Dougherty County Board of Education, Albany, Georgia, annual financial report for the fiscal year ended 2014 June 30 (including independent auditor's reports)

DOUGHERTY COUNTY BOARD OF EDUCATION
ALBANY, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2014
(Including Independent Auditor's Reports)

DOUGHERTY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

EXHIBITS

BASIC FINANCIAL STATEMENTS

DISTRICT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET POSITION

B

STATEMENT OF ACTIVITIES

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

G

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

H NOTES TO THE BASIC FINANCIAL STATEMENTS

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

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

SUPPLEMENTARY INFORMATION

2 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 3 SCHEDULE OF STATE REVENUE 4 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS 5 ALLOTMENTS AND EXPENDITURES
GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE) BY PROGRAM

Page
i
1 2 4 5 6 7 8 9
29 30 32 33 34

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DOUGHERTY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

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SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
January 19, 2016

Honorable Nathan Deal, 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 REPORT
Ladies and Gentlemen:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information (Exhibits A through H) of the Dougherty County Board of Education, as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the Board's basic financial statements of the Board's primary government as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
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effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
Except for the matter described in the "Basis for Disclaimer of Opinion for the Discretely Presented Component Unit" paragraph, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Basis for Disclaimer of Opinion for the Discretely PresentedComponent Unit
The financial statements of Dougherty County Stadium Authority (Authority) have not been audited, and we were not engaged to audit the Authority's financial statements as a part of our audit of the School District's basic financial statements. The Authority's financial activities are included in the School District's basic financial statements as a discretely presented component unit.
Disclaimer of Opinion
In our opinion, because of the significance of the matter described in the "Basis for Disclaimer Opinion for the Discretely Presented Component Unit" paragraph, the scope of our work was not sufficient to enable us to express, and we do not express, an opinion on the financial statements of the Authority as of the year ended June 30, 2014.
Unmodified Opinions
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, and each major fund of the Dougherty County Board of Education, as of June 30, 2014, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As described in Note 2 to the financial statements, in 2014 the Dougherty County Board of Education adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual, as presented on pages i through xi and page 28 respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge
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we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Dougherty County Board of Education's basic financial statements. The accompanying supplementary information, consisting of Schedules 2 through 5, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements.
The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated January 19, 2016, 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 of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Dougherty County Board of Education's internal control over financial reporting and compliance.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,

GSG:er 2014ARL-25X

Greg S. Griffin State Auditor

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DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014
INTRODUCTION
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, 2014. 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
Key financial highlights for fiscal year 2014 are as follows:
The School District continues to maintain a sound fiscal position in fiscal year 2014. Among major funds the general fund had $154.0 million in revenues and $155.0
million in expenditures. The general fund's fund balance decreased slightly from $18.2 million to $17.5 million. Total Net Position increased nearly $6.2 million in fiscal year 2014. This total increase was due to governmental activities since the School District has no businesstype activities.
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 Position 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 financial position of the School District has improved or diminished. There are many factors that can affect the overall financial condition of the School District such as the 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.
The Statement of Activities reflects the governmental activities of the School District 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 District's activities.
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DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014
Fund Financial Statements Fund financial reports provide detail information about the School District's major funds. Funds are accounting devices the School District uses to keep track of 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. Governmental funds record how money flows in and out within the current period, and reports the balances remaining at year-end available for spending in future periods. The governmental fund statements provide a short-term 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 of Net Position and the Statement of Activities) 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, 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 its operations.
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 2013 and fiscal year 2014.
Statement of Net Position (Analysis of the District as a Whole) As previously stated above, the Statement of Net Position 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 2014 and the comparative amount for fiscal year 2013.
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DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Table 1 Net Position (In Thousands)

Governmental Activities

Fiscal

Fiscal

Increase

Year 2014

Year 2013 (Decrease)

Assets Current and Other Assets Capital Assets, Net

$ 100,389 $ 62,193 $ 38,196

252,050

246,007

6,043

Total Assets

352,439

308,200 44,239

Liabilities Current and Other Liabilities Long-Term Liabilities

22,993 35,505

19,390 1,052

3,603 34,453

Total Liabilities

58,498

20,442 38,056

Net Position Net Investment in Capital Assets Restricted Unrestricted

247,174 33,746 13,021

246,007 27,520 14,231

1,167 6,226 -1,210

Total N et Position $ 293,941 $ 287,758 $ 6,183

See Table 5 for an analysis of the increase in Capital Assets.
See Table 6 for complete analysis of the increase on Long-Term Debt at June 30.
Restricted or designated assets are assets that must be used for a specific purpose. Restricted assets increased $6.2 million and include $1.1 million restricted for the continuation of federal programs and for $5.1 million for capital projects and debt services.
Unrestricted Net Position for Governmental Activities decreased from a $14.2 million balance at the end of fiscal year 2013 to a $13.0 million balance at the end of fiscal year 2014. The decrease is mainly due to program expenditures exceeding total general fund revenues.
Statement of Activities Table 2 shows the changes in net position for fiscal year 2014 and fiscal year 2013 as reported on the Statement of Activities.

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DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Table 2 Change in Net Position
(In Thousands)

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

Governmental Activities

Fiscal Year

Fiscal Year

2014

2013

Increase (Decrease)

$

1,534 $

2,026 $

97,921

91,083

622

762

-492 6,838
-140

Total Program Revenues

100,077

93,871

6,206

General Revenues: Taxes Property Taxes For Maintenance and Operations Other Taxes Sales Taxes Special Purpose Local Option Sales Tax For Debt Services For Capital Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous

40,889 47
4,507 11,176
307
11,504 53
1,947

40,205 43
16,413 306
10,377 61
1,126

684 4
4,507 -5,237
1
1,127 -8
821

Total General Revenues

70,430

68,531

1,899

Total Revenues

170,507

162,402

8,105

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

97,635
4,348 7,707 3,092 1,619 10,144 2,082 14,210 7,380 4,922
409 498 9,555 723

94,026
4,430 5,672 3,295 1,765 9,801 1,468 13,900 6,744 3,408
391 527 9,233

3,609
-82 2,035
-203 -146 343 614 310 636 1,514
18 -29 322 723

Total Expenses

164,324

154,660

9,664

Increase in Net Position

$

6,183 $

7,742 $

-1,559

iv

DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014
The change in Net Position decreased $1.6 million from fiscal year 2013 to fiscal year 2014.
The $6.2 million increase in programs revenues are directly correlated with the $2.0 million increase in QBE and state funding and $4.2 million in federal awards. Property tax revenues increased slightly by $684,000 mainly due to an increase in Motor Vehicle Ad Valorem and TAVT (Title Ad Valorem Taxes). Sales tax revenues decreased by $729,000 signifying a decrease in economic spending as our economy continues to recover. Although program revenues make up a majority of the total revenue, the School District is still dependent upon tax revenues for the funding of governmental activities.
Total Program Expenses increased $9.7 million for fiscal year 2014 compared to the previous fiscal year. Instructional expenses account for $3.6 million, this increase is mainly due to salary and benefits as mandated by the state for certified personnel and Improvement of Instructional Services account for $2.0 million due to increase professional learning activities.
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.
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 of Plant 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.
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DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

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 fiscal year 2013 and fiscal year 2014. This information is presented on the Statement of Activities.

Table 3 Governmental Activities
(In Thousands)

Total Cost of Services

Fiscal

Fiscal

Year 2014

Year 2013

Net Cost of Services

Fiscal

Fiscal

Year 2014

Year 2013

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

Interest on Short-Term and Long-Term Debt

97,635 $
4,348 7,707 3,092 1,619 10,144 2,082 14,210 7,380 4,211
711
409 498 9,555 723

94,026 $
4,430 5,672 3,295 1,765 9,801 1,468 13,900 6,744 2,830
578
391 527 9,233

32,808 $ 35,009

3,173 2,022 1,017
-423 5,916 1,983 9,191 4,617 4,016
1

2,620 1,813
982 -648 4,601 1,367 8,282 3,512 2,772
11

409

391

498

527

-1,704

-450

723

Total Expenses

$ 164,324 $ 154,660 $

64,247 $ 60,789

The Net Cost of Services reflects the balance of costs that were funded by taxes and other General Revenues.
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.

