Douglas County Board of Education, Douglasville, Georgia, report on audit of the financial statements for the fiscal year ended 2015 June 30 (including independent auditor's reports)

DOUGLAS COUNTY BOARD OF EDUCATION
ANNUAL FINANCIAL REPORT FOR THE
FISCAL YEAR ENDED JUNE 30, 2015

DOUGLAS COUNTY BOARD OF EDUCATION
ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2015
TABLE OF CONTENTS

I. Financial Section
Independent Auditor's Report Management's Discussion and Analysis Basic Financial Statements:
Government-wide Financial Statements: Statement of Net Position Statement of Activities
Fund Financial Statements: Balance Sheet Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Statement of Fiduciary Assets and Liabilities Agency Fund
Notes to the Basic Financial Statements
II. Required Supplementary Information
Schedule of Proportionate Share of Net Pension Liability Teachers Retirement System of Georgia Schedule of Contributions Teachers Retirement System of Georgia Schedule of Proportionate Share of Net Pension Liability Public Schools
Employees Retirement System of Georgia Notes to Required Supplementary Information
III. Other Supplementary Information
Schedule of Expenditures of Special Purpose Local Option Sales Tax Proceeds
IV. Single Audit Section
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 Report on Internal Control Over Compliance Required by OMB Circular A-133
Schedule of Expenditures of Federal Awards
Schedule of Findings and Questioned Costs Schedule of Prior Audit Findings

Page 1-3 4-10
11 12 13 14 15 16 17 18 19-47
48 49 50 51
52
53 and 54
55-57 58-60 61 and 62
63

I. FINANCIAL SECTION

INDEPENDENT AUDITOR'S REPORT
To the Superintendent and Members of the Douglas County Board of Education
Douglasville, Georgia
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 Douglas County Board of Education as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the Douglas County Board of Education's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants RSM International

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Douglas County Board of Education as of June 30, 2015, and the respective changes in financial position, and the budgetary comparison for the General Fund, for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Notes 14 and 16, the Douglas County Board of Education implemented Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions an amendment of GASB Statement No. 27, as well as Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date an amendment of GASB Statement No. 68, as of July 1, 2014. These standards significantly changed the accounting for the Douglas County Board of Education's net pension liability and the related disclosures. 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, Schedule of Proportionate Share of Net Pension Liability Teachers Retirement System of Georgia, Schedule of Contributions Teachers Retirement System of Georgia, and Schedule of Proportionate Share of Net Pension Liability Public Schools Employees Retirement System of Georgia on pages 4 through 10, 48, 49, and 50 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
2

Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Douglas County Board of Education's basic financial statements. The schedule of expenditures of special purpose local option sales tax proceeds, as required by the Official Code of Georgia 48-8-121, and the accompanying schedule of expenditures of federal awards, as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The schedule of expenditures of special purpose local option sales tax proceeds and the schedule of expenditures of federal awards (collectively "the supplementary information") are the responsibility of management and were derived from and relate 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 supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Governmental Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March 1, 2016 on our consideration of the Douglas County Board of Education's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Douglas County Board of Education's internal control over financial reporting and compliance.
Atlanta, Georgia March 1, 2016
3

DOUGLAS COUNTY BOARD OF EDUCATION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
Our discussion and analysis of the Douglas County Board of Education's ("School District") financial performance provides an overall review of the School District's financial activities for the fiscal year ended June 30, 2015. The intent of this discussion and analysis is to look at the School District's financial performance as a whole; readers should also review the financial statements and the notes to the basic financial statements to enhance their understanding of the School District's financial performance.
Financial Highlights
Key financial highlights for fiscal year 2015 are as follows:
Net position increased approximately $9.8 million, which represents a 7.4 percent increase from fiscal year 2014. This total increase was due to an increase in total revenues of approximately $16.0 million from fiscal year 2014.
General revenues accounted for approximately $111.4 million in revenue or 41.1 percent of all revenues. Program specific revenues in the form of charges for services and sales, grants and contributions accounted for approximately $159.9 million or 58.9 percent of total revenues. Total revenues were approximately $271.3 million.
The School District had $261.5 million in expenses related to governmental activities; only approximately $159.9 million of these expenses were offset by program specific charges for services, grants or contributions.
Using the Basic Financial Statements
This annual report consists of management's discussion and analysis, a series of financial statements and notes to those statements. These statements are organized so the reader can understand the Douglas County School District as a financial whole, or as an entire operating entity.
The district-wide financial statements include the Statement of Net Position and Statement of Activities. These statements provide information about the activities of the School District, presenting both an aggregate view of the School District's finances and a longer-term view of those finances.
The fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. The fund financial statements also look at the School District's most significant funds. In the case of the Douglas County School District, the General Fund, District-wide Capital Projects Fund, and Debt Service Fund are the most significant funds.
4

District-Wide Statements
The District-Wide financial statements are a consolidation of the District's operating funds into one column, with both short and long-term focus, called governmental activities. While these documents contain the large number of funds used by the District to provide programs and activities, the view of the District as a whole looks at all financial transactions and asks the question, "How did we do financially during fiscal year 2015?" The Statement of Net Position and the Statement of Activities answer this question. These statements include all assets, all deferred outflows of resources, all liabilities, and all deferred inflows of resources, using the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year's revenues and expenses regardless of when cash is received or paid.
These two statements report the District's net position and changes in net position. This change in net position is important because it tells the reader whether, for the District as a whole, the financial position of the School District has improved or diminished. The causes of this change may be the result of many factors, some financial, some not. Non-financial factors include the District's property tax base, facility conditions, required educational programs and other factors.
In the Statement of Net Position and the Statement of Activities, the District has one distinct type of activity:
Governmental Activities - All of the District's programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, food service, after school program, school activity accounts and various others.
Fund Financial Statements
Fund financial reports provide detailed information about the District's major funds. The District uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the District's most significant funds. The District's major governmental funds are the general fund, the district-wide capital projects fund, and the debt service fund.
Governmental Funds Most of the District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the District's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is reconciled in the financial statements.
Fiduciary Funds The District is the trustee, or fiduciary, for assets that belong to others, such as school clubs and organizations within the school activity accounts. The District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The District excludes these activities from the district-wide financial statements because it cannot use these assets to finance its operations.
5

FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE

The perspective of the Statement of Net Position is of the District as a whole. Table 1 provides a summary of the District's net position for fiscal year 2015 compared to fiscal year 2014.

Assets Current and Other Assets Capital Assets, Net
Total Assets

Governmental Activities

Fiscal

Fiscal Year

Year 2015

2014 (Restated)

$ 117,854,503 $ 144,907,082

418,897,890

398,738,358

536,752,393

543,645,440

Deferred outflows of resources

38,313,893

27,299,145

Liabilities Current and Other Liabilities Long-Term Liabilities
Total Liabilities

43,317,632 335,948,168 379,265,800

44,385,240 394,325,834 438,711,074

Deferred inflows of resources

53,792,937

-

Net position Net investment in capital assets Restricted Unrestricted
Total net position

263,833,678

261,336,929

39,403,666

38,041,542

(161,229,795)

(167,144,960)

$ 142,007,549 $ 132,233,511

Total net position increased approximately $9.8 million.
Table 2 shows the changes in net position for fiscal year 2015 compared to the changes in net position for fiscal year 2014.

6

Change in Net Position Table 2
Revenues Program Revenues: Charges for Services and Sales Operating Grants and Contributions Capital Grants and Contributions
Total Program Revenues
General Revenues: Taxes Property Taxes For Maintenance and Operations For Debt Service Sales Taxes Special Purpose Local Option Sales Tax For Debt Service For Capital Projects Other Taxes
Grants and Contributions not Restricted to Specific Programs
Investment Earnings
Total General Revenues
Total Revenues
Program Expenses Instruction Support Services Pupil Services Improvement of Instructional Services Educational Media Services Federal Grant Administration General Administration School Administration Business Administration Maintenance and Operations of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt
Total Expenses
Change in Net Position Net Position, Beginning of Year, previously reported Restatement Net Position, End of Year

Governmental Activities

Fiscal

Fiscal Year

Year 2015

2014 (Restated)

$

9,682,038

144,031,333

6,148,630

159,862,001

$

10,427,433

136,942,658

2,790,823

150,160,914

60,861,704 4,689,507
11,157,300 13,089,553
6,009,826

59,979,182 5,525,735
10,097,650 11,825,497
4,805,624

15,543,834 61,235
111,412,959
271,274,960

12,799,602 103,156
105,136,446
255,297,360

166,571,098
6,718,919 6,847,976 4,650,949
436,538 2,154,012 15,690,813 1,906,788 15,173,610 12,811,660 3,285,204 3,195,564
1,135,232 14,305,507
6,617,052
261,500,922
9,774,038 132,233,511
$ 142,007,549

165,445,836
6,777,740 7,130,270 4,508,066
446,912 2,144,129 15,569,611 2,086,722 14,827,573 12,452,657 3,306,701 2,756,906
1,228,435 13,750,644
7,514,965
259,947,167
(4,649,807) 319,445,500 (182,562,182) $ 132,233,511

7

Governmental Activities

Instruction comprises 63.7 percent of governmental program expenses. Interest expense comprises 2.5 percent of governmental program expenses. Interest expense was attributable to the outstanding bonds for capital projects.

