Dougherty County Board of Education, Albany, Georgia, annual financial report for the fiscal year ended 2016 June 30 (including independent auditor's reports)

DOUGHERTY COUNTY BOARD OF EDUCATION
ALBANY, GEORGIA
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2016
(Including Independent Auditor's Reports)

DOUGHERTY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

Page

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

i

EXHIBITS

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS

A

STATEMENT OF NET POSITION

1

B

STATEMENT OF ACTIVITIES

2

FUND FINANCIAL STATEMENTS

C

BALANCE SHEET

GOVERNMENTAL FUNDS

4

D

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

5

E

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES

GOVERNMENTAL FUNDS

6

F

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT

OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES TO THE STATEMENT OF ACTIVITIES

7

G

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

8

H NOTES TO THE BASIC FINANCIAL STATEMENTS

10

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

TEACHERS RETIREMENT SYSTEM OF GEORGIA

35

2 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

36

3 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM OF GEORGIA

37

4 SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA

38

5 SCHEDULE OF CONTRIBUTIONS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 39

6 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION

40

7 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

41

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DOUGHERTY COUNTY BOARD OF EDUCATION - TABLE OF CONTENTS -

SECTION I
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION
8 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 9 SCHEDULE OF STATE REVENUE 10 SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS

Page
42 44 45

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 THE UNIFORM GUIDANCE

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

SECTION IV FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS
SECTION V MANAGEMENT'S CORRECTIVE ACTION SCHEDULE OF MANAGEMENT'S CORRECTIVE ACTION

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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
September 8, 2017

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 of the Dougherty County Board of Education (School District), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

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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 on 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 on Discretely Presented Component Unit
The financial statements of the Dougherty County Stadium Authority (Authority) have not been audited, and we were not engaged to audit the Authority's financial statements as 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
Because of the significance of the matter described in the "Basis for Disclaimer of Opinion on 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 audit opinion on the financial statements of the Discretely Presented Component Unit as of and for the year ended June 30, 2016.
Unmodified Opinions
In our opinion, the basic financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the School District, as of June 30, 2016, and the respective changes in financial position, and 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 2016, the School District adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application, GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and 68, and GASB Statement No. 79, Certain External Investment Pools and Pool Participants. Our opinions are 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, Schedules of Proportionate Share of the Net Pension Liability, Schedule of Contributions to Retirement System, Notes to the Required Supplementary Information and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual as presented on pages i through xi and pages 35 through 41 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

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States of America, which consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District's basic financial statements. The accompanying supplementary information, consisting of Schedules 8 through 10, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U. S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements.
The accompanying supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated September 8, 2017, on our consideration of the School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control over financial reporting and compliance.
A copy of this report has been filed as a permanent record in the office of the State Auditor and made available to the press of the State, as provided for by Official Code of Georgia Annotated Section 50-6-24.
Respectfully submitted,
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, 2016
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, 2016. 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.
In fiscal year 2016, the School District adopted the following Governmental Accounting Standards Board (GASB) Statements:
No. 72, Fair Value Measurement and Application. The provisions of this statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This statement provides guidance for determining a fair value measurement for financial reporting purposes. This statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The School District did not have any items that required a reassessment of value for reporting purposes as a result of this statement.
No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and 68. This statement establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement No. 68. It also amends certain provisions of Statement No. 67, Financial Reporting for Pension Plans, and Statement No. 68 for pension plans and pensions that are within their respective scopes. The adoption of this statement does not have a significant impact on the School District's financial statements.
No. 79, Certain External Investment Pools and Pool Participants. This statement addresses accounting and financial reporting for certain external investment pools and pool participants. If an external investment pool meets the criteria in this statement and measures all of its investments at amortized cost, the pool's participants also should measure their investments in that external investment pool at amortized cost for financial reporting purposes. The School District participates in an external investment pool, the State of Georgia local government investment pool (Georgia Fund 1), which does not meet the criteria of this statement. Therefore, the investment in this pool is measured at fair value as provided in paragraph 11 of GASB Statement No. 31, as amended.
FINANCIAL HIGHLIGHTS
Key financial highlights for fiscal year 2016 are as follows:
The School District's net position at June 30, 2016 was $176.8 million. Net position reflects the difference between all assets and deferred outflows of resources of the School District (including capital assets, net of depreciation) and all liabilities, both short-term and long-term, and deferred inflows of resources. The net position at June 30, 2016 of $176.8 million represented an increase of $8.2 million when compared to the prior year primarily due to the increase in program revenues and a decrease in instructional expenditures.
i

DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016
General fund revenues accounted for $157.6 million or about 91% of all governmental fund revenues totaling almost $173.3 million.
Among major funds the general fund had $157.6 million in revenues and $154.8 million in expenditures. The general fund's fund balance increased from $18.3 million to $21.0 million.
The School District continues to maintain a sound fiscal position in fiscal year 2016.
Overview of the 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.
Government-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 position 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 School District's property tax base, state and federal funding, and the condition of buildings and equipment.
All of the School District's programs and activities included in the government-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.
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 kinds of funds as discussed below:
Governmental Funds
Most of the School District's activities are reported in governmental funds, which focus on the determination of financial position and change in financial position, not on income determination. These funds are reported using the modified accrual method of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the School District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The differences between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds are reconciled to the financial statements.
ii

DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016

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 activities from the government-wide financial statements because it cannot use these assets 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 2015 and fiscal year 2016.
Statement of Net Position (Analysis of the School 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 position for this fiscal year 2016 and the comparative amounts for fiscal year 2015.
Table 1 Net Position (In Thousands)

Assets Current and Other Assets Capital Assets, Net

Governmental Activities

Fiscal

Fiscal

Increase

Year 2016

Year 2015

(Decrease)

$

82,427 $

260,083

89,814 $ 260,823

(7,387) (740)

Total Assets

342,510

350,637

(8,127)

Deferred Outflows of Resources Related to Defined Benefit Pension Plans

11,227

10,374

853

Liabilities Current and Other Liabilities Long-Term Liabilities

20,501 141,878

24,100 134,096

(3,599) 7,782

Total Liabilities

162,379

158,196

4,183

Deferred Inflows of Resources Related to Defined Benefit Pension Plans

14,572

34,213

(19,641)

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

254,733 45,389
(123,336)

252,664 41,374
(125,436)

2,069 4,015 2,100

Total Net Position

$

176,786 $

168,602 $

8,184

iii

DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 See Table 5 for analysis of the decrease in capital assets. Restricted or designated net position is funds that must be used for a specific purpose. Restricted net position increased $4.0 million and is primarily restricted to service debt. Total net position increased by $8.2 million in fiscal year 2016 from the prior year due to the decrease in debt related to capital assets.
iv

DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016

Statement of Activities

Table 2 shows the changes in net position for fiscal year 2016 and fiscal year 2015 as reported on the Statement of Activities.

Table 2 Change in Net Position
(In Thousands)

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

Fiscal Year 2016

Governmental Activities Fiscal Year 2015

Increase (Decrease)

$

1,577 $

1,463 $

114

103,961

102,984

977

464

90

374

Total Program Revenues

106,002

104,537

1,465

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

40,069 52
15,552 -
271
9,210 120
1,918 -

39,807 51
12,051 3,482 272
9,065 64
1,890 (684)

262 1
3,501 (3,482)
(1)
145 56 28
684

Total General Revenues and Special Items

67,192

65,998

1,194

Total Revenues

173,194

170,535

2,659

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 and Other Support Services Operations of Non-Instructional Services Enterprise Operations Community Services Food Services Interest on Short-Term and Long-Term Debt

92,717
3,995 9,988 3,021 1,661 9,991 3,076 14,121 6,581 7,583
342 496 10,990 447

103,416
4,141 9,299 2,917 1,519 9,787 1,923 13,714 6,412 5,668
396 494 10,044 672

(10,699)
(146) 689 104 142 204 1,153 407 169 1,915
(54) 2
946 (225)

Total Expenses

165,009

170,402

(5,393)

Increase in Net Position

$

8,185 $

133 $

8,052

v

DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016
The change in net position increased $8.1 million from fiscal year 2015 to fiscal year 2016.
There was a $1.5 million increase in programs revenues directly correlated with nearly $1.0 million in federal awards and the remaining in QBE and state funding. Property tax revenues increased by $263,000. Sales tax revenues increased slightly by $18,000. 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 decreased $5.4 million for fiscal year 2016 compared to the previous fiscal year. Although there was an increase in support and operation expenditures of $5.3 million, there was a decrease in instructional expenditures of $10.7 million. The decrease in instructional expenditures was due to the initial purchase of technology equipment and peripherals that were purchased for the 1:1 initiative in fiscal year 2015. 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. 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.
vi

DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016

Governmental Activities
Table 3 shows, for governmental activities, the total cost of services and the net cost of services for fiscal year 2015 and fiscal year 2016. This information is presented on the Statement of Activities.
Table 3 Governmental Activities
(In Thousands)

Total Cost of Services

Fiscal

Fiscal

Year 2016

Year 2015

Net Cost of Services

Fiscal

Fiscal

Year 2016

Year 2015

Instruction

$

92,717 $

103,416 $

23,964 $

35,719

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 and Other Support Services
Operations of Non-Instructional Services Enterprise Operations Community Services Food Services
Interest on Short-Term and Long-Term Debt

3,995 9,988 3,021 1,661 9,991 3,076 14,121 6,581 7,583
342 496 10,990 447

4,141 9,299 2,917 1,519 9,787 1,923 13,714 6,412 5,668
396 494 10,044 672

2,879 1,811
997 (497) 5,802 2,979 9,439 4,145 6,897
342 496 (692) 447

2,971 1,490
874 (601) 5,489 1,831 8,897 4,259 4,801
396 494 (1,427) 672

Total Expenses

$

165,009 $

170,402 $

59,009 $

65,865

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

vii

DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016

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.

