19,092 92,402 23,722 1,662 365 725 3,084 $ 19,022 $ 181,086 $ 2,993 362 7,096 1,090 ----=2=5 $ 11,566 $ 7,456 $ 103,793 49,956 504 570 8,180 7,096 1,463 29 $ 171,591 $ 9,495 $ 981 $ 139 0 $ 139 $ 981 $ 7,595 $ 10,476 7,356 8,829 $ 14,951 $ 19,305 lX DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Revenues for all governmental funds totaled $181.1 million and expenditures totaled $171.6 million. Revenues were $9.5 million more than expenditures. The fund balance for governmental funds increased from $8.8 million at the beginning of the fiscal year to $19.3 million at June 30, 2008. The fund balance reported for the General Fund increased from $1.5 million at the beginning of the fiscal year to $4.4 million at June 30, 2008. The fund balance reported for the Capital Projects Fund and Debt Service Fund increased from $7.4 million at the beginning of the fiscal year to $15.0 million at June 30, 2008. Capital Projects activities slowed during fiscal year 2008. Projects that were funded by a previously approved special purpose local sales tax referendum were nearing completion in fiscal year 2008. Collections from a newly approved sales tax referendum began in October, 2008, and the School District began receiving those funds in December, 2008. However, major projects planned for those funds were delayed until fiscal year 2009 when the School District received additional start up proceeds from the issuance of a General Obligation Bond. General Fund Budgeting Highlights The School District's budget is prepared according to Georgia law and in compliance with Georgia Department of Education requirements. The School District uses site-based budgeting. The budgeting process is designed to control site budgeted expenditures while providing spending flexibility to site administration. General Fund Budget compared to Actual is presented in the Schedule ofRevenues, Expenditures and Changes in Fund Balances - Budget to Actual Schedule 1.11 11 During fiscal year 2008, the School District amended its general fund budget as needed. The Original Budget approved by the School District's Board in June, 2007, included revenues and expenditures for State and Federal Grants that were known at the time. Amendments are made to the budget to include grants awarded to the School District later in the fiscal year. The receipt of these additional grants requires an increase in revenues and expenditures. This is because grant funds are restricted for a specific purpose which can only be used to fund additional programs. Also, Federal grants cannot be used to fund State mandated programs or replace local funds that previously funded the same activities. Some of the budgeting challenges the School District faced in fiscal year 2008 included a $1.4 million reduction of the State educational formula allotment, and a State mandated 3 percent cost of living increase for teachers, bus drivers and child nutrition workers. The addition of a new elementary school resulted in additional school personnel, equipment, supplies and maintenance labor. High utilities and gasoline prices continued throughout the fiscal year. X DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Capital Assets and Debt Administration Capital Assets Since fiscal year 2002, the School District developed ongoing capital programs that have aggressively sought to upgrade its aging school facilities, many of which are 50 to 60 years old. In fiscal year 2008, capital project activities consisted of the reflooring and installation of heating and cooling systems in all elementary gymnasiums. The renovation of an old school building and conversion to office space for the purpose of housing special education, gifted and other central support staff was also a major focus of capital projects during the year. In December, 2008, the School District began receiving the proceeds from a newly approved Special Purpose Local Option Sales Tax referendum. The approved referendum provided for the renovation of three of the School District's high schools. Most of the work on these projects was delayed until fiscal year 2009 when the School District received additional start up proceeds from the issuance of a General Obligation Bond. However, fiscal year 2008 capital project activities included some preparation work on these renovation projects. At the end of fiscal year 2008 the School District had invested $213.5 million in capital assets. Table 5 compares fiscal year 2007 Capital Asset balances to fiscal year 2008 balances. Table 5 Capital Assets at June 30 (Net of Depreciation, in Thousands) Governmental Activities Fiscal Fiscal Increase/ Year 2008 Year 2007 Decrease Land Construction in Progress Buildings and Building Improvements Equipment $ 9,091 5,432 194,466 4,486 $ 9,057 21,047 179,683 4,198 $ 34 -15,615 14,783 288 Total $ 213A75 $ 213,985 $ -510 Table 5 shows that Capital Assets decreased $0.5 million in fiscal year 2008. The decrease in Construction in Progress is offset by an increase in Buildings and Building Improvements. This represents the completion of a construction project and the opening of a new elementary school. The increase in equipment is primarily due to the lease-purchase of 12 new buses. All construction projects were funded by a 1 percent Special Purpose Local Option Sales Tax approved by the voters of Dougherty County. Bus replacement funds received from the State were used to pay the annual lease-purchase payments for the school buses. Xl DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Debt Table 6 summarizes the Long-Term Debt outstanding at June 30 for fiscal year 2007 and fiscal year 2008. Table 6 Debt at June 30 (in Thousands) Governmental Activities Fiscal Fiscal Increase/ Year 2008 Year 2007 Decrease General Obligation Bonds Compensated Absences Capital Leases $ 1,237 $ -1,237 $ 1,113 1,191 -78 916 308 608 Total $ 2,029 $ 2,736 $==--70"""'7 As shown in Table 6, the debt for General Obligation Bonds was completely eliminated by the end of the fiscal year. The $1.1 million debt for Compensated Absences is the School District's estimated financial obligation for future payments to employees for accumulated unused vacation leave. The increase in Capital Leases is due to the lease-purchase of 12 new buses during the year. The $0.9 million in Capital Lease debt shown for fiscal year 2008 is the balance due to be paid for the buses in future years. Current Financial Issues Like most school systems in Georgia, the School District has faced several financial challenges in the recent years. Such challenges include rising costs in employee benefits, state mandated teacher salary increases, high cost of fuel, utilities and textbooks and the continued state formula allotment reductions. Other challenges include a slow decline in student enrollment (FTE) over the years and a stagnant local tax digest. For several years prior to fiscal year 2004 (2003 tax digest) the School District's millage rate remained unchanged at a rate of 17.70 mills. In fiscal year 2003, the rate was rolled back to 17.55. When faced with mid-year state allotment reductions in both fiscal year 2003 and fiscal year 2004 the Board voted to increase the millage rate to 19 mills. However, the financial statements for the General Fund reported a negative fund balance for fiscal year 2005 and 2006. During this time, the School District also began implementing cost savings measures and spending reductions in all areas of support operations including Student Transportation, Maintenance, General Administration, School Food Service, Business Administration, and Xll DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Central Support Services. As a result, the School District recovered from the negative fund balances by fiscal year 2007 and reported a positive $4.4 million fund balance by the end of fiscal year 2008. Twice, since increasing the millage rate to 19 mills in fiscal year 2004, the Board voted to roll the millage rate back, once in fiscal year 2007 (2006 digest) and again in fiscal year 2008 (2007 digest). The millage rate for fiscal year 2008 (2007 digest) was 18.445 mills. In 2007, the Dougherty County Tax Department undertook a revaluation of the 2007 tax digest. This revaluation was comprehensive and resulted in a larger than average number of appeals and a lawsuit against the Dougherty County Tax Department. As of June 17, 2009, and after most of the appeals have been resolved, the 2008 Net M & 0 digest (fiscal year 2009) remains virtually unchanged in value with 136 parcels representing an assessed value of $20.1 million still outstanding under various stages of appeal. The value of the outstanding parcels in appeal represents approximately 0.90 percent of the 2008 digest. Other items affecting the financial status of the School District is the slow decline in student enrollment (FTE) and the State's most recent announcements of additional reductions in state funding. Student enrollment is a factor in the State's education funding formula. According to the State's funding formula, student enrollment is converted to a "Full Time Equivalent (FTE)" count. As student enrollment, or FTE, decreases, so does State funding. The FTE count for fiscal year 2008 and the five years prior is as follows: Fiscal Year 2004 Fiscal Year 2005 Fiscal Year 2006 Fiscal Year 2007 Fiscal Year 2008 16,362 16,522 16,731 16,376 16,208 In August, 2008, the School District was notified of the decline in State revenues and the resulting additional reduction in educational funding for fiscal year 2009. In total, State funding for fiscal year 2009 was reduced $5.2 million. Expenditure reduction measures were taken in all areas with the purpose of preserving the fiscal year 2008 fund balance. Management has continued to monitor expenditures and identify additional costs savings and reductions on a monthly basis. In March, of fiscal year 2007, the voters of Dougherty County approved the continuation of the I percent sales tax (Sales Tax for Educational Progress), and the issuance of general obligation bonds in the maximum principal amount of $40.0 million. These sales tax revenues will be used to complete the renovation of schools outlined by the long-range facilities plan. Other sales tax projects include the installation of safety and access controls at fifteen schools and various other facilities, and the purchase of musical instruments and other academic/instruction related equipment. In the fall