The Statement of Activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. That is, it identifies the cost of these services supported by tax revenue and unrestricted State entitlements.

Table 3 Governmental Activities

Instruction Support Services
Pupil Services Improvement of Instructional Services Educational Media Services Federal Grant Administration General Administration School Administration Business Administration Maintenance and Operation of Plant Student Transportation Services Central Support Services Other Support Services Operations of Non-Instructional Services Enterprise Operations Food Services Interest on Short-Term and Long-Term Debt

Total Cost of Services

Fiscal

Fiscal

Year 2015

Year 2014

$ 166,571,098

165,445,836

6,718,919 6,847,976 4,650,949
436,538 2,154,012 15,690,813 1,906,788 15,173,610 12,811,660 3,285,204 3,195,564

6,777,740 7,130,270 4,508,066
446,912 2,144,129 15,569,611 2,086,722 14,827,573 12,452,657 3,306,701 2,756,906

1,135,232 14,305,507 6,617,052

1,228,435 13,750,644 7,514,965

Net Cost of Services

Fiscal

Fiscal

Year 2015

Year 2014

$ 54,593,136 $ 72,439,647

5,140,654 1,352,660 1,412,784
814,827 9,338,248 1,679,468 7,072,019 9,595,457 2,391,223 2,116,327

4,969,137 1,412,710 1,316,939
446,912 960,641 9,160,559 1,353,545 3,228,397 6,701,460 1,507,298 1,869,411

30,188 (515,122) 6,617,052

104,744 (3,200,112) 7,514,965

Total Expenses

$ 261,500,922

259,947,167 $ 101,638,921 $ 109,786,253

Although program revenues make up a majority of the revenues, the District is still dependent upon tax revenues for governmental activities. Over 33 percent of instruction activities are supported through taxes and other general revenues; for all governmental activities general revenue support is 39 percent.

The District's Funds

The District's governmental funds are accounted for using the modified accrual basis of accounting. Total governmental funds had revenues and other financing sources of approximately $282.0 million and expenditures and other financing uses of approximately $308.6 million. Included in the expenditures were approximately $44.7 million of capital outlay expenditures and approximately $13.7 million of principal retirement. The School System's General Fund remains in sound financial position with a year-end fund balance of approximately $25.1 million.

8

General Fund Budgeting Highlights

The District's budget is prepared according to Georgia law. The most significant budgeted fund is the General Fund. The District uses site-based budgeting. The budgeting systems are designed to tightly control total site budgets but provide flexibility for site management.

For the General Fund, the actual revenues of approximately $241.0 million were approximately $7.5 million more than the final budgeted amount. This difference was related primarily to local school funds that were not included in the School District budget, actual tax collections exceeding projections and construction reimbursements were received earlier than expected.

The actual expenditures of approximately $233.1 million for the General Fund were less than the budgeted amount by approximately $784.0 thousand.

The District's Board continues to monitor fund balance in anticipation of future needs, continued decline in funding, and continued increases to expenditures. These results are evidence of their work.

Capital Assets and Debt Administration

Capital Assets

At the end of fiscal year 2015, the District had approximately $418.9 million invested in capital assets, all in governmental activities. Table 4 shows fiscal year 2015 balances compared with fiscal year 2014 balances.

Table 4 Capital Assets (Net of Depreciation)

Governmental Activities

Fiscal

Fiscal

Year 2015

Year 2014

Land Construction in Progress Buildings and Improvements Equipment
Land Improvement

$ 31,469,359 20,035,104 319,384,183 24,179,642
23,829,602

$ 31,469,359 13,903,746 308,039,498 20,675,201
24,650,554

Total

$ 418,897,890 $ 398,738,358

The growth in the county has slowed down, so the District is focusing construction on additions and renovations to existing facilities. More detailed information on the District's capital assets can be found in the notes to the financial statements.

9

Debt

At June 30, 2015, the Board had approximately $175.0 million in bonds outstanding with approximately $13.2 million due within one year. Table 5 shows fiscal year 2015 balances compared with fiscal year 2014 balances.

Table 5 Debt at June 30

Governmental Activities

Fiscal

Fiscal

Year 2015

Year 2014

General Obligation Bonds

$ 174,973,000 $ 188,718,000

More detailed information on the District's long-term debt can be found in Note 10 of the financial statements.
Current Issues
The Douglas County School System is financially stable. The School System's current operating millage is 19.85, which produces approximately $3.3 million per mill. The operating millage rate for 2015 remained the same as the rate for 2014 of 19.85, which supported the fiscal year 2015 budget. Douglas County, and the Douglas County School System, continues to suffer economic setbacks in line with a state and national economy that is declining in growth. The State of Georgia has experienced revenue shortfalls that will directly impact funding to the state's school systems. From all indications, the State of Georgia will continue to impose formula reductions across the State. This is a significant factor in the District's annual budget and planning processes. Despite these challenges, the School System's management and Board are committed to continue to effectively and prudently manage the available resources to provide quality educational opportunities for all of the System's students.
Contacting the Board's Financial Management
This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the District's finances and to show the District's accountability for the money it receives. If you have questions about this report or need additional information, contact the Douglas County Board of Education, 9030 Highway 5, Douglasville, Georgia 30134 or call 770651-2000.

10

BASIC FINANCIAL STATEMENTS

DOUGLAS COUNTY BOARD OF EDUCATION
STATEMENT OF NET POSITION JUNE 30, 2015

ASSETS
Cash and cash equivalents Investments Receivables:
Taxes Intergovernmental:
State Federal Local Other Inventory Prepaid items Capital assets (nondepreciable) Capital assets (depreciable, net of accumulated depreciation)
Total assets
DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refunding Plan contributions - pension Difference between employer contributions and employer
proportionate share of contributions - pension Total deferred outflows of resources
LIABILITIES
Accounts payable Salaries and benefits payable Contracts payable Accrued interest payable Retainage payable Unearned revenue Claims payable due within one year Claims payable due in more than one year Bonds payable due within one year Bonds payable due in more than one year Compensated absences due within one year Compensated absences due in more than one year Net pension liability
Total liabilities
DEFERRED INFLOWS OF RESOURCES Net difference between projected and actual investment earnings - pension
Total deferred outflows of resources
NET POSITION
Net investment in capital assets Restricted for:
Federal programs Capital projects Debt service Winston Ruritan Club - expendable Winston Ruritan Club - nonexpendable Unrestricted
Total net position
The accompanying notes are an integral part of these financial statements.
11

Governmental Activities

$

81,783,229

9,478,696

5,035,653

17,150,910 3,318,397
410,150 32,246 635,850 9,372
51,504,463
367,393,427 536,752,393

9,739,592 16,387,830
12,186,471 38,313,893

5,439,871 34,228,822 1,207,607
1,271,321 1,093,828
76,183 2,629,876
464,096 13,191,000 164,233,314
958,727 169,187 154,301,968 379,265,800
53,792,937 53,792,937

263,833,678
5,753,222 31,459,682
2,097,872 46,987 45,903
(161,229,795) $ 142,007,549

DOUGLAS COUNTY BOARD OF EDUCATION
STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Functions/Programs

Governmental activities:

Instruction

$

Support services:

Pupil services

Improvement of instructional

services

Educational media services

Federal grant administration

General administration

School administration

Business administration

Maintenance and operation of facilities

Student transportation services

Central support services

Other support services

Operations of non-instructional services:

Miscellaneous non-instructional services

Food services operation

Interest on long-term debt

Total governmental activities

$

Expenses
166,571,098
6,718,919
6,847,976 4,650,949
436,538 2,154,012 15,690,813 1,906,788 15,173,610 12,811,660 3,285,204 3,195,564
1,135,232 14,305,507 6,617,052 261,500,922

Charges for Services

Program Revenues Operating Grants and
Contributions

Capital Grants and Contributions

$ 5,572,218 $ 101,326,786 $ 5,078,958

-

1,578,265

-

18,700 -

5,495,316 3,149,959
436,538 1,107,256 6,352,565
227,320 8,077,794 2,693,560
893,981 1,079,237

88,206
231,929
5,097 522,643 -

1,105,044

-

-

2,986,076

11,612,756

221,797

-

-

-

$ 9,682,038 $ 144,031,333 $ 6,148,630

Net (Expense) Revenue and
Changes in Net Position Governmental
Activities
$ (54,593,136)
(5,140,654)
(1,352,660) (1,412,784)
(814,827) (9,338,248) (1,679,468) (7,072,019) (9,595,457) (2,391,223) (2,116,327)
(30,188) 515,122 (6,617,052) (101,638,921)

General revenues: Taxes: Property taxes, levied for general purposes Property taxes, levied for debt service Sales taxes: For debt service For capital projects Other taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Total general revenues Change in net position
Net position, beginning of year, restated Net position, end of year
The accompanying notes are an integral part of these financial statements.