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DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Table 4 Governmental Funds Net Change in Fund Balance
(in Thousands)

REVENUES

General Fund

Capital Projects Funds

Debt Service Fund

Totals

Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues

$

40,558

307 $

82,670

27,377

1,534

13

1,912

$

154,371 $

11,176 $
7 35 11,218 $

$ 4,507
33 4,540 $

40,558 15,990 82,670 27,377
1,534
53
1,947 170,129

EXPENDITURES

Current Instruction Support Services Enterprise Operations Community Services Food Service Operations
Capital Outlay Debt Services (Interest)
Total Expenditures Excess of Revenues over (under)
Expenditures

91,970 52,256
409 498 9,345 622
155,100
-729

1,445 1,688
11,860 14,993
-3775

624 624
3,916

93,415 53,944
409 498 9,345 12,482 624 170,717
-588

OTHER FINANCING SOURCES (USES)

Proceeds of Bonds Premiums on Bonds Sold Transfers In Transfers Out
Total Other Financing Sources (Uses)

32,450

2,566

57

-57

-10,917

-57

24,156

10,917 10,917

32,450 2,566
10,974 -10,974 35,016

Net Change in Fund Balances Fund Balances - Beginning

-786 18,284

20,381 24,390

14,833

34,428 42,674

Fund Balances - Ending

$

17,498 $

44,771 $

14,833 $

77,102

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DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014
Total revenues for all governmental funds were $170.1 million and total expenditures were $170.7 million. Total expenditures exceeded total revenues by $588,000 for governmental activities. The fund balance for governmental funds increased from $42.7 million at the beginning of the fiscal year to $77.1 million at June 30, 2014 mainly due to bond proceeds of $32.0 million in November 2013.
The fund balance reported for the General Fund decreased from $18.3 million at the beginning of the fiscal year to $17.5 million at June 30, 2014 due to a combined increase of expenditures in the areas of instruction, support services, food servicing, and capital outlay over general fund revenues received to fund these governmental activities.
The fund balance reported for the Capital Projects Fund increased from $24.4 million at the beginning of the fiscal year to $44.8 million at June 30, 2014. This was mainly due to the $32.0 million bond issuance in November 2013.
The fund balance reported for the Debt Service Fund is $14.8 million at the end of the fiscal year. Revenue from sales taxes offset by bond interest payments and a transfer from the Capital Projects Fund of $10.9 million account for total fund balance.
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 of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Schedule "1."
During fiscal year 2014, the School District amended its general fund budget as needed. The Original Budget approved by the School District's Board in June, 2013, 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 district later in the fiscal year. The receipt of these additional grants requires an increase in revenues and expenditures. This is because grant funds restricted for a specific purpose 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.
Capital Assets
Since fiscal year 2002, the School District has developed ongoing capital programs that have aggressively sought to upgrade its aging school facilities, many of which are 50 to 60 years old.
In December, 2008, the District began receiving the proceeds from a newly approved special purpose local option sales tax referendum. The approved referendum provides for the renovation of three of the District's high schools. Most of the work on these projects was delayed until fiscal year 2009 when the District received additional start up proceeds from the issuance of a General Obligation Bond. At the end of fiscal year 2014 renovations and improvements were completed on four high schools and five elementary schools. Also, the School District had invested $252.0 million in capital assets. Table 5 compares fiscal year 2014 Capital Asset balances to fiscal year 2013 balances.
In November of fiscal year 2011, the voters of Dougherty County approved the continuation of the one percent sales tax (Sales Tax for Educational Progress). These sales tax revenues will be used to complete the renovation of schools and improvements, acquire school buses, vehicles for
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DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

maintenance and transportation, real and personal property. Sales tax revenues will also be used to upgrade the IT Infrastructure located in the administration building and in one elementary school, leading classroom technology for teachers and end user projects such as One to One technology to all students. Other sales tax projects include the installation of safety and access controls, and the purchase of musical instruments and other academic/instruction related equipment. In the fall of fiscal year 2014 the School District issued General Obligation Bonds in the amount of $32.5 million.

Table 5 Capital Assets at June 30 (Net of Depreciation, in Thousands)

Fiscal Year 2014

Governmental Activities Fiscal Year 2013

Increase (Decrease)

Land

$

Construction in Progress

Buildings and Building Improvements

Equipment

9,051 $ 11,650 226,908
4,441

9,051 685 $
232,619 3,652

10,965 -5,711
789

Total

$

252,050 $

246,007 $ 6,043

Table 5 shows that Total Capital Assets increased $6.0 million in fiscal year 2014. The increase in Construction in Progress is largely due to Dougherty High School's Phase II renovation and the IT Infrastructure Upgrade both totaling $10.7 million. All construction projects were funded by a one percent special purpose local option sales tax approved by the voters of Dougherty County.
Debt
Table 6 summarizes the Long-Term Debt outstanding at June 30 for fiscal year 2013 and fiscal year 2014.
Table 6 Debt at June 30 (in Thousands)

Governmental Activities

Fiscal Year

Fiscal Year

Increase

2014

2013

(Decrease)

General Obligation Bonds $ Compensated Absences Bond Premiums Amortized

32,450 1,003 $ 2,052

$ 1,052

32,450 -49
2,052

Total

$

35,505 $

1,052 $

34,453

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DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014

As shown in Table 6, General Obligation Bonds were issued for $32.4 million to finance capital outlay projects funded by forthcoming SPLOST revenues. Amortized bond premiums represent $2.0 million and $1.0 million is for Compensated Absences, which represent the School District's estimated financial obligation for future payments to employees for accumulated unused vacation leave.
Current Financial Issues Like most School Districts in Georgia, the Dougherty County School District has faced several financial challenges in the recent years. Such challenges include the rising costs in employee benefits, state mandated teacher salary increases, utilities 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.

Despite these challenges, the School District is financially stable. The School Districts operating millage for fiscal year 2014 was 18.445. The current millage rate has remained at 18.445 since fiscal year 2008 (2007 digest).

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. After an increase last fiscal year, there was a small decrease in the FTE count for fiscal year 2014.

Fiscal Year 2010 Fiscal Year 2011 Fiscal Year 2012 Fiscal Year 2013 Fiscal Year 2014

15,962 15,628 15,497 15,676 15,628

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 fund balance. Management has continued to monitor expenditures and identify additional costs savings and reductions on a monthly basis, which contributed to the preservation of the general fund balance.

The School District continues to be financially challenged by multiple years of reductions in State funding to local districts. Austerity reductions to State funding were budgeted again for fiscal year 2014. Even with these reductions in State resources (and the local tax digest), the School District has maintained the current millage of 18.445 mills since fiscal year 2009 and has been able to maintain a healthy General Fund Balance.

In spite of the continued challenges, The Dougherty County School District recognizes its responsibility as a steward of taxpayer dollars. The School District completed an occupancy and space utilization assessment aimed at ensuring the School District is using its facilities space efficiently. As a result three schools (two elementary and one middle) were closed at the end of the 2013 school year, resulting in an operational cost savings of approximately $2.0 million. The School District strives to emphasize student achievement while maintaining sound fiscal management.

x

DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 Contacting the 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 Board's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Kenneth Dyer, Associate Superintendent and CFO, Dougherty County School System, P.O. Box 3170, 200 Pine Avenue, Albany, Georgia 31701. You may also email your questions to kenneth.dyer@docoschools.org.
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DOUGHERTY COUNTY BOARD OF EDUCATION

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DOUGHERTY COUNTY BOARD OF EDUCATION STATEMENT OF NET POSITION JUNE 30, 2014

EXHIBIT "A"

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable, Net
Taxes State Government Federal Government Local Other Inventories Prepaid Items Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net of Accumulated Depreciation)
Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Claims Incurred but not Reported (IBNR) Interest Payable Retainages Payable Deposits and Unearned Revenues Long-Term Liabilities
Due Within One Year Due in More Than One Year
Total Liabilities
NET POSITION
Net Investment in Capital Assets Restricted for
Continuation of Federal Programs Debt Service Capital Projects Unrestricted

PRIMARY GOVERNMENT GOVERNMENTAL
ACTIVITIES

COMPONENT UNIT DOUGHERTY COUNTY STADIUM AUTHORITY

$

46,992,352.95 $

29,620,053.43

4,911,529.61 10,003,197.76
7,449,695.57 31,965.63
903,434.92 473,475.90
2,985.00 20,701,362.06 231,348,843.04

352,438,895.87

160,849.83
410,000.00 2,125,630.00 2,696,479.83

4,151,030.15 16,845,208.50
1,223,673.06 98,583.33
613,092.46 61,360.85
8,308,327.15 27,197,080.30
58,498,355.80

247,173,958.90
4,274,579.35 14,734,756.52 14,736,515.37 13,020,729.93

2,535,630.00 160,849.83

Total Net Position

$

293,940,540.07 $

2,696,479.83

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, 2014

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 Interest on Short-Term and Long-Term Debt
Total Governmental Activities
COMPONENT UNIT
Dougherty County Stadium Authority
General Revenues Taxes Property Taxes For Maintenance and Operations Railroad Cars Sales Taxes Special Purpose Local Option Sales Tax For Debt Services For Capital Projects Other Sales Tax Grants and Contributions not Restricted to Specific Programs Investment Earnings Miscellaneous
Total General Revenues
Change in Net Position
Net Position - Beginning of Year