of fiscal year 2009 the School District issued General Obligation Bonds in the amount of$18.0 million. Xlll DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 At the end of fiscal year 2005, the Child Nutrition Program (food services operations) reported a deficit balance of $3.9 million. Operational cost controls implemented by program management, since that time, were successful in significantly reducing the deficit balance to $0.06 million by the end of fiscal year 2008. In October, 2009, the Child Nutrition Program began reporting a positive fund balance. The Dougherty County School District recognizes its responsibilities as a steward of taxpayer dollars and State and Federal funds and strives to emphasize student achievement while maintaining sound fiscal management of those funds. Contacting the School District's Financial Management This management's discussion and analysis report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the School District's finances, and to document the School District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Robert Lloyd, Executive Director of Business and Operations, at the Dougherty County School District, 200 Pine Avenue, Albany, Georgia 31702. You may also email your questions to robert.11oyd@dougherty.kl2.ga.us. XIV DOUGHERTY COUNTY BOARD OF EDUCATION DOUGHERTY COUNTY BOARD OF EDUCATION STATEMENT OF NET ASSETS JUNE 30, 2008 EXHIBIT"A" ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Local Other Inventories Prepaid Items Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation) PRIMARY GOVERNMENT GOVERNMENTAL ACTIVITIES COMPONENT UNIT DOUGHERTY COUNTY STADIUM AUTHORITY $ 18,903,440.54 $ 17,630,494.78 4,810,341.72 11,303,141.56 2,820,621.62 1,714.59 388,249.37 386,568.50 90,513.00 14,523,511.47 198,951,747.40 168,777.00 25,000.00 410,000.00 2,692,128.00 Total Assets $ 269,810,344.55 $====3=,2=95='=90=5=.0=0 LIABILITIES Accounts Payable Salaries and Benefits Payable Payroll Withholdings Payable Short-Term Debt Contracts Payable Retainages Payable Deposits and Deferred Revenues Claims Incurred but not Reported (IBNR) Long-Term Liabilities Due Within One Year Due in More Than One Year Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Bus Replacement Debt Service Capital Projects Unrestricted Governmental Activities Dougherty County Stadium Authority Total Net Assets $ 2,991,934.90 $ 16,924,203.85 13,955.16 16,000,000.00 360,589.21 68,530.94 459,435.22 543,278.38 332,380.09 1,696,847.99 $ 39,391,155.74 $ $ 212,559,282.81 $ 89,223.72 773,846.46 14,177,272.06 2,819,563.76 $ 230,419,188.81 $ 42,813.00 42 813.00 3,102,128.00 150 964.00 3,253,092.00 Total Liabilities and Net Assets $ 269,810,344.55 $======3=,2=9=5'=9o=s=.o==o The notes to the basic financial statements are an integral part of this statement. - 1- DOUGHERTY COUNTY BOARD OF EDUCATION STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2008 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 Community Services Food Services Total Governmental Activities COMPONENT UNIT Dougherty County Stadium Authority General Revenues Taxes Property Taxes For Maintenance and Operations Other Taxes Sales Taxes Special Purpose Local Option Sales Tax For Capital Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous Special Items Loss on Disposal of Building Total General Revenues and Special Items Changes in Net Assets Net Assets - Beginning of Year (Restated) Net Assets - End of Year EXPENSES CHARGES FOR SERVICES $ 107,709,786.48 $ 4,540,529.43 5,867,425.92 3,301,286.83 1,880,073.65 9,413,074.02 2,016,539.59 13,345,634.20 5,771,844.01 3,122,890.57 1,107,694.14 535,860.20 570,184.92 8,337,983.56 $ 167,520,807.52 $ 654,024.50 1,008,303.12 1,662,327.62 $ 220,996.00 $ ---'1-"-00=,-"-00"-'0-'-'.0=-0 The notes to the basic financial statements are an integral part of this statement. -2- EXHIBIT"B" PROGRAM REVENUES OPERATING CAPITAL GRANTS AND GRANTS AND CONTRIBUTIONS CONTRIBUTIONS NET(EXPENSES)REVENUES AND CHANGES IN NET ASSETS PRIMARY GOVERNMENT COMPONENT UNIT GOVERNMENTAL DOUGHERTY COUNTY ACTIVITIES STADIUM AUTHORITY $ 73,573,873.57 1,756,508.22 3,496,558.38 2,186,038.90 2,702,930.55 4,603,186.33 56,181.24 5,362,652.73 2,273,021.33 $ 29,572.69 581,049.12 620.00 8,661,852.70 $ 105,284,045.76 $ $ 282,053.00 282,053.00 $ -33,481,888.41 -2,784,021.21 -2,370,867 .54 -1,115,247.93 822,856.90 -4,809,887 .69 -1,960,358.35 -7,982,981.47 -3,216,769.68 -3,093,317.88 -526,645.02 -535,860.20 -569,564.92 1,332,172.26 -60,292,381.14 $ _ _ _ _-_1_20~9_9_6_.o_o $ 40,107,773.00 39,258.56 18,656,880.16 434,923.66 10,556,901.00 724,451.31 $ 3,084,059.64 -2,891,845.13 $ 70,712,402.20 $ $ 10,420,021.06 $ 219,999,167.75 7,935.00 2,933.00 10 868.00 -110, 128.00 3,363,220.00 $ 230,419,188.81 $ =======3=,2=53=,0=9=2=.0=0 -3 - DOUGHERTY COUNTY BOARD OF EDUCATION BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2008 EXHIBIT"C" ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net Taxes State Government Federal Government Local lnterfund Other Inventories Prepaid Items GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 18,161,035.29 $ 740,850.91 $ 5,050,567.11 11,807,635.55 1,880,811.82 11,303,141.56 2,820,621.62 1,714.59 388,249.37 386,568.50 90,513.00 3,261,082.35 139,041.41 1,554.34 $ 18,903,440.54 772,292.12 17,630,494.78 5,141,894.17 11,303,141.56 2,820,621.62 1,714.59 139,041.41 388,249.37 386,568.50 90,513.00 Total Assets $ 40,083,222.86 $ 15,948,610.22 $ 773,846.46 $ 56,805,679.54 LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Accounts Payable - lnterfund Salaries and Benefits Payable Payroll Withholdings Payable Short-Term Debt Contracts Payable Retainages Payable Deposits and Deferred Revenue Total Liabilities FUND BALANCES Reserved for: Bus Replacement Debt Service Capital Projects Unreserved Designated for Self-Insurance Undesignated Reported in: General Fund Total Fund Balances $ 2,192,995.27 $ 139,041.41 16,924,203.85 13,955.16 16,000,000.00 459,435.22 1,342,218.01 360,589.21 68,530.94 $ 35,729,630.91 $ 1,771,338.16 $ 3,535,213.28 139,041.41 16,924,203.85 13,955.16 16,000,000.00 360,589.21 68,530.94 459,435.22 $ 37,500,969.07 $ 89,223.72 $ $ 14,177,272.06 635,699.25 3,628,668.98 $ 4,353,591.95 $ 14,177,272.06 $ $ 89,223.72 773,846.46 773,846.46 14,177,272.06 635,699.25 3,628,668.98 773,846.46 $ 19,304,710.47 Total Liabilities and Fund Balances $ 40,083,222.86 $ 15,948,610.22 $ 773,846.46 $ 56,805,679.54 The notes to the basic financial statements are an integral part of this statement. -4- DOUGHERTY COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE30, 2008 EXHIBIT"D" Total Fund Balances - Governmental Funds (Exhibit "C") Amounts reported for Governmental Activities in the Statement of Net Assets are different because: Capital Assets used in Governmental Activities are not financial resources and therefore are not reported in the funds. These assets consist of: Land Construction in Progress Buildings Equipment Accumulated Depreciation Total Capital Assets Some of the School District's property tax revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures. Long-Term Liabilities, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of: Capital Leases Payable Compensated Absences Total Long-Term Liabilities Net Assets of Governmental Activities (Exhibit "A") $ 19,304,710.47 $ 9,091,354.08 5,432,157.39 279,110,374.38 15,282,755.53 -95,441,382.51 213,475,258.87 -331,552.45 $ -915,976.04 -1, 113,252.04 -2,029,228.08 $ 230,419,188.81 The notes to the basic financial statements are an integral part of this statement. -5- DOUGHERTY COUNTY BOARD OF EDUCATION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2008 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 Community Services Food Services Operation Capital Outlay Debt Services Principal Interest Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES {USES) Capital Leases Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning (Restated) Fund Balances - Ending GENERAL FUND DISTRICTWIDE CAPITAL PROJECTS FUND DEBT SERVICE FUND TOTAL $ 40,399,328.98 $ 434,923.66 $ 18,656,880.16 92,401,392.29 23,721,607.48 1,662,327.62 359,875.84 364,575.47 3,084,059.64 $ 162,063,515.51 $ 19,021,455.63 $ 0.00 $ 40,399,328.98 19,091,803.82 92,401,392.29 23,721,607.48 1,662,327.62 724,451.31 3,084,059.64 0.00 $ 181,084,971.14 $ 100,800,099.03 $ 2,993,508.62 $ 103,793,607.65 4,529,362.78 5,451,316.98 3,080,575.27 1,848,063.86 9,203,685.66 1,937,010.87 12,797,194.30 6,544,664.25 3,094,523.40 1,107,694.14 503,875.50 570,184.92 8,180,127.26 22,053.29 339,977.13 7,095,694.35 4,529,362.78 5,451,316.98 3,080,575.27 1,848,063.86 9,203,685.66 1,959,064.16 13,137,171.43 6,544,664.25 3,094,523.40 1,107,694.14 503,875.50 570,184.92 8,180,127.26 7,095,694.35 372,731.12 4 009.91 $ 1,090,000.00 24,525.00 1,462,731.12 28,534.91 $ 160,025,119.25 $ 10,451,233.39 $ 1,114,525.00 $ 171,590,877.64 $ 2,038,396.26 $ 8,570,222.24 $ -1, 114,525.00 $ 9,494,093.50 $ 980,970.00 $ 139,041.41 -139 041.41 $ 980,970.00 139,041.41 -139 041.41 $ 841,928.59 $ 139 041.41 $ 980,970.00 $ 2,880,324.85 $ 8,709,263.65 $ -1,114,525.00 $ 10,475,063.50 1,473,267.10 5,468,008.41 1,888,371.46 8,829,646.97 $ 4,353,591.95 $ 14,177,272.06 $ 773,846.46 $ 19,304,710.47 The notes to the basic financial statements are an integral part of this statement. -6- DOUGHERTY COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES JUNE 30, 2008 EXHIBIT"F" Total Net Change in Fund Balances - Governmental Funds (Exhibit "E") Amounts reported for Governmental Activities in the Statement of Activities are different because: Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are: Capital Outlay Depreciation Expense Excess of Capital Outlay over Depreciation Expense Because some property taxes will not be collected for several months after the School District's fiscal year ends, they are not considered "available" revenues. In the Statement of Activities, only the loss on the sale/disposal of the building/equipment is reported, whereas in the Governmental Funds, the entire proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balances by the carrying value of the building/equipment sold/disposed. Some of the Capital Assets acquired this year were financed with capital leases. In Governmental Funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets, the lease obligation is reported as a Long-Term Liability. Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Assets. In the current year, these amounts consist of: Amortized Bond Premium Bond Principal Retirements Capital Lease Payments Total Long-Term Debt Repayments Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of: Decrease in Compensated Absences $ 10,475,063.50 $ 6,997,318.32 -4,558, 117.97 2,439,200.35 -252,297.42 -2,948,632.41 -980,970.00 $ 147,190.00 1,090,000.00 372,731.12 1,609,921.12 77,735.92 Change in Net Assets of Governmental Activities (Exhibit "B") $ 10,420,021.06 The notes to the basic financial statements are an integral part of this statement. -7- DOUGHERTY COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2008 ASSETS Cash and Cash Equivalents Accounts Receivable, Net Federal Local Other Total Assets LIABILITIES Funds Held for Others EXHIBIT "G" AGENCY FUNDS $ 85,085.57 11,476.87 42,812.96 30,507.96 $ 169,883.36 $ 169,883.36 The notes to the basic financial statements are an integral part of this statement. -8 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY REPORTING ENTITY The Dougherty County Board ofEducation (School District) was established under the laws ofthe State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity. DISCRETELY PRESENTED COMPONENT UNIT The non-profit organization, Dougherty County Stadium Authority, operates the Hugh Mills Memorial Stadium. The School District has a contract with Dougherty County Stadium Authority relative to the use, maintenance, and control of the Stadium. The Stadium Authority's financial data (Statement of Net Assets and Statement of Activities) is included within the School District's basic financial statements as a discretely presented component unit. See Note 19 for additional component unit disclosures. Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The School District's basic financial statements are collectively comprised of the District-wide financial statements, fund financial statements and notes to the basic financial statements of the Dougherty County Board of Education. District-wide Statements: The Statement ofNet Assets and the Statement ofActivities display information about the financial activities ofthe overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. The Statement ofActivities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support ofthe School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs. -9 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT"H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Program revenues include (a) charges paid by the recipients ofgoods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting ofinternal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. The School District reports the following major governmental funds: General Fund is the School District's primary operating fund. It accounts for all financial resources ofthe School District, except those resources required to be accounted for in another fund. District-wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST) and Bond Proceeds to be used for the acquisition, construction or renovation of major capital facilities. Debt Service Fund accounts for taxes (sales) legally restricted for the payment ofgeneral longterm principal, interest and paying agent's fees. The School District reports the following fiduciary fund type: Agency funds account for assets held by the School District as an agent for various funds or individuals. BASIS OF ACCOUNTING The basis ofaccounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless ofwhen the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. - 10 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 ofaccounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources. The School District funds certain programs by a combination ofspecific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues. RESTATEMENT OF PRIOR YEAR NET ASSETS/FUND BALANCE For fiscal year 2008, the School District restated its beginning fund balance for the Capital Projects fund and the beginning net assets for District-wide governmental activities. At June 30, 2007, the School District booked a $528,050.60 accounts receivable and revenue from GSFIC for reimbursement of Capital Projects expenditures. Subsequently, the funds were never collected from GSFIC, and are not longer available. The result is a decrease in Capital Projects accounts receivable and beginning fund balance, as well as, a decrease in District-wide Governmental Activities accounts receivable and beginning net assets. This prior period adjustment was done to correct the accounts receivable. This change is in accordance with generally accepted accounting principles. CASH AND CASH EQUIVALENTS COMPOSITION OF DEPOSITS Cash and cash equivalents consist ofcash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorize 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. - 11 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVESTMENTS COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates ofdeposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase ofone year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code ofGeorgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate ofreturn shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following: (1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State of Georgia, Office of Treasury and Fiscal Services, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia. The School District does not have a formal policy regarding investment policies that address credit risks, custodial credit risks, concentration ofcredit risks, interest rate risks or foreign currency risks. RECEIVABLES Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables. - 12 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PROPERTY TAXES The Dougherty County Board ofCommissioners fixed the property tax levy for the 2007 tax digest year (calendar year) on October 24, 2007 (levy date). Taxes were due on January 20, 2008 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2007 tax digest are reported as revenue in the governmental funds for fiscal year 2008. The Dougherty County Tax Commissioner bills and collects the property taxes for the School District, withholds 2.1 % 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, 2008, for maintenance and operations amounted to $40,399,328.98. The tax millage rate levied for the 2007 tax year (calendar year) for the Dougherty County Board of Education was as follows (a mill equals $1 per thousand dollars of assessed value): School Operations 18.450 mills SALES TAXES Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $18,656,880.16 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years. INVENTORIES FOOD INVENTORIES On the basic financial statements, inventories ofdonated food commodities used in the preparation ofmeals are reported at their Federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used. 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 consumable supplies inventory whereby as asset is recorded when supplies are purchased and expenses are recorded at the time the supplies are consumed. PREPAID ITEMS Payments made to vendors for services that will benefit periods subsequent to June 30, 2008, are recorded as prepaid items. - 13 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CAPITAL ASSETS Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value ofassets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works ofart. During the fiscal year under review, no events or changes in circumstances affecting a capital asset that may indicate impairment were known to the School District. Capitalization thresholds and estimated useful lives of capital assets reported in the District-wide statements are as follows: Capitalization Policy Estimated Useful Life Land Buildings and Improvements Equipment Any Amount $ 5,000.00 $ 5,000.00 NIA 20 to 80 years 4 to 12 years Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives. COMPENSATED ABSENCES Members ofthe Teachers Retirement System ofGeorgia (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. A maximum of 18 days of vacation leave is awarded on a fiscal year basis to all full time personnel employed on a twelve month basis. No other employees are eligible to earn vacation leave. Vacation leave not utilized during the fiscal year may be carried over to the next fiscal year, providing such vacation leave does not exceed 30 days. Changes in the compensated absences liability for the last three fiscal years are as follows: - 14 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Beginning of Year Liability Annual Leave Annual Leave End of Year Earned Utilized Liability 2006 2007 2008 $ 1,263,431.00 $ 1,026,675.00 $ 1,142,136.00 $ 1,147,970.00 $ 1,147,970.15 $ 1,033,577.72 $ 990,559.91 $ 1,190,987.96 $ 1,190,987.96 $ 1,029,076.29 $ 1,106,812.22 $ 1,113,252.03 GENERAL OBLIGATION BONDS The School District issues general obligation bonds to provide funds for the acquisition and construction ofmajor capital facilities. In the District-wide financial statements, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as deferred charges and amortized over the term of the debt. In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement ofNet Assets. NET ASSETS The School District's net assets in the District-wide Statements are classified as follows: Invested in capital assets, net of related debt - This represents the School District's total investment in capital assets, net ofoutstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. Restricted net assets - These represent resources for which the School District is legally or contractually obligated to spend resources for bus replacement, continuation of Federal programs, debt service and capital projects in accordance with restrictions imposed by external third parties. Unrestricted net assets - Unrestricted net assets represent resources derived from property taxes, sales taxes, grants and contributions not restricted to specific programs, charges for services, and miscellaneous revenues. These resources are used for transactions relating to the educational and general operations of the School District, and may be used at the discretion of the Board to meet current expenses for those purposes. - 15 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DEFICIT FUND BALANCES The fund reporting a deficit fund balance at June 30, 2008, is as follows: Fund Type/Fund Name Deficit Balance Governmental Fund Type School Food Service Fund $ 59,664.11 Operational cost controls initiated by management in fiscal year 2005 and continued through fiscal years 2006, 2007 and 2008 were successful in fully eliminating the Child Nutrition Program deficit by October 2008. Note 3: DEPOSITS AND INVESTMENTS COLLATERALIZATION OF DEPOSITS Official Code of Georgia Annotated (OCGA) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent ofthe public funds being secured after the deduction ofthe amount ofdeposit insurance. Ifa depository elects the pooled method (OCGA 45-8-13.1) the aggregate ofthe market value ofthe securities pledged to secure a pool ofpublic funds shall be not less than 110 percent ofthe daily pool balance. At June 30, 2008, $8,425.63 of deposits were not secured by surety bond, insurance or collateral as specified above. The School District is working with the affected financial institutions to ensure appropriate levels of collateral are maintained for all of the School District's deposits. 