REVENUES
Property Taxes Sales Taxes State Funds Federal Funds Charges for Services Investment Earnings Miscellaneous
Total Revenues
EXPENDITURES
Current Instruction Support Services Enterprise Operations Community Services Food Service Operations
Capital Outlay Debt Services
Total Expenditures

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

General Fund

Capital Projects
Fund

$ 39,918 $ 271
84,948 28,915
1,577 13
1,918
157,560

- $ 15 78
93

88,220 54,796
342 496 10,448
481 -
154,783

6,196 2,167
-
5,490 3,270
17,123

Excess of Revenues over (under) Expenditures
OTHER FINANCING SOURCES (USES) Capital Leases Transfers In Transfers Out Total Other Financing Sources(Uses)

2,777
(86) (86)

(17,030)
3,768 86 -
3,854

Net Change in Fund Balances Fund Balances - Beginning

2,691 18,286

(13,176) 29,080

Debt Service Fund
- $ 15,552
92 15,644
8,820 8,820
6,824
-
6,824 18,096

Totals
39,918 15,823 84,948 28,915
1,577 120
1,996 173,297
94,416 56,963
342 496 10,448 5,971 12,090 180,726
(7,429)
3,768 86 (86)
3,768
(3,661) 65,462

Fund Balances - Ending

$

20,977 $

15,904 $

24,920 $

61,801

Total revenues for all governmental funds were $173.3 million and total expenditures were $180.7 million. Total expenditures exceeded total revenues by $7.4 million for governmental activities. The fund balance for governmental funds decreased from $65.5 million at the beginning of the fiscal year to $61.8 million at June 30, 2016.
The fund balance reported for the general fund increased from $18.3 million at the beginning of the fiscal year to $21.0 million at June 30, 2016 due to a combined increase of general fund revenues received over expenditures in the areas of instruction, support services and food service operations.
viii

DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016

The fund balance reported for the capital projects fund decreased from $29.1 million at the beginning of the fiscal year to $15.9 million at June 30, 2016. This was mainly due to the capital outlay expenditures exceeding revenues in the current year. The School District entered into a capital lease agreement with Dell Financial to finance the School District's 1:1 initiative, to help support classroom learning that is student-centered, collaborative, imaginative, and adaptive.
The fund balance reported for the debt service fund increased from $18.1 million at the beginning of the fiscal year to $24.9 million at June 30, 2016. This increase was a result of an increase in sales tax revenue of $3.5 million.
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 "6".
During fiscal year 2016, the School District amended its general fund budget as needed. The original budget approved by the School District's Board in June 2015, included revenues and expenditures for State and Federal Grants that were known at the time. Amendments are made to the budget to include grants awarded to the School District later in the fiscal year. The receipt of these additional grants requires an increase in revenues and expenditures. This is because grant funds 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.
For the past three consecutive years the state budget included funds that provided continued relief to the "austerity reductions" that began in fiscal year 2003. The additional state funding enabled school districts to eliminate teacher adjusted work days, increase instructional days, and/or increase teacher salaries. The cumulative effect of these reductions to the School District over the 13-year period is the loss of just under $90.0 million in state funding. While there were still challenges of a continued decline in local tax revenue, decline in student enrollment and increases in employee benefits cost, the School District presented a balanced budget.
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.
The School District has invested over $260 million in capital assets, net of depreciation. Table 5 compares fiscal year 2016 capital asset balances to fiscal year 2015 balances.
Table 5 Capital Assets at June 30 (Net of depreciation, in Thousands)

Governmental Activities

Fiscal Year

Fiscal Year

Increase

2016

2015

(Decrease)

Land

$

9,051 $

9,051 $

Construction in Progress

32,269

27,039

Buildings and Building Improvements

214,846

220,506

Equipment

3,917

4,227

Total

$ 260,083 $ 260,823 $

5,230 (5,660)
(310)
(740)

ix

DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016

Table 5 shows that total capital assets decreased $740,000 in fiscal year 2016. The decrease is a cumulative total of the following: Increase in construction in progress largely due to school renovations, completion of the IT infrastructure upgrade and the full implementation of 1:1 technology. All construction projects were funded by a one percent Special Purpose Local Option Sales Tax (SPLOST) approved by the voters of Dougherty County. Current year depreciation expense represents the majority of the decrease in buildings and equipment totaling $6.0 million.
Debt
Table 6 summarizes the long-term debt outstanding at June 30 for fiscal year 2015 and fiscal year 2016.
Table 6 Debt at June 30 (In Thousands)

Governmental Activities

Fiscal Year

Fiscal Year

2016

2015

Increase (Decrease)

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

$

16,775 $

24,725 $

(7,950)

9,483

8,881

602

931

990

(59)

1,026

1,540

(514)

$

28,215 $

36,136 $

(7,921)

As shown in Table 6, capital leases total $9.5 million with Key Financial, US Bank and Dell Financial to finance technology upgrades. The annual bond principal payment of $7.9 million was made during the fiscal year. In addition, compensated absences of $931,000 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 increased employer cost for employee health benefits and teachers retirement and the continued state formula allotment reductions. Other challenges include a 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 District's operating millage for fiscal year 2016 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. The School District has experienced decreases in student enrollment since fiscal year 2013.
Fiscal Year 2012 15,497 Fiscal Year 2013 15,676 Fiscal Year 2014 15,628 Fiscal Year 2015 15,361

x

DOUGHERTY COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2016 The Dougherty County School District recognizes its responsibility as a steward of taxpayer dollars. In order to meet the challenges of mandated increases, fully funding teacher salaries, provide a step increase for all employees, the School District implemented cost-saving measures, while maintaining essential levels of service to support teaching and learning. The School District strives to emphasize student achievement while maintaining sound fiscal management. Contacting the School District's Financial Management This management's discussion and analysis report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the School District's finances, and to document the Board's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Susan Hatcher, Chief Financial Officer, Dougherty County School System, P.O. Box 3170, 200 Pine Avenue, Albany, Georgia 31701. You may also email your questions to shatcher@docoschools.org.
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DOUGHERTY COUNTY BOARD OF EDUCATION

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DOUGHERTY COUNTY BOARD OF EDUCTION STATEMENT OF NET POSTION JUNE 30, 2016

EXHIBIT "A"

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

GOVERNMENTAL ACTIVITIES

COMPONENT UNIT DOUGHERTY COUNTY STADIUM AUTHORITY

$ 62,620,636.73 $ 9,804.39
3,791,485.33 10,943,915.01
3,846,969.31 29,734.81
761,963.22 415,324.93
6,940.91 41,319,692.09 218,763,586.01
342,510,052.74

151,279.00 -
410,000.00 2,793,068.00
3,354,347.00

11,227,004.79

-

1,682,872.80 15,785,890.23
135,322.07 1,430,585.90
904,181.37 266,171.57 296,070.22 113,662,108.00
11,860,929.86 16,354,661.17
162,378,793.19

10,407.00 -
-
10,407.00

14,571,785.00

-

253,563,067.60
4,700,207.11 24,861,571.01 15,826,984.64 (122,165,351.02)

3,203,068.00
140,872.00

Total Net Position

$ 176,786,479.34 $

3,343,940.00

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, 2016

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 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
Net Position - End of Year

EXPENSES

CHARGES FOR SERVICES

$ 92,717,280.08 $
3,994,617.76 9,988,042.21 3,020,641.35 1,660,938.50 9,991,209.72 3,075,796.33 14,121,341.05 6,581,209.99 6,937,929.54
645,907.40
341,619.46 495,632.06 10,990,247.37 446,780.29
$ 165,009,193.11 $

1,219,141.62
19,355.51 181,581.27 -
157,003.28 -
1,577,081.68

$

219,909.00 $

141,684.00

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

$ 67,456,134.78 $
1,116,062.02 8,177,329.28 2,023,157.00 2,158,059.16 4,188,952.48
96,449.83 4,663,197.61 1,868,730.05
8,458.57 678,753.20
11,525,524.16 -
$ 103,960,808.14 $

77,586.35 $ (23,964,417.33)

386,100.00 -

(2,878,555.74) (1,810,712.93)
(997,484.35) 497,120.66 (5,802,257.24) (2,979,346.50) (9,438,787.93) (4,144,798.67) (6,929,470.97)
32,845.80

-

(341,619.46)

-

(495,632.06)

-

692,280.07

-

(446,780.29)

463,686.35

(59,007,616.94)

$

78,225.00

40,068,490.50 51,632.25
15,552,233.54 271,154.23
9,210,277.00 120,194.81
1,918,140.89
67,192,123.22
8,184,506.28
168,601,973.06