EXPENSES

CHARGES FOR SERVICES

$

97,634,907.34 $

4,348,437.29 7,707,376.42 3,091,961.42 1,618,925.39 10,143,840.50 2,081,754.87 14,210,171.61 7,380,253.96 4,210,614.75
711,159.25

408,630.13 498,129.08 9,554,971.43 722,944.45

$

164,324,077.89 $

1,111,852.35
69,775.00 154,134.26
198,413.87 1,534,175.48

$

242,520.50 $

110,000.00

Net Position - End of Year

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

EXHIBIT "B"

PROGRAM REVENUES OPERATING GRANTS AND
CONTRIBUTIONS

CAPITAL GRANTS AND CONTRIBUTIONS

NET (EXPENSES) REVENUES

AND CHANGES IN NET POSITION

PRIMARY

GOVERNMENT

COMPONENT UNIT

GOVERNMENTAL

DOUGHERTY COUNTY

ACTIVITIES

STADIUM AUTHORITY

$

63,632,745.24 $

1,175,850.11 5,685,170.32 2,075,263.00 2,042,018.68 4,227,809.23
98,411.71 4,949,801.18 2,068,953.59
194,104.43 710,040.07

11,060,584.88

$

97,920,752.44 $

82,000.00 $ 540,540.00 622,540.00 $

-32,808,309.75
-3,172,587.18 -2,022,206.10 -1,016,698.42
423,093.29 -5,916,031.27 -1,983,343.16 -9,190,595.43 -4,616,626.11 -4,016,510.32
-1,119.18
-408,630.13 -498,129.08 1,704,027.32 -722,944.45
-64,246,609.97

$

-132,520.50

40,888,603.92 47,006.47
4,507,389.07 11,176,370.71
306,506.20 11,504,148.00
52,706.00 1,946,864.15
70,429,594.52
6,182,984.55
287,757,555.52

$

293,940,540.07 $

747.44 44,036.20 44,783.64 -87,736.86 2,784,216.69
2,696,479.83

- 3 -

DOUGHERTY COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2014

EXHIBIT "C"

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

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 13,015,507.39 $ 31,242,521.85 $ 2,734,323.71 $

1,719,361.55

17,133,576.19

10,767,115.69

3,579,629.16 10,003,197.76
7,449,695.57 31,965.63
903,434.92 473,475.90
2,985.00

1,331,900.45

46,992,352.95 29,620,053.43
4,911,529.61 10,003,197.76
7,449,695.57 31,965.63
903,434.92 473,475.90
2,985.00

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

$ 37,179,252.88 $ 48,376,098.04 $ 14,833,339.85 $ 100,388,690.77

$ 1,158,078.97 $ 16,845,208.50
61,360.85
18,064,648.32

2,992,951.18 $ 613,092.46
3,606,043.64

$

4,151,030.15

16,845,208.50

613,092.46

61,360.85

21,670,691.96

1,616,347.11

1,616,347.11

476,460.90 4,198,805.93 2,614,255.99 1,795,032.46 8,413,702.17
17,498,257.45

44,770,054.40 $ 14,833,339.85

44,770,054.40

14,833,339.85

476,460.90 63,802,200.18
2,614,255.99 1,795,032.46 8,413,702.17
77,101,651.70

Total Liabilities, Deferred Inflows of Resources, and Fund Balances

$ 37,179,252.88 $ 48,376,098.04 $ 14,833,339.85 $ 100,388,690.77

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 POSITION JUNE 30, 2014

EXHIBIT "D"

Total Fund Balances - Governmental Funds (Exhibit "C")
Amounts reported for Governmental Activities in the Statement of Net Position are different because:
Capital Assets used in Governmental Activities are not financial resources and therefore are not reported as assets in governmental funds. These assets consist of:
Land Construction in Progress Buildings Equipment Accumulated Depreciation
Total Capital Assets
Taxes that are not available to pay for current period expenditures are deferred in the governmental funds.
Property Taxes
Long-Term Liabilities, including Bonds Payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-Term Liabilities at year-end consist of:
Bonds Payable Accrued Interest Payable Compensated Absences Payable Bond Premiums, Net of Amortization Claims and Judgments Payable
Total Long-Term Liabilities
Net Position of Governmental Activities (Exhibit "A")

$ 77,101,651.70

$

9,051,054.08

11,650,307.98

339,600,537.16

10,448,236.37

-118,699,930.49

252,050,205.10

1,616,347.11

$ -32,450,000.00 -98,583.33
-1,002,915.05 -2,052,492.40 -1,223,673.06

-36,827,663.84

$ 293,940,540.07

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, 2014

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
Interest
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Proceeds of Bonds Premiums on Bonds Sold Transfers In Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Fund Balances - Ending

GENERAL FUND

DISTRICTWIDE
CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 40,558,598.74

306,506.20 $ 11,176,370.71 $

82,670,371.97

27,377,068.47

1,534,175.48

12,491.38

7,025.40

1,911,864.15

35,000.00

154,371,076.39

11,218,396.11

$ 4,507,389.07
33,189.22

40,558,598.74 15,990,265.98 82,670,371.97 27,377,068.47
1,534,175.48 52,706.00
1,946,864.15

4,540,578.29

170,130,050.79

91,969,680.91
4,334,171.74 7,677,805.25 2,911,533.19 1,611,840.27 9,820,180.06 1,891,428.10 13,382,006.62 6,469,009.90 3,446,573.24
711,159.25 408,630.13 498,129.08 9,345,020.60 622,540.00

1,445,452.80
5,625.60 7,085.12 95,053.38 529,755.57 427,992.19 623,073.88
11,859,790.23

155,099,708.34 -728,631.95

14,993,828.77 -3,775,432.66

624,361.12 624,361.12 3,916,217.17

93,415,133.71
4,334,171.74 7,683,430.85 2,911,533.19 1,618,925.39 9,820,180.06 1,986,481.48 13,911,762.19 6,897,002.09 4,069,647.12
711,159.25 408,630.13 498,129.08 9,345,020.60 12,482,330.23
624,361.12
170,717,898.23
-587,847.44

-57,026.11 -57,026.11 -785,658.06 18,283,915.51

32,450,000.00 2,565,615.50 57,026.11
-10,917,122.68
24,155,518.93
20,380,086.27
24,389,968.13

10,917,122.68
10,917,122.68 14,833,339.85
0.00

32,450,000.00 2,565,615.50
10,974,148.79 -10,974,148.79
35,015,615.50
34,427,768.06
42,673,883.64

$

17,498,257.45 $ 44,770,054.40 $ 14,833,339.85 $ 77,101,651.70

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, 2014

EXHIBIT "F"

Total Net Change in Fund Balances - Governmental Funds (Exhibit "E")
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Capital Outlays are reported as expenditures in Governmental Funds. However, in the Statement of Activities, the cost of Capital Assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are:
Capital Outlay Depreciation Expense
Excess of Capital Outlay over Depreciation Expense
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) is to decrease net position.
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
Bond proceeds provide current financial resources to Governmental Funds; however, issuing debt increases Long-Term Liabilities in the Statement of Net Position. In the current period, proceeds were received from:
General Obligation Bonds Issued, Including a Premium of $2,565,615.50
Repayment of Long-Term Debt is reported as an expenditure in Governmental Funds, but the repayment reduces Long-Term Liabilities in the Statement of Net Position. In the current year, these amounts consist of:
Amortized Bond Premium
Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in Governmental Funds. These activities consist of:
Net Decrease in Accrued Interest on Issuance of Bonds Increase in Compensated Absences Decrease in Claims and Judgments
Total Additional Expenditures
Change in Net Position of Governmental Activities (Exhibit "B")

$ 34,427,768.06

$ 12,482,330.23 -6,259,858.27

6,222,471.96 -179,652.46 377,011.65

-35,015,615.50

513,123.10

$

-98,583.33

49,411.16

-112,950.09

-162,122.26

$

6,182,984.55

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

DOUGHERTY COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2014
ASSETS Cash and Cash Equivalents Accounts Receivable, Net
Local
Total Assets
LIABILITIES Funds Held for Others

EXHIBIT "G"

AGENCY FUNDS

$

390,162.60

17,422.63

$

407,585.23

$

407,585.23

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, 2014

EXHIBIT "H"

NOTE 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
REPORTING ENTITY
The Dougherty County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
DISCRETELY PRESENTED COMPONENT UNIT
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 17 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 of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expenses (expenses of the School District related to the administration and support of the School District's programs, such as office and maintenance personnel and accounting) are not allocated to programs.
Program revenues include (a) charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.