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, - 16 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 3: DEPOSITS AND INVESTMENTS (6) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and (7) Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association. CATEGORIZATION OF DEPOSITS At June 30, 2008, the bank balances were $24,811,966.45. The amounts ofthe total uninsured bank balances are classified into three categories of custodial credit risk: Category 1 - Uncollateralized, Category 2 - Cash collateralized with securities held by the pledging financial institution, or Category 3 - Cash collateralized with securities held by the pledging financial institution's trust department or agent but not in the School District's name. PRIMARY GOVERNMENT The School District's uninsured deposits are classified by custodial credit risk category at June 30, 2008, as follows: Custodial Credit Risk Category Bank Balance 1 $ 8,425.63 2 0.00 3 24,296.017 .24 Total $ 24,304,442.87 COMPONENT UNIT At June 30, 2008, Dougherty County Stadium Authority's bank balances of $168,777.00 were classified by custodial credit risk category as follows: - 17 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 3: DEPOSITS AND INVESTMENTS Custodial Credit Risk Category Bank Balance 1 $ 0.00 2 0.00 3 11,726.00 Total $ 11,726.00 CATEGORIZATION OF INVESTMENTS At June 30, 2008, the carrying value ofthe School District's total investments was $17,630,494.78, which is materially the same as fair value. This investment consisted entirely of funds invested in the Georgia Fund 1, formerly referred to as LGIP, administered by the State of Georgia, Office of Treasury and Fiscal Services which are 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 ofTreasury and Fiscal Services for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State ofGeorgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.state.ga.us/intemet/searchRpts.html. The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company but does operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAm rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2008, was 40 days. Note 4: NON-MONETARY TRANSACTIONS The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their Federally assigned value. See Note 2 - Inventories Note 5: CAPITAL ASSETS The following is a summary of changes in the Capital Assets during the fiscal year: - 18 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 5: CAPITAL ASSETS PRIMARY GOVERNMENT Governmental Activities Capital Assets, Not Being Depreciated: Land Construction in Progress Total Capital Assets Not Being Depreciated Capital Assets Being Depreciated Buildings and Improvements Equipment Less Accumulated Depreciation for: Buildings and Improvements Equipment Total Capital Assets, Being Depreciated, Net Governmental Activity Capital Assets - Net Balances Jul}'. 1, 2007 Increases Decreases Balances June 30, 2008 $ 9,057,267.66 $ 34,086.42 $ 9,091,354.08 21,046,659.31 2,881,577.81 $18,496,079.73 5,432,157.39 $ 30,103,926.97 $ 2,915,664.23 $ 18,496,079.73 $ 14,523,511.47 $263,661,231.31 $21,380,227.22 $ 5,931,084.15 $279,110,374.38 15,414,509.44 1,197,506.60 1,329,260.51 15,282,755.53 83,978,383.46 11,216,593.33 3,667,363.69 890,754.28 3,000,966.85 84,644,780.30 1,310,745.40 10,796,602.21 $183,880,763.96 $18,019,615.85 $ 2,948,632.41 $198,951,747.40 $213,284,620.23 $ 2Q,235,28Q,Q8 $21,444,112.14 $213,475,258.81 Capital assets being acquired under capital leases as of June 30, 2008, are as follows: Equipment Less: Accumulated Depreciation Governmental Funds $ 1,010,638.00 2,708.50 $ 1,007,929.50 Current year depreciation expense by function is as follows: Instruction Support Services Pupil Services Improvements of Instructional Services Educational Media Services School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Enterprise Operations Food Services $ 2,958,901.89 $ 5,600.82 189,278.18 147,469.10 150,457.37 81,729.09 102,534.14 491,953.98 33,312.58 1,202,335.26 18,904.37 377,976.45 $ 4,558.117 .97 - 19 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 5: CAPITAL ASSETS COMPONENT UNIT Governmental Activities Capital Assets, Not Being Depreciated: Land Capital Assets Being Depreciated Buildings Equipment Stadium Improvements Less Accumulated Depreciation for: Buildings Equipment Stadium Improvements Total Capital Assets, Being Depreciated, Net Governmental Activity Capital Assets - Net Balances July 1, 2007 Increases Decreases Balances June 30, 2008 $ 410,000.00 $ 0.00 $ $ 308,976.00 $ 239,886.00 2,586,683.00 27,035.00 $ 86,549.00 229,370.00 7,724.00 26,235.00 66,504.00 $ 2,792,591.00 $ -100,463.00 $ $ 3.202.591.00 $ -100.463.00 $ 0.00 $ 410,000.00 0.00 $ 308,976.00 239,886.00 2,586,683.00 34,759.00 112,784.00 295 874.00 0.00 $ 2,692,128.00 0.00 $ 3.102.128.00 Note 6: RESTRICTED ASSETS Special Purpose Local Option Sales Tax (SPLOST) and general obligation bond proceeds are restricted assets in the Statement of Net Assets because their use is limited by applicable bond covenants or statutory provisions. Restricted assets at June 30, 2008, were as follows: District-wide Capital Projects Bond SPLOST Proceeds Debt Service Funds Restricted Cash and Cash Equivalents: Debt Services Capital Acquisitions Restricted Investments: Debt Services Capital Acquisitions $ 865,619.70 $ $ 14,272.62 1,554.34 $ 772,292.12 $ 11,132,634.71 $ 675,000.84 Note 7: INTERFUND ASSETS AND LIABILITIES Due to and due from other funds are recorded for interfund receivables and payables which arise from interfund transactions. Interfund balances at June 30, 2008, consisted of the following: - 20 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 7: INTERFUND ASSETS AND LIABILITIES Due From Other Funds Due To Other Funds General Fund District-wide Capital Projects $ 139,041.41 $ 139,041.41 $ 1392041.41 $ 1392041.41 Transfers are used to move property tax revenues collected by the General Fund to cover a portion of employee's salaries not funded as a part of the Special Purpose Local Option Sales Tax (SPLOST) projects. Note 8: INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2008, consisted of the following: Transfer to Transfers From General Fund District-wide Capital Projects $ 1392041.41 Transfers are used to move property tax revenues collected by the General Fund to cover a portion of employee's salaries not funded as a part of the Special Purpose Local Option Sales Tax (SPLOST) projects. Note 9: 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 participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by - 21 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT"H" Note 9: RISK MANAGEMENT the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage. The School District has established a limited risk management program for workers' compensation claims. A premium is charged when needed by the Internal Service Fund to each user program on the basis of the percentage of that program's payroll to total payroll in order to cover estimated claims budgeted by management based on known claims and prior experience. The School District accounts for claims with expense and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. An excess coverage insurance policy covers individual claims in excess of $350,000.00 loss per occurrence, up to the statutory limit. Changes in the workers' compensation claims liability during the last two fiscal years are as follows: Beginning of Year Liability Claims and Changes in Estimates Claims Paid End ofYear Liability 2007 2008 $ 282,293.00 $ 1,156,102.32 $ 843,106.88 $ 595,288.44 $ 595,288.44 $ 1,290,462.11 $ 1,342,472.17 $ 543,278.38 The School District is self-insured with regard to unemployment compensation claims. A premium is charged when needed by the General Fund to each user program on the basis ofthe percentage of that fund's payroll to total payroll in order to cover estimated claims budgeted by management based on known claims and prior experience. The School District accounts for claims 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 ofYear Liability 2007 2008 $ 0.00 $ 28,470.00 $ 28,470.00 $ 0.00 $ 0.00 $ 16,110.00 $ 16,110.00 $ 0.00 The School District has purchased surety bonds to provide additional insurance coverage as follows: - 22 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 9: RISK MANAGEMENT Position Covered Amount Superintendent All Other Employees $ 50,000.00 $ 250,000.00 Note 10: OPERATING LEASES Dougherty County Board of Education has entered into various leases as lessee for copiers, fax machines and a mailing machine. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2008, for governmental funds amounted to $358,114.73. Future minimum lease payments for these leases are as follows: Year Ending Governmental Funds 2009 2010 2011 2012 2013 $ 357,723.84 357,723.84 5,627.00 2,730.00 1,450.00 Total $ 725,254.68 Note 11: SHORT-TERM DEBT The School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its General Fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution ofthe State of Georgia limits the aggregate amount ofshort-term debtto 75 percent ofthe total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred. Short-term debt activity for the fiscal year is as follows: Beginning Balance Issued Redeemed Ending Balance Tax Anticipation Notes $==o=.o=o $30.000,000.00 $14,000,000.00 $16.000.000.00 - 23 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 12: LONG-TERM DEBT CAPITAL LEASES The Dougherty County Board of Education entered into various lease agreements for buses. These lease agreements qualify as capital leases for accounting purposes, and, therefore, have been recorded at the present value ofthe future minimum lease payments as ofthe date oftheir inception. COMPENSATED ABSENCES Compensated absences represent obligations of the School District relating to employees' rights to receive compensation for future absences based upon service already rendered. This obligation relates only to vesting accumulating leave in which payment is probable and can be reasonably estimated. Typically, the General Fund is the fund used to liquidate this long-term debt. The School District uses the vesting method to compute compensated absences. GENERAL OBLIGATION DEBT OUTSTANDING Voters have authorized $40,000,000.00 in general obligation debt for the purpose of funding (1) the school renovations and improvements, land acquisition for future expansion, certain capital repairs and modifications, (2) additional classroom technology, system-wide replacement of computers, upgrading of technology, (3) additional safety and security equipment, (4) vehicle and equipment replacement and (5) related financing, project management and elections costs, which was not issued as of June 30, 2008. The changes in Long-Term Debt during the fiscal year ended June 30, 2008, were as follows: Balance July 1, 2007 Governmental Funds Additions Deductions Balance June 30, 2008 Due Within One Year G.O. Bonds Capital Leases Compensated Absences Bond Premiums Amortized $1,090,000.00 307,737.16 1,190,987.96 147 190.00 $ 980,970.00 1,029,076.29 $ 1,090,000.00 372,731.12 1,106,812.21 147 190.00 $ 0.00 915,976.04 I, 113,252.04 0.00 $ 233,791.55 98,588.54 $2,735,915, 12 $ 2,Q10,Q46.29 $ 2,716,733.33 $ 2,Q29,228,Q8 $ 332 38Q,Q2 At June 30, 2008, payments due by fiscal year which includes principal and interest for these items are as follows: Fiscal Year Ended June 30 Capital Leases Principal Interest 2009 2010 2011 2012 $ 233,791.55 $ 241,264.98 248,977.31 191,942.20 26,184.29 18,710.86 10,998.53 3,039.68 Total Principal and Interest $ 915,976.04 $==58-,9==3==3==3.==6 - 24- DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT"H" Note 13: ON-BEHALF PAYMENTS The School District has recognized revenues and costs in the amount of $3,479,638.77 for health insurance and retirement contributions paid on the School District's behalf by the following State Agencies. Georgia Department of Education Paid to the Georgia Department of Community Health For Health Insurance of Non-Certified Personnel In the amount of $3,392,057.11 Paid to the Teachers Retirement System of Georgia For Teachers Retirement System (TRS) Employer's Cost In the amount of $66,722.66 Office of Treasury and Fiscal Services Paid to the Public School Employees Retirement System For Public School Employees Retirement (PSERS) Employer's Cost In the amount of $20,859.00 Note 14: SPECIAL ITEMS In fiscal year 2008, the Dougherty County Board of Education demolished the Radium Springs Middle School. The loss associated with demolition is reported as a Special Item on the Statement of Activities. Note 15: SIGNIFICANT COMMITMENTS The following is an analysis ofsignificant outstanding construction or renovation contracts executed by the School District as of June 30, 2008: Project Unearned Executed Contracts Security and Access Control System, Phase II Elementary School Gymnasiums Monroe High School Reroofing $ 974,517.92 209,110.00 751,500.19 $ 1,935,128.11 The amounts described in this note are not reflected in the basic financial statements. - 25 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 16: SIGNIFICANT CONTINGENT LIABILITIES Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position. The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance ofroutine School District operations. The ultimate disposition ofthese proceedings is not presently determinable, but is not believed to be material to the basic financial statements. Note 17: POSTEMPLOYMENT BENEFITS Georgia Retiree Health Benefit Fund Plan Description. The School District contributes to the Georgia Retiree Health Benefit Fund ("GRHBF"), a cost-sharing multiple-employer defined benefit postemployment healthcare plan administered by the Department ofCommunity Health. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries. Pursuant to Title 45, Chapter 18 ofthe Official Code ofGeorgia Annotated, the authority to establish and amend the benefit provisions ofthe plan is assigned to the Board of Community Health. The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department ofCommunity Health at 2 Peachtree Street, Atlanta, Georgia 30303. Funding Policy. The contribution requirements of plan members and participating employers are established and may be amended by the Board of Community Health. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) of the cost of health insurance coverage. Participating employers are statutorily required to contribute in accordance with the employer contribution rate established by the Board of Community Health. This contribution rate is established to fund both the active and retired employee health insurance plans based on projected pay-as-you-go financing requirements. The employer contribution rates for the combined active and retiree plans for the fiscal year ended June 30, 2008, were as follows: Teachers Non-Certificated Employees 18.534% of state-based salaries $162.72 per month The School District's contribution to the health insurance plans for the fiscal year ended June 30, 2008, was $12,896,504.27, which equaled the required contribution. - 26 - DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2008 EXHIBIT "H" Note 18: RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS) TRS PLAN DESCRIPTION Substantially all teachers, administrative and clerical personnel employed by local school systems are covered by the Teachers Retirement System of Georgia (TRS), which is a cost-sharing multiple employer defined benefit pension plan. TRS provides service retirement, disability retirement and survivors benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts. TRS CONTRIBUTIONS REQUIRED AND MADE Employees ofthe School District who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The School District makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. The required employer contribution rate is 9.28% and employer contributions for the current fiscal year and the preceding two fiscal years are as follows: Fiscal Year Percentage Contributed Required Contribution 2008 2007 2006 100% 100% 100% $ 7,962,738.90 $ 7,725,403.24 $ 7,389,992.00 Note 19: COMPONENT UNIT The Dougherty County Stadium Authority (Authority) is a legally separate tax-exempt component unit of the Dougherty County Board of Education (School District). Because the Authority has a fiscal dependency on the School District, it is considered a component unit ofthe School District and is discretely presented in the School District's financial statements. The Authority utilizes the modified accrual method ofaccounting. The Authority has implemented the financial reporting requirements ofGASB Statement Nos. 33 and 34. The Authority's fiscal year is July 1 through June 30. - 27 - (This page left intentionally blank) DOUGHERTY COUNTY BOARD OF EDUCATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2008 SCHEDULE "1" REVENUES Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous Total Revenues EXPENDITURES Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Food Services Operation Enterprise Operations Community Services Operations Debt Service Total Expenditures Excess of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Other Sources Other Uses Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning NONAPPROPRIATED BUDGETS ORIGINAL (1) FINAL (1) ACTUAL AMOUNTS $ 40,904,416.00 $ 41,248,771.38 $ 40,399,328.98 434,923.66 88,069,916.00 91,594,109.48 92,401,392.29 22,727,122.90 27,792,225.48 23,721,607.48 2,346,596.63 2,534,620.06 1,662,327.62 410,000.00 410,000.00 359,875.84 1,308,375.76 2,236,989.06 3,084,059.64 $ 155,766,427.29 $ 165,816,715.46 $ 162,063,515.51 $ 96,949,857.46 $ 102,654,469.31 $ 100,800,099.03 4,868,714.50 4,744,008.06 3,350,478.19 2,033,892.99 8,756,507.95 1,951,804.92 13,292,009.89 5,222,843.57 2,733,910.98 1,143,951.00 10,161,349.78 448,481.00 597,962.00 4,822,441.34 7,218,323.33 3,464,252.41 2,117,814.75 9,216,073.82 1,988,033.98 13,277,911.95 5,827,652.42 3,448,927.39 1,475,314.88 10,865,191.55 463,161.15 622,693.31 4,529,362.78 5,451,316.98 3,080,575.27 1,848,063.86 9,203,685.66 1,937,010.87 12,797,194.30 6,544,664.25 3,094,523.40 1,107,694.14 8,180,127.26 503,875.50 570,184.92 376 741.03 $ 156,255,772.29 $ 167,462,261.59 $ 160,025,119.25 $ -489,345.00 $ -1 645 546.13 $ 2,038,396.26 $ 1,666,550.00 $ 2,328,541.83 $ -640 000.00 -682 995.70 980,970.00 -139 041.41 $ 1,026,550.00 $ 1645546.13 $ 841 928.59 $ 537,205.00 $ 0.00 $ 2,880,324.85 1,072,146.32 1,072,146.32 1473267.10 Fund Balances - Ending $ 1,609,351.32 $ 1,072,146.32 $ ====4.,.3=5=3=5=91==95= Notes to the Schedule of Revenues. Expenditures and Changes in Fund Balances Budget and Actual (1) Original and Final Budget amounts do not include budgeted revenues or expenditures of the various principal accounts. The 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. - 29 - DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2008 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program Total Child Nutrition Cluster Other Programs Pass-Through From Georgia Department of Education Food Donation (1) Total U.S. Department of Agriculture Corporation for National and Community Service Pass-Through From Georgia Department of Education Learn and Serve America School and Community Based Programs Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants Total Special Education Cluster Other Programs Direct State Grants for Innovative Programs Impact Aid Transition to Teaching Pass-Through From Georgia Department of Education Career and Technical Education - Basic Grants to States English Language Acquisition Grants Enhancing Education Through Technology Program Improving Teacher Quality State Grants Mathematics and Science Partnerships Migrant Education Reading First State Grants Safe and Drug-Free Schools and Communities - State Grants Special Education State Personnel Development State Grants for Innovative Programs Title I Grants to Local Educational Agencies Total U. S. Department of Education Health and Human Services, U. S. Department of Pass-Through From Georgia Department of Human Resources Block Grants for Prevention and Treatment of Substance Abuse Labor, U. S. Department of Pass-Through From Southwest Georgia Regional Development Center Workforce Investment Act Youth Activities CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD 10.553 10.555 N/A (2) N/A $ 7,512,050.75 $ 7,512,050.75 10.550 N/A 488,775.27 $ 8,000,826.02 94.004 N/A $ 20,000.00 . 