-
441.00 812,365.00
812,806.00
734,581.00
2,619,766.00

$ 176,786,479.34 $

3,354,347.00

- 3 -

DOUGHERTY COUNTY BOARD OF EDUCATION BALANCE SHEET
GOVERNMENTAL FUNDS JUNE 30, 2016

EXHIBIT "C"

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

GENERAL FUND

CAPITAL PROJECTS
FUND

DEBT SERVICE
FUND

TOTAL

$ 21,619,808.18 $ 17,360,914.93 $

9,804.39

-

2,510,619.61

-

10,943,915.01

-

3,846,969.31

-

29,734.81

-

761,963.22

-

415,324.93

-

6,940.91

-

23,639,913.62 $ -
1,280,865.72 -

62,620,636.73 9,804.39
3,791,485.33 10,943,915.01
3,846,969.31 29,734.81
761,963.22 415,324.93
6,940.91

Total Assets
LIABILITIES
Accounts Payable Salaries and Benefits Payable Contracts 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

$ 40,145,080.37 $ 17,360,914.93 $ 24,920,779.34 $ 82,426,774.64

$ 1,490,033.58 $ 15,785,890.23 201,445.83

192,839.22 $ -
904,181.37 266,171.57
94,624.39

17,477,369.64

1,457,816.55

- $ -
-

1,682,872.80 15,785,890.23
904,181.37 266,171.57 296,070.22
18,935,186.19

1,690,514.43

-

-

1,690,514.43

422,265.84 4,575,656.41 4,221,294.03
363,990.33 11,393,989.69
20,977,196.30

15,903,098.38
-
15,903,098.38

24,920,779.34
-
24,920,779.34

422,265.84 45,399,534.13
4,221,294.03 363,990.33
11,393,989.69
61,801,074.02

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 40,145,080.37 $ 17,360,914.93 $ 24,920,779.34 $ 82,426,774.64

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

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DOUGHERTY COUNTY BOARD OF EDUCATION RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET POSITION JUNE 30, 2016

EXHIBIT "D"

Total fund balances - governmental funds (Exhibit "C")
Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds.
Land Construction in progress Buildings and improvements Equipment Accumulated depreciation
Some liabilities are not due and payable in the current period and, therefore, are not reported in the funds.
Net pension liability
Deferred outflows and inflows of resources related to pensions are applicable to future periods and, therefore, are not reported in the funds.
Taxes that are not available to pay for current period expenditures are deferred in the funds.
Long-term liabilities, and related accrued interest, are not due and payable in the current period and therefore are not reported in the funds.
Bonds payable Accrued interest payable Capital leases payable Compensated absences payable Unamortized bond premiums Claims and judgments payable
Total Long-Term Liabilities

$

61,801,074.02

$

9,051,054.08

32,268,638.01

336,765,218.37

11,573,143.37

(129,574,775.73)

260,083,278.10

(113,662,108.00) (3,344,780.21) 1,690,514.43

$ (16,775,000.00) (135,322.07)
(9,483,109.07) (931,235.76)
(1,026,246.20) (1,430,585.90)

(29,781,499.00)

Net position of governmental activities (Exhibit "A")

$

176,786,479.34

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, 2016

EXHIBIT "E"

REVENUES

Property Taxes

$

Sales Taxes

State Funds

Federal Funds

Charges for Services

Investment Earnings

Miscellaneous

Total Revenues

EXPENDITURES

Current Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Enterprise Operations Community Services Food Services Operation
Capital Outlay Debt Services
Principal Interest

Total Expenditures

Revenues over (under) Expenditures

OTHER FINANCING SOURCES (USES)

Capital Leases Transfers In Transfers Out

Total Other Financing Sources (Uses)

Net Change in Fund Balances

Fund Balances - Beginning

GENERAL FUND
39,918,165.02 $ 271,154.23
84,947,619.92 28,914,994.05
1,577,081.68 13,335.02
1,918,140.89
157,560,490.81
88,220,350.02
4,134,746.25 10,264,135.76
2,891,390.00 1,677,965.10 9,947,631.54 1,839,280.83 13,313,722.63 5,479,878.74 4,567,200.76
680,216.08 341,619.46 495,632.06 10,447,933.15 481,559.00
-
154,783,261.38
2,777,229.43
(86,250.80)
(86,250.80)
2,690,978.63
18,286,217.67

CAPITAL PROJECTS
FUND
- $ 15,090.81 77,586.35
92,677.16
6,196,288.73
6,260.00 7,994.00 2,755.58 1,675,491.28 108,777.44 365,703.54 5,489,766.93
3,165,685.49 104,486.45
17,123,209.44
(17,030,532.28)
3,767,715.10 86,250.80 -
3,853,965.90
(13,176,566.38)
29,079,664.76

DEBT SERVICE
FUND

TOTAL

- $ 15,552,233.54
91,768.98 -
15,644,002.52

39,918,165.02 15,823,387.77 84,947,619.92 28,914,994.05
1,577,081.68 120,194.81
1,995,727.24
173,297,170.49

-
-
7,950,000.00 869,500.00
8,819,500.00
6,824,502.52

94,416,638.75
4,134,746.25 10,264,135.76
2,891,390.00 1,684,225.10 9,955,625.54 1,842,036.41 14,989,213.91 5,588,656.18 4,932,904.30
680,216.08 341,619.46 495,632.06 10,447,933.15 5,971,325.93
11,115,685.49 973,986.45
180,725,970.82
(7,428,800.33)

-
-
6,824,502.52
18,096,276.82

3,767,715.10 86,250.80 (86,250.80)
3,767,715.10
(3,661,085.23)
65,462,159.25

Fund Balances - Ending

$

20,977,196.30 $ 15,903,098.38 $

24,920,779.34 $

61,801,074.02

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, 2016

EXHIBIT "F"

Net change in fund balances total governmental funds (Exhibit "E")
Amounts reported for governmental activities in the Statement of Activities are different because:
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense.
Capital outlay Depreciation expense
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, donations, and disposals) is to decrease net position.
Taxes reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.
The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts and the difference between the carrying value of refunded debt and the acquisition cost of refunded debt when debt is first issued. These amounts are deferred and amortized in the Statement of Activities.
Capital leases issued Bond principal retirements Capital lease payments Amortization of bond premium
District pension contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the reported net pension liability is measured a year before the District's report date. Pension expense, which is the change in the net pension liability adjusted for changes in deferred outflows and inflows of resources related to pensions, is reported in the Statement of Activities.
Pension expense
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.
Accrued interest on issuance of bonds Compensated absences Claims and judgments

$ (3,661,085.23)

$ 5,971,325.93 (6,787,469.79)

(816,143.86) 76,713.73
201,957.73

$ (3,767,715.10) 7,950,000.00 3,165,685.49 513,123.10

7,861,093.49

4,792,717.92

$

14,083.06

58,864.63

(343,695.19)

(270,747.50)

Change in net position of governmental activities (Exhibit "B")

$ 8,184,506.28

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

- 7 -

ASSETS Cash and Cash Equivalents Receivables, Net
Local
Total Assets LIABILITIES Accounts Payable Funds Held for Others
Total Liabilities

DOUGHERTY COUNTY BOARD OF EDUCATION STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2016

EXHIBIT "G"
AGENCY FUNDS $ 393,672.53 10,409.17 $ 404,081.70
$ 7,972.48 396,109.22
$ 404,081.70

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

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

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 board elected by the voters and a Superintendent appointed by the Board. The School District is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
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 Notes 5 and 15 for additional component unit disclosures.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the School District's accounting policies are described below.
BASIS OF PRESENTATION
The School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements and notes to the basic financial statements. The government-wide statements focus on the School District as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information's usefulness.
GOVERNMENT-WIDE STATEMENTS:
The Statement of Net Position and the Statement of Activities display information about the financial activities of the overall School District, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions.
The Statement of Net Position presents the School District's non-fiduciary assets and liabilities, with the difference reported as net position. Net position is reported in three categories as follows:
1. Net investment in capital assets consists of the School District's total investment in capital assets, net of accumulated depreciation, and reduced by outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets.
2. Restricted net position consists of resources for which the School District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties or imposed by law through constitutional provisions or enabling legislation.
3. Unrestricted net position consists of resources not meeting the definition of the two preceding categories. Unrestricted net position often has constraints on resources imposed by management which can be removed or modified.

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

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 financial statements are presented for governmental and fiduciary funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
The general fund is the School District's primary operating fund. It accounts for and reports all financial resources not accounted for and reported in another fund.
The capital projects fund accounts for and reports financial resources including Education Special Purpose Local Option Sales Tax (ESPLOST) and Bond Proceeds that are restricted, committed or assigned for capital outlay expenditures, including the acquisition or construction of capital facilities and other capital assets.
The debt service fund accounts for and reports financial resources that are restricted, committed, or assigned including taxes (sales) legally restricted for the payment of general long-term principal and interest.
The School District reports the following fiduciary fund type:
Agency funds are used to report resources held by the School District in a purely custodial capacity (assets equal liabilities) and do not involve measurement of results of operations.
BASIS OF ACCOUNTING
The basis of accounting determines when transactions are reported on the financial statements. The government-wide and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes and grants. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied.
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.