- 9 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

District-wide Capital Projects Fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and Bond Proceeds that are restricted, committed or assigned to the expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest.
The School District reports the following fiduciary fund type:
Agency funds account for assets held by the School District as an agent for various funds or individuals.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental and fiduciary financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants are recognized in the fiscal year in which all eligibility requirements have been satisfied.
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School District considers all revenues reported in the governmental funds to be available if they are collected within sixty days after year-end. The School District considers all intergovernmental revenues to be available if they are collected within 120 days after year-end. Property taxes, sales taxes and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general longterm 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 of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, both restricted and unrestricted resources are available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2014, the School District adopted the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. The provisions of this Statement establish accounting and financial reporting standards that reclassify, as deferred outflows or inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows or inflows of resources, certain items that were previously reported as assets and liabilities.

- 10 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

FUTURE ACCOUNTING PRONOUNCEMENTS
In fiscal year 2015, the School District will adopt Governmental Account Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this Statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. Implementation of this statement will require the School District to record a liability for its proportionate share of the Net Pension Liability of pension plans in which it participates. Based on information provided by the Teachers' Retirement System of Georgia (TRS), the School District's liability for the unfunded portion of the pension plan administered through TRS is estimated to be $97,782,417.00 at June 30, 2015.
CASH AND CASH EQUIVALENTS
Composition of Deposits Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated Section 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
Composition of Investments Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
1. Obligations issued by the State of Georgia or by other states,
2. Obligations issued by the United States government,
3. Obligations fully insured or guaranteed by the United States government or a United States government agency,
4. Obligations of any corporation of the United States government,
5. Prime banker's acceptances,
6. The local government investment pool (Georgia Fund 1) administered by the State of Georgia, Office of the State Treasurer,
7. Repurchase agreements, and
8. Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investment policies that address current credit risk, custodial credit risk, concentration of credit risk, interest rate risk or foreign currency risk.

- 11 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

RECEIVABLES
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
PROPERTY TAXES
The Dougherty County Board of Commissioners County Board of Commissioners adopted the property tax levy for the 2013 tax digest year (calendar year) on July 15, 2013 (levy date) based on property values as of January 1, 2013. Taxes were due on December 20, 2013 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2013 tax digest are reported as revenue in the governmental funds for fiscal year 2014. 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, 2014, for maintenance and operations amounted to $38,784,468.35.
The tax millage rate levied for the 2013 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

18.445 mills

Additionally, Title Ad Valorem Tax revenues, at the fund reporting level, amounted to $1,727,123.92 during fiscal year ended June 30, 2014.
SALES TAXES
Education Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $15,683,759.78 and is to be used for capital outlay and debt services for educational purposes. 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 of donated food commodities used in the preparation of meals are reported at their federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.
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 an asset is recorded when supplies are purchased and expenses are recorded at the time the supplies are consumed.

- 12 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

PREPAID ITEMS

Payments made to vendors for services that will benefit periods subsequent to June 30, 2014, are recorded as prepaid items.
CAPITAL ASSETS

Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost.

The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art.
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 Intangible Assets

Any amount

N/A

$ 100,000.00 20 to 80 years

$

50,000.00 4 to 10 years

$ 1,000,000.00

4 to 8 years

Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives, with the exception of intangible assets which are amortized.

Amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, copyrights and internally generated software is computed using the straight-line method over the estimated useful lives of the assets, generally 4 to 8 years.
DEFERRED OUTFLOWS/INFLOWS OF RESOURCES

In addition to assets, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. The School District did not have any items that qualified for reporting in this category for the year ended June 30, 2014.

In addition to liabilities, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time. The School District has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and grants and these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available.

- 13 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

COMPENSATED ABSENCES
Members of the Teachers' Retirement System of Georgia (TRS) may apply unused sick leave toward early retirement. The liability for early retirement will be borne by TRS rather than by the individual school districts. Otherwise, sick leave does not vest with the employee, and no liability is reported in the School District's financial statements.
Vacation leave of 18 days is awarded on a fiscal year basis to all full time personnel employed on a twelve month basis. No other employees are eligible to earn vacation leave. Vacation leave not utilized during the fiscal year may be carried over to the next fiscal year, providing such vacation leave does not exceed 30 days.

Beginning of Year Liability

Increase

Decrease

End of Year Liability

2012 2013 2014

$ 1,194,069.27 $ 1,168,992.95 $ 1,052,326.21

$ 870,137.27 $ 815,575.40 $ 785,895.50

$ 895,213.59 $ 1,168,992.95 $ 932,242.14 $ 1,052,326.21 $ 835,306.66 $ 1,002,915.05

GENERAL OBLIGATION BONDS

The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In the District-wide financial statements, bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued.

In the fund financial statements, the School District recognizes bond premiums and discounts, as well as bond issuance costs during the fiscal year bonds are issued. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. General obligation bonds are direct obligations and pledge the full faith and credit of the government. The outstanding amount of these bonds is recorded in the Statement of Net Position.
NET POSITION

The School District's net position in the District-wide Statements is classified as follows:

Net Investment in capital assets - This represents the School District's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets.

Restricted net position This represents resources for which the School District is legally or contractually obligated to spend resources for continuation of Federal Programs, debt service and capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net position - Unrestricted net position represents 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.

- 14 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

FUND BALANCES
The School District's fund balances are classified as follows:
Nonspendable Amounts that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.
Restricted Constraints are placed on the use of resources are either (1) externally imposed conditions by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.
Committed Amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education. The Board of Education is the School District's highest level of decision-making authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned Amounts that are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board of Education or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.
Unassigned The residual classification for the General Fund. This classification represents fund balances that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund.
Fund Balances of the Governmental Funds at June 30, 2014, are as follows:

Nonspendable

Inventories

$

473,475.90

Prepaid Assets

2,985.00 $ 476,460.90

Restricted

Continuation of Federal Programs

4,198,805.93

Capital Projects

44,770,054.40

Debt Service

14,833,339.85

63,802,200.18

Committed

Self-Insurance

2,614,255.99

Assigned

Subsequent Period Expenditures

1,433,004.00

School Activity Accounts

362,028.46

1,795,032.46

Unassigned

8,413,702.17

Fund Balance, June 30, 2014

$ 77,101,651.70

It is the goal of the School District to achieve and maintain a committed, assigned, and unassigned fund balance in the general fund at fiscal year-end of 8% to 12% of expenditures, not to exceed 15% of the total budget of the subsequent fiscal year, in compliance with Official Code of Georgia Annotated Section 20-2-167(a)5. If the unassigned fund balance at fiscal year-end falls below the goal, the School District shall develop a restoration plan to achieve and maintain the minimum fund balance.

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
NOTE 3: BUDGETARY DATA
The budget is a complete financial plan for the School District's fiscal year, and is based upon careful estimates of expenditures together with probable funding sources. The budget is legally adopted each year for the general and capital projects funds. There is no statutory prohibition regarding over expenditure of the budget at any level. The budget for all governmental funds, except the various school activity (principal) accounts, is prepared and adopted by fund, function and object. The legal level of budgetary control was established by the Board at the aggregate level. The budget for the General Fund was prepared in accordance with accounting principles generally accepted in the United States of America.
The budgetary process begins with the School District's administration presenting an initial budget for the Board's review. The administration makes revisions as necessary based on the Board's guidelines and a tentative budget is approved. After approval of this tentative budget by the Board, such budget is advertised at least once in a newspaper of general circulation in the locality, as well as the School District's website. At the next regularly scheduled meeting of the Board after advertisement, the Board receives comments on the tentative budget, makes revisions as necessary and adopts a final budget. The approved budget is then submitted, in accordance with provisions of Official Code of Georgia Annotated Section 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
See Schedule 1 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual for a detail of any over/under expenditures during the fiscal year under review.
NOTE 4: DEPOSITS AND INVESTMENTS
COLLATERALIZATION OF DEPOSITS
Official Code of Georgia Annotated (O.C.G.A.) Section 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. Section 45-8-13.1) the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110 percent of the daily pool balance.
At June 30, 2014 $37,161,722.37 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,

- 16 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

2. Insurance on accounts provided by the Federal Deposit Insurance Corporation,
3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
5. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
7. Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
CATEGORIZATION OF DEPOSITS
Custodial credit risk is the risk that in the event of a bank failure, the School District's deposits may not be returned to it. The School District does not have a deposit policy for custodial credit risk. At June 30, 2014, the School District had deposits with a carrying amount of $47,407,950.08, which includes $25,434.53 in Certificates of Deposit that are reported as Investments, and a bank balance of $53,465,444.32. The bank balances insured by Federal depository insurance were $1,658,183.31 and the bank balances collateralized with securities held by the pledging institution or by the pledging financial institution's trust department or agent in the School District's name were $85,568.16. The amounts exposed to custodial credit risk are classified into three categories as follows:
Category 1 - Uncollateralized Category 2 - Cash collateralized with securities held by the pledging financial institution
o 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.