84.027 . 84.173 N/A $ 3,895,238.45 N/A 136,731.00 $ 4,031,969.45 84.298 84.041 84.350 84.048 84.365 . 84.318 84.367 84.366 . 84.011 84.357 84.186 84.323 84.298 84.010 277,960.39 (3) 4,325.00 N/A 262,210.00 N/A 5,609.12 N/A 119,426.59 N/A 1,553,664.39 N/A 109,111.00 N/A 27,761.43 N/A 1,409,782.33 N/A 113,850.00 NIA 26,987.70 N/A 35,850.99 N/A 7,078,295.79 $ 15,056,804.18 93.959 N/A $ 30,032.18 17.259 N/A $ 57 919.60 - 30 - DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2008 SCHEDULE "2" FUNDING AGENCY PROGRAM/GRANT Defense, U. S. Department of Direct Department of the Air Force R.O.T.C. Program Department of the Marine Corps R.O.T.C. Program Total U. S. Department of Defense CFDA NUMBER PASSTHROUGH ENTITY ID NUMBER EXPENDITURES IN PERIOD $ 71,922.64 105,356.39 $ 177,279.03 Total Federal Financial Assistance $ 23,342,861.01 N/A = Not Available Notes to the Schedule of Expenditures of Federal Awards (1) The amount shown for the Food Donation Program represents the Federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the School District during the current fiscal year. (2) Expenditures for the funds earned on the School Breakfast Program ($2,650,112.45) were not maintained separately and are included in the 2008 National School Lunch Program. (3) Funds earned on the Impact Aid Program, in the amount of $167,329.79, do not require reporting of expenditures. Major Programs are identified by an asterisk (*) in front of the CFDA number. The School District did not provide Federal Assistance to any Subrecipient. The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the Dougherty County Board of Education and is presented on the modified accrual basis of accounting which is the basis of accounting used in the presentation of the fund financial statements. See notes to the basic financial statements. - 31 - DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2008 AGENCY/FUNDING GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV CategoryV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) Media Center Program 20 Days Additional Instruction Staff and Professional Development Indirect Cost Central Administration School Administration Facility Maintenance and Operations Categorical Grants Pupil Transportation Regular Bus Replacement Nursing Services Vocational Supervisors Mid-term Adjustment Hold-Harmless Education Equalization Funding Grant Food Services Vocational Education Amended Formula Adjustment Other State Programs Charter Schools Communities in Schools - Dropout Recovery and Prevention Graduation Coaches Health Insurance National Teacher Certification Preschool Handicapped Program Remedial Summer Middle School Severely Emotionally Disturbed Teachers' Retirement Virtual Schools Grant Office of Treasury and Fiscal Services Public School Employees Retirement - 32 - SCHEDULE "3" GOVERNMENTAL FUND TYPE GENERAL FUND $ 1,084,284.83 5,794,340.00 283,860.00 13,908,463.00 993,660.00 6,636,381.00 621,418.00 1,832,964.00 8,630,180.00 7,995,008.00 2,397,580.00 216,910.00 2,039,730.00 3,842,602.00 657,009.00 657,647.00 1,324,878.00 458,979.00 778,306.00 76,517.00 1,826,533.00 560,009.00 270,082.00 1,718,561.00 3,657,432.00 4,187,213.00 1,732,113.00 282,053.00 281,705.00 34,654.00 329,309.00 10,556,901.00 449,610.00 107,346.81 -1,388, 155.00 10,000.00 26,412.00 427,260.00 3,392,057.11 34,995.00 457,374.00 18,727.00 2,659,534.00 66,722.66 825.00 20,859.00 DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2008 AGENCY/FUNDING CONTRACT Human Resources, Georgia Department of Year Round and Summer Learning SCHEDULE "3" GOVERNMENTAL FUND TYPE GENERAL FUND $ =====92='=40=1=,3=9=2.=2=9 See notes to the basic financial statements. - 33 - DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2008 SCHEDULE "4" PROJECT ORIGINAL ESTIMATED COST(1) CURRENT ESTIMATED COSTS(2) AMOUNT EXPENDED IN CURRENT YEAR (3) (4) AMOUNT EXPENDED IN PRIOR YEARS (3) (4) PROJECT STATUS The acquisition, construction, and equipping of six new elementary physical education facilities, two new middle schools, supply services freezer, completion of expansion program at five schools, roof replacement on 24 buildings, technology power upgrade on 30 buildings, ceilings and lights in 27 buildings, HVAC upgrades on 24 buildings, four new high school field houses, three support facilities for new elementary schools, renovation of McIntosh Teacher Academy, renovation of five schools, Highland conversion, underslab plumbing replacement in 17 buildings, asbestos removal at 48 sites, lawn revitalization at 30 sites, facilities department shops, tower, media service center, security lighting at 28 sites, sports field lighting at four sites and 41 new vehicles, including the acquisition of all necessary property, the maximum cost of such projects not to exceed $88,653,060.00. $ 88,653,060.00 $ 113,707,711.69 $ 113,707,711.69 Completed The acquisition, construction and equipping of three elementary schools, renovation and improvements of one middle school, renovation and improvements of four high schools, renovation and improvements of five elementary schools, provision of gifted, special education, and alternative education sites, capital funding necessary for compliance with Individuals with Disabilities Education Act (IDEA) for children with disabilities, renovation of existing school buildings, four Pre-K facilities in each of four quadrants in the Dougherty County School System, additional technology (hardware and software), including teacher and student classroom computers, peripheral devices and wiring, mobile wireless computer labs, accessory support technology, wireless connectivity for portable classrooms and technology associates with distance and foreign language labs, safety equipment including, but not limited to, upgrading locks on all school buildings, installation of cameras and other devices on schools and school buses, and security/attendance card system, upgrade of school vehicles and maintenance equipment, funding certain financing and project management cost for implementation of capital programs funded through SPLOST 11, the maximum cost of such projects not to exceed $95,000,000.00. 95,000,000.00 91,512,154.40 $ 2,378,393.03 89,133,761.70 Ongoing -34 - DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS YEAR ENDED JUNE 30, 2008 SCHEDULE "4" PROJECT ORIGINAL ESTIMATED COST (1) CURRENT ESTIMATED COSTS (2) AMOUNT EXPENDED IN CURRENT YEAR(3} (4) The renovation and improvement of four high schools and five elementary schools, strategic land acquisition for future school expansion, certain other capital repairs and modifications in system- wide schools, buildings and offices (including carpet replacement, gym flooring and certain other capital repairs and modifications), (ii) the provision of additional classroom technology (including hardware, software and computer furniture), regular system-wide replacement of computers five years or older, installing six computers in all K-8th grade classrooms and three computers in all 9th - 12th grade classrooms, providing system-wide teacher laptop computers, system-wide "wireless-connectivity" in all classroom and other buildings, upgrading existing computer- aided instructional systems to "Model Classroom" standards and providing three additional "Model Classrooms" per school, providing system-wide upgraded or new servers and upgraded main data frame (MDF) rooms, installing "voice-over-internet- protocol" (VoIP) in various classrooms throughout the school system, (iii) the provision of safety and security equipment, including system-wide communication equipment and card-access systems at various system-wide buildings and the installation of radio signal-boosters ("radio repeaters") for West Dougherty Tower, (iv) vehicle and equipment replacement, including school buses and departmental trucks, vans and sedans for system-wide use, major maintenance, supply and service equipment, musical instruments, playground equipment and other educational related equipment, and (v) funding certain financing, project management and election costs related thereto, the maximum cost of such projects not to exceed $95,000,000.00. $ 95,000,000.00 $ 95,000,000.00 $ 7,933,798.95 AMOUNT EXPENDED IN PRIOR YEARS (3) (4) PROJECT STATUS Ongoing $ 278,653,060.00 $ 300,219,866.09 $ 10,312,191.98 $ 202,841,473.39 (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 Dougherty 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. (4) In addition to the expenditures shown above, the School District has incurred interest to provide advance funding for the above projects as follows: Prior Years $ 6,200,246.00 Current Year 24 525.00 Total $ 6,224,771.00 See notes to the basic financial statements. - 35 - (This page left intentionally blank) DOUGHERTY COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAM (QBE) ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2008 SCHEDULE "5" DESCRIPTION ALLOTMENTS FROM GEORGIA DEPARTMENT OF EDUCATION (1) (2) ELIGIBLE QBE PROGRAM COSTS SALARIES OPERATIONS TOTAL Direct Instructional Programs Kindergarten Program $ Kindergarten Program-Early Intervention Program Primary Grades (1-3) Program Primary Grades-Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades-Early Intervention (4-5) Program Middle Grades (6-8) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities Category I Category II Category Ill Category IV Gifted Student - Category VI Remedial Education Program Alternative Education Program English Speakers of Other Languages (ESOL) 6,662,281.00 $ 334,815.00 15,856,846.00 1,136,758.00 7,545,485.00 7,289,398.77 $ 244,867.77 16,076,741.83 974,249.25 8,745,230.27 164,660.96 313,187.61 14,749.61 586,514.53 704,040.00 2,064,358.00 9,903,222.00 9,185,339.00 2,676,124.00 8,520,457.00 1,522,140.00 495,872.00 889,637.00 82 861.00 615,778.21 2,276,692.84 12,077,743.42 12,658,974.80 2,487,596.95 285,632.14 3,639,300.07 5,195,727.28 359,054.09 985,551.75 1,030,022.41 116,720.15 