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

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 judgements and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and acquisitions under capital leases are reported as other financing sources.
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
NEW ACCOUNTING PRONOUNCEMENTS
In fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application. This statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This statement provides guidance for determining a fair value measurement for financial reporting purposes. This statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. The School District did not have any items that required a reassessment of value for reporting purposes as a result of adoption of this statement.
In fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and 68. This statement establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement No. 68. It also amends certain provisions of Statement No. 67, Financial Reporting for Pension Plans, and Statement No. 68 for pension plans and pensions that are within their respective scopes. The adoption of this statement does not have a significant impact on the School District's financial statements.
In fiscal year 2016, the School District adopted Governmental Accounting Standards Board (GASB) Statement No. 79, Certain External Investment Pools and Pool Participants. This statement addresses accounting and financial reporting for certain external investment pools and pool participants. If an external investment pool meets the criteria in this statement and measures all of its investments at amortized cost, the pool's participants also should measure their investments in that external investment pool at amortized cost for financial reporting purposes. The School District participates in an external investment pool, the State of Georgia local government investment pool (Georgia Fund 1), which does not meet the criteria of this statement. Therefore, the investment in this pool is measured at fair value as provided in paragraph 11 of GASB Statement No. 31, as amended.

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, demand deposits, investments in the State of Georgia local government investment pool (Georgia Fund 1) and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Official Code of Georgia Annotated (O.C.G.A.) 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks, insured Federal savings and loan associations or insured chartered building and loan associations.
INVESTMENTS
The School District can invest its funds as permitted by O.C.G.A. 36-83-4. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity.
Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. All other investments are reported at fair value.
For accounting purposes, certificates of deposit are classified as investments if they have an original maturity greater than three months when acquired.
RECEIVABLES
Receivables consist of amounts due from property and sales taxes, grant reimbursements due on Federal, State or other grants for expenditures made but not reimbursed and other receivables disclosed from information available. Receivables are recorded when either the asset or revenue recognition criteria has been met. Receivables recorded on the basic financial statements do not include any amounts which would necessitate the need for an allowance for uncollectible receivables.
INVENTORIES
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 (calculated on the first-in, first-out basis). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.
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.
PREPAID ITEMS
Payments made to vendors for services that will benefit future accounting periods are recorded as prepaid items, in both the government-wide and governmental fund financial statements.

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

CAPITAL ASSETS
On the government-wide financial statements, capital assets are recorded at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at acquisition value on the date donated. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. The School District does not capitalize book collections or works of art.

Capital acquisition and construction are recorded as expenditures in the governmental fund financial statements at the time of purchase (including ancillary charges), and the related assets are reported as capital assets in the governmental activities column in the government-wide financial statements.

Depreciation is computed using the straight-line for all assets, except land, and is used to allocate the actual or estimated historical cost of capital assets over estimated useful lives.

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

DEFERRED OUTFLOWS/INFLOWS OF RESOURCES

In addition to assets, the statement of financial position will report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period(s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the statement of financial position will report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period(s) and therefore will not be recognized as an inflow of resources (revenue) until that time.

COMPENSATED ABSENCES
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.

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

LONG-TERM LIABILITIES AND BOND DISCOUNTS/PREMIUMS
In the School District's government-wide financial statements, outstanding debt is reported as liabilities. Bond premiums and discounts and the difference between the reacquisition price and the net carrying value of refunded debt are deferred and amortized over the life of the bonds using the straight-line method. To conform to generally accepted accounting principles, bond premiums and discounts should be amortized using the effective interest method. The effect of this deviation is deemed to be immaterial to the fair presentation of the basic financial statements. Bond issuance costs are recognized as an outflow of resources in the fiscal year in which the bonds are issued.
In the governmental fund financial statements, the School District recognizes the proceeds of debt and premiums as other financing sources of the current period. Bond issuance costs are reported as debt service expenditures.
PENSIONS
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan's fiduciary net position and additions to/deductions from the plan's fiduciary net position have been determined on the same basis as they are reported by plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
FUND BALANCES
Fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent.
The School District's fund balances are classified as follows:
Nonspendable consists of resources that cannot be spent either because they are in a nonspendable form or because they are legally or contractually required to be maintained intact.
Restricted consists of resources that can be used only for specific purposes pursuant constraints either (1) externally imposed by creditors, grantors, contributors, or laws and regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation.
Committed consists of resources that can be used only for specific purposes pursuant to constraints imposed by formal action of the Board. The Board is the School District's highest level of decisionmaking authority, and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Board. Committed fund balance also should incorporate contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements.
Assigned consists of resources constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. The intent should be expressed by (1) the Board or (2) the budget or finance committee, or the Superintendent, or designee, to assign amounts to be used for specific purposes.
Unassigned consists of resources within the general fund not meeting the definition of any aforementioned category. The general fund should be the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance.

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

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.

PROPERTY TAXES
The Dougherty County Board of Commissioners adopted the property tax levy for the 2015 tax digest year (calendar year) on July 20, 2015 (levy date) based on property values as of January 1, 2015. Taxes were due on December 20, 2015 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2015 tax digest are reported as revenue in the governmental funds for fiscal year 2016. The Dougherty County Board of Commissioners 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, 2016, for maintenance and operations amounted to $37,607,755.06.

The tax millage rate levied for the 2015 tax year (calendar year) for the School District 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 $2,258,777.71 during fiscal year ended June 30, 2016.
SALES TAXES
Education Special Purpose Local Option Sales Tax (ESPLOST), at the fund reporting level, during the year amounted to $15,552,233.54 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.
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 fund 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 O.C.G.A. 20-2-167(c), to the Georgia Department of Education. The Board may increase or decrease the budget at any time during the year. All unexpended budget authority lapses at fiscal year-end.
See the General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual in the Supplementary Information Section for a detail of any over/under expenditures during the fiscal year under review.
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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

NOTE 4: DEPOSITS AND CASH EQUIVALENTS
COLLATERALIZATION OF DEPOSITS
O.C.G.A. 45-8-12 provides that there shall not be on deposit at any time in any depository for a time longer than ten days a sum of money which has not been secured by surety bond, by guarantee of insurance, or by collateral. The aggregate of the face value of such surety bond and the market value of securities pledged shall be equal to not less than 110% of the public funds being secured after the deduction of the amount of deposit insurance. If a depository elects the pooled method (O.C.G.A. 45-8-13.1), the aggregate of the market value of the securities pledged to secure a pool of public funds shall be not less than 110% of the daily pool balance.
Acceptable security for deposits consists of any one of or any combination of the following:
1. Surety bond signed by a surety company duly qualified and authorized to transact business within the State of Georgia,
2. Insurance on accounts provided by the Federal Deposit Insurance Corporation,
3. Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or of the State of Georgia,
4. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia,
5. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,
6. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia, and
7. Bonds, bills, notes, certificates of indebtedness, or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
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, 2016, School District had deposits with a carrying amount of $17,718,746.92, and a bank balance of $25,331,007.78. The bank balances insured by Federal depository insurance were $1,235,844.70 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 $28,033.68.

- 17 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

At June 30, 2016, $24,317,129.40 of the School District's bank balance was exposed to custodial credit risk as follows:

Uninsured and Uncollateralized Uninsured with collateral held by the pledging
financial institution Uninsured with collateral held by the pledging
financial institution's trust department or agent but not in the School District's name

$

-

-

24,067,129.40

Total

$ 24,067,129.40

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

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

$ 62,620,636.73 393,672.53

Total cash and cash equivalents

63,014,309.26

Add: Deposits with original maturity of three months or more reported as investments

9,804.39

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

45,305,366.73

Total carrying value of deposits - June 30, 2016

$ 17,718,746.92

COMPONENT UNIT
At June 30, 2016, Dougherty County Stadium Authority's bank balance of $151,279.00 was insured through Federal Depository Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA).
CATEGORIZATION OF CASH EQUIVALENTS
The School District reported cash equivalents of $45,305,366.73 in Georgia Fund 1, a local government investment pool. Georgia Fund 1 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, which approximates fair value. The pool is an AAAf rated investment pool by Standard and Poor's. The weighted average maturity of Georgia Fund 1 may not exceed 60 days. The weighted average maturity for Georgia Fund 1 on June 30, 2016, was 42 days.
Georgia Fund 1, administered by the State of Georgia, Office of the State Treasurer, is not required to be categorized since the School District did not own any specific identifiable securities in the pool. The investment policy of the State of Georgia, Office of the State Treasurer for the Georgia Fund 1, does not provide for investment in derivatives or similar investments. Additional information on the Georgia Fund 1 is disclosed in the State of Georgia Comprehensive Annual Financial Report. This audit can be obtained from the Georgia Department of Audits and Accounts at www.audits.ga.gov/SGD/CAFR.html.