The School District's deposits by custodial risk category at June 30, 2014, are as follows:

Custodial Credit Risk Category

Bank Balance

1

$ 37,161,722.37

2

0.00

3

14,559,970.48

Total

$ 51,721,692.85

- 17 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

COMPONENT UNIT

At June 30, 2014, Dougherty County Stadium Authority's bank balance of $160,849.83 was insured through Federal Depository Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA).
CATEGORIZATION OF INVESTMENTS
At June 30, 2014, the carrying value of the School District's total investments was $29,620,053.43, which is materially the same as fair value. This includes $25,434.53 invested in Certificates of Deposit, which are collateralized in the same manner as other cash deposits.
This investment also includes $29,594,618.90 invested in the Georgia Fund 1 (local government investment pool) administered by the State of Georgia, Office of the State Treasurer which is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1 (Primary Liquidity Portfolio) does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at http://www.audits.ga.gov/SGD/cafr.html.
The Primary Liquidity Portfolio consists of Georgia Fund 1 which is not registered with the SEC as an investment company and does not operate in a manner consistent with the SEC's Rule 2a-7 of the Investment Company Act of 1940. The investment is valued at the pool's share price, $1.00 per share. The pool is an AAAf rated investment pool by Standard and Poor's. The weighted average maturity for Georgia Fund 1 on June 30, 2014, was 62 days.
NOTE 5: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. These commodities are recorded at their federally assigned value. See Note 2 - Inventories
NOTE 6: CAPITAL ASSETS

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

Balances July 1, 2013

Transfers

Increases

Decreases

Balances June 30, 2014

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

$ 9,051,054.08

$

685,024.75 $ -7,806.50 $ 10,973,089.73

0.00 $

9,051,054.08 11,650,307.98

Total Capital Assets Not Being Depreciated

9,736,078.83 -7,806.50 10,973,089.73

0.00

20,701,362.06

Capital Assets Being Depreciated Buildings and Improvements Equipment

339,613,760.08 9,309,699.37

7,806.50

178,433.50 1,330,807.00

199,462.92 192,270.00

339,600,537.16 10,448,236.37

Less Accumulated Depreciation for: Buildings and Improvements Equipment

106,994,848.09 5,657,304.59

5,717,789.14 542,069.13

19,810.46 192,270.00

112,692,826.77 6,007,103.72

Total Capital Assets, Being Depreciated, Net 236,271,306.77

7,806.50 -4,750,617.77

179,652.46

231,348,843.04

Governmental Activity Capital Assets - Net $ 246,007,385.60 $

0.00 $ 6,222,471.96 $ 179,652.46 $ 252,050,205.10

- 18 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

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

Food Services

$ 4,509,235.37

14,801.63 25,441.04 190,717.88 341,838.95 100,444.83 178,605.95 510,587.24 29,774.28
$

1,392,211.80 358,411.10
6,259,858.27

COMPONENT UNIT
Component Unit's Summary of Changes in Capital Assets
Balances July 1, 2013

Increase

Decrease

Balances June 30, 2014

Governmental Activities Capital Assets, Not Being Depreciated:
Land

$ 410,000.00 $

0.00 $

0.00 $ 410,000.00

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

308,976.00 239,886.00 2,607,983.00

73,378.00 229,063.00 630,527.00

7,724.00 21,889.00 68,634.00

308,976.00 239,886.00 2,607,983.00

81,102.00

250,952.00

0.00

699,161.00

Total Capital Assets, Being Depreciated, Net

2,223,877.00

-98,247.00

Governmental Activity Capital Assets - Net $ 2,633,877.00 $ -98,247.00 $

0.00

2,125,630.00

0.00 $ 2,535,630.00

- 19 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

NOTE 7: INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2014, consisted of the following:

Transfers to

Transfers From

District-wide

General Fund

Capital Projects

District-wide Capital Projects $ 57,026.11

Debt Service Fund

$ 10,917,122.68

Total

$ 57,026.11 $ 10,917,122.68

EXHIBIT "H"

Transfers are used to (1) move property tax revenues collected by the General Fund to the District-wide Capital Projects Fund to cover a portion of the employees' salaries not funded as part of the Education Special Purpose Local Option Sales Tax (ESPLOST) projects and (2) move Education Special Purpose Local Option Sales Tax (ESPLOST) proceeds collected by the District-wide Capital Projects Fund to the Debt Service Fund to meet debt service requirements.
NOTE 8: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God and unemployment compensation.
The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the system. The School District pays an annual premium to the system for its general insurance coverage. Additional coverage is provided through agreements by the system with other companies according to their specialty for property, boiler and machinery (including coverage for flood and earthquake), general liability (including coverage for sexual harassment, molestation and abuse), errors and omissions, crime and automobile risks. Payment of excess insurance for the system varies by line of coverage.
The School District has established a limited risk management program for workers' compensation claims. 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.

- 20 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2013 $ 1,463,903.42 $ 2014 $ 1,110,722.97 $

934,091.09 $ 1,287,271.54 $ 1,151,177.37 $ 1,038,227.28 $

1,110,722.97 1,223,673.06

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2013 $ 2014 $

0.00 $ 0.00 $

63,106.45 $ 47,583.00 $

63,106.45 $ 47,583.00 $

0.00 0.00

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

Position Covered

Amount

Superintendent All Other Employees

$

50,000.00

$ 100,000.00

NOTE 9: OPERATING LEASES
Dougherty County Board of Education has entered into various leases as lessee for copiers and fax machines. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended June 30, 2014, for governmental funds amounted to $353,108.16. Future minimum lease payments for these leases are as follows:

Year Ending

Governmental Funds

2015

$

34,425.68

NOTE 10: 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 provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75 percent of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred.

- 21 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

Short-term debt activity for the fiscal year is as follows:

Beginning Balance

Issued

Redeemed

Ending Balance

Tax Anticipation Notes $

0.00 $ 9,000,000.00 $ 9,000,000.00 $

0.00

NOTE 11: LONG-TERM LIABILITIES COMPENSATED ABSENCES

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

General Obligation Bond currently outstanding is as follows:

Purpose

Interest Rates

Amount

General Government - Series 2013

2.00% - 5.00% $ 32,450,000.00

Voters have authorized $7,550,000.00 in general obligation debt for (a) renovation and improvement of one or more existing schools, administration and related facilities, (b) acquisition, construction and equipping of new schools, administration and related facilities, (c) acquisition of school buses, vehicles and other transportation equipment, (d) acquisition, construction and equipping of new athletic facilities, (e) acquisition of software, hardware and computer equipment for the use of both staff and students and (f) acquisition of real and personal property necessary for the foregoing. These bonds had not been issued as of June 30, 2014.
The changes in Long-Term Liabilities during the fiscal year ended June 30, 2014, were as follows:

Balance July 1, 2013

Additions

Governmental Activities

Balance

Deductions

June 30, 2014

Due Within One Year

G.O. Bonds

$

Compensated Absences

Bond Premiums Amortized

$

0.00 $ 1,052,326.21
0.00

32,450,000.00 785,895.50 $
2,565,615.50

$ 835,306.66 513,123.10

32,450,000.00 $ 1,002,915.05 2,052,492.40

1,052,326.21 $ 35,801,511.00 $ 1,348,429.76 $ 35,505,407.45 $

7,725,000.00 70,204.05
513,123.10
8,308,327.15

- 22 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

At June 30, 2014, payments due by fiscal year which include principal and interest for these items are as follows:

Fiscal Year Ended June 30:

General Obligation Debt

Principal

Interest

Unamortized Bond Premium

2015 2016 2017 2018

$ 7,725,000.00 $ 1,105,750.00 $

7,950,000.00

869,500.00

8,175,000.00

550,250.00

8,600,000.00

195,000.00

513,123.10 513,123.10 513,123.10 513,123.10

Total Principal and Interest $ 32,450,000.00 $ 2,720,500.00 $ 2,052,492.40

NOTE 12: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $8,236,222.05 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 Certificated Personnel In the amount of $7,867,176.00
Paid to the Teachers' Retirement System of Georgia For Teachers' Retirement System (TRS) Employer's Cost In the amount of $37,582.05
Office of the State Treasurer Paid to the Public School Employees' Retirement System For Public School Employees' Retirement (PSERS) Employer's Cost In the amount of $331,464.00
Funds paid to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District are reported as part of the Quality Basic Education revenue allotments on Schedule 3 Schedule of State Revenue.
NOTE 13: SIGNIFICANT COMMITMENTS
The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2014.