78,420.26 445,203.45 690,931.53 217,702.25 5,631.57 7,101.89 47,319.03 26,323.52 20,858.49 161,761.96 241.56 7,454,059.73 244,867.77 16,389,929.44 988,998.86 9,331,744.80 615,778.21 2,355,113.10 12,522,946.87 13,349,906.33 2,705,299.20 291,263.71 3,646,401.96 5,243,046.31 385,377.61 1,006,410.24 1,191,784.37 116961.71 TOTAL DIRECT INSTRUCTIONAL PROGRAMS $ 67,580,235.00 $ 75,059,282.00 $ 2,780,608.22 $ 77,839,890.22 Media Center Program Staff and Professional Development 2,042,028.00 355,049.00 2,569,865.15 306,194.88 266,700.56 2,876,060.03 266,700.56 TOTAL QBE FORMULA FUNDS $ 69,977,312.00 $ 77,629,147.15 $ 3,353,503.66 $ 80,982,650.81 (1) Comprised of State Funds plus Local Five Mill Share. (2) Allotments do not include the impact of the State amended formula adjustment. See notes to the basic financial statements. - 37 - SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 October 1, 2009 Honorable Sonny Perdue, Governor Members of the General Assembly Members of the State Board of Education and Superintendent and Members of the Dougherty County Board of Education REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Ladies and Gentlemen: We have audited the financial statements of the governmental activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of Dougherty County Board ofEducation as of and for the year ended June 30, 2008, which collectively comprise Dougherty County Board of Education's basic financial statements and have issued our report thereon dated October 1, 2009. Our report was modified to include a reference to other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Other auditors audited the financial statements ofthe Dougherty County Board of Education's discretely presented component unit, as described in our report on the Dougherty County Board of Education's financial statements. This report does not include the results of other auditor's testing of internal controls over financial reporting or compliance and other matters that are reported on separately by those auditors. Internal Control Over Financial Reporting In planning and performing our audit, we considered Dougherty County Board of Education's internal control over financial reporting as a basis for designing our auditing procedures for the purpose ofexpressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness ofthe Dougherty County Board ofEducation's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Dougherty County Board of Education's internal control over financial reporting. 2008YB-30X Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies. A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Dougherty County Board of Education's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement ofthe Dougherty County Board ofEducation's financial statements that is more than inconsequential will not be prevented or detected by the Dougherty County Board of Education's internal control. We consider item FS-6471-08-01 in the accompanying Schedule ofFindings and Questioned Costs to be a significant deficiency in internal control over financial reporting. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Dougherty County Board of Education's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph ofthis section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe that the significant deficiency described above is not a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether Dougherty County Board of Education's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, 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 and other auditor's tests disclosed no instances ofnoncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we have reported to management of Dougherty County Board of Education in a separate letter dated October 1, 2009. Dougherty County Board ofEducation's response to the findings identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Dougherty County Board of Education's response and, accordingly, we express no opinion on it. 2008YB-30X This report is intended solely for the information and use of the audit committee, management, members ofthe Dougherty County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~W~ Ru sell W. Hinton, CPA, CGFM State Auditor RWH:as 2008YB-30X Russell W. Hinton STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 October 1, 2009 Honorable Sonny Perdue, Governor Members ofthe General Assembly Members of the State Board of Education and Superintendent and Members of the Dougherty County Board of Education REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 Ladies and Gentlemen: Compliance We have audited the compliance of Dougherty County Board of Education with the types of compliance requirements described in the U.S. Office ofManagement and Budget (0MB) Circular A-133 Compliance Supplement that are applicable to each ofits major Federal programs for the year ended June 30, 2008. Dougherty County Board of Education's major Federal programs are identified in the Summary of Auditor's Results Section ofthe accompanying Schedule ofFindings and Questioned Costs. Compliance with the requirements oflaws, regulations, contracts and grants applicable to each ofits major Federal programs is the responsibility ofDougherty County Board of Education's management. Our responsibility is to express an opinion on Dougherty County Board of Education's compliance based on our audit. We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and 0MB Circular A133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and 0MB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the Dougherty County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the 2008SA-40 circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on Dougherty County Board ofEducation's compliance with those requirements. In our opinion, the Dougherty County Board of Education complied, in all material respects, with the requirements referred to above that are applicable to each of its major Federal programs for the year ended June 30, 2008. The results of our auditing procedures disclosed instances of noncompliance with those requirements, which are described in the accompanying Schedule of Findings and Questioned Costs as items FA-6471-08-01 and FA-6471-08-02. Internal Control Over Compliance The management of Dougherty County Board of Education is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to Federal programs. In planning and performing our audit, we considered Dougherty County Board of Education's internal control over compliance with requirements that could have a direct and material effect on a major Federal program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance, 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 ofthe Dougherty County Board of Education's internal control over compliance. Our consideration ofthe internal control over compliance was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the Board's internal control that might be significant deficiencies or material weaknesses as defined below. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be significant deficiencies. A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent or detect noncompliance with a type ofcompliance requirement of a Federal program on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to administer a Federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a Federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. We consider the deficiencies in internal control over compliance described in the accompanying Schedule ofFindings and Questioned Costs as items FA-6471-08-01 and FA-6471-08-02 to be significant deficiencies. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a Federal program will not be prevented or detected by the entity's internal control. We do not consider any ofthe deficiencies described in the accompanying Schedule ofFindings and Questioned Costs to be material weaknesses. 2008SA-40 Dougherty County Board ofEducation's response to the findings identified in our audit is described in the accompanying Schedule of Management's Responses. We did not audit Dougherty County Board of Education's response and, accordingly, we express no opinion on it. This report is intended solely for the information and use ofmanagement, members ofthe Dougherty County Board of Education, others within the entity, Federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, RWH:as 2008SA-40 v)~~ ell W. Hinton, CPA, CGFM State Auditor SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS DOUGHERTY COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-64 71-06-02 FS-6471-07-01 Further Action Not Warranted Partially Resolved - See Corrective Action/Responses CORRECTIVE ACTION/RESPONSES CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Procedures over School Activity Accounts Finding Control Number: FS-6471-07-01 The number of staff available for assignment of accounting functions is limited in the schools. The School District's internal auditor will continue to work with the available staff in each school to develop compensating controls. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FA-6471-06-01 Unresolved - See Corrective Action/Responses CORRECTIVE ACTION/RESPONSES ACTIVITIES ALLOWED OR UNALLOWED Inadequate Internal Control Procedures U. S. Department of Education Through Georgia Department of Education Amount: $22,396.00 Finding Control Number: FA-6471-06-01 The School District expended more than $1 million in local funds for students with disabilities. Any of these expenditures could have been earmarked for the $22,396.00 Hurricane Education Recovery Act funds. The School District will provide this information to Georgia Department of Education upon their request. SECTION IV FINDINGS AND QUESTIONED COSTS DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 I SUMMARY OF AUDITOR'S RESULTS 1. Type of Report Issued on the Financial Statements The auditor's opinion on the Dougherty County Board of Education's financial statements was unqualified. 2. Significant Deficiencies in Internal Control Disclosed by the Audit ofthe Financial Statements The audit report for the Dougherty County Board of Education disclosed a financial statement significant deficiency related to the following control categories. Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements The significant deficiency described above is not considered to be a material weakness. 