- 18 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

NOTE 5: CAPITAL ASSETS
The following is a summary of changes in the capital assets for governmental activities during the fiscal year:

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

Balances July 1, 2015

Increases

Decreases

Balances June 30, 2016

$ 9,051,054.08 $

- $

27,038,831.08

5,229,806.93

- $ 9,051,054.08

-

32,268,638.01

Total Capital Assets Not Being Depreciated

36,089,885.16

5,229,806.93

-

41,319,692.09

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

338,916,569.12 10,831,624.37

741,519.00

2,151,350.75 -

336,765,218.37 11,573,143.37

118,410,615.91 6,604,754.51

5,736,742.52 1,050,727.27

2,228,064.48 -

121,919,293.95 7,655,481.78

Total Capital Assets, Being Depreciated, Net

224,732,823.07

(6,045,950.79)

(76,713.73)

218,763,586.01

Governmental Activity Capital Assets - Net $ 260,822,708.23 $ (816,143.86) $

(76,713.73) $ 260,083,278.10

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

14,801.63 29,159.59 190,717.88 341,838.95 100,444.83 238,371.27 842,038.93 92,901.11

$ 4,522,610.93
1,850,274.19 414,584.67
$ 6,787,469.79

- 19 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

COMPONENT UNIT
Capital Assets, Not Being Depreciated: Land

Balances July 1, 2015

Increases

Decreases

Balances June 30, 2016

$

410,000.00 $

- $

- $

410,000.00

Capital Assets Being Depreciated Buildings and Improvements Equipment Stadium Improvements

308,976.00 239,886.00 2,607,983.00

812,365.00

-

308,976.00

-

239,886.00

-

3,420,348.00

Less Accumulated Depreciation for: Buildings and Improvements Equipment Stadium Improvements

88,826.00 239,885.00 766,372.00

7,724.00 5,411.00 67,924.00

-

96,550.00

-

245,296.00

-

834,296.00

Total Capital Assets, Being Depreciated, Net

2,061,762.00

731,306.00

-

2,793,068.00

Capital Assets - Net

$ 2,471,762.00 $ 731,306.00 $

- $ 3,203,068.00

NOTE 6: INTERFUND TRANSFERS INTERFUND TRANSFERS
Interfund transfers for the year ended June 30, 2016, consisted of the following:

Transfers to

Transfers From General Fund

Capital Projects Fund

$ 86,250.80

Transfers are used to move property tax revenues collected by the general fund to the capital projects fund to cover a portion of the employee's salaries not funded as part of the Education Special Purpose Local Option Sales Tax (ESPLOST) projects.

NOTE 7: SHORT-TERM DEBT
The School District issues tax anticipation notes in advance of property tax collections, depositing the proceeds in its general fund. This short-term debt is to provide cash for operations until property tax collections are received by the School District. Article IX, Section V, Paragraph V of the Constitution of the State of Georgia limits the aggregate amount of short-term debt to 75% of the total gross income from taxes collected in the preceding year and requires all short-term debt to be repaid no later than December 31 of the calendar year in which the debt was incurred.

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

Beginning Balance

Issued

Redeemed

Ending Balance

Tax Anticipation Notes

$

- $ 8,200,000.00 $ 8,200,000.00 $

-

- 20 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

NOTE 8: LONG-TERM LIABILITIES
The changes in long-term liabilities during the fiscal year for governmental activities, were as follows:

Balance July 1, 2015

Additions

Governmental Activities

Deductions

Balance June 30, 2016

Due Within One Year

General Obligation Bonds $ 24,725,000.00 $

- $

Capital Leases

8,881,079.46

3,767,715.10

Bond Premiums Amortized

1,539,369.30

-

Compensated Absences

990,100.39

781,447.06

7,950,000.00 $ 3,165,685.49
513,123.10 840,311.69

16,775,000.00 $ 9,483,109.07 1,026,246.20 931,235.76

8,175,000.00 3,107,620.26
513,123.10 65,186.50

$ 36,135,549.15 $ 4,549,162.16 $ 12,469,120.28 $ 28,215,591.03 $ 11,860,929.86

GENERAL OBLIGATION DEBT OUTSTANDING
The School District's bonded debt consists of general obligation bonds that are generally noncallable with interest payable semiannually. Bond proceeds primarily pay for acquiring or constructing capital facilities. The School District repays general obligation bonds from voter-approved property and sales taxes. General obligation bonds are direct obligations and pledge the full faith and credit of the School District.
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, 2016.
General obligation bonds currently outstanding are as follows:

Description

Interest Rates

Issue Date Maturity Date Amount Issued Amount Outstanding

General Government - Series 2013 2.00 - 5.00% 11/21/2013

12/1/2017 $ 32,450,000.00 $

16,775,000.00

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

Fiscal Year Ended June 30:
2017 2018
Total Principal and Interest

General Obligation Debt

Principal

Interest

Unamortized Bond Premium

$

8,175,000.00 $

8,600,000.00

550,250.00

$

195,000.00

513,123.10 513,123.10

$

16,775,000.00 $

745,250.00

$

1,026,246.20

- 21 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

CAPITAL LEASES
The School District has acquired information technology equipment under the provisions of various long-term lease agreements classified as capital leases for accounting purposes because they provide for a bargain purchase option or a transfer of ownership by the end of the lease term.
The following assets were acquired through capital leases and are reflected in the capital asset note at fiscal year-end:
Governmental Activities

Construction In Progress

$ 7,008,854.30

During the current fiscal year, the School District entered into a lease agreement as lessee for financing the acquisition of information technology equipment at a cost of $3,767,715.10. This lease qualifies as a capital lease for accounting purposes, and, therefore, has been recorded at the present value of the future minimum lease payments as of the date of inception.

Capital leases currently outstanding are as follows:

Purpose

Interest Rates

Issue Date

Maturity Date

Amount Issued

Amount Outstanding

Key Financial (Technology) US Bank (Technology) Dell (Technology)

2.20% 0.27% 3.00%

7/17/2014 5/1/2015 12/1/2015

10/17/2018 $ 5/1/2019 12/1/2018

5,543,885.34 $ 5,857,254.97 3,767,715.10

3,185,157.45 3,514,336.52 2,783,615.10

The following is a schedule of total capital lease payments:

$

15,168,855.41 $ 9,483,109.07

Fiscal Year Ended June 30:

Principal

Interest

2017 2018 2019

$ 3,107,620.26 $ 3,160,595.77 3,214,893.04

162,927.25 109,951.74
55,654.46

Total Principal and Interest $ 9,483,109.07 $

328,533.45

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.

NOTE 9: RISK MANAGEMENT
INSURANCE
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.

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

Georgia School Boards Association Risk and Insurance Management System
The School District participates in the Georgia School Boards Association Risk and Insurance Management System (the 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.

WORKERS' COMPENSATION
The School District has established a limited risk management program for workers' compensation claims. A premium is charged when needed by the internal service fund to each user program on the basis of the percentage of that program's payroll to total payroll in order to cover estimated claims budgeted by management based on known claims and prior experience. The School District accounts for claims with expense and liability being reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. An excess coverage insurance policy covers individual claims in excess of $350,000.00 loss per occurrence, up to the statutory limit.

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

Beginning of Year Liability

Claims and Changes in Estimates

Claims Paid

End of Year Liability

2015 2016

$ 1,223,673.06 $ 1,086,890.71

$ 928,271.89 $ 1,569,873.56

$ 1,065,054.24 $ 1,226,178.37

$ 1,086,890.71 $ 1,430,585.90

UNEMPLOYMENT COMPENSATION

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

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

Beginning

Claims and

of Year

Changes in

Claims

End of Year

Liability

Estimates

Paid

Liability

2015

$

-

$

74,014.30

$

74,014.30

$

-

2016

$

-

$

20,674.00

$

20,674.00

$

-

- 23 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

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

Position Covered

Amount

Superintendent

$

50,000.00

NOTE 10: FUND BALANCE CLASSIFICATION DETAILS
The School District's financial statements include the following amounts presented in the aggregate at June 30, 2016:

Nonspendable
Inventories Prepaid assets Restricted Continuation of federal programs Capital projects Debt service Committed Self-Insurance Subsequent period expenditures Assigned School activity accounts Unassigned

$

415,324.93

6,940.91 $

422,265.84

$

4,575,656.41

15,903,098.38

24,920,779.34

45,399,534.13

$

2,311,114.03

1,910,180.00

4,221,294.03

363,990.33 11,393,989.69

Fund balance, June 30, 2016

$ 61,801,074.02

When multiple categories of fund balance are available for expenditure, the School District will start with the most restricted category and spend those funds first before moving down to the next category with available funds.
It is the goal of the School District to achieve and maintain a committed, assigned, and unassigned fund balance in the general fund at fiscal year-end of 8% to 12% of expenditures, not to exceed 15% of the total budget of the subsequent fiscal year, in compliance with O.C.G.A. 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, 2016

EXHIBIT "H"

NOTE 11: SIGNIFICANT COMMITMENTS
COMMITMENTS UNDER CONSTRUCTION CONTRACTS
The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2016:

Project

Unearned Executed Contracts (1)

Payments through June 30, 2016 (2)

IT Infrastructure Upgrade/Data Centers Demolition Albany High Cafeteria Monroe High Phase II Magnolia Education Center

$

14,694.87 $

531,309.27

232,845.00

19,507.50

2,291,358.68

2,275,612.32

27,021,177.00

872,224.00

60,347.00

7,153.00

$

29,620,422.55 $

3,705,806.09

(1) The amounts described are not reflected in the basic financial statements. (2) Payments include Contracts and Retainages Payable at year-end.