Project IT Infrastructure Upgrade/Data Centers Dougherty High School COE Phase II

Unearned Executed Contracts

$

1,864,368.25

10,840,098.79

$

12,704,467.04

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

- 23 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

NOTE 14: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but believed to be material to the basic financial statements.
NOTE 15: POST-EMPLOYMENT BENEFITS
GEORGIA SCHOOL PERSONNEL POST-EMPLOYMENT HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand-alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.
Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "payas-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.

- 24 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

The combined active and retiree contribution rates established by the Board for employers participating in the School OPEB Fund were as follows for the fiscal year ended June 30, 2014. For certificated teachers, librarians and regional educational service agencies and certain other eligible participants:

July 1, 2013 - June 30, 2014 $945.00 per member per month

For non-certificated school personnel:

July 1, 2013 - June 30, 2014 $596.20 per member per month
No additional contribution was required by the Board for fiscal year 2014 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other post-employment benefits and are subject to appropriation.
The School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows:

Percentage Fiscal Year Contributed

Required Contribution

2014 2013 2012

100% 100% 100%

$ 16,535,080.12 $ 14,708,855.59 $ 14,352,395.01

NOTE 16: RETIREMENT PLANS

TEACHERS' RETIREMENT SYSTEM OF GEORGIA (TRS)

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

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

TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.

Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

- 25 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

Funding Policy. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2014, were 6.00% of annual salary. Employer contributions required for fiscal year 2014 were 12.28% of annual salary as required by the June 30, 2011, actuarial valuation. Employer contributions will increase to 13.15% effective July 1, 2015.

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

Percentage Fiscal Year Contributed

Required Contribution

2014 2013 2012

100% 100% 100%

$ 9,743,172.49 $ 8,933,693.84 $ 8,086,748.31

PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM (PSERS)

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

In August 1996, Dougherty County Board of Education began an employer paid 403(b) annuity plan for the group of employees covered under the Public School Employees' Retirement System (PSERS). Recognizing that PSERS was a limited defined contribution and defined benefit plan which did not provide for an adequate retirement for this group of employees, it was the Board's desire to supplement the retirement of this group.

The Board selected VALIC as the provider of this plan. For each employee covered under PSERS, employees contribute 1% of their base pay and the Board matches 3% of employee's contribution.

The employee becomes vested in the plan with 5 years of experience. Funds accumulated in the employer paid accounts are only available to the employee upon termination of employment and 5 years of service to Dougherty County Board of Education. If an employee terminates employment prior to achieving 5 years of service, funds paid on behalf of the non-vested employee are credited back to the Board.

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

Percentage Fiscal Year Contributed

Required Contribution

2014 2013 2012

3%

$ 163,989.90

3%

$ 173,175.01

3%

$ 173,373.75

- 26 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2014

EXHIBIT "H"

NOTE 17: 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 of the School District and is discretely presented in the School District's financial statements.
The Authority utilizes the modified accrual method of accounting. The Authority has implemented the financial reporting requirements of GASB Statement Nos. 33 and 34. The authority's fiscal year is July 1 through June 30.

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DOUGHERTY COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2014

SCHEDULE "1"

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Operations Food Services Operation
Capital Outlay
Total Expenditures
Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES)
Other Transfers from Other Funds Sale or Compensation for Loss of Fixed Assets Other Sources Other Transfers to Other Funds
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances - Beginning
Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

$ 39,774,794.00 $ 40,589,871.00 $ 40,558,598.74 $

-31,272.26

45,000.00

306,506.00

306,506.20

0.20

81,342,294.00

82,693,214.43

82,670,371.97

-22,842.46

27,216,332.00

35,603,950.78

27,377,068.47

-8,226,882.31

1,519,380.63

1,066,247.13

1,534,175.48

467,928.35

32,000.00

10,478.00

12,491.38

2,013.38

1,829,559.37

2,870,756.42

1,911,864.15

-958,892.27

151,759,360.00

163,141,023.76

154,371,076.39

-8,769,947.37

91,346,229.79
4,836,194.38 8,244,909.87 2,895,170.00 2,172,195.21 9,104,177.82 1,523,907.00 13,573,333.14 6,089,931.22 3,804,498.00
783,876.57 349,000.00 428,718.00 10,179,950.00
155,332,091.00
-3,572,731.00

95,486,025.39
4,481,538.65 11,983,340.84
2,873,767.74 1,991,249.61 9,275,328.94 1,808,150.24 13,684,879.10 7,170,767.44 3,407,533.40 1,180,125.00
371,888.87 465,409.00 11,834,374.48
166,014,378.70
-2,873,354.94

91,969,680.91
4,334,171.74 7,677,805.25 2,911,533.19 1,611,840.27 9,820,180.06 1,891,428.10 13,382,006.62 6,469,009.90 3,446,573.24
711,159.25 408,630.13 498,129.08 9,345,020.60 622,540.00
155,099,708.34
-728,631.95

3,516,344.48
147,366.91 4,305,535.59
-37,765.45 379,409.34 -544,851.12 -83,277.86 302,872.48 701,757.54 -39,039.84 468,965.75 -36,741.26 -32,720.08 2,489,353.88 -622,540.00
10,914,670.36
2,144,722.99

608,436.00 12,000.00
1,233,710.00 -748,436.00
1,105,710.00
-2,467,021.00
13,897,420.00

683,305.00 39,695.00
1,069,715.00 -683,305.00
1,109,410.00
-1,763,944.94
18,277,703.83
-378,526.05

-57,026.11 -57,026.11 -785,658.06 18,283,915.51

-683,305.00 -39,695.00
-1,069,715.00 626,278.89
-1,166,436.11
978,286.88
6,211.68
378,526.05

Fund Balances - Ending

$ 11,430,399.00 $ 16,135,232.84 $ 17,498,257.45 $ 1,363,024.61

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

(1) Original and Final Budget amounts do not include the budgeted revenues or expenditures of the various principal accounts. The actual revenues and expenditures of the various principal accounts are $821,758.10 and $814,861.03 respectively.

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, 2014

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 U. S. Department of Agriculture
Education, U. S. Department of Educational Technology State Grants Cluster Pass-Through From Georgia Department of Education Education Technology State Grants
School Improvement Grants Cluster Pass-Through From Georgia Department of Education ARRA - School Improvement Grants School Improvement Grants
Total School Improvement Grants Cluster
Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education ARRA - Race-to-the-Top Incentive Grants Career and Technical Education - Basic Grants to States Education for Homeless Children and Youth English Language Acquisition Grants Improving Teacher Quality State Grants Migrant Education - State Grant Program Special Education State Personnel Development Title I Grants to Local Educational Agencies Pass-Through From Georgia Professional Standards Commission Transition to Teaching
Total Other Programs
Total U. S. Department of Education
Health and Human Services, U. S. Department of Child Care and Development Fund Cluster Pass-Through From Georgia Department of Behavorial Health and Developmental Disabilities Block Grants for Prevention and Treatment of Substance Abuse
Labor, U. S. Department of Workforce Investment Act Cluster Pass-Through From Southwest Georgia 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

$ 9,873,882.10 (1)

9,873,882.10

84.318

N/A

84.388

N/A

84.377

N/A

1,184.00
444,083.11 490,170.65 934,253.76

* 84.027

N/A

* 84.173

N/A

* 84.395

N/A

84.048

N/A

84.196

N/A

84.365

N/A

* 84.367

N/A

84.011

N/A

84.323

N/A

* 84.010

N/A

84.350

N/A

3,532,761.53 125,451.00
3,658,212.53
2,173,148.99 172,532.98 18,855.52 44,156.96
1,130,992.08 45,683.13
40,033.86 8,007,080.12
1,500.00
11,633,983.64
16,227,633.93

93.959

N/A

17.259

N/A

81,550.83 68,298.30

- 30 -

DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2014

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 Marines R.O.T.C. Program
Total U. S. Department of Defense

CFDA NUMBER

PASSTHROUGH
ENTITY ID
NUMBER

EXPENDITURES IN PERIOD

$

58,765.07

126,528.46

185,293.53

Total Expenditures of Federal Awards

$ 26,436,658.69

N/A = Not Available

Notes to the Schedule of Expenditures of Federal Awards

(1) Includes the Federally assigned value of donated commodities for the Food Donation Program in the amount of $676,803.92.
(2) Expenditures for the funds earned on the School Breakfast Program ($2,778,821.64) were not maintained separately and are included in the 2014 National School Lunch Program.