3. Noncompliance Material to the Financial Statements The audit of the Dougherty County Board of Education disclosed no instances of noncompliance that were deemed to be material to the financial statements. 4. Significant Deficiencies in Internal Control Over Major Programs The audit report for the Dougherty County Board of Education disclosed significant deficiencies in internal control over major programs for the following compliance requirements. Period of Availability of Federal Funds Allowable Costs/Cost Principles None of the significant deficiencies described above are considered to be material weaknesses. 5. Type of Report Issued on Compliance for Major Programs The auditor's opinion on the Dougherty County Board ofEducation's report on compliance with requirements applicable to major programs was unqualified. 6. Audit Findings Required to be Reported by Section .5 lO(a) of 0MB Circular A-133 The Dougherty County Board of Education's audit disclosed audit findings required to be reported by section .510(a) of 0MB Circular A-133. These audit findings are included in section IV of this report. - 1- DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 I SUMMARY OF AUDITOR'S RESULTS 7. Major Programs Federal awards audited as major programs are as follows: 84.027 Special Education - Grants to States 84.173 Special Education - Preschool Grants 84.357 Reading First State Grants 84.367 Improving Teacher Quality State Grants 8. Type "A" Program Dollar Threshold The dollar threshold for type "A" programs was $705,305.72. 9. Low Risk Auditee The Dougherty County Board of Education qualified as a low risk auditee as defined by Section .530 of 0MB Circular A-133. II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Procedures over School Activity Accounts Significant Deficiency Finding Control Number: FS-6471-08-01 Condition: This is a repeat finding ((FS-6471-07-01, FS-6471-06-02, FS-6471-05-02, FS-6471-04-02, FS-6471-03-02, and FS-6471-02-02) from the years ended June 30, 2007, June 30, 2006, June 30, 2005, June 30, 2004, June 30, 2003, and June 30, 2002, respectively. The accounting procedures of the School District were insufficient to provide for adequate internal controls over the school activity accounts. Criteria: The School District's management is responsible for designing and maintaining internal controls that provide proper separation of duties and reasonable assurance that transactions are processed according to established procedures. Questioned Cost: NIA Information: Cash and Cash Equivalents The bank reconciliation function was not separated from the record keeping and voucher payment functions. -2 - DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Procedures over School Activity Accounts Significant Deficiency Finding Control Number: FS-6471-08-01 Revenues and Receivables Deposit preparation was not separated from the record keeping and cash custody functions. The following deficiencies were noted during our testing of transactions: 1. A few receipts were not deposited timely. 2. Numerous receipts did not have enough information to trace to recording on general ledger. Expenditures/Liabilities/Disbursements The check writing function was not separated from the record keeping or processing of signed checks. The following deficiencies were noted during our testing of transactions: 1. A voucher lacked proof of receiving function. 2. Numerous expenditures did not have enough information to trace to general ledger. Cause: These deficiencies were a result of management's failure to ensure that internal controls were established, implemented and functioning at the school level. Effect: Errors and /or fraud may not be detected in a timely manner. Recommendation: The School District should implement procedures to ensure that the key accounting functions of custody, record keeping and authorization are separated and/or utilize management oversight of these incompatible activities. Additionally, management should revise and monitor controls to provide reasonable assurance that transactions are processed according to established procedures. -3- DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ALLOWABLE COSTS/COST PRINCIPLES Time and Attendance Records Not Utilized Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Reading First State Grants (CFDA 84.357) Finding Control Number: FA-6471-08-01 Condition: A review of salaries charged to the Reading First State Grants (CFDA 84.357) revealed that employee time and attendance records were not being utilized as required by 0MB Circular A-87. Criteria: Provisions of the 0MB Circular A-87, Cost Principles for Determining Allowable Costs, require that "Where employees work on multiple activities or cost objectives, a distribution oftheir salaries or wages will be supported by personnel activity reports or equivalent documentation that meets the following standards: (a) They must reflect an after-the-fact distribution ofthe actual activity of each employee, (b) they must account for the total activity for which the employee is compensated, (c) they must be prepared at least monthly and must coincide with one or more pay periods, and (d) they must be signed by the employee. Such documentary support will be required where employees work on: (a) More than one Federal award, or (b) a Federal award and a non-Federal award." Questioned Cost: $27,390.48 Information: Testing of employee compensation payments charged to the Reading First State Grants program revealed that personnel activity reports or equivalent documentation had not been completed for an employee who worked on multiple activities to document the actual time worked in the program. In addition, an employee funded completely with Federal funds was missing a periodic certification for the period. Cause: Management failed to implement controls for monitoring compliance with Federal guidelines to ensure that proper documentation was maintained related to employee compensation expenses paid from Federal award programs. -4 - DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ALLOWABLE COSTS/COST PRINCIPLES Time and Attendance Records Not Utilized Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Reading First State Grants (CFDA 84.357) Finding Control Number: FA-6471-08-01 Effect: Failure to require timesheets and/or time schedules for split-funded employees resulted in noncompliance with the requirements of the Federal grant. Recommendation: The School District should establish procedures to ensure that adequate time records that support the basis for compensation are maintained for all split funded employees. The Georgia Department ofEducation should review this matter to determine if a refund is appropriate. PERIOD OF AVAILABILITY OF FEDERAL FUNDS Expenditures Outside of Grant Period Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education Through Georgia Department of Education Improving Teacher Quality State Grants (CFDA 84.367) Reading First State Grants (CFDA 84.357) Finding Control Number: FA-6471-08-02 Condition: An examination of transactions for the Reading First State Grants (CFDA 84.357) and the Improving Teacher Quality State Grants (CFDA 84.367) revealed that expenditures occurring outside the grant period were charged to these programs. Criteria: The Uniform Administrative Requirements for Grants and Cooperative Agreements to State andLocal Governments states, in part, "where a funding period is specified, a grantee may charge to the award only costs resulting from obligations of the funding period". Questioned Cost: $38,536.67 Improving Teacher Quality State Grants (CFDA 84.367) $11,666.67 Reading First State Grants (CFDA 84.357) $26,870.00 -5- DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008 III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS PERIOD OF AVAILABILITY OF FEDERAL FUNDS Expenditures Outside of Grant Period Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Through Georgia Department of Education Improving Teacher Quality State Grants (CFDA 84.367) Reading First State Grants (CFDA 84.357) Finding Control Number: FA-6471-08-02 Information: A review ofexpenditures revealed that two vendor invoices charged to these programs were for software licensing agreement costs incurred subsequent to the end of the grant period. Cause: Management failed to adequately monitor the compliance with Federal guidelines to ensure that expenditures were charged during the approved grant period. Effect: Failure to ensure that expenditures were charged in the correct grant period resulted in noncompliance with the requirements of the Federal Grant. Recommendation: The School District should implement adequate procedures to ensure that expenditures are charged to the appropriate grant period. The Georgia Department ofEducation should review this matter to determine ifa reclaim of funds is appropriate. -6 - SECTIONV MANAGEMENT'S RESPONSES DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF MANAGEMENT'S RESPONSES YEAR ENDED JUNE 30, 2008 Finding Control Number: FS-6471-08-01 We concur with this finding. However, financial resources limit the number of staff available for assignment of accounting functions in the schools. The School District's internal auditor will continue to work with the available staff in each school to further develop compensating controls where needed. Finding Control Number: FA-6471-08-01 We concur with this finding. All Federal Program Directors will be notified of the time and attendance and periodic certification requirement by Central Office Administration staff. All Federal Program Directors will require this information on a monthly basis for split-funded employees and twice a year for employees that are funded completely with Federal funds. The Internal Auditor will monitor the required documentation twice a year (October and February) to ensure that the documentation is being maintained. These monitoring procedures will be implemented by October, 2009. Finding Control Number: FA-6471-08-02 We concur with this finding. Accounting, Accounts Payable and Purchasing Department staff will continue to monitor these requirements in their respective functions. Principals, Department Heads and Program Directors are constantly informed of these requirements during the school year in an effort to prevent improper expenditures. Contact Person: Telephone: Fax: Email: Robert Lloyd, Finance Director (229) 431-1234 (229) 431-1239 Robert.lloyd@docoschools.org