OPERATING LEASES
The School District leases copiers, postage meters and equipment under the provisions of one or more long-term lease agreements classified as operating leases for accounting purposes. Rental expenditures under the terms of the operating leases totaled $386,744.96 for governmental activities for the year ended June 30, 2016. The following future minimum lease payments were required under operating leases at June 30, 2016:

Year Ending

Governmental Activities

2017

$

28,101.11

NOTE 12: SIGNIFICANT CONTINGENT LIABILITIES
FEDERAL GRANTS
Amounts received or receivable principally from the Federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. Any disallowances resulting from the grantor audit may become a liability of the School District. However, the School District believes that such disallowances, if any, will be immaterial to its overall financial position.
LITIGATION
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but it is not believed to have a material adverse effect on the financial condition of the School District.

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

NOTE 13: 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). Additional information about the School OPEB Fund is disclosed in the State of Georgia Comprehensive Annual Financial Report. This report can be obtained from the Georgia Department of Audits and Accounts at www.audits.ga.gov/SGD/CAFR.html.

Funding Policy. The contribution requirements of plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2012, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2012, pay approximately 25% of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board of Community Health sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy. Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rates are established to fund all benefits due under the health insurance plans for both active and retired employees based on projected "payas-you-go" financing requirements. Contributions are not based on the actuarially calculated annual required contribution (ARC) which represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.

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, 2016:

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

July 1, 2015 June 30, 2016

$945.00 per member per month

For non-certificated school personnel:

July 1, 2015 December 31, 2015 $596.20 per member per month

January 1, 2016 June 30, 2016 $746.20 per member per month

No additional contribution was required by the Board for fiscal year 2016 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.

- 26 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

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:

Fiscal Year

Percentage Contributed

Required Contribution

2016 2015 2014

100% 100% 100%

$

16,637,068.51

$

15,938,801.37

$

16,535,080.12

NOTE 14: RETIREMENT PLANS
The School District participates in various retirement plans administered by the State of Georgia, as further explained below.
TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan Description: All teachers of the School District as defined in O.C.G.A 47-3-60 and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. The Teachers Retirement System of Georgia issues a publicly available separate financial audit report that can be obtained at www.trsga.com/publications.
Benefits Provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.
Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Pursuant to O.C.G.A. 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employer by the State of Georgia. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2016. The School District's contractually required contribution rate for the year ended June 30, 2016 was 14.27% of annual School District payroll, of which 14.21% of payroll was required from the School District and 0.06% of payroll was required from the State. For the current fiscal year, employer contributions to the pension plan were $11,216,453.07 and $43,975.82 from the School District and the State, respectively.
EMPLOYEES' RETIREMENT SYSTEM
Plan description: The Employees' Retirement System of Georgia (ERS) is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. ERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

Benefits provided: The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the old plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are new plan members subject to modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS.
Under the old plan, the new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon the monthly average of the member's highest 24 consecutive calendar months, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor. Annually, postretirement cost-of-living adjustments may also be made to members' benefits, provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
Contributions: Member contributions under the old plan are 4% of annual compensation, up to $4,200.00, plus 6% of annual compensation in excess of $4,200.00. Under the old plan, the state pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these state contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The School District's contractually required contribution rate, actuarially determined annually, for the year ended June 30, 2016 was 24.72% of annual covered payroll for old and new plan members and 21.69% for GSEPS members. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employer contributions to the pension plan were $9,095.72 for the current fiscal year.
PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM (PSERS)
Plan description: PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. PSERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.
Benefits provided: A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service.
Upon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-of-living adjustments to the monthly benefits. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits.

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

Contributions: The general assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer in accordance with O.C.G.A. 47-4-29(a) and 60(b). Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees. The current fiscal year contribution was $364,890.00.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
At June 30, 2016, the School District reported a liability of $113,662,108.00 for its proportionate share of the net pension liability for TRS ($113,556,934.00) and ERS ($105,174.00).

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

School District's proportionate share of the net pension liability

$ 113,556,934.00

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

446,368.00

Total

$ 114,003,302.00

The net pension liability for TRS and ERS was measured as of June 30, 2015. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2014. An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. The School District's proportion of the net pension liability was based on contributions to TRS and ERS during the fiscal year ended June 30, 2015.
At June 30, 2015, the School District's TRS proportion was 0.745907%, which was a decrease of 0.028075% from its proportion measured as of June 30, 2014. At June 30, 2015, the School District's ERS proportion was 0.002596%, which was a decrease of 0.002157% from its proportion measured as of June 30, 2014.
At June 30, 2016, the School District did not have a PSERS liability for a proportionate share of the net pension liability because of a Special Funding Situation with the State of Georgia, which is responsible for the net pension liability of the plan. The amount of the State's proportionate share of the net pension liability associated with the School District is $1,556,980.00.
The PSERS net pension liability was measured as of June 30, 2015. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2014. An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the School District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2015.

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

For the year ended June 30, 2016, the School District recognized pension expense of $6,472,461.00 for TRS, ($32,327.00) for ERS and $92,849.00 for PSERS and revenue of $10,588.00 for TRS and $92,849.00 for PSERS. The revenue is support provided by the State of Georgia. For TRS the State of Georgia support is provided only for certain support personnel.
At June 30, 2016, the School District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

TRS

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

ERS

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

Differences between expected and actual experience $

- $

998,792.00 $

- $

Net difference between projected and actual earnings on pension plan investments
Changes in proportion and differences between School District contributions and proportionate share of contributions

-

9,578,647.00

-

-

3,925,530.00

1,456.00

School District contributions subsequent to the measurement date

11,216,453.07

-

9,095.72

Total

$ 11,216,453.07 $ 14,502,969.00 $ 10,551.72 $

840.00 7,588.00
60,388.00 -
68,816.00

The School District contributions subsequent to the measurement date of $11,216,453.07 for TRS and $9,095.72 for ERS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30:

TRS

ERS

2017 2018 2019 2020 2021

$ (5,623,872.00) $ (42,745.00)

$ (5,623,872.00) $ (23,792.00)

$ (5,623,880.00) $ (3,382.00)

$ 2,600,186.00 $ 2,559.00

$ (231,531.00) $

-

- 30 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

Actuarial assumptions: The total pension liability as of June 30, 2015 was determined by an actuarial valuation as of June 30, 2014, using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers Retirement System:

Inflation

3.00%

Salary increases

3.75% 7.00%, average, including inflation

Investment rate of return

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

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

The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

Employees' Retirement System:

Inflation

3.00%

Salary increases

5.45% 9.25%, average, including inflation

Investment rate of return

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

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

The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

Public School Employees Retirement System:

Inflation

3.00%

Salary increases

N/A

Investment rate of return

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

Mortality rates were based on the RP-2000 Combined Mortality Table set forward one year for males for the period after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back two years for males and set forward one year for females for the period after disability retirement.
The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

The long-term expected rate of return on TRS, ERS and PSERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class

Target allocation

Long-term expected real rate of return*

Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks

30.00% 39.70%
3.70% 1.60% 18.90% 6.10%

3.00% 6.50% 10.00% 13.00% 6.50% 11.00%

Total

100.00%

* Rates shown are net of the 3.00% assumed rate of inflation
Discount rate: The discount rate used to measure the total TRS, ERS and PSERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS, ERS and PSERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

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

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

1% Decrease (6.50%)
$ 195,139,005.00

Current Discount Rate (7.50%)

$

113,556,934.00

1% Increase (8.50%)
$ 46,313,895.00

Employees' Retirement System:

1% Decrease (6.50%)

Current Discount Rate (7.50%)

1% Increase (8.50%)

School District's proportionate share of the

net pension liability

$

149,088.00 $

105,174.00 $

67,736.00

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

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DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "H"

DEFINED CONTRIBUTION PLAN
On August 1, 1996, the School District 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 School District selected VALIC as the provider of this plan. For each employee covered under PSERS, employees contribute 1% of their base pay and the School District matches 3% of the 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 School District.
Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2016 2015 2014

3%

$

3%

$

3%

$

144,801.75 152,225.45 163,989.90

NOTE 15: 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 No. 33 and 34. The authority's fiscal year is July 1 through June 30.
NOTE 16: SUBSEQUENT EVENTS
On November 8, 2016, the voters of Dougherty County approved the continuation of the Education Special Purpose Local Option Sales Tax (ESPLOST) of one percent to be imposed on all sales and uses in Dougherty County for a period of time not to exceed 20 calendar quarters to raise not more than $90,000,000.00. The proceeds are to be used as stated on the Official Ballot of Dougherty County as follows:
"For the purpose of funding the (a) renovation, improvement and equipping of existing schools, administration, athletic and related facilities, (b) acquisition, construction and equipping of new schools, administration, athletic and related facilities, (c) the acquisition of school buses and vehicles for maintenance and transportation use, (d) acquisition of software, hardware and computer equipment for the use of both staff and students, (e) acquisition of energy savings equipment and (f) acquisition of real and personal property necessary for the foregoing."
This vote also approved the issuance of general obligation debt of the Dougherty County School District in the principal amount of $50,000,000.00 for the above capital outlay purposes.