60,861,704 4,689,507
11,157,300 13,089,553 6,009,826 15,543,834
61,235 111,412,959
9,774,038 132,233,511 $ 142,007,549

12

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

ASSETS
Cash and cash equivalents Investments Receivables:
Taxes Intergovernmental:
State Federal Local Other Due from other funds Inventory

General

District-Wide Capital Projects

$

38,026,506 $

41,940,485 $

280

9,399,307

2,731,823

2,008,415

17,150,910

-

3,318,397

-

410,150

-

32,246

-

204,597

-

635,850

-

Total assets

$

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES

LIABILITIES

Accounts payable

$

Unearned revenue

Contracts payable

Salaries and benefits payable

Retainage payable

Due to other funds

Total liabilities
DEFERRED INFLOWS OF RESOURCES Unavailable revenue - property taxes

Total deferred inflows of resources
FUND BALANCES Nonspendable:
Inventory Permanent fund corpus Restricted for: Winston Ruritan Club Federal programs Capital projects Debt service Assigned for FY16 expenditures Unassigned: General fund
Total fund balances

Total liabilities, deferred inflows of

resources and fund balances

$

62,510,759 $
979,323 $ 76,183 -
34,228,822 -
35,284,328
2,096,645
2,096,645
635,850 -
5,753,222 -
1,629,866 17,110,848 25,129,786
62,510,759 $

53,348,207 $
4,460,548 $ -
1,207,607 -
1,093,828 204,597
6,966,580
-
-
46,381,627 -
46,381,627
53,348,207 $

The accompanying notes are an integral part of these financial statements.

Debt Service
1,802,457 -
295,415

Non-major Winston
Ruritan Club

$

13,781

79,109

-

Total Governmental
Funds

$

81,783,229

9,478,696

5,035,653

-

-

17,150,910

-

-

3,318,397

-

-

410,150

-

-

32,246

-

-

204,597

-

-

635,850

2,097,872 $

92,890 $

118,049,728

- $ -
-
206,830
206,830
1,891,042
1,891,042
2,097,872 $

- $ -
-
-
-

5,439,871 76,183
1,207,607 34,228,822
1,093,828 204,597
42,250,908
2,303,475
2,303,475

45,903
46,987 -
-
92,890

635,850 45,903
46,987 5,753,222 46,381,627 1,891,042 1,629,866
17,110,848
73,495,345

92,890 $

118,049,728

13

DOUGLAS COUNTY BOARD OF EDUCATION
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION
JUNE 30, 2015

Total fund balances - governmental funds

$

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.

Cost Less accumulated depreciation

$

564,105,269

(145,207,379)

Other long-term assets are not available to pay for current-period expenditures and, therefore, are unavailable in the funds.
Property taxes

The net pension liability is not a financial liability in governmental fund activities and, therefore, not reported in governmental funds.

Net pension liability

$

Deferred outflows of resources - contributions

Deferred outflows of resources - difference between employer

contributions and employer's proportionate share of contributions

Deferred inflows of resources - investment earnings

(154,301,968) 16,387,830
12,186,471 (53,792,937)

Long-term liabilities and related items are not due and payable in the current period and, therefore, are not reported

in the funds.

Bonds payable

$

(174,973,000)

Premium, net of amortization

(2,451,314)

Prepaid bond insurance, net of amortization

9,372

Unamortized loss on refunding

9,739,592

Accrued interest

(1,271,321)

Compensated absences

(1,127,914)

Claims liability

(3,093,972)

Net position of governmental activities

$

The accompanying notes are an integral part of these financial statements.

73,495,345 418,897,890
2,303,475 (179,520,604)
(173,168,557) 142,007,549

14

DOUGLAS COUNTY BOARD OF EDUCATION
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015

REVENUES Property taxes Sales taxes Other taxes State funds Federal funds Investment income (loss) Charges for services Miscellaneous Total revenues
EXPENDITURES Current: Instruction Support services: Pupil services Improvement of instructional services Educational media services Federal grant administration General administration School administration Business administration Maintenance and operation of facilities Student transportation services Central support services Other support services Miscellaneous non-instructional services Food services operation Capital outlay Debt service: Principal retirement Interest and fees Total expenditures
Excess (deficiency) of revenues over (under) expenditures
OTHER FINANCING SOURCES (USES) Transfers in Transfers out Sale of capital assets Total other financing sources (uses)
Net change in fund balances

General

$

60,540,012 $

-

5,241,882

138,599,151

26,917,500

25,836

4,132,621

5,549,417

241,006,419

District Wide
Capital Projects
- $ 24,246,853
38,222 24,285,075

Debt Service

Non-major Winston
Ruritan Club

Total Governmental
Funds

4,674,447 $ -
767,944 -
4,971 -
5,447,362

- $ (7,794) (7,794)

65,214,459 24,246,853 6,009,826 138,599,151 26,917,500
61,235 4,132,621 5,549,417 270,731,062

147,183,728
6,795,888 6,937,267 4,426,895
400,214 1,436,905 15,963,578 1,931,155 15,216,887 11,566,724 3,315,809 3,206,865 1,135,232 13,561,573
-
233,078,720
7,927,699
106,356 106,356
8,034,055

-
44,740,991
44,740,991
(20,455,916)
(11,157,300)
(11,157,300)
(31,613,216)

-
4,289 -
13,745,000 5,826,717 19,576,006
(14,128,644)
11,157,300 -
11,157,300
(2,971,344)

-
-
-
(7,794)
-
(7,794)

147,183,728
6,795,888 6,937,267 4,426,895
400,214 1,436,905 15,963,578 1,935,444 15,216,887 11,566,724 3,315,809 3,206,865 1,135,232 13,561,573 44,740,991
13,745,000 5,826,717 297,395,717
(26,664,655)
11,157,300 (11,157,300)
106,356 106,356
(26,558,299)

FUND BALANCES, beginning of year

17,095,731

77,994,843

FUND BALANCES, end of year

$

25,129,786 $

46,381,627 $

The accompanying notes are an integral part of these financial statements.

4,862,386 1,891,042 $

100,684 92,890 $

100,053,644 73,495,345

15

DOUGLAS COUNTY BOARD OF EDUCATION
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Amounts reported for governmental activities in the statement of activities are different because:

Net change in fund balances - total governmental funds

$

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. The amount by which capital outlays exceeded depreciation in the current period is as follows:

Capital outlay Depreciation expense

$

41,524,292

(20,967,136)

The net effect of miscellaneous transactions involving capital assets is as follows:

Net book value of assets sold

$

(397,624)

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.

Property taxes

Contributions to the pension plan in the current fiscal year are not included on the statement of activities.
In the governmental funds, current year expenditures related to pensions are comprised solely of amounts contributed to the plan for the current year. However, in the statement of activities, expenses related to pensions include amounts that do not require the use of current financial resources. This amount represents the difference in the required accounting treatment of pensions and related items.
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 assets. This amount is the net effect of these differences in the treatment of long-term debt and related items.

(26,558,299)
20,557,156 (397,624) 336,752
16,387,830 (13,346,252)

Principal payments - bonds

Some expenses 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.

Amortization of bond premium Amortization of prepaid bond insurance Amortization of loss on refunding Change in claims payable Change in compensated absences Change in accrued interest

$

1,231,478

(8,673)

(2,258,389)

(221,565)

61,375

245,249

Change in net position of governmental activities

$

The accompanying notes are an integral part of these financial statements.