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

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

The accompanying schedule of expenditures of Federal awards includes the Federal grant activity of the 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, 2014

AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education (1) Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities 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 Mid-term Adjustment Hold-Harmless Amended Formula Adjustment Categorical Grants Pupil Transportation Regular Nursing Services Education Equalization Funding Grant Other State Programs Food Services GNETS State Grant Math and Science Supplements Move on When Ready Preschool Handicapped Program Pupil Transportation - State Bonds Teachers' Retirement Technology to Support Digital Learning - State Bonds Vocational Education
Office of the State Treasurer Public School Employees Retirement

(1) Payments to the Georgia Department of Community Health by the Georgia Department of Education on behalf of the School District in the amount of $7,867,176.00 are included as part of the Quality Basic Education revenue allotments. above.

See notes to the basic financial statements

- 32 -

SCHEDULE "3"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

1,118,561.89

6,273,531.00 536,241.00
13,410,235.00 2,679,327.00 5,651,734.00 1,942,120.00
10,642,159.00 8,984,709.00 2,454,406.00 6,702,194.00 1,658,654.00 613,996.00 716,812.00 224,411.00 1,823,913.00 582,031.00 318,838.00
1,558,872.00 3,649,520.00 4,022,822.00
304,989.00 -10,404,325.00
1,593,661.00 308,777.00
11,504,148.00
246,293.00 2,084,578.81
66,860.73 300.00
256,313.00 540,540.00
37,582.05 82,000.00 152,103.49
331,464.00
$ 82,670,371.97

DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
YEAR ENDED JUNE 30, 2014

SCHEDULE "4"

PROJECT

SPLOST III

(i)

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 office (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

Subtotal SPLOST III

SPLOST IV

(a) The renovation and improvement of one or more existing schools, administration and related facilities, including the provision of safety and security equipment for these facilities

(b) acquisition, construction and equipping of new schools, administration and related facilities

(c)

the acquisition of school buses, vehicles for maintenance

and transportation use and other transportation equipment

(d) acquisition, construction and equipping of new athletic facilities

(e) acquisition of software, hardware and computer equipment for the use of both staff and students

(f)

acquisition of real and personal property necessary for the

foregoing

Subtotal SPLOST III

Total

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED IN PRIOR YEARS (3) (4)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED (4) (5)

ESTIMATED COMPLETION
DATE

$ 75,200,000.00 $ 61,187,834.94 $ 2,671,105.21 $ 58,516,729.73 $ 61,187,834.94 $

0.00

Completed

10,500,000.00

23,565,820.29

5,978,353.71

9,175,505.60

15,153,859.31

December 2015

5,700,000.00

6,180,686.12

20,671.44

6,160,014.68

6,180,686.12

0.00

Completed

3,600,000.00 95,000,000.00

4,252,667.13 95,187,008.48

1,280,714.03 9,950,844.39

2,971,953.10 76,824,203.11

4,252,667.13 86,775,047.50

0.00 0.00

Completed

83,400,000.00

83,400,000.00

4,893,280.01

0.00

4,893,280.01

0.00

0.00

0.00

6,200,000.00

6,200,000.00

0.00

0.00

0.00

0.00

10,000,000.00

10,000,000.00

0.00

400,000.00

400,000.00

0.00

100,000,000.00

100,000,000.00

4,893,280.01

0.00

4,893,280.01

$ 195,000,000.00 $ 195,187,008.48 $ 14,844,124.40 $ 76,824,203.11 $ 91,668,327.51 $

0.00 June 30, 2018

June 30, 2018

June 30, 2018

June 30, 2018

June 30, 2018

0.00 0.00

June 30, 2018

(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 and other fees to provide advance funding for the above projects as follows:

Prior Years

$

0.00

Current Year

717,039.38

Total

$

717,039.38

(5)

SPLOST III Projects (ii), (iii), and (iv) were reported as completed at June 30, 2013 in error. Project (ii) is expected to be completed in December 2015.

Projects (iii) and (iv) were completed as of June 30, 2014.

See notes to the basic financial statements.

- 33 -

DOUGHERTY COUNTY BOARD OF EDUCATION GENERAL FUND - QUALITY BASIC EDUCATION PROGRAMS (QBE)
ALLOTMENTS AND EXPENDITURES - BY PROGRAM YEAR ENDED JUNE 30, 2014

SCHEDULE "5"

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

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

ELIGIBLE QBE PROGRAM COSTS

SALARIES

OPERATIONS

TOTAL

$

7,246,762.00 $

7,029,510.17 $

46,313.46 $

7,075,823.63

538,639.00

430,167.27

430,167.27

15,262,503.00

14,210,983.74

42,934.59

14,253,918.33

2,813,752.00

1,617,992.07

1,617,992.07

6,517,178.00

8,646,057.79

254,792.02

8,900,849.81

2,090,275.00
12,066,003.00 10,205,430.00
2,809,795.00 7,788,730.00
1,959,140.00 614,161.00 831,327.00 259,646.00

1,253,435.21 2,211,664.30 10,271,794.49 11,736,220.85 1,566,717.27
78,350.62 3,134,518.30 5,570,751.08
184,857.35 812,548.94
1,521,619.52 320,612.49

16,670.68 139,467.09 1,698,526.80 141,002.42
74.55
19,819.72 7,730.48 9,960.49
123,795.41

1,253,435.21 2,228,334.98 10,411,261.58 13,434,747.65 1,707,719.69
78,425.17 3,134,518.30 5,590,570.80
192,587.83 822,509.43
1,645,414.93 320,612.49

71,003,341.00

70,597,801.46

2,501,087.71

73,098,889.17

2,073,604.00 354,146.00

2,533,572.17 5,586.34

209,237.09 36,536.17

2,742,809.26 42,122.51

TOTAL QBE FORMULA FUNDS

$

73,431,091.00 $

73,136,959.97 $ 2,746,860.97 $ 75,883,820.94

(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.

- 34 -

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
January 19, 2016

Honorable Nathan Deal, 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 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, except as discussed in the following paragraph, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Dougherty County Board of Education as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise Dougherty County Board of Education's basic financial statements and have issued our report thereon dated January 19, 2016.
The financial statements of Dougherty County Stadium Authority (Authority) have not been audited, and we were not engaged to audit the Authority's financial statements as a part of our audit of the School District's basic financial statements. The Authority's financial activities are included in the School District's basic financial statements as a discretely presented component unit. We do not express an opinion for the discretely presented component unit.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Dougherty County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Dougherty County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Dougherty County Board of Education's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on
2014YB-50

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a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. We did identify a certain deficiency in internal control, described in the accompanying Schedule of Findings and Questioned Costs as item FS-2014-002 that we consider to be a significant deficiency.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Dougherty County Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed an instance of noncompliance or other matters that are required to be reported under Government Auditing Standards and which is described in the accompanying Schedule of Findings and Questioned Costs as item FS-2014-001.
We also noted certain matters that we have reported to management of Dougherty County Board of Education in a separate letter dated January 19, 2016.
Dougherty County Board of Education's Response to Findings
Dougherty County Board of Education's response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Dougherty County Board of Education's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,

GSG:er 2014YB-50

Greg S. Griffin State Auditor

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
January 19, 2016

Honorable Nathan Deal, 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 REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
Ladies and Gentlemen:
Report on Compliance for Each Major Federal Program
We have audited Dougherty County Board of Education's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2014. Dougherty County Board of Education's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of Dougherty County Board of Education's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Dougherty County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

2014SA-40

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We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Dougherty County Board of Education's compliance.
Opinion on Each Major Federal Program
In our opinion, the Dougherty County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2014.
Other Matters
The results of our auditing procedures disclosed an instance of noncompliance, which is required to be reported in accordance with OMB Circular A-133 and which is described in the accompanying Schedule of Findings and Questioned Costs as item FA 2014-001. Our opinion on each major federal program is not modified with respect to this matter.
Dougherty County Board of Education's response to the noncompliance finding identified in our audit is described in the accompanying schedule of findings and questioned costs. Dougherty County Board of Education's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
Report on Internal Control over Compliance
Management of Dougherty County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Dougherty County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Dougherty County Board of Education's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses.
2014SA-40

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However, we identified a deficiency in internal control over compliance, as described in the accompanying Schedule of Findings and Questioned Costs as item FA 2014-001 that we consider to be a significant deficiency.
Dougherty County Board of Education's response to the internal control over compliance finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. Dougherty County Board of Education's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,

GSG:er 2014SA-40

Greg S. Griffin State Auditor

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

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DOUGHERTY COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-6471-12-01 Further Action Not Warranted FS-6471-13-01 Unresolved 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-6471-13-01

The School District will implement procedures to strengthen its internal controls over Cash and Cash Equivalents. The School District will revise and monitor its procedures to ensure that accounting functions over custody, recordkeeping and authorization are separated and utilize management oversight of these activities. The School District will implement a monitoring process to ensure that transactions are processed according to established procedures.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER

AUDITEE'S RESPONSE/STATUS

FA-6471-12-03 FA-6471-13-01 FA-6471-13-02

Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented Partially Resolved See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES MATCHING, LEVEL OF EFFORT AND/OR EARMARKING PERIOD OF AVAILABILITY Inadequate Internal Control Procedures Finding Control Number: FA-6471-13-02

The School District has implemented procedures to ensure that all expenditures charged to federal programs are allowable under OMB Circular A-87, approved by the Program Coordinator and properly documented.