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

SCHEDULE "1"

Year Ended
2016 2015

School District's proportion of the
net pension liability

School District's proportionate share of the net pension liability

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

Total

School District's covered-employee
payroll

0.745907% $ 113,556,934.00 $ 0.773982% $ 97,782,417.00 $

446,368.00 381,664.00

$ 114,003,302.00 $ 98,164,081.00

$ 79,042,137.85 $ 79,341,795.52

School District's proportionate share of the net pension liability as a percentage of its covered
employee payroll

Plan fiduciary net position as a
percentage of the total pension liability

143.67% 123.24%

81.44% 84.03%

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

- 35 -

DOUGHERTY COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "2"

Year Ended
2016 2015

School District's proportion of the net
pension liability

School District's proportionate share of the net pension liability

School District's covered-employee
payroll

School District's proportionate share of the net pension liability as a
percentage of covered payroll

0.002596% $ 0.004753% $

105,174.00 $ 178,267.00 $

64,229.58 97,265.38

163.75% 183.28%

Plan fiduciary net position as a
percentage of total net pension liability
76.20% 77.99%

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

- 36 -

DOUGHERTY COUNTY BOARD OF EDUCATION REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "3"

Year Ended
2016 2015

School District's proportion of the
net pension liability

School District's proportionate share of
the net pension liability

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

Total

School District's covered-employee
payroll

School District's proportionate share of the net pension liability as a percentage of its covered
employee payroll

Plan fiduciary net position as a
percentage of the total pension liability

0.00% $ 0.00% $

-

$

1,556,980.00 $ 1,556,980.00 $ 7,670,767.69

-

$

1,422,781.00 $ 1,422,781.00 $ 7,101,357.18

N/A

87.00%

N/A

88.29%

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

- 37 -

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

SCHEDULE "4"

Year Ended
2016 2015

Contractually required contribution

Contributions in relation to the contractually required
contribution

Contribution deficiency (excess)

$

11,216,453.07 $

11,216,453.07 $

-

$

10,355,842.01 $

10,355,842.01 $

-

School District's covered-employee
payroll
$ 78,919,817.39 $ 79,042,137.85

Contribution as a percentage of covered-
employee payroll
14.21% 13.10%

The schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 38 -

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

SCHEDULE "5"

Year Ended
2016 2015

Contractually required contribution

Contributions in relation to the contractually required
contribution

Contribution deficiency (excess)

$

9,095.72 $

9,095.72 $

-

$

14,104.86 $

14,104.86 $

-

School District's covered-employee
payroll

$

36,794.90

$

64,229.58

Contribution as a percentage of covered-
employee payroll
24.72% 21.96%

The schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

- 39 -

DOUGHERTY COUNTY BOARD OF EDUCATION NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2016

SCHEDULE "6"

Teachers Retirement System
Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP 2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience.
Method and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2016 reported in that schedule:

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

June 30, 2013 Entry age Level percentage of payroll, closed 30 years Five-year smoothed market 3.00% 3.75 7.00%, including inflation 7.50%, net of pension plan investment
expense, including inflation

Employees' Retirement System

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

Method and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2016 reported in that schedule:

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

June 30, 2013 Entry age Level dollar, closed 25 years Five-year smoothed market 3.00% 5.45% - 9.25% 7.50%, net of pension plan investment
expense, including inflation

Public School Employees Retirement System

Changes of assumptions: The last experience investigation was prepared for the five-year period ending June 30, 2009, and based on the results of the investigation various assumptions and methods were revised and adopted by the board on December 16,2010. The next experience investigation will be prepared for the period July 1, 2009 through June 30, 2014.

Method and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2016 reported in that schedule:

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

June 30, 2013 Entry age Level dollar, closed 25 years Five-year smoothed market 3.00% N/A 7.50%, net of pension plan investment
expense, including inflation 1.50% semi-annually

- 40 -

DOUGHERTY COUNTY BOARD OF EDUCATION GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2016

SCHEDULE "7"

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

Total Expenditures

Excess of Revenues over (under) Expenditures

OTHER FINANCING SOURCES (USES)

Other Sources Other Uses

Total Other Financing Sources (Uses)

Net Change in Fund Balances

Fund Balances - Beginning

Adjustments

NONAPPROPRIATED BUDGETS

ORIGINAL (1)

FINAL (1)

40,441,437.00 $ 220,782.00
83,923,126.00 29,386,693.00
990,858.00 14,000.00
2,953,236.00
157,930,132.00

40,129,442.00 $ 220,782.00
81,692,029.00 33,582,259.00
1,206,108.00 14,000.00
5,056,218.00
161,900,838.00

90,665,611.00
3,884,426.00 9,990,057.00 2,889,695.00 1,709,948.00 9,272,739.00 1,714,184.00 14,479,199.00 6,055,208.00 5,076,395.00
911,652.00 12,510,873.00
346,200.00 472,802.00
-
159,978,989.00
(2,048,857.00)

90,487,182.23
4,149,074.77 12,472,708.00
2,890,930.00 2,213,235.00 9,278,741.15 1,553,374.00 14,570,233.85 6,214,828.00 5,183,444.00 1,081,929.00 12,977,427.00
330,870.00 472,802.00
-
163,876,779.00
(1,975,941.00)

2,465,715.00 (825,000.00)
1,640,715.00 (408,142.00)
16,485,515.53 -

2,471,610.00 (825,000.00)
1,646,610.00 (329,331.00)
18,565,390.10 (19,407.34)

ACTUAL AMOUNTS

VARIANCE OVER/UNDER

39,918,165.02 $ 271,154.23
84,947,619.92 28,914,994.05
1,577,081.68 13,335.02
1,918,140.89
157,560,490.81

(211,276.98) 50,372.23
3,255,590.92 (4,667,264.95)
370,973.68 (664.98)
(3,138,077.11)
(4,340,347.19)

88,220,350.02
4,134,746.25 10,264,135.76
2,891,390.00 1,677,965.10 9,947,631.54 1,839,280.83 13,313,722.63 5,479,878.74 4,567,200.76
680,216.08 341,619.46 495,632.06 10,447,933.15 481,559.00
154,783,261.38
2,777,229.43

2,266,832.21
14,328.52 2,208,572.24
(460.00) 535,269.90 (668,890.39) (285,906.83) 1,256,511.22 734,949.26 616,243.24 401,712.92 12,635,807.54 (164,762.06) (9,975,131.15) (481,559.00)
9,093,517.62
4,753,170.43

(86,250.80) (86,250.80) 2,690,978.63 18,286,217.67
-

(2,471,610.00) 738,749.20
(1,732,860.80) 3,020,309.63
(279,172.43) 19,407.34

Fund Balances - Ending

$

16,077,373.53 $

18,216,651.76 $

20,977,196.30 $

2,760,544.54

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 $1,31,408.91 and $1,036,757.67, 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.

- 41 -

DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2016

SCHEDULE "8"

FUNDING AGENCY PROGRAM/GRANT
Agriculture, U. S. Department of Child Nutrition Cluster Pass-Through From Georgia Department of Education Food Services School Breakfast Program National School Lunch Program
Total Child Nutrition Cluster
Other Programs Pass-Through From Bright From the Start: Georgia Department of Early Care and Learning Child and Adult Care Food Program
Total U. S. Department of Agriculture
Education, U. S. Department of Special Education Cluster Pass-Through From Georgia Department of Education Special Education Grants to States Preschool Grants
Total Special Education Cluster
Other Programs Pass-Through From Georgia Department of Education 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 School Improvement Grants Special Education State Personnel Development Title I Grants to Local Educational Agencies
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 Behavioral 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 Developmental Center Workforce Investment Act Youth Activities
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

10.553 10.555

16165GA324N1099 $ 16165GA324N1099

2,800,982.71 8,335,194.06
11,136,176.77

10.558

15165GA368N2020

115,431.81 11,251,608.58

84.027 84.173

H027A150073 H173A150081

84.048 84.196 84.365 84.367 84.011 84.377
84.323 84.010

V048A150010 S196A150011 S365A150010 S367A150001 S011A150011 S377A150011
H323A120020 S010A150010

3,755,122.96 118,005.63
3,873,128.59
212,203.00 18,073.59 40,585.58
1,590,026.93 40,411.03
2,211,354.86
37,372.43 9,320,676.43
13,470,703.85
17,343,832.44

93.959

not available

17.259

15151507013

91,732.54
34,259.89
37,560.34 81,173.05 118,733.39

Total Expenditures of Federal Awards

$ 28,840,166.84

- 42 -

DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2016

SCHEDULE "8"

Notes to the Schedule of Expenditures of Federal Awards
Note 1. Basis of Presentation
The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of the Dougherty County Board of Education (the "Board") under programs of the federal government for the year ended June 30, 2016. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position or changes in net assets of the Board.
Note 2. Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The Board has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance.

See notes to the basic financial statements.

- 43 -

DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF STATE REVENUE YEAR ENDED JUNE 30, 2016
AGENCY/FUNDING
GRANTS Bright From the Start: Georgia Department of Early Care and Learning Pre-Kindergarten Program
Education, Georgia Department of Quality Basic Education Direct Instructional Cost Kindergarten Program Kindergarten Program - Early Intervention Program Primary Grades (1-3) Program Primary Grades - Early Intervention (1-3) Program Upper Elementary Grades (4-5) Program Upper Elementary Grades - Early Intervention (4-5) Program Middle School (6-8) Program High School General Education (9-12) Program Vocational Laboratory (9-12) Program Students with Disabilities 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 Principal 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 Preschool Handicapped Program Pupil Transportation - State Bonds Teachers Retirement Vocational Education
Office of the State Treasurer Public School Employees Retirement
See notes to the basic financial statements.