13,745,000
(950,525) 9,774,038

16

DOUGLAS COUNTY BOARD OF EDUCATION
GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (GAAP BASIS)
FOR THE FISCAL YEAR ENDED JUNE 30, 2015

REVENUES Taxes State funds Federal funds Charges for services Investment income Miscellaneous
EXPENDITURES Current: Instruction Support services:
Pupil services Improvement of instructional services Educational media services Federal grant administration General administration School administration Business administration Maintenance and operation of plant Student transportation services Central support services Other support services Miscellaneous non-instructional services Food services operation Total expenditures
Excess (deficiency) of revenues over (under) expenditures
OTHER FINANCING SOURCES Proceeds from sale of capital assets Total other financing sources
Net change in fund balances
FUND BALANCES, beginning of year
FUND BALANCES, end of year

Budget Original

Final

$

64,999,288 $

64,999,288 $

133,174,088

134,805,058

18,209,871

28,117,578

2,839,935

2,839,935

46,800

46,800

2,689,574

2,720,918

221,959,556

233,529,577

142,592,847
6,792,356 4,079,791 4,394,025
85,798 1,420,021 16,045,221 1,629,938 15,060,886 11,046,889 3,569,926
746,606 2,238
14,447,662 221,914,204
45,352

148,838,889
7,110,531 7,690,381 4,430,424
408,173 1,553,574 16,153,404 1,640,363 15,050,461 11,329,803 3,524,665 1,681,744
2,238 14,448,054 233,862,704
(333,127)

50,000 50,000

50,000 50,000

95,352

(283,127)

17,095,731

17,095,731

$ 17,191,083 $ 16,812,604 $

The accompanying notes are an integral part of these financial statements.

Actual

Variance With Final Budget

65,781,894 $ 138,599,151 26,917,500
4,132,621 25,836
5,549,417 241,006,419

782,606 3,794,093 (1,200,078) 1,292,686
(20,964) 2,828,499 7,476,842

147,183,728
6,795,888 6,937,267 4,426,895
400,214 1,436,905 15,963,578 1,931,155 15,216,887 11,566,724 3,315,809 3,206,865 1,135,232 13,561,573 233,078,720
7,927,699

1,655,161
314,643 753,114
3,529 7,959 116,669 189,826 (290,792) (166,426) (236,921) 208,856 (1,525,121) (1,132,994) 886,481 783,984
8,260,826

106,356 106,356 8,034,055 17,095,731 25,129,786 $

56,356 56,356 8,317,182
8,317,182

17

DOUGLAS COUNTY BOARD OF EDUCATION
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES AGENCY FUND JUNE 30, 2015

Cash Total assets
Funds held for others Total liabilities

ASSETS LIABILITIES

The accompanying notes are an integral part of these financial statements.

Club and Athletics
Fund

$

632,087

$

632,087

$

632,087

$

632,087

18

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 1: DESCRIPTION OF SCHOOL DISTRICT AND REPORTING ENTITY
Reporting Entity
The Douglas County Board of Education (School District) was established under the laws of the State of Georgia and operates under the guidance of a school board elected by the voters and a Superintendent appointed by the Board. The Board is organized as a separate legal entity and has the power to levy taxes and issue bonds. Its budget is not subject to approval by any other entity. Accordingly, the School District is a primary government and consists of all the organizations that compose its legal entity.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The School District's basic financial statements are collectively comprised of the government-wide financial statements, fund financial statements and notes to the basic financial statements of the Douglas County Board of Education.
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 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.
In the Statement of Net Position, equity is reported as net position and consists of net investment in capital assets, amounts restricted by outside parties for specific purposes and unrestricted amounts.
19

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fund Financial Statements: The fund financial statements provide information about the School District's funds, including fiduciary funds. Eliminations have been made to minimize the double counting of internal activities. Separate statements for each category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column.
The School District reports the following major governmental funds:
General Fund is the School District's primary operating fund. It accounts for all financial resources of the School District, except those resources required to be accounted for in another fund.
District-Wide Capital Projects Fund accounts for financial resources including Special Purpose Local Option Sales Tax (SPLOST), Bond Proceeds and grants from Georgia State Financing and Investment Commission to be used for the acquisition, construction or renovation of major capital facilities.
Debt Service Fund accounts for taxes (property and sales) legally restricted for the payment of general long-term debt principal, interest and paying agent's fees.
The School District also reports the following fund types:
Agency Fund accounts for assets held by the School District as an agent for various individual school clubs and activities.
Permanent Fund accounts for the operations of the School District's endowment for which the corpus held in this fund cannot be used.
Basis of Accounting/Measurement Focus
The basis of accounting determines when transactions are reported on the financial statements. The District-wide governmental activities and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Agency funds are custodial in nature and do not present results of operations or have a measurement focus. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the School District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, sales taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from sales taxes is recognized in the fiscal year in which the underlying transaction (sale) takes place. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
20

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The School District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the School District considers most revenues to be available if they are collected within 60 days of the end of the current fiscal period; however, intergovernmental revenues reported in the governmental funds are considered to be available if they are collected within 120 days after year-end.
Property taxes, sales taxes, intergovernmental revenue, and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term liabilities and capital leases are reported as other financing sources.
Revenue from grants and donations is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the School District must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the School District on a reimbursement basis.
The State of Georgia reimburses the School District for teachers' salaries and operating costs through the Quality Basic Education (QBE) Formula Earnings program. State of Georgia law defines the formula driven grant that determines the cost of an academic school year and the State of Georgia's share in this cost. Generally teachers are contracted for the school year (July 1 June 30) and paid over a twelve month contract period, generally September 1 through August 31. In accordance with the requirements of the enabling legislation of the QBE program, the State of Georgia reimburses the School District over the same twelve month period in which teachers are paid, funding the academic school year expenditures. At June 30, the amount of teachers' salaries incurred but not paid until July and August of the subsequent year are accrued as the State of Georgia has only postponed the final payment of their share of the cost until the subsequent appropriations for cash management purposes. By June 30 of each year, the State of Georgia has a signed appropriation that includes this final amount, which represents the State of Georgia's intent to fund this final payment. Based on guidance in Government Accounting Standards Board (GASB) Statement No. 33, paragraph 74, the State of Georgia recognizes its QBE liability for the July and August salaries at June 30, and the School District recognizes the same QBE as a receivable and revenue, consistent with symmetrical recognition.
21

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The School District funds certain programs by a combination of specific cost-reimbursement grants, categorical grants, and general revenues. Thus, when program costs are incurred, there are both restricted and unrestricted net position available to finance the program. It is the School District's policy to first apply grant resources to such programs, followed by cost-reimbursement grants, then general revenues.
Cash and Cash Equivalents
COMPOSITION OF DEPOSITS Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition in authorized financial institutions. Georgia Laws OCGA 45-8-14 authorizes the School District to deposit its funds in one or more solvent banks or insured federal savings and loan associations.
Investments
COMPOSITION OF INVESTMENTS Investments made by the School District in nonparticipating interest-earning contracts (such as certificates of deposit) and repurchase agreements are reported at cost. Participating interest-earning contracts and money market investments with a maturity at purchase of one year or less are reported at amortized cost. Both participating interest-earning contracts and money market investments with a maturity at purchase greater than one year are reported at fair value. The Official Code of Georgia Annotated Section 36-83-4 authorizes the School District to invest its funds. In selecting among options for investment or among institutional bids for deposits, the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity. Funds may be invested in the following:
(1) Obligations issued by the State of Georgia or by other states, (2) Obligations issued by the United States government, (3) Obligations fully insured or guaranteed by the United States government or a United
States government agency, (4) Obligations of any corporation of the United States government, (5) Prime banker's acceptances, (6) The Local Government Investment Pool administered by the State Treasurer of the State
of Georgia, (7) Repurchase agreements, and (8) Obligations of other political subdivisions of the State of Georgia.
The School District does not have a formal policy regarding investments that addresses credit risks, custodial credit risks, concentration of credit risks, interest rate risks or foreign currency risks.
22

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 are reported net of an allowance for uncollectible receivables when necessary.

Property Taxes

The Douglas County Tax Commissioner levied the property tax for the 2014 tax digest year (calendar year) on September 15, 2014 (levy date). Taxes were due on November 17, 2014 (lien date). Taxes collected within the current fiscal year or within 60 days after year-end on the 2014 tax digest are reported as revenue in the governmental funds for fiscal year 2015. The Douglas County Tax Commissioner bills and collects the property taxes for the School District, withholds 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, 2015, for maintenance and operations amounted to $60,540,012 and for debt service amounted to $4,674,447. Allowances for uncollectible property taxes at June 30, 2015 for the School District's General Fund and Debt Service Fund are $55,751 and $6,029, respectively.

The Georgia Constitution, Article VIII, Section VI, Paragraph I requires the board of education of each school system to annually certify to its fiscal authority or authorities a school tax not greater than 20 mills per dollar for the support and maintenance of education. The Douglas County Board of Education is in compliance with this law. Tax millage rates levied for the 2014 tax year (calendar year) for the Douglas County Board of Education were as follows (a mill equals $1 per thousand dollars of assessed value):

School Maintenance and Operations School Bonds
Sales Taxes

19.85 mills 1.50 mills 21.35 mills

Special Purpose Local Option Sales Tax, at the fund reporting level, during the year amounted to $24,246,853 and is to be used for capital outlay for educational purposes or debt service. This sales tax was authorized by local referendum and the sales tax must be re-authorized at least every five years.