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SECTION IV FINDINGS AND QUESTIONED COSTS

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DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

I SUMMARY OF AUDITOR'S RESULTS

Financial Statements

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

Unmodified Disclaimer

Internal control over financial reporting:

Material weakness identified?

No

Significant deficiencies identified?

Yes

Noncompliance material to financial statements noted:

Yes

Federal Awards

Internal Control over major programs:

Material weakness identified?

No

Significant deficiency identified?

Yes

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

Unmodified

Any audit findings disclosed that are required to be reported in

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

Yes

Identification of major programs:

CFDA Number

Name of Federal Program or Cluster

84.010 84.027, 84.173 84.367 84.395

Title I, Part A Special Education Cluster Improving Teacher Quality State Grants ARRA Race-to-the-Top Incentive Grants

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

$793,099.76

Auditee qualified as low-risk auditee?

No

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DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2014-001 Uncollateralized Deposits

Control Category:

Cash and Cash Equivalents

Compliance Impact:

Material Noncompliance

Description: The School District failed to have its bank balances fully collateralized.

Criteria: The Official Code of Georgia Annotated (O.C.G.A.) 45-8-12 states in part: "The collecting officer or officers holding public funds may not have on deposit at any one time in any depository for a time longer than ten days a sum of money belonging to the public body when such depository has not given bond to the public body as set forth in this code section. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance."

Questioned Cost: N/A

Condition: As of June 30, 2014, the School District had $37,161,722.37 of bank balances that were not properly collateralized as required by O.C.G.A. 45-8-12.

Cause: In discussing this condition with management, they stated that management mistakenly relied on the financial institution's position that collateralization was not needed for bond proceeds as they are not appropriated by the State.

Effect or Potential Effect: A financial loss could be incurred by the School District for the uncollateralized bank balances.

Recommendation: The School District should implement procedures to monitor the collateralization of bank balances to ensure compliance with State laws governing deposits.

Views of Responsible Officials and Corrective Action Plans: We concur with this finding. Management will ensure that all bond proceeds are adequately collateralized according to O.C.G.A. 45-8-12. The School District has implemented procedures to monitor the collateralization of bank balances. This change will be implemented in fiscal year 2016.

Contact Person: Kenneth Dyer, Associate Superintendent & CFO Phone: (229) 431-1234 Fax: (229) 431-1239 Email: kenneth.dyer@docoschools.org

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DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2014-002 Inadequate Internal Control Procedures over School Activity Accounts

Control Category:

Cash and Cash Equivalents

Revenues/Receivables/Receipts

Expenditures/Liabilities/Disbursements

General Ledger

Internal Control Impact:

Significant Deficiency

Description: This is a repeat finding (FS-6471-13-01, FS-6471-12-01 and FS-6471-11-01) from the years ended June 30, 2013, June 30, 2012, and June 30, 2011, 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.

Financial Management for Georgia Local Units of Administration Chapter 43, School Activity Accounts (Principal Accounts) states in part "District Activity Funds (Governmental Funds 500) belong to the district, are used to support its co-curricular and extra-curricular activities, and are administered by the school district. ... Examples of Authorized District Activity Funds: Athletics..." In addition, it states "All activity funds should operate on a cash basis, meaning that no commitments or indebtedness may be incurred unless the fund contains sufficient cash.

Condition: The following deficiencies were noted with the School District's school activity accounts: Cash and Cash Equivalents
The bank reconciliation function was not separated from the record keeping and voucher payment functions.
Testing revealed bank reconciliations that were not approved by the appropriate personnel.

Revenues/Receipts/Receivables Deposit preparation was not separated from the record keeping and cash custody functions. The following deficiencies were noted during a test of forty receipt transactions: 1. Three receipts were not deposited in a timely manner. 2. Two receipts did not agree to the deposit tickets. 3. Thirty of the receipts examined lacked information to be able to trace to recording on the general ledger. 4. Five receipts did not contain the signature of two employees as required by board policy. 5. Ten receipts could not be located.

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 test of forty disbursement transactions: 1. Ten disbursements did not have original invoices attached. 2. Forty of the disbursements examined lacked information to be able to trace to recording on the general ledger. 3. Eight voucher packages did not have evidence of receipt of goods.
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DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014
II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
4. Sixteen vouchers did not have appropriately approved requisition requests as required by board policy.
5. One check written did not agree to the attached invoice. 6. Nine disbursements examined lacked information to be able to determine if charged to
the correct period.
General Ledger During testing of school activity accounts at three schools, the auditor noted twenty-two accounts with deficit balances.
Questioned Cost: None
Cause: In discussing this condition with management, they stated that school personnel have not been adequately following the policies and procedures set-forth in the School Districts "Accounting Manual for Activity Funds".
Effect or Potential Effect: Errors and/or irregularities may not be detected in a timely manner.
Recommendation: The School District should implement necessary procedures to ensure that the key accounting functions of custody and record keeping are separated. In addition, the School District should implement procedures to ensure that disbursements and receipts of funds within the school activity accounts are adequately documented and recorded in the financial records. The School District should also establish a monitoring process to provide reasonable assurance that transactions are processed according to established procedures.
Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The School District will use Central Office Finance staff to provide a monthly review of school activity accounts. This change will be implemented February 2016.
Contact Person: Kenneth Dyer, Associate Superintendent & CFO Phone: (229) 431-1234 Fax: (229) 431-1239 Email: kenneth.dyer@docoschools.org
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DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA 2014-001 Inadequate Internal Control Procedures

Compliance Requirements:
Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title:

ACTIVITIES ALLOWED/UNALLOWED ALLOWABLE COSTS/COST PRINCIPLES MATCHING, LEVEL OF EFFORT AND/OR EARMARKING Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education Georgia Department of Education CFDA 84.010 Title I, Part A

Description: This is a repeat finding (FA-6471-13-02 and FA-6471-12-02) from the years ended June 30, 2013 and June 30, 2012 respectively. A review of expenditures charged to the Title I Part A Custer (CFDA 84.010) program and monitoring reports performed by Georgia Department of Education (GDOE) revealed that the School District failed to implement internal control procedures to ensure expenditures were in compliance with grant requirements.

Criteria: Provisions of OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, require that "to be allowable under Federal awards, costs must be...necessary and reasonable for proper and efficient performance and administration of Federal awards", "conform to any limitations or exclusions set forth in the terms and conditions of the Federal award", and "be consistent with policies, regulations and procedures that apply uniformly to both Federal awards and other activities of the governmental unit".

The Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local 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".

Condition: A review of expenditures and the monitoring reports performed by GDOE revealed the following deficiencies:

Title I, Part A Cluster operating expenditures totaling $71.96 were not authorized or did not meet program guidelines.
Title I, Part A Cluster split-funded personnel did not provide acceptable time logs to support amounts paid.
The School District paid travel for an employee to attend training and credentialing workshop totaling $311.44 and 45 cases of paper and 48 boxes of file folders totaling $1,276.51 for a target assistance school. These payments constitute supplanting and cannot be paid by Title I, Part A.

Questioned Cost: $1,659.91

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DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2014
III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Cause: In discussing these conditions with management, they stated the grant Program Coordinator and staff did not have adequate procedures in place to ensure that the stated regulations were followed. Effect or Potential Effect: Failure to ensure that program expenditures are properly documented and allowable resulted in noncompliance with the Federal grant. Recommendation: The School District should implement procedures to ensure that all expenditures charged to Federal programs are allowable as required by Federal guidelines. The Board reclassified $1,348.47 of the unallowable costs from Title I, Part A to the General Fund and $311.44 of the unallowable costs from Title I, Part A to Race to the Top prior to closing out the 2014 fiscal year. Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The School District has implemented internal control procedures to ensure expenditures are in compliance with grant requirements. The two unallowable costs for Title I and Race to the Top were reclassified to the General Fund in fiscal year 2014. Contact Person: Kenneth Dyer, Associate Superintendent & CFO Phone: (229) 431-1234 Fax: (229) 431-1239 Email: kenneth.dyer@docoschools.org
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