SCHEDULE "9"

GOVERNMENTAL FUND TYPE GENERAL FUND

$

1,208,872.02

5,760,656.00 430,095.00
13,662,984.00 2,381,149.00 5,645,766.00 1,867,670.00 9,253,564.00 8,502,007.00 2,513,426.00 7,751,861.00 1,796,559.00 871,821.00 674,044.00 313,421.00 1,771,469.00 557,343.00 275,700.00 6,060.00
1,569,220.00 3,583,368.00 3,898,074.00
65,281.00 (3,875,646.00)
1,548,993.00 297,461.00
9,210,277.00
266,130.00 1,834,671.00
103,351.88 265,425.00 386,100.00
43,975.82 141,581.20
364,890.00
$ 84,947,619.92

- 44 -

DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF APPROVED LOCAL OPTION SALES TAX PROJECTS
FOR THE YEAR ENDED JUNE 30, 2016

SCHEDULE "10"

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.
(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 IV

ORIGINAL ESTIMATED
COST (1)

CURRENT ESTIMATED COSTS (2)

AMOUNT EXPENDED IN CURRENT YEAR (3) (4)

AMOUNT EXPENDED IN PRIOR YEAR (3) (4)

TOTAL COMPLETION
COST

EXCESS PROCEEDS NOT
EXPENDED (4)

ESTIMATED COMPLETION
DATE

$ 75,200,000.00 $ 64,362,346.56 $

1,747.02 $ 64,360,599.54 $

64,362,346.56 $

-

Completed

10,500,000.00

20,214,620.13

8,111.15

20,206,508.98

20,214,620.13

-

Completed

3,600,000.00 89,300,000.00

4,254,842.13 88,831,808.82

9,858.17

4,254,842.13 88,821,950.65

4,254,842.13 88,831,808.82

-

Completed

-

83,400,000.00

80,000,000.00

7,377,665.08

13,685,476.96

-

-

-

-

6,200,000.00

1,000,000.00

359,971.00

383,388.00

-

69.22

69.22

-

10,000,000.00

17,603,987.72

6,883,722.58

10,720,265.14

400,000.00 100,000,000.00

200,000.00 98,804,056.94

14,621,427.88

24,789,130.10

69.22 69.22

-

June 2018

-

June 2018

-

June 2018

-

Completed

-

June 2018

-

June 2018

-

Total

$ 189,300,000.00 $ 187,635,865.76

14,631,286.05 $ 113,611,080.75 $

88,831,878.04 $

-

(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

$ 1,852,247.66

Current Year

973,986.45

Total

$ 2,826,234.11

See notes to the basic financial statements.

- 45 -

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SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

(This page left intentionally blank)

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
September 8, 2017

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
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
Ladies and Gentlemen:
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Dougherty County Board of Education (School District) as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the School District's basic financial statements, and have issued our report thereon dated September 8, 2017. The report was modified for a scope limitation as identified in the auditor's report on the basic financial statements and described below.
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 the School District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District's internal control. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control.

(This page left intentionally blank)

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
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. We did identify a certain deficiency in internal control, described in the accompanying Schedule of Findings and Questioned Costs as item FS 2016-001 that we consider to be a significant deficiency.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
We also noted certain matters that we have reported to management of Dougherty County Board of Education in a separate letter dated September 8, 2017.
School District's Response to Findings
The School District's response to the finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,
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
September 8, 2017

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
REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE
INDEPENDENT AUDITOR'S REPORT
Ladies and Gentlemen:
Report on Compliance for Each Major Federal Program
We have audited Dougherty County Board of Education's (School District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2016. The School District's major federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs.
Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the School District's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the School District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

(This page left intentionally blank)

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the School District's compliance.
Opinion on Each Major Federal Program
In our opinion, the School District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2016.
Report on Internal Control over Compliance
Management of the School District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School District's internal control over compliance.
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. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,
Greg S. Griffin State Auditor

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

(This page left intentionally blank)

DOUGHERTY COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 6471-12-01 Inadequate Accounting Procedures over School Activity Accounts

Control Category:
Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Revenues/Receipts/Receivables Expenditures/Liabilities/Disbursements Significant Deficiency None

Finding Status:

Unresolved

The School District will use Central Office Finance staff to provide a monthly review of student activity accounts. This change was implemented February 2016.

FS 6471-13-01 Inadequate Accounting Procedures over School Activity Accounts

Control Category:
Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Revenues/Receipts/Receivables Expenditures/Liabilities/Disbursements Significant Deficiency None

Finding Status:

Unresolved

The School District will use Central Office Finance staff to provide a monthly review of student activity accounts. This change was implemented February 2016.

FS 2014-001 Uncollateralized Deposits

Control Category: Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents None Material Noncompliance

Finding Status:

Previously Reported Corrective Action Implemented

FS 2014-002 Inadequate Accounting Procedures over School Activity Accounts

Control Category:
Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Revenues/Receipts/Receivables Expenditures/Liabilities/Disbursements Significant Deficiency None

Finding Status:

Unresolved

The School District will use Central Office Finance staff to provide a monthly review of student activity accounts. This change was implemented February 2016.

- 1 -

DOUGHERTY COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2015-001 Uncollateralized Deposits

Control Category: Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents None Material Noncompliance

Finding Status:

Previously Reported Corrective Action Implemented

FS 2015-002 Inadequate Control over Financial Reporting Process

Control Category: Internal Control Impact: Compliance Impact:

Financial Reporting Material Weakness None

Finding Status:

Further Action Not Warranted (1)

FS 2015-003 Inadequate Accounting Procedures over School Activity Accounts

Control Category:
Internal Control Impact: Compliance Impact:

Cash and Cash Equivalents Revenues/Receipts/Receivables Expenditures/Liabilities/Disbursements Significant Deficiency None

Finding Status:

Unresolved

The School District will use Central Office Finance staff to provide a monthly review of student activity accounts. This change was implemented February 2016.

(1) Findings/internal control deficiencies of their nature, that are not deemed significant deficiencies or material weaknesses and do not require reporting in the audit report in accordance with Statements on Auditing Standards (SAS) 122 or Governmental Auditing Standards (Yellow Book), will be communicated in a management letter.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

- 2 -

SECTION IV FINDINGS AND QUESTIONED COSTS

(This page left intentionally blank)

DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

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 deficiency identified?

Yes

Noncompliance material to financial statements noted:

No

Federal Awards

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

No None Reported

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

Unmodified

Any audit findings disclosed that are required to be reported in

accordance with 2 CFR 200.516(a)?

No

Identification of major programs:

CFDA Numbers

Name of Federal Program or Cluster

10.553, 10.555 84.377

Child Nutrition Cluster School Improvement Grants Cluster

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

$862,785.48

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, 2016

II FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS 2016-001 Control Category:
Internal Control Impact: Compliance Impact: Repeat of Prior Year Finding:

Internal Controls over School Activity Accounts Cash and Cash Equivalents Revenues/Receivables/Receipts Expenditures/Liabilities/Disbursements General Ledger Significant Deficiency None FS 2015-003, FS 2014-002, FS-6471-13-01

Description: 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 School 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.

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-six receipt transactions: o Eighteen receipts were not deposited in a timely manner. o Four receipts did not contain the signature of two employees as required by Board policy. o Thirty-four receipts could not be traced to their recording on the general ledger due to lack of adequate information. o Five receipts did not agree to the amount deposited. o Twelve receipts were not supported by adequate documentation.

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: o Four disbursements did not have original invoices attached. o Twenty-one of the disbursements examined lacked information to be able to trace to recording on the general ledger.

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DOUGHERTY COUNTY BOARD OF EDUCATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016

II

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

o Three voucher packages did not have evidence of receipt of goods. o Four vouchers did not have appropriately approved requisition requests as required by
Board policy. o Three checks written did not agree to the attached invoice. o Four 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 eight accounts with deficit balances.

Cause: In discussing these conditions with management, they stated that school personnel have not been adequately following the policies and procedures set-forth in the School District's "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 the case when management determines separation of duties is not cost beneficial, management should implement compensating controls that reduce vulnerabilities in ineffectively separated functions and the risk of errors and fraud. 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: We concur with this finding.

III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

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SECTION V MANAGEMENT'S CORRECTIVE ACTION

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DOUGHERTY COUNTY BOARD OF EDUCATION AUDITEE'S RESPONSE
SCHEDULE OF MANAGEMENT'S CORRECTIVE ACTION YEAR ENDED JUNE 30, 2016

CORRECTIVE ACTION PLANS - FINANCIAL STATEMENT FINDINGS

FS 2016-001

Internal Controls over School Activity Accounts

Control Category:

Cash and Cash Equivalents

Revenues/Receivables/Receipts

Expenditures/Liabilities/Disbursements

General Ledger

Internal Control Impact: Significant Deficiency

Compliance Impact:

None

Repeat of Prior Year Finding: FS 2015-003, FS 2014-002, FS-6471-13-01

The accounting procedures of the School District were insufficient to provide for adequate internal controls over the school activity accounts.

Corrective Action Plans: The school district will use Central Office staff to provide a monthly review of school activity accounts. Central Office staff will also provide training to school staff as needed.

Estimated Completion Date: This change was implemented February 2016.

Contact Person: Susan Hatcher

Telephone: (229) 431-1234

E-mail:

shatcher@docoschools.org

CORRECTIVE ACTION PLANS FEDERAL AWARD FINDINGS

No matters were reported.