23

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Inventories
CONSUMABLE SUPPLIES On the basic financial statements, consumable supplies are reported at cost (first-in, first-out). The School District uses the consumption method to account for the consumable supplies inventory whereby an asset is recorded when supplies are purchased and expenses/expenditures are recorded at the time the supplies are consumed.
FOOD INVENTORIES On the basic financial statements, inventories of donated food commodities used in the preparation of meals are reported at their federally assigned value and purchased foods inventories are reported at cost (first-in, first-out). The School District uses the consumption method to account for inventories whereby donated food commodities are recorded as an asset and as revenue when received, and expenses/expenditures are recorded as the inventory items are used. Purchased foods are recorded as an asset when purchased and expenses/expenditures are recorded as the inventory items are used.
Prepaid Items
Payments made to vendors for services that will benefit periods subsequent to June 30, 2015, are recorded as prepaid items.
Capital Assets
Capital assets purchased, including capital outlay costs, are recorded as expenditures in the fund financial statements at the time of purchase (including ancillary charges). On the District-wide financial statements, all purchased capital assets are valued at cost where historical records are available and at estimated historical cost based on appraisals or deflated current replacement cost where no historical records exist. Donated capital assets are recorded at estimated fair market value on the date donated. Disposals are deleted at depreciated recorded cost. The cost of normal maintenance and repairs that do not add to the value of assets or materially extend the useful lives of the assets is not capitalized. Depreciation is computed using the straight-line method. The School District does not capitalize book collections or works of art. Depreciation is used to allocate the actual or estimated historical cost of all capital assets over estimated useful lives.
24

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

statements are as follows:

Capitalization Estimated

Policy

Useful Life

Land Land Improvements Buildings
Temporary Permanent Building Improvements Equipment

All

N/A

$

10,000

20 years

$

10,000

25 years

$

50,000

50 years

$

10,000 7 to 30 years

$

10,000 4 to 20 years

Deferred Outflows/Inflows of Resources

In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense / expenditure) until then. The School District has two types of items that qualify for reporting in this category. These items are deferred charges on refunding and deferred outflows of resources related to the reporting of the net pension liability reported in the government-wide statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded debt or the refunding debt. The School District reports two deferred outflows of resources related to the reporting of the net pension liability. The Governmental Activities report (1) a deferred outflow of resources for the School District's actual contributions to the pension plan during the fiscal year ended June 30, 2015 which will be recognized in fiscal year 2016; and (2) a deferred outflow of resources for the difference between the Boards actual contributions towards the pension plan and the School District's proportionate share of contributions, which will be amortized over the remaining service period.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The School District has one type of deferred inflow under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and these amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available. The School District also has one item that qualifies for reporting in this category which occurs only in the governmental activities. The Governmental Activities report a deferred inflow of resources for the net difference between projected and actual investment earnings on the pension assets. This difference will be amortized over a five year period.

25

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
General Obligation Bonds
The School District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. In addition, general obligation bonds have been issued to refund existing general obligations bonds. Bond issuance costs are recognized in the financial statements during the fiscal year bonds are issued. General obligation bonds are direct obligations and pledge the full faith and credit of the government.
In the fund financial statements, the face amount of debt issued and any related premium, is reported as other financing sources. Issuance costs, whether or not withheld from actual proceeds, are reported as debt service expenditures.
In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed when incurred.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities and deferred inflows of resources, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers Retirement System of Georgia (TRS) and additions to/deductions from TRS's fiduciary net position have been determined on the same basis as they are reported by TRS. 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.
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Public School Employees Retirement System of Georgia (PSERS) and additions to/deductions from PSERS's fiduciary net position have been determined on the same basis as they are reported by PSERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
26

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fund Equity
Fund equity at the governmental fund financial reporting level is classified as "fund balance." Fund equity for all other reporting is classified as "net position."
Fund Balance Generally, fund balance represents the difference between the assets, liabilities and deferred inflows of resources under the current financial resources measurement focus of accounting. In the fund financial statements, governmental funds report fund balance classifications that comprise a hierarchy based primarily on the extent to which the School District is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Fund balances are classified as follows:
Nonspendable Fund balances are reported as nonspendable when amounts cannot be spent because they are either (a) not in spendable form (i.e., items that are not expected to be converted to cash) or (b) legally or contractually required to be maintained intact.
Restricted Fund balances are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the School District or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments.
Committed Fund balances are reported as committed when they can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Education through the adoption of a resolution. Only the Board of Education may modify or rescind the commitment.
Assigned Fund balances are reported as assigned when amounts are constrained by the School District's intent to be used for specific purposes, but are neither restricted nor committed. Through resolution, the Board of Education has authorized the Superintendent or his or her designee to assign fund balances.
Unassigned Fund balances are reported as unassigned as the residual amount when the balances do not meet any of the above criterion. The School District reports positive unassigned fund balance only in the general fund. Negative unassigned fund balances may be reported in all funds.
Flow Assumptions When both restricted and unrestricted amounts of fund balance are available for use for expenditures incurred, it is the School District's policy to use restricted amounts first and then unrestricted amounts as they are needed. For unrestricted amounts of fund balance, it is the School District's policy to use fund balance in the following order:
Committed Assigned Unassigned
27

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015 Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Net Position - Net position represents the difference between assets and deferred outflows of resources, and liabilities and deferred inflows of resources in reporting which utilizes the economic resources measurement focus. Net investment in capital assets, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used (i.e., the amount that the School District has spent) for the acquisition, construction or improvement of those assets. Net position is reported as restricted using the same definition as used for restricted fund balance as described in the section above. All other net position is reported as unrestricted. The School District applies restricted resources first when an expense is incurred for purposes for which both restricted and unrestricted net position is available. Note 3: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY The School System adopts an annual budget for the General Fund and Debt Service Fund. The budget is prepared in accordance with provisions of the Quality Basic Education Act, OCGA Section 20-2-167 and in accordance with U.S. generally accepted accounting principles. After the Board of Education has tentatively adopted the budget, such budget is advertised at least one time in a local newspaper of general circulation. At the next regular meeting of the Board after advertisement, the budget is revised as necessary and adopted as the final budget.
Note 4: DEPOSITS AND INVESTMENTS
CUSTODIAL CREDIT RISK Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the School District will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. State statutes require all deposits and investments (other than federal or state government instruments) to be collateralized by depository insurance, obligations of the U.S. government, or bonds of public authorities, counties, or municipalities. As of June 30, 2015, all deposits and investments were properly collateralized and insured.
28

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 4: DEPOSITS AND INVESTMENTS (Continued)

CATEGORIZATION OF INVESTMENTS At June 30, 2015, the carrying value of the School District's total investments was $9,478,696, which is materially the same as fair value.

The investment in the Georgia Fund 1 represents the School District's portion of a pooled investment account operated by the Office of the State Treasurer. The pool consists of U.S. treasury obligations, securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities, banker's acceptances, overnight and term repurchase agreements with highly rated counterparties, and collateralized bank accounts. The investment in the Georgia Fund 1 is valued at fair market value.

Investment
Georgia Fund 1 Common stock
Total

Maturity
56 days N/A

Fair Value

$

9,399,587

79,109

$

9,478,696

Note 5: NON-MONETARY TRANSACTIONS
The School District receives food commodities from the United States Department of Agriculture (USDA) for school breakfast and lunch programs. For the year ended June 30, 2015, the commodities usage is recorded at their federally assigned value of $729,900.

29

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 6: CAPITAL ASSETS

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

Balances July 1, 2014

Increases

Decreases

Transfers

Balances June 30, 2015

Governmental activities:

Capital assets, not

being depreciated:

Land

$

Construction in

progress

Total

31,469,359 $
13,903,746 45,373,105

- $
29,254,378 29,254,378

- $

- $

-

(23,123,020)

-

(23,123,020)

31,469,359
20,035,104 51,504,463

Capital assets, being depreciated: Building improvements Equipment
Land improvements
Total
Less accumulated depreciation for: Building improvements Equipment
Land improvements
Total

393,795,526 55,469,341 31,418,680 480,683,547
(85,756,028) (34,794,140)
(6,768,126) (127,318,294)

47,320 11,586,006
636,588 12,269,914
(10,900,487) (8,476,485) (1,590,164)
(20,967,136)

(504,355) (2,971,320)
(3,475,675)
180,777 2,897,274
3,078,051

22,521,430 468,966 132,624
23,123,020
-

415,859,921 64,552,993 32,187,892 512,600,806
(96,475,738) (40,373,351)
(8,358,290) (145,207,379)

Total capital assets, being depreciated, net

353,365,253

(8,697,222)

(397,624)

23,123,020

367,393,427

Governmental activities capital assets, net

$ 398,738,358 $

20,557,156 $

(397,624) $

- $ 418,897,890

Depreciation expense was charged to functions as follows:

Instruction

$

Support services:

Educational media services

General administration

Maintenance and operation of facilities

Student transportation services

Operations of non-instructional services:

Food services

$

17,802,634
300,656 803,130 17,650 1,275,023
768,043 20,967,136

30

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 7: INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interfund receivables/payables as of June 30, 2015, consisted of the following:

Interfund Payable District-Wide Capital Projects

Interfund Receivable

General

Fund

$

204,597

The interfund balance above represents expenditures to be reimbursed upon future collections of sales tax.

Interfund transfers for the year ended June 30, 2015, consisted of the following:

Transfers To Debt Service

Transfers From District-Wide
Capital Projects $ 11,157,300

Transfers are used to move SPLOST proceeds from District-Wide Capital Projects Fund to Debt Service Fund to fund debt service as allowed in the referendum.
Note 8: RISK MANAGEMENT
The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illness or injuries to employees; acts of God; and unemployment compensation and vision plan.
The School District participates in the Georgia School Boards Association Risk and Insurance Management System, a public entity risk pool organized on July 1, 1994, to develop and administer a plan to reduce risk of loss on account of general liability, motor vehicle liability, or property damage, including safety engineering and other loss prevention and control techniques, and to administer one or more groups of self-insurance funds, including the processing and defense of claims brought against members of the district. The School District pays an annual premium to the district for its general insurance coverage. Additional coverage is provided through agreements by the district 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 district varies by line of coverage.

31

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 8: RISK MANAGEMENT (Continued)
The School District has established a limited risk management program for workers' compensation claims. A premium is paid by the General Fund at the beginning of the fiscal year for an excess workers' compensation coverage policy which covers individual claims in excess of $450,000 loss per occurrence, up to the statutory limit. Assessments of individual programs, except School Food Services, are performed, as needed, on the basis of that program's payroll to total payroll in order to cover estimated claims budgeted by management based on known claims and prior experiences. School Food Services is billed by the General Fund for the actual amount of claims for that program. The School District accounts for claims with expenses/expenditures and liabilities being reported when it is probable that a loss has occurred in the amount of that loss can be reasonably estimated. For purposes of estimating the unpaid claims liability as of June 30, 2015, the School District's third party administrator computed the reserve liability based on the estimated cost of each outstanding claim from claims experience of similar claims, including consideration of any incurred, but not reported amounts.
Changes in the workers' compensation claims liability during the last two fiscal years are as follows:

Beginning of Year

Claims and Changes in Estimates

Claims Paid

End of Year

Due Within One Year

2014 2015

$ 2,133,153 $ 3,319,661 $ 2,580,407 $ 2,872,407 $ 2,441,546 $ 2,872,407 $ 2,062,953 $ 1,841,388 $ 3,093,972 $ 2,629,876

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

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

Beginning of Year

Changes in Estimates

Claims Paid

End of Year

2014

$

- $ 40,643 $ 40,643 $

-

2015

$

- $ 66,375 $ 66,375 $

-

32

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 8: RISK MANAGEMENT (Continued)

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

Position Covered

Amount

Superintendent

$100,000

Note 9: OPERATING LEASES

Douglas County Board of Education is committed under various leases for equipment. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year totaled approximately $217,275. Future minimum lease payments on these leases are as follows:

Year ending June 30, 2016 2017 2018 2019
Total

$ 217,273 217,275 217,275 217,275
$ 869,098

Note 10: LONG TERM DEBT
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.

33

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 10: LONG TERM DEBT (Continued)

GENERAL OBLIGATION DEBT OUTSTANDING General Obligation Bonds currently outstanding are as follows:

Purpose

Interest Rates

Outstanding Balance at June 30, 2015

General Government - Series 2007 General Government - Series 2012 General Government - Series 2013 General Government - Series 2014

4.00% - 5.00% 3.43% - 4.00%
2.60% 2.41%

$ 12,435,000 27,970,000 73,035,000 61,533,000
$ 174,973,000

The changes in long-term obligations during the fiscal year ended June 30, 2015, were as follows:

Governmental activities: General obligation bonds Unamortized bond premium Claims payable Net pension liability Compensated absences Governmental activity
Long-term liabilities

Beginning Balance

Additions

Reductions

Ending Balance

Due Within One Year

$ 188,718,000 $

- $ (13,745,000) $ 174,973,000 $ 13,191,000

3,682,792

-

(1,231,478)

2,451,314

-

2,872,407

2,062,953

(1,841,388)

3,093,972

2,629,876

197,863,346

13,346,252

(56,907,630)

154,301,968

-

1,189,289

802,975

(864,350)

1,127,914

958,727

$ 394,325,834 $ 16,212,180 $ (74,589,846) $ 335,948,168 $ 16,779,603

For governmental activities, compensated absences and the net pension liability are being liquidated primarily by the General Fund.
In fiscal year 2012, the School District issued $27,970,000 of Series 2012 General Obligation Refunding Bonds to (i) refund a portion of the Series 2005 General Obligation Refunding Bonds and (ii) pay the costs of issuing the Series 2012 General Obligation Refunding Bonds. The School District defeased the 2005 bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the School District's financial statements. At June 30, 2015, $28,310,000 of bonds outstanding are considered defeased. The School District has pledged its full faith and credit and taxing power to service the debt.

34

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 10: LONG TERM DEBT (Continued)
In fiscal year 2014, the School District issued $75,000,000 of Series 2013 General Obligation Refunding Bonds to (i) refund a portion of the Series 2007 General Obligation Bonds and (ii) pay the costs of issuing the Series 2013 General Obligation Refunding Bonds. The School District defeased the 2007 bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. The School District also issued $62,478,000 of Series 2014 General Obligation Refunding Bonds to (i) refund a portion of the Series 2007 General Obligation Bonds and (ii) pay the costs of issuing the Series 2013 General Obligation Refunding Bonds. The School District defeased the 2007 bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the School District's financial statements. At June 30, 2015, $120,245,000 of bonds outstanding are considered defeased. The School District has pledged its full faith and credit and taxing power to service the debt.
At June 30, 2015, payments due by fiscal year, which includes principal and interest, for these items are as follows:

Fiscal Year Ended June 30

General Obligation Bonds

Principal

Interest

2016 2017 2018 2019 2020 2021-2025 2026-2027
Total

$ 13,191,000 $ 14,396,000 15,064,000 15,517,000 15,995,000 68,240,000 32,570,000
$ 174,973,000 $

5,077,641 4,530,523 3,928,955 3,476,816 2,998,641 9,447,398 1,275,690
30,735,663

35

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 11: ON-BEHALF PAYMENTS
The School District has recognized revenues and costs in the amount of $543,448 for retirement contributions paid on the School District's behalf by the following State Agencies.
Georgia Department of Education Paid to the Teachers Retirement District for Teachers Retirement (TRS) in the amount of $41,290
State Treasurer of the State of Georgia Paid to the Public School Employees Retirement System for Public School Employees Retirement (PSERS) Employer's Cost in the amount of $502,158
Note 12: SIGNIFICANT COMMITMENTS
The following is an analysis of significant outstanding construction or renovation contracts executed by the School District as of June 30, 2015:
Project

Chapel Hill High Auxiliary Gym Alexander High Competition Gym Burnett Elementary Roof Chapel Hill High Roof Chapel Hill Windows South Douglas Floorcovering South Douglas Gym Floor Lithia Springs High Retaining Wall High School Track Resurfacing

$ 190,115 656,164 275,809 297,158 87,800 209,974 83,870 15,505 322,800
$ 2,139,195

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

36

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 13: SIGNIFICANT CONTINGENT LIABILITIES
Amounts received or receivable principally from the federal government are subject to audit and review by grantor agencies. This could result in requests for reimbursement to the grantor agency for any costs which are disallowed under grant terms. The School District believes that such disallowances, if any, will be immaterial to its overall financial position.
The School District is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine School District operations. The ultimate disposition of these proceedings is not presently determinable, but is not believed to be material to the basic financial statements.
Note 14: RETIREMENT PLANS
GENERAL INFORMATION ABOUT THE TEACHERS RETIREMENT SYSTEM OF GEORGIA (TRS)
Plan description: All teachers of the District as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) and certain other support personnel as defined by 47-3-63 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multipleemployer 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. TRS issues a publicly available financial 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 6.00 % of their annual pay during fiscal year 2015. The School District's contractually required contribution rate for the year ended June 30, 2015 was 13.15% of annual school district payroll. District contributions to TRS were $16,387,830 for the year ended June 30, 2015.
37

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 14: RETIREMENT PLANS (Continued)

PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS

Effective July 1, 2014, the District implemented the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions an amendment of GASB Statement No. 27 as well as Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date an amendment of GASB Statement No. 68, which significantly changed the District's accounting for pension amounts. The information disclosed below is presented in accordance with these new standards.

At June 30, 2015, the District reported a liability for its proportionate share of the net pension liability that reflected a reduction for support provided to the District by the State of Georgia for certain public school support personnel. The amount recognized by the 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 District were as follows:

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

$ 154,301,968
480,712 $ 154,782,680

The net pension liability was measured as of June 30, 2014. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2013. An expected total pension liability as of June 30, 2014 was determined using standard roll-forward techniques. The District's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2014. At June 30 2014, the District's proportion was 1.221354%, which was an increase of 0.085832% from its proportion measured as of June 30, 2013.

38

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 14: RETIREMENT PLANS (Continued)

PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS (Continued)

For the year ended June 30, 2015, the District recognized pension expense of $13,346,252 and revenue of $40,146 for support provided by the State of Georgia for certain support personnel. At June 30, 2015, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Net difference between projected and actual earnings on pension plan investments
Changes in proportion and differences between District contributions and proportionate share of contributions
District contributions subsequent to the measurement date
Total

Deferred Outflows of Resources

$

-

Deferred Inflows of Resources
$ 53,792,937

12,186,471

-

16,387,830

-

$ 28,574,301 $ 53,792,937

District contributions subsequent to the measurement date of $16,387,830 are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year ended June 30: 2016 2017 2018 2019 2020 Total

$ (10,678,579) (10,678,579) (10,678,579) (10,678,591) 1,107,862
$ (41,606,466)

39

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 14: RETIREMENT PLANS (Continued)

PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS (Continued)

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

Inflation Salary increases
Investment rate of return

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

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

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

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

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

Target allocation
30.00% 39.70 3.70 1.60 18.90 6.10 100.00%

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

40

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 14: RETIREMENT PLANS (Continued)

PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS (Continued)

Discount rate: The discount rate used to measure the total 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 State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the 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 District's proportionate share of the net pension liability to changes in the discount rate: The following presents the District's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the 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:

District's proportionate share of the net pension liability

1% Decrease (6.50%) $ 284,357,825

Current discount rate
(7.50%) $ 154,301,968

1% Increase (8.50%) $ 47,203,671

Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS financial report which is publically available at www.trsga.com/publications.

GENERAL INFORMATION ABOUT THE PUBLIC SCHOOLS 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.

41

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 14: RETIREMENT PLANS (Continued)

GENERAL INFORMATION ABOUT THE PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM (PSERS) (Continued)

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.

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.

Pension Liabilities and Pension Expense

At June 30, 2015, the District did not have a liability for a proportionate share of the net pension liability because of the related State of Georgia support. The amount of the State's proportionate share of the net pension liability associated with the District is as follows:

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

$

1,923,001

The net pension liability was measured as of June 30, 2014. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2013. An expected total pension liability as of June 30, 2014 was determined using standard roll-forward techniques. The State's proportion of the net pension liability associated with the District was based on actuarially determined contributions paid by the State during the fiscal year ended June 30, 2014.

42

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 14: RETIREMENT PLANS (Continued)

GENERAL INFORMATION ABOUT THE PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM (PSERS) (Continued)

For the year ended June 30, 2015, the District recognized pension expense of $167,000 and revenue of $167,000 for support provided by the State of Georgia.

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

Inflation Salary increase Investment rate of return

3.0% N/A 7.50%, net of pension plan
investment expense, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table set forward one year for males for the period after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back two years for males and set forward one year for females for the period after disability retirement.
The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

43

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 14: RETIREMENT PLANS (Continued)

GENERAL INFORMATION ABOUT THE PUBLIC SCHOOLS EMPLOYEES RETIREMENT SYSTEM (PSERS) (Continued)

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

Asset class Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks
Total

Target allocation
30.00% 39.70 3.70 1.60 18.90 6.10
100.00%

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

* Rates shown are net of the 3.00% assumed rate of inflation

Discount rate: The discount rate used to measure the total 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 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.

44

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 15: POSTEMPLOYMENT BENEFITS
GEORGIA RETIREE HEALTH BENEFIT FUND
Plan Description. The Georgia School Personnel Postemployment Health Benefit Fund (School OPEB Fund) is a cost-sharing multiple-employer defined benefit postemployment healthcare plan that covers eligible former employees of public school systems, libraries and regional educational service agencies. The School OPEB Fund provides health insurance benefits to eligible former employees and their qualified beneficiaries through the State Employees Health Benefit Plan administered by the Department of Community Health. The Official Code of Georgia Annotated (O.C.G.A.) assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees, to the Board of Community Health (Board). The Department of Community Health, which includes the School OPEB Fund, issues a separate stand alone financial audit report and a copy can be obtained from the Georgia Department of Audits and Accounts.
Funding Policy. The contribution requirements of Plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of Plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. For members with fewer than five years of service as of January 1, 2013, contributions also vary based on years of service. On average, members with five years or more of service as of January 1, 2013, pay approximately 25 percent of the cost of the health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2013, 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 "pay-as-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.
45

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
Note 15: POSTEMPLOYMENT BENEFITS (Continued)

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

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

July 1, 2014 June 30, 2015

$945.00 per member per month

For non-certificated school personnel:

July 1, 2014 June 30, 2015

$596.20 per member per month

No additional contribution was required by the Board for fiscal year 2015 nor contributed to the School OPEB Fund to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the School plan for other postemployment benefits and are subject to appropriation.

The School District's combined active and retiree contributions to the health insurance plans, which equaled the required contribution, for the current fiscal year and the preceding two fiscal years were as follows:

Fiscal Year 2015 2014 2013

Percentage Contributed
100% 100% 100%

Required Contribution $ 22,308,889 $ 23,091,300 $ 21,218,058

NOTE 16 CHANGE IN ACCOUNTING PRINCIPLE

In conjunction with the implementation of Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions an amendment of GASB Statement No. 27, and Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date an amendment of GASB Statement No. 68, the School District is required to change its accounting treatment of pension liabilities and the related pension expense. The new standard requires that the School District's proportionate share of the Net Pension Liability be recorded on the Statement of Net Position.

46

DOUGLAS COUNTY BOARD OF EDUCATION NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
NOTE 16 CHANGE IN ACCOUNTING PRINCIPLE (Continued)

Therefore, in conjunction with the implementation of Statement No. 68 and Statement No. 71, the following restatement was required to the beginning net position of the Governmental Activities to properly recognize the School District's Net Pension Liability and related deferred outflows of resources for contributions subsequent to the measurement date as of the end of the prior period:

Net position, as previously reported Restatement for implementation of GASB Statement No. 68 and 71:
Net pension liability as of June 30, 2014 Deferred outflows of resources - contributions Net position, as restated

Governmental Activities
$ 314,795,693
(197,863,346) 15,301,164
$ 132,233,511

47

II. REQUIRED SUPPLEMENTARY INFORMATION

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

District's proportion of the net pension liability

District's proportionate share of the net pension liability

$

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

Total

$

District's covered-employee payroll

$

District's proportionate share of the net pension liability as a percentage of its coveredemployee payroll

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

2015 1.221354%
154,301,968
480,712 154,782,680 124,824,359
123.62% 84.03%

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

48

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

Contractually required contributions

2015 $ 16,387,830 $

2014 15,301,164 $

2013 14,223,779 $

2012 12,695,949 $

2011

2010

12,865,793 $ 12,287,112 $

2009 11,629,926 $

2008 10,768,785 $

2007 9,709,691 $

2006 8,731,863

Contributions in relation to the contractually required contributions

16,387,830

Contribution deficiency (excess)

$

- $

15,301,164 - $

14,223,779 - $

12,695,949 - $

12,865,793

12,287,112

- $

- $

11,629,926 - $

10,768,785 - $

9,709,691 - $

8,731,863 -

District's covered-employee payroll

124,746,171

124,824,359

124,505,755

123,987,972

124,740,716

125,319,117

124,926,441

133,740,203

104,942,844

94,137,974

Contributions as a percentage of covered-employee payroll

13.14%

12.26%

11.42%

10.24%

10.31%

9.80%

9.31%

8.05%

9.25%

9.28%

49

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

District's proportion of the net pension liability

2015 0.000000%

District's proportionate share of the net pension liability

$

-

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

1,923,001

Total

$

1,923,001

District's covered-employee payroll

$

6,390,704

District's proportionate share of the net pension liability as a percentage of its covered-

employee payroll

N/A

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

88.29%

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

50

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

Teachers Retirement System of Georgia:
Changes of assumptions : In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience.
Method and assumptions used in calculations of actuarially determined contributions : The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the contractually required contributions for year ended June 30, 2015 reported in that schedule:

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

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

Public Schools Employees Retirement System of Georgia:
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.

51

III. OTHER SUPPLEMENTARY INFORMATION

DOUGLAS COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF SPECIAL PURPOSE LOCAL OPTION SALES TAX PROCEEDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Project

Original Estimated Cost (1)

Current Estimated Cost (2)

Expended In Current Year (3)

Expended In Prior Years (3)

Total Completion
Cost

Project Status

SPLOST Issue 2005: The payment of principal and interest on the School District's Series 1999 Bonds maturing July 1, 2007, through and including January 1, 2012, and the School District's Series 2002A Bonds maturing July 1, 2007, through and including January 1, 2010.
$ 12,600,000 $ 12,600,000 $
The acquisition, construction and equipping of new schools and the purchase of land to be used as sites for future educational facilities; the acquisition, construction and equipping of classroom additions, other educational facilities and renovations and renovations and modifications to existing educational facilities; the acquisition and installation of new instructional, safety and transportation equipment for all educational facilities.

107,400,000

125,000,000

-

$

12,600,000

2,593,141

120,905,650

$

12,600,000 Complete

123,498,791 Ongoing

SPLOST Issue 2011: The payment of a portion of principal and interest on the School District's Series 2005 and 2007 Bonds and Series 2010 Refunding Bond
The adding to, renovating, repairing, improving, furnishing, equipping and completing existing school buildings and other buildings and facilities; acquiring technology improvements; acquiring and making modifications to land; acquiring new school equipment; acquiring band instruments, textbooks and instructional materials and equipment; acquiring any necessary or desirable property, both real and personal.

61,000,000 61,000,000

61,000,000

11,157,300

61,000,000

12,183,704

18,134,675 7,753,973

29,291,975 Ongoing 19,937,677 Ongoing

Total

$ 242,000,000 $ 259,600,000 $ 25,934,145 $ 159,394,298 $ 185,328,443

(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 project(s). Includes all cost from project inception to completion.
(3) The voters of Douglas 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.

52

IV. SINGLE AUDIT SECTION

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
To the Superintendent and Members of the Douglas County Board of Education
Douglasville, Georgia
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 the Douglas County Board of Education, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the Douglas County Board of Education's basic financial statements, and have issued our report thereon dated March 1, 2016. Our report includes a reference to the changes in accounting principle resulting from the implementation of Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions--an amendment of GASB Statement No.27, as well as Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date--an amendment of GASB Statement No. 68, as of July 1, 2014.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Douglas County Board of Education's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Douglas County Board of Education's internal control. Accordingly, we do not express an opinion on the effectiveness of the Douglas County Board of Education's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a 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. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants RSM International

Compliance and Other Matters As part of obtaining reasonable assurance about whether the Douglas County Board of Education's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Atlanta, Georgia March 1, 2016
54

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
To the Superintendent and Members of the Douglas County Board of Education
Douglasville, Georgia
Report on Compliance for Each Major Federal Program
We have audited the Douglas County Board of Education's compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Douglas County Board of Education's major federal programs for the year ended June 30, 2015. The Douglas County Board of Education's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the Douglas County Board of Education's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Douglas County Board of Education's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the Douglas County Board of Education's compliance.
200 GALLERIA PARKWAY S.E., SUITE 1700 ATLANTA, GA 30339-5946 770-955-8600 800-277-0080 FAX 770-980-4489 www.mjcpa.com Members of The American Institute of Certified Public Accountants RSM International

Opinion on Each Major Federal Program
In our opinion, the Douglas County Board of Education complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2015.
Report on Internal Control Over Compliance
Management of the Douglas County Board of Education is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Douglas County Board of Education's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Douglas County Board of Education's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. 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.
56

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Atlanta, Georgia March 1, 2016
57

DOUGLAS COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Federal Grantor/Pass-Through Grantor/Program Title
U. S. DEPARTMENT OF AGRICULTURE: Passed through Georgia Department of Education: Fresh Fruit and Vegetable Program - Cash Assistance Child Nutrition Cluster School Breakfast Program - Cash Assistance National School Lunch Program: Non-Cash Assistance - Commodities (1) Cash Assistance School Snack Program Total Child Nutrition Cluster
Total U. S. Department of Agriculture
U. S. DEPARTMENT OF DEFENSE Junior R.O.T.C. Total U. S. Department of Defense
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Abstinence Education and Youth Development Program Total U.S. Department of Health and Human Services
U. S. DEPARTMENT OF EDUCATION Direct Awards Fund for the Improvement of Education: Elementary and Secondary School Counsel
Total Direct Awards
Passed through the Georgia Department of Education: Race to the Top Cluster Race to the Top - Math - ELA Training Grant Race to the Top - SLO Total Race to the Top Cluster
Title I, Part A Cluster Title I Programs - Local Education Agency Title I Programs - School Improvement Title I Programs - Reward Schools Award Total Title I, Part A Cluster
ARRA - Title I-G School Improvement

Federal CFDA Number
10.582 10.553 10.555 10.555 10.555
12.unknown
93.235
84.215
84.395 84.395
84.010 84.010 84.010 84.388

Total Expenditures

$

68,224

2,755,659

729,900 7,393,944
187,639 11,067,142

11,135,366

233,185 233,185

63,485 63,485

354,631 354,631

17,254 13,587 30,841
5,873,746 259,000 9,000
6,141,746
395,434
(Continued)

58

DOUGLAS COUNTY BOARD OF EDUCATION
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

Federal Grantor/Pass-Through Grantor/Program Title

Federal CFDA Number

Total Expenditures

U. S. DEPARTMENT OF EDUCATION (Continued): Passed through Georgia Department of Education (continued): Title II-A - Improving Teacher Quality Title II-A - Advance Placement Grant Subtotal

84.367 84.367

514,162 3,200
517,362

Special Education Cluster (IDEA) Title VI-B Preschool Title VI-B Flowthrough Title VI-B High Cost Fund Pool Total Special Education Cluster (IDEA)

84.173 84.027 84.027

97,987 3,966,990
43,018 4,107,995

Education for Homeless Children and Youth

84.196

41,408

Title III Cluster Title III - Limited English Proficient Title III - Immigrant Total Title III Cluster

84.365 84.365

197,708 6,352
204,060

Vocational Education - Perkins Plus Vocational Education - Perkins IV - Reserve - Perkins Carryover Vocational Education - Program Improvement Total Vocational Education

84.048 84.048 84.048

16,949 17,015 182,112 216,076

Title IV B - Twenty-first Century Community Learning Centers

84.287

1,743,912

Charter Schools Cluster Charter Schools - Federal Implementation Grant (pass-through) Charter Schools - Federal Dissemination Grant (pass-through) Total Charter Schools Cluster

84.282 84.282

499,619 149,995 649,614

Total Passed Through Georgia Department of Education

14,048,448

Total U. S. Department of Education

14,403,079

Total Expenditures of Federal Awards

$ 25,835,115

(1) The amounts shown for the Food Distribution Program represents the federally assigned value of nonmonetary assistance for donated commodities received and/or consumed by the system during the current fiscal year.

59

DOUGLAS COUNTY BOARD OF EDUCATION
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2015

The Schedule of Expenditures of Federal Awards includes the federal grant activity of the Douglas County Board of Education and is presented on the modified accrual basis of accounting.

The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of State and Local Governments, and Non-Profit Organizations . Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the financial statements.

During 2015, disbursements were made to sub-recipients of the following grant programs:

Program Charter Schools - Federal Implementation Grant Charter Schools - Federal Dissemination Grant

CFDA Number 84.282 84.282

Sub-recipient Brighten Academy Brighten Academy

Amount $ 499,619
149,995 $ 649,614

60

DOUGLAS COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2015

SECTION I SUMMARY OF AUDITOR'S RESULTS

Financial Statements Type of auditor's report issued

Unmodified

Internal control over financial reporting: Material weaknesses identified?

yes X no

Significant deficiencies identified?

yes X none reported

Noncompliance material to financial statements noted?

yes X no

Federal Awards Internal Control over major programs: Material weaknesses identified?

yes X no

Significant deficiencies identified?

yes X none reported

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

Unmodified

Any audit findings disclosed that are required to be reported in accordance with OMB Circular A-133, Section 510(a)?

yes X no

Identification of major program: CFDA Number 10.553, 10.555 84.027, 84.173

Name of Federal Program or Cluster Child Nutrition Cluster Special Education Cluster (IDEA)

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

$775,053

Auditee qualified as low-risk auditee?

yes X no

61

DOUGLAS COUNTY BOARD OF EDUCATION
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2015

None reported. None reported.

SECTION II FINANCIAL STATEMENT FINDINGS AND RESPONSES
SECTION III FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

62

None reported.

DOUGLAS COUNTY BOARD OF EDUCATION SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED JUNE 30, 2015
STATUS OF PRIOR YEAR